SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q\A
AMENDMENT TO APPLICATION OR REPORT
FILED PURSUANT TO SECTION 12, 13, OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
International Thoroughbred Breeders, Inc.
(Exact name of registrant as specified in its charter)
Commission File Number: 0-9624
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items of its
December 31, 1993 Form 10-Q dated February 10, 1993 as set forth in the pages
attached hereto:
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
[Registrant]
February 14, 1994 By: /s/William H. Warner
William H. Warner
Treasurer, Principal Financial and
Accounting Officer
<PAGE>
<PAGE>
<TABLE>
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1993 AND JUNE 30, 1993
ASSETS
<CAPTION>
December 31,
1993 June 30,
(UNAUDITED) 1993
<S> <C> <C>
CURRENT ASSETS:
Cash $ 4,961,318 $ 5,009,733
Short-Term Investments 12,365,177 10,327,922
TOTAL CASH AND CASH EQUIVALENTS 17,326,495 15,337,655
Restricted Cash and Investments 178,920 1,945,017
Accounts Receivable - Net 1,109,239 727,692
Prepaid Expenses 379,993 590,381
Accrued Interest Receivable 38,658 4,171
Other Current Assets 9,531 14,858
TOTAL CURRENT ASSETS 19,042,836 18,619,774
LAND, BUILDINGS, EQUIPMENT AND LIVESTOCK (4):
Land and Buildings 51,684,329 51,512,558
Equipment 1,616,884 1,529,394
Livestock 187,951 1,182,011
TOTAL LAND, BUILDINGS, EQUIPMENT
AND LIVESTOCK 53,489,164 54,223,963
LESS: Accumulated Depreciation 539,142 1,174,590
TOTAL LAND, BUILDINGS, EQUIPMENT
AND LIVESTOCK - NET 52,950,022 53,049,373
DEPOSITS AND OTHER ASSETS 417,207 594,395
TOTAL ASSETS $72,410,065 $72,263,542
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1993 AND JUNE 30, 1993
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
December 31,
1993 June 30,
(UNAUDITED) 1993
<S> <C> <C>
CURRENT LIABILITIES:
Accounts Payable and Accrued Expenses $ 2,303,556 $ 4,455,994
Notes Payable - Current Portion 25,000 35,418
TOTAL CURRENT LIABILITIES 2,328,556 4,491,412
DEFERRED INCOME 375,469 414,741
LONG-TERM LIABILITIES 25,000 50,000
COMMITMENTS AND CONTINGENCIES 0 0
SHAREHOLDERS' EQUITY:
Series A (Convertible) Preferred Stock
$100 Par Value, Authorized 500,000 Shares,
Issued and Outstanding, 362,428
and 441,664 Shares, Respectively (3) 36,242,775 44,166,375
Common Stock $2.00 Par Value,
Authorized 25,000,000 Shares,
Issued and Outstanding, 9,551,195
and 9,511,415 Shares, Respectively 19,102,389 19,022,830
Capital in Excess of Par (June 30, 1993
reflects quasi-reorganization)(4) 11,962,225 4,118,184
Retained Earnings (subsequent to June 30,
1993, date of quasi-reorganization, total
deficit eliminated $102,729,936) (4) 2,373,651 0
TOTAL SHAREHOLDERS' EQUITY 69,681,040 67,307,389
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 72,410,065 $ 72,263,542
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 1993
(UNAUDITED)
<CAPTION>
Common
Number of
Shares Amount
<S> <C> <C>
BALANCE - JUNE 30, 1993 9,511,415 $ 19,022,830
Shares Issued for Fractional
Exchanges With Respect to the
One-for-twenty Reverse Stock
Split effected on March 13, 1992 151 302
Exchange of Preferred Stock
for Common Stock (3) 39,629 79,257
Net Income for the Six Months
Ended December 31, 1993 --- ---
BALANCE - DECEMBER 31, 1993 9,551,195 $ 19,102,389
<CAPTION>
Preferred
Number of
Shares Amount
<S> <C> <C>
BALANCE - JUNE 30, 1993 441,664 $ 44,166,375
Shares Issued for Fractional
Exchanges With Respect to the
One-for-twenty Reverse Stock
Split effected on March 13, 1992 21 2,100
Exchange of Preferred Stock
for Common Stock (3) (79,257) (7,925,700)
Net Income for the Six Months
Ended December 31, 1993 --- ---
BALANCE - DECEMBER 31, 1993 362,428 $ 36,242,775
<CAPTION>
Capital
in Excess Retained
of Par Earnings Total
<S> <C> <C> <C>
BALANCE - JUNE 30, 1993 $ 4,118,184 $ 0 $ 67,307,389
Shares Issued for Fractional
Exchanges With Respect to the
One-for-twenty Reverse Stock
Split effected on March 13, 1992 (2,402) --- ---
Exchange of Preferred Stock
for Common Stock (3) 7,846,443 --- ---
Net Income for the Six Months
Ended December 31, 1993 --- 2,373,651 2,373,651
BALANCE - DECEMBER 31, 1993 $ 11,962,225 $ 2,373,651 $ 69,681,040
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1993 AND 1992
(UNAUDITED)
<CAPTION>
Three Months Ended
December 31,
1993 1992
<S> <C> <C>
REVENUES:
Revenue from Operations $11,282,588 $ 9,438,277
Investment Income Revenue 1,239,052 1,607,427
TOTAL REVENUES 12,521,640 11,045,704
EXPENSES:
Cost of Revenues 3,648,189 2,479,430
Operating Expenses 5,553,461 5,570,080
Depreciation & Amortization (4) 132,017 1,503,897
General & Administrative Expenses 1,345,690 1,312,466
Interest Expense 0 297,079
TOTAL EXPENSES 10,679,357 11,162,952
INCOME(LOSS) BEFORE TAXES 1,842,283 (117,248)
LESS:Income Tax Expense (2) 0 0
NET INCOME(LOSS) $ 1,842,283 $ (117,248)
NET INCOME(LOSS) PER SHARE (6) $ 0.19 $ (0.01)
<CAPTION>
Six Months Ended
December 31,
1993 1992
<S> <C> <C>
REVENUES:
Revenue from Operations $18,743,653 $16,213,729
Investment Income Revenue 1,359,588 3,203,348
TOTAL REVENUES 20,103,241 19,417,077
EXPENSES:
Cost of Revenues 4,737,004 3,429,343
Operating Expenses 10,236,958 10,670,134
Depreciation & Amortization (4) 272,925 2,762,358
General & Administrative Expenses 2,482,703 2,555,418
Interest Expense 0 638,693
TOTAL EXPENSES 17,729,590 20,055,946
INCOME(LOSS) BEFORE TAXES 2,373,651 (638,869)
LESS:Income Tax Expense (2) 0 0
NET INCOME(LOSS) $ 2,373,651 $ (638,869)
NET INCOME(LOSS) PER SHARE (6) $ 0.25 $ (0.08)
Results from operations are materially affected as a result
of the quasi-reorganization effective June 30, 1993.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1993 AND 1992
(UNAUDITED)
<CAPTION>
Six Months Ended
December 31,
1993 1992
<S> <C> <C>
INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash Received from Customers $ 17,864,222 $ 15,914,220
Cash Paid to Suppliers and Employees (19,191,756) (19,787,817)
Interest Received 200,101 123,964
Interest Paid 0 (638,693)
Change in Restricted Cash & Investments 1,766,097 1,456,418
NET CASH PROVIDED(USED) BY OPERATIONS 638,664 (2,931,908)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from Sale of Livestock 391,612 170,808
Proceeds from Sale of Equipment 67,000 35,300
Decrease in Mortgage Receivable 0 264,042
Interest Received on Investments 1,125,000 3,072,019
Capital Expenditures (375,206) (142,341)
Decrease in Other Investment Activity 177,188 9,617
NET CASH PROVIDED BY INVESTING ACTIVITIES 1,385,594 3,409,446
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of Common Stock 0 8,993,829
Principal Payments on Long Term Notes (35,418) (3,037,502)
NET CASH PROVIDED(USED) BY FINANCING ACTIVITIES (35,418) 5,956,327
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,988,840 6,433,865
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 15,337,655 1,792,155
CASH AND CASH EQUIVALENTS AT
END OF THE PERIOD $ 17,326,495 $ 8,226,020
See Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE> INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
Unaudited
(1) INTEREST EXPENSE
All interest expense of the subsidiaries is considered expense of the
parent company. The parent company is due interest on funds it has advanced
to Garden State Park for the purchase, construction and equipping of the
racetrack and funding its operations as needed. As of December 31, 1993,
such advances totaled $131,723,919 to Garden State Park, in addition to
initial capitalization of $86,130,000 provided by the net proceeds of the
Company's preferred stock offering in July, 1983. The interest on these
advances was computed at the prime lending rate of 6% during the periods.
The resulting interest owed to the parent company for the three and six
months ended December 31, 1993 by Garden State Park was $1,992,099 and
$3,984,197, respectively.
(2) INCOME TAX EXPENSE
For the six months ended December 31, 1993, the Company incurred a tax
loss of approximately $1,553,424. A difference of $3,927,075 to the
Company's financial income of $2,373,651 is the result of permanent
differences (primarily tax depreciation of $4,200,000) due to the quasi-
reorganization. Therefore, the Company did not make a provision for income
taxes for the period.
When the Company incurs income taxes in the future, any future income
tax benefits resulting from the utilization of net operating losses and other
carryforwards existing at June 30, 1993 to the extent resulting from the
quasi-reorganization, will be excluded from the results of operations and
credited to paid in capital. (See Note 4).
Effective July 1, 1993, the Company adopted FAS 109 Accounting for
Income Taxes. The Company has a deferred tax asset of approximately
$62,000,000 arising from a net operating loss carryforward of $155,000,000.
However, due to the uncertainty that the Company will generate income in the
future sufficient to fully or partially utilize these carryforwards, this net
operating loss carryforward is offset by an allowance of $62,000,000. The
effect of adoption on current and prior financial statements is immaterial.
(3) PREFERRED STOCK CONVERSION
The conversion period for the company's Series A Convertible Preferred
Stock concluded as of July 31, 1993.
(4) QUASI-REORGANIZATION
The Company adjusted its June 30, 1993 balance sheet to fair value and
transferred the accumulated deficit of $102,729,936 to Capital in Excess of
Par in accordance with quasi-reorganization accounting principles. The
effect of the quasi-reorganization will be that current and future operations
will reflect depreciation and amortization which is more consistent with
current value. Current and future operating statements will not be
comparable to those ending through June 30, 1993.
<PAGE>
<PAGE> INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
Unaudited
(5) COMMITMENTS AND CONTINGENCIES
On October 20, 1993, the United States District Court for the District
of New Jersey signed an order granting preliminary approval to a proposed
partial settlement of the consolidated class action pending since 1986
against the Company, its officers and directors and various other defendants
alleging various violations of federal securities laws and other statutes.
Although the Company believes this lawsuit is totally without merit, it has
incurred approximately $1,150,000 in legal expense in defending against the
lawsuit and would have been required to expend significant additional amounts
to continue the defense through trial. Therefore, in order to avoid further
expense, inconvenience and delay and to dispose of this expensive, burdensome
and protracted litigation, the Company executed the proposed partial
Settlement Agreement. The proposed partial settlement requires the Company
to make a $250,000 settlement payment and an additional payment of up to
$150,000 contingent upon receipt of future amounts by the Company from its
sale of the Philadelphia Park mortgage note. If effectuated, the settlement
would dispose of all class claims made against the Company, its officers and
directors and all derivative claims made on behalf of the Company against all
parties in the litigation. As part of the proposed settlement, the Company's
directors and officers' liability insurance carrier will pay $3,125,000 plus
an additional $4,125,000 which latter amount is subject to reduction on a
dollar for dollar basis in the event of collections from certain Non-Settling
Defendants or in the event of collection of any of the above described
$150,000 contingency payment. The proposed Settlement Agreement is subject
to final court approval and various other conditions and no assurances can be
given that it will take effect.
In the event the proposed Settlement Agreement does not take effect, the
Company intends to continue to vigorously contest this lawsuit.
As of September 27, 1993, the Company entered into development and
management agreements with Gale and Wentworth, Inc., a real estate company of
Florham Park, New Jersey, to develop an unused 56 acre portion of the
property at the Garden State Park racetrack as a retail shopping center.
(6) NET INCOME (LOSS) PER SHARE
Income/(Loss) per share for the three months and six months ended
December 31, 1993 and 1992 is computed on the weighted average number of
shares outstanding. Convertible Preferred Stock has not been included in the
1992 computation since their inclusion as a common stock equivalent would
result in anti-dilution. The conversion period for the Series A Convertible
Preferred Stock concluded as of July 31, 1993, therefore the Convertible
Preferred Stock has not been included in the 1993 computation. The number of
shares used in the computations were 9,539,796 and 9,509,396 for the three
months ended December 31, 1993 and 1992, respectively and for the respective
six month periods were 9,544,622 and 8,399,688.
<PAGE>
<PAGE> INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
Unaudited
(7) OPINION OF MANAGEMENT
In the opinion of management, these interim financial statements reflect
all adjustments consisting only of normal recurring accruals which are
necessary to present a fair statement of the results of operations for the
interim periods presented. These statements should be read in conjunction
with the Summary of Significant Accounting Policies and notes contained in
the Company's Annual Report (Form 10-K) for the year ending June 30, 1993.
(8) NEW AUTHORITATIVE PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 106, "Employers Accounting for
Postretirement Benefits Other Than Pensions," Financial Accounting Standards
No. 107, "Disclosure about Fair Value of Financial Investments," and
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
Companies are required to adopt the new methods of accounting within the next
year. However, the adoption of the new statements is not expected to have a
material impact on the Company's financial position or results of operations.
The Company currently does not have postretirement benefits. The Financial
Accounting Standards No. 107 and No. 109 were adopted on July 1, 1993.
(9) SUBSEQUENT EVENTS
A settlement agreement containing certain contingencies has been reached
on real estate tax appeals with the township of Cherry Hill for the racetrack
property. If the settlement is effectuated, the original assessment of
$88,203,100 will be reduced to $72,000,000 effective as of January 1, 1994.
This new assessment would reduce the real estate taxes on the racetrack
property by approximately $415,000 per year based upon current tax rates.
<PAGE>
<PAGE> INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1993 AND 1992
An independent accountant has reviewed the financial information herein
in accordance with standards established by the American Institute of
Certified Public Accountants. All adjustments and additional disclosures
proposed by said independent accountants have been reflected in the data
presented.
<PAGE>
<PAGE>
REVIEW REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Shareholders
International Thoroughbred Breeders, Inc.
and Subsidiaries
We have reviewed the Consolidated Balance Sheet as of December 31, 1993
and the Consolidated Statements of Shareholders' Equity, Operations, and Cash
Flows of International Thoroughbred Breeders, Inc. and Subsidiaries for the
three month and six month periods ended December 31, 1993 and 1992. These
financial statements are the responsibility of the company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the Consolidated Balance Sheet as of June 30, 1993, and
the related Consolidated Statements of Operations, Statement of Shareholders'
Equity, and Cash Flows for the year then ended (not presented herein); and
have issued our report thereon dated October 6, 1993. In our opinion, the
information set forth in the accompanying consolidated balance sheet as of
June 30, 1993, is fairly stated in all material respects in relation to the
Consolidated Balance Sheet from which it has been derived.
MORTENSON AND ASSOCIATES, P.C.
Certified Public Accountants
Cranford, NJ
January 25, 1994
<PAGE>
<PAGE> INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
FOR THE QUARTER ENDED DECEMBER 31, 1993
AND FOR THE SIX MONTHS ENDED DECEMBER 31, 1993
OPERATIONS
Total revenues for the three months ended December 31, 1993 increased
$1,475,936 or 13% compared to the three months ended December 31, 1992. For
the six month period ended December 31, 1993, total revenues increased
$686,164 or 3.5% in comparison to the same period last year. The increase in
revenues primarily reflect the net effect of: (1) a 14% increase in revenues
generated by the racetrack segment in the first half of fiscal 1994 as
compared to the first half of fiscal 1993; (2) increased revenues generated
by the breeding segment during the comparable periods; reduced by (3) a
decrease in investment income as a result of the sale of the mortgage note
held on Philadelphia Park in January, 1993.
The Company realized net income from operations of $2,373,651 and
$1,842,283 for the respective six and three month period ended December 31,
1993 as compared to a net loss of $638,869 and $117,248 for the comparable
periods in fiscal 1993. The change of $3,012,520 and $1,959,531 from net
losses to net income for the respective six and three month periods just
ended primarily resulted from: (1) operating profits, before interest due to
the parent, generated by Garden State Park and the breeding segment;
(2) increased income on short term investments; partially offset by
(3) decreased interest income as a result of the sale of the note held on
Philadelphia Park.
Depreciation expense for the six and three months ended December 31,
1993 was $272,925 and $132,017 as compared to $2,762,358 and $1,503,897 for
the comparable periods in the last fiscal year. The significant decreases of
$2,489,433 and $1,371,880 were primarily due to the quasi-reorganization of
the Company's assets at June 30, 1993 which reduced the assets to fair
values. (See Note 4)
Garden State Park
During the three and six months ended December 31, 1993, Garden State
Park realized income of $774,393 and $1,503,138, respectively before interest
due the parent company of $1,992,099 and $3,984,197 for the three and six
month periods, respectively.
Quarterly and year-to-date net income at Garden State Park for the
current fiscal year as compared to the net losses for last year are as
follows:
Net Income/(Loss) Net Loss
Fiscal 1994 Fiscal 1993 Decrease
1st Quarter $ 728,745 $(1,274,657) $(2,003,402)
2nd Quarter 774,393 (971,790) (1,746,183)
Year-to-Date $1,503,138 $(2,246,447) $(3,749,585)
<PAGE> INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
FOR THE QUARTER ENDED DECEMBER 31, 1993
AND FOR THE SIX MONTHS ENDED DECEMBER 31, 1993
Garden State Park (Continued)
During the three months ended December 31, 1993, Garden State Park's
revenue increased $1,540,396 or 16.5% when compared to the same period last
year, primarily reflecting the net effect of: 1) a 123% increase in revenues
generated from the simulcasting of the live races to out-of-state racetracks
in addition to the simulcasting into the Atlantic City Casinos; 2) a 14%
increase in revenues generated from simulcasting of Garden State Park races
into other New Jersey racetracks; offset by 3) a 19% decrease in revenues
generated by live on-track racing. The significantly smaller percentage
increase in Garden State Park simulcasting into the other New Jersey
racetracks reflects the increased competition between all New Jersey
racetracks for simulcast signals as a result of the addition of out-of-state
simulcasting. Expenses decreased $205,787 or 2% for the three months ending
December 31, 1993 when compared to the same period last year primarily as a
result of: 1) a significant decrease in depreciation and amortization
primarily as a result of the quasi-reorganization at June 30, 1993 which
adjusted the racetrack's assets to market value; 2) a net decrease in
operating expenses primarily as a result of the continuation of a cost
reduction program initiated in fiscal 1993; partially offset by 3) an
increase in expenses associated with the increase of simulcasting received
from out-of-state racetracks throughout the country. The increase in
revenues and the decrease in expenses primarily accounted for the racetrack
realizing net income from operations of $774,393 for the three months ended
December 31, 1993 as compared to a loss of $971,790 during the three months
ended December 31, 1992.
During the six months ended December 31, 1993 Garden State's revenue
increased $2,285,829 or 14% when compared to the same period last year,
primarily reflecting the net effect of increased revenues generated by New
Jersey and out-of-state simulcasting and decreased revenues generated by live
racing as discussed above. Expenses decreased $1,463,756 or 8% for the six
months ending December 31, 1993 when compared to the same period last year
primarily as a result of the significant decrease in depreciation expense
partially offset by the increased operating expenses discussed above. As a
result of increased revenues and decreased expenses, Garden State Park
realized income of $1,503,138 for the first half of fiscal 1994 as compared
to a loss of $2,246,447 for the first half of fiscal 1993.
Average daily on-track attendance and wagering at the track's 1993
Standardbred (harness) Meet, which began September 8, and ended December 11,
1993 (running 14 days in the first fiscal quarter and 41 days in the second
fiscal quarter of the year) decreased 21% and 22%, respectively, averaging
2,674 and $237,558 per day, respectively, during the 1993 Meet, as compared
to 3,330 and $303,908 per day, respectively, during the 1992 Standardbred
Meet (running 13 days in the first quarter and 40 days in the second quarter
of fiscal 1993).
<PAGE>
<PAGE> INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
FOR THE QUARTER ENDED DECEMBER 31, 1993
AND FOR THE SIX MONTHS ENDED DECEMBER 31, 1993
Garden State Park (Continued)
The following summarizes the average handle associated with the
simulcast activity at Garden State Park during the first six months of both
fiscal 1994 and 1993.
<TABLE>
<CAPTION>
July 1 thru December 31,
FISCAL 1994 FISCAL 1993
Number Average Number Average
of Days Handle of Days Handle
<S> <C> <C> <C> <C> <C>
SIMULCAST OF GARDEN
STATE PARK RACES TO:
MONMOUTH (S) 55 21,958 0 0
FREEHOLD (S) 55 83,757 52 105,829
ATLANTIC CITY (S) 0 0 53 31,691
MEADOWLANDS (S) 55 444,343 52 373,375
OUT-OF-STATE TRACK (S) 55 367,498 53 164,549
A.C. CASINOS (S) 55 33,228 0 0
SIMULCAST OF RACES TO
GARDEN STATE PARK RACES FROM:
MONMOUTH (T) 49 110,920 49 175,176
ATLANTIC CITY (T) 48 117,337 49 185,868
MEADOWLANDS (T) 68 132,925 69 214,521
FREEHOLD (S) 114 41,576 107 60,959
MEADOWLANDS (S) 38 138,201 38 187,307
OUT-OF-STATE TRACK (T,S) 183 213,356 163 110,052
(T)=Thoroughbred Races (S)=Standardbred (Harness) Races
</TABLE>
Garden State Park's 1994 Thoroughbred Meet began January 13, 1994 and is
scheduled to run through May 28, 1994. Racing is currently scheduled four
times a week during the 79 racing date meet. Racing will be conducted at
night on all dates included in the schedule. As of February 12, 1994, severe
inclement weather, which has affected the northeastern portion of the United
States, has caused the Company to cancel 12 out of its intended 19 nights of
scheduled Thoroughbred racing and nine nights of simulcast receiving.
Attendance and handle on many of the completed live racing programs were also
adversely affected by weather conditions. It is anticipated that this severe
weather, which has also caused most other racetracks in the northeastern
United States to limit their live racing programs, will have an adverse impact
on earnings from live racing programs in January and February which will be
included in the Company's third quarter results. At this time it is
uncertain whether all or a portion of the lost live racing days will be
rescheduled.
<PAGE> INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
FOR THE QUARTER ENDED DECEMBER 31, 1993
AND FOR THE SIX MONTHS ENDED DECEMBER 31, 1993
Garden State Park (Continued)
The Company has received approval from the New Jersey Racing Commission
to run a 51 night harness meet from September 7 through December 3, 1994.
Breeding Operations
Revenues and expenses for the six months ended December 31, 1993 from
breeding operations were less than 3% and 2% of total revenues and expenses,
respectively, of the corporation for the period.
Revenues from breeding operations for the three months ended December
31, 1993 and 1992 were $441,720 and $94,825 for the respective quarters
representing an increase of $346,895 during the comparable periods. Revenues
for the six months ended December 31, 1993 and 1992 were $503,965 and
$185,389, respectively, representing an increase of $318,576. These
increases are primarily a result of the breeding stock sold during comparable
periods being significantly increased in value.
The cost of revenues generated by the breeding segment in the second
quarter of fiscal 1994 was $132,103, representing an increase of $66,761 over
the same quarter last fiscal year and on a fiscal year-to-date basis was
$163,661, representing a $21,313 increase over last fiscal year-to-date
primarily as a result of the higher cost of bloodstock sold during comparable
periods. Operating and depreciation expenses for the three and six months
ended December 31, 1993 were reduced $48,196 or 47% due to the number of
animals owned during the periods being significantly reduced. Total expenses
for the breeding segment for the three months ended December 31, 1993 and
1992 were $204,958 and $166,390 respectively, and $297,719 and $404,593 for
the respective six months then ended.
The breeding operations realized income of $236,762 and $206,246 before
taxes for the three and six months ended December 31, 1993 as compared to a
loss of $71,565 and $219,204 for the comparable periods in fiscal 1993
primarily as a result of the increased revenues and decreased expenses
generated in this fiscal year from the bloodstock sales discussed above.
LIQUIDITY AND FINANCIAL RESOURCES
Consolidated and Racetrack Segment
The Company's working capital as of December 31, 1993 was $16,714,280
which represents an increase of $6,443,956 from the first half of fiscal
1993. This increase is primarily the net result of the cash proceeds from
sale of the Philadelphia Park Mortgage reduced by the retirement of the
Garden State Park mortgage notes in the third quarter of fiscal 1993 and
positive cash flow from operations.
<PAGE>
<PAGE> INTERNATIONAL THOROUGHBRED BREEDERS, INC.
AND SUBSIDIARIES
MANAGEMENT'S ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
FOR THE QUARTER ENDED DECEMBER 31, 1993
AND FOR THE SIX MONTHS ENDED DECEMBER 31, 1993
Breeding Segment
At December 31, 1993, the Company owned 3 thoroughbred broodmares, 5
stallion shares in 6 thoroughbred stallions, various seasons, one foal, one
other horse and a two thirds interest in one other horse.
During fiscal 1994 the Company plans to continue a reduction of its
bloodstock holdings begun during fiscal 1986 in response to what management
believed to be a long term downturn in the bloodstock market and the
continuing need to raise cash for the operating requirements of the
racetrack.
INFLATION
To date, inflation has not had a material effect on the Company's
operations.
