Magna Entertainment Corp Results for 2005 - PariMax announced - Horse Racing News: 2008 Breeders’ Cup World Championships News, Daily Horse Racing Winners, Results & Payouts

Magna Entertainment Corp Results for 2005 - PariMax announced

Posted on Tuesday, February 28th, 2006

Magna Entertainment Corp suffered a net loss of $105 million for year ended Dec. 31, 2005.

In announcing these results, Tom Hodgson, President and Chief Executive Officer of MEC, remarked: "2005 has been a financially challenging, yet exciting year for MEC. Developments over the past year included the sale of Flamboro Downs and our investment in Maryland-Virginia Racing Circuit, Inc., agreements to sell a tract of residential land at Palm Meadows in Florida and The Meadows in Pennsylvania, the opening of a casino facility at Remington Park, the passing of slot legislation in Florida and in early January 2006 the opening of the new Gulfstream Park clubhouse, which has been under development for the past 18 months. We have recently announced the participation in a joint venture involved in the development of an international subscription television channel into the United Kingdom and Ireland. We have made significant progress in 2005 in the pursuit of alternative gaming, regulatory reform and strategic initiatives, which will deliver future returns, but achieving these milestones has not been without cost and financing challenges. We are encouraged by the fact that the third and fourth quarters of 2005, which are typically our least profitable quarters, given the seasonality of our business, have delivered two consecutive quarters of EBITDA and net loss improvements from continuing operations over the comparative periods in 2004. These profit improvements in our continuing operations are positive steps in the achievement of cost reduction initiatives, the growth of our alternative gaming operations and the stabilization of our core racing business."

"I am also pleased to announce that our Board of Directors today approved the formation of PariMax, Inc., a new company to oversee the development of our various electronic distribution platforms including XpressBet(R), HRTV(TM), MagnaBet(TM), RaceONTV(TM) and our 30% stake in AmTote International, Inc. Joe DeFrancis, Chief Executive Officer of The Maryland Jockey Club, has been appointed Chief Executive Officer of PariMax. PariMax will focus on the development of complete wagering solutions and will concentrate on serving the global wagering market by developing product lines which meet the needs of both distribution partners and end consumers worldwide. For distribution partners, RaceONTV(TM) will provide simulcasting and wagering solutions for betting shops internationally. AmTote will continue to provide a variety of wagering interfaces and connectivity products for racetracks, OTBs, and account wagering providers, both domestically and abroad. For consumers, XpressBet(R) and MagnaBet(TM) will be PariMax’s account wagering platforms, which provide video streaming and wagering opportunities to an increasingly international customer base. Consumers will be further served by PariMax supported television channels, including HRTV(TM) in the United States, Racing World in the United Kingdom and Ireland (a planned joint venture between MEC, Churchill Downs Inc., and Racing UK) and PremiereWin (a MEC television partner) in central Europe. This will be the first time a company with such breadth of services will have such a focus, and we are optimistic that PariMax will create significant value for the North American racing industry as a whole, including MEC’s portfolio of tracks."

Our racetracks operate for prescribed periods each year. As a result, our racing revenues and operating results for any quarter will not be indicative of our racing revenues and operating results for the year.

Our financial results for the fourth quarter of 2005 reflect the full quarter’s operations for all of MEC’s racetracks and pari-mutuel wagering operations but do not include the operations of Bay Meadows and Multnomah Greyhound Park, which were included in the comparative results for the fourth quarter of 2004 as the facility leases expired on December 31, 2004. Our financial results for the three months and year ended December 31, 2004 have also been restated to reflect only continuing operations. Discontinued operations for the three months and year ended December 31, 2005 and 2004 reflect the results of Flamboro Downs, the sale of which was completed on October 19, 2005, and Maryland-Virgina Racing Circuit, Inc., the sale of which was completed on September 30, 2005.

Revenues for the three months ended December 31, 2005 decreased $4.6 million to $127.0 million, compared to $131.6 million for the three months ended December 31, 2004. In the fourth quarter of 2004, $4.7 million of additional revenues were recognized under the golf course access fee agreements as the agreements were entered into in November 2004 and revenue was recognized at that time from the date of expiration of the previous agreements. Also in the fourth quarter of 2004, Bay Meadows and Multnomah Greyhound Park accounted for $13.6 million of revenue as the facility leases expired on December 31, 2004. These revenue decreases were partially offset by revenue increases attributable to gaming revenues generated at our Remington Park casino facility, which opened on November 28, 2005, a shift in the racing calendar at Golden Gate Fields, which resulted in ten additional live race days in the fourth quarter of 2005 compared to the fourth quarter of 2004 and improvements at our Maryland operations with the opening of the new turf course at Laurel Park. Revenues were $624.7 million in 2005, compared to $702.5 million in 2004, a decrease of $77.8 million or 11.1%. The decrease is primarily due to the expiry of the leases at Bay Meadows and Multnomah Greyhound Park, which combined accounted for $64.0 million of revenue in 2004, as well as reduced revenues of $16.4 million from the sale of non-core real estate in the prior year.

EBITDA from continuing operations for the three months ended December 31, 2005 was a loss of $19.1 million, compared to a loss of $26.8 million in the three months ended December 31, 2004, an improvement of $7.7 million from the prior year period. The improvement is primarily attributable to a reduction of predevelopment, pre-opening and other costs, the opening of the Remington Park casino facility, a strong start to the Santa Anita Park 2006 race meet, which began on December 26, 2005 and cost reductions at our European, Northern U.S. and Corporate operations.

EBITDA from continuing operations was a loss of $29.4 million for 2005, compared to a loss of $44.3 million in 2004, an improvement of $15.0 million from the prior year. It should be noted that the EBITDA loss in 2004 was negatively impacted by $26.7 million of non-cash write-downs of long-lived assets and positively impacted by $9.6 million of earnings on the sale of non-core real estate.

During the fourth quarter of 2005, cash used for operations was $16.0 million, which has improved from cash used for operations of $23.8 million in the fourth quarter of 2004. Cash used in investing activities during the three months ended December 31, 2005 was $67.7 million, which included real estate property and fixed asset additions of $66.6 million and other asset additions of $1.1 million. Cash provided by financing activities during the three months ended December 31, 2005 of $78.2 million represents advances and long-term debt from our parent company of $80.4 million, $0.2 million of long-term debt incurred on a capital lease and $2.0 million from net increases of bank indebtedness, partially offset by long-term debt repayments of $4.4 million.

Cash used for operations in 2005 was $64.9 million, decreasing from a use of cash in operations in 2004 of $40.9 million. Cash used in investing activities in 2005 of $145.5 million included $151.3 million of real estate property, fixed asset and other asset additions, partially offset by $5.8 million of proceeds on disposal of real estate properties and fixed assets. Financing activities in 2005 provided cash of $171.4 million, including advances and long-term debt from our parent company of $156.5 million, $27.7 million of proceeds of long-term debt and $2.8 million from net increases of bank indebtedness, partially offset by long-term debt repayments of $15.6 million.

MEC, North America’s number one owner and operator of horse racetracks, based on revenue, acquires, develops and operates horse racetracks and related pari-mutuel wagering operations, including off-track betting facilities. Additionally, MEC owns and operates XpressBet(R), a national Internet and telephone account wagering system, and HorseRacing TV(TM), a 24-hour horse racing television network.

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"Magna Entertainment Corp Results for 2005 - PariMax announced" was posted on Tuesday, February 28th, 2006 at 12:14 pm and is filed under Gulfstream Park, Horse Racing Industry, Pimlico Track, Santa Anita Track, USA Horse Racing. You can follow any responses to this entry through the RSS 2.0 feed. Leave a response, or trackback from your own site.