<PAGE> 1
EXHIBIT (c)(1)
Presentation to the Board of Directors of
FAIR GROUNDS CORPORATION
[FAIR GROUNDS CORPORATION LOGO]
VALUATION OF COMMON STOCK FOR
PURPOSES OF PROPOSED REVERSE STOCK SPLIT
August 29, 2000
<PAGE> 2
TABLE OF CONTENTS
I. INTRODUCTION
II. SCOPE OF ANALYSIS
III. COMPANY OVERVIEW
IV. VALUATION OVERVIEW
V. VALUATION ANALYSIS
VI. CONCLUSION
DUFF & PHELPS, LLC
<PAGE> 3
APPENDICES
A. Comparable Public Company Descriptions
B. Comparable Public Company Financial and Market Summary
C. Fair Grounds Stock Price and Volume Graph
D. Fair Grounds Corporation Historical Financial Statements
DUFF & PHELPS, LLC
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I. INTRODUCTION
- The board of directors of Fair Grounds Corporation ("Fair Grounds"
or the "Company") is considering a reverse stock split (the
"Proposed Reverse Stock Split"), in which the Company would cash out
all fractional shares resulting from the reverse stock split. The
fractional shares will be cashed out at a price established by the
board of directors. The Company has engaged Duff & Phelps, LLC
("Duff & Phelps") as an independent financial advisor to determine
the fair market value of the common stock in connection with the
Proposed Reverse Stock Split.
- There are currently more than 400 shareholders of record of the
Company's common stock. After the Proposed Reverse Stock Split, it
is expected that there will be less than 100 shareholders.
- Fair Grounds Corporation, which was incorporated in 1941, is the
owner of the Fair Grounds Race Course in New Orleans, Louisiana, at
which thoroughbred horse racing, off-track betting and video poker
gaming are conducted. The Fair Grounds Race Course currently is in
its 128th racing season, making it the third oldest thoroughbred
racing track in the United States.
- The Management Group consists of Marie G. Krantz, Chairman and
Treasurer, Bryan G. Krantz, President and General Manager, Vickie L.
Krantz, Assistant General Manager.
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II. SCOPE OF ANALYSIS
Duff & Phelps conducted the following actions and analyses:
- Held discussions with Bryan Krantz and Will Bienvenu regarding Fair
Grounds' history and future prospects;
- Toured Fair Grounds Race Course with onsite OTB and one offsite OTB
facility;
- Reviewed and analyzed Fair Grounds' historical financial statements:
- Audited financial statements on SEC Form 10K for the fiscal
years ending October 31, 1994 to 1999
- Unaudited financial statements on SEC Form 10Q for the periods
ending April 30, 1999 to 2000
- Internal unaudited statements provided by the Company for the
period ending July 2000;
- Performed a discounted cash flow analysis;
- Analyzed a group of seven publicly-traded gaming companies to
analyze the industry's financial performance, growth, and valuation
multiples;
- Reviewed recent stock price and volume trading activity of Fair
Grounds' common stock.
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III. COMPANY OVERVIEW
- The Company's live racing meet is conducted annually at the Fair
Grounds Race Course over 88 racing days, generally from Thanksgiving
Day to late March.
- The Company's live races are simulcasted to its off track betting
facilities ("Tele-tracks") and to other facilities located both
inside and outside Louisiana.
- In addition to its live racing operations, the Company operates
off-track betting facilities, at locations in St. Bernard,
Jefferson, St. John and LaFourche Parishes, Louisiana, as well as a
tele-track facility located at the Fair Grounds Race Course. Through
Finish Line Management Corporation, an affiliate, the Company
operates five tele-track facilities in Terrebonne, St. Tammany and
Jefferson Parishes, Louisiana.
- At each location, the Company makes available pari-mutuel
wagering and food and beverage services to the public and
receives revenues from such services.
- Video poker wagering is conducted at all locations other than
the two facilities located in St. Tammany Parish.
- For two weekends each year, after the Company's live racing meet has
concluded, the infield of the Fair Grounds Race Course is used by a
non-profit organization in New Orleans to host a Jazz and Heritage
Festival. As compensation for the use of its facilities, the Company
receives all revenues from certain beverage concessions during the
Festival.
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III. COMPANY OVERVIEW
- The Company recently closed the tele-track facility on Bourbon
Street in New Orleans, and is planning to build a tele-track in
Harahan Parish.
- The Company is exploring new opportunities to supplement its
off-track betting operations. Specifically, the Company is pursuing
an account wagering program.
- Account wagering enables an individual to place bets on Fair
Grounds' or other races by telephone or over the Internet.
- Source market fees would allow Fair Grounds to retain a fee
when a resident within a certain distance of the racetrack
places a wager through an out-of-state facility on a Fair
Grounds race (i.e. When a person from New Orleans calls
Churchill Downs to bet on a Fair Grounds race, Fair Grounds
would receive a portion of the wager).
- The Company's stock trades over-the-counter in the United States,
but trading activity is minimal.
- From June, 1999 to June, 2000, the stock (symbol FGNO) has
traded between $30.50 and $45.00 a share, with the high being
achieved on June 26, 2000, the latest trading activity for the
stock.
- Trading volume has totaled 42,500 shares over that span,
reaching a high for one day of 5,800 shares on August 20,
1999.
- Refer to the graph in Appendix C for more detailed stock price
and volume history for the last year.
DUFF & PHELPS, LLC
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IV. VALUATION OVERVIEW
- The valuation basis of Fair Grounds' common stock was based on a
marketable minority interest basis.
- We performed two valuation methodologies including:
- Discounted Cash Flow Analysis ("DCF");
- Project free cash flows (FCFs) - cash available to
invest in the business, service debt, or distribute to
investors; cash flows should represent a weighted
average of several likely scenarios for future
performance
- Duff & Phelps uses a 10-year projection period which is
intended to capture the primary growth phase of the
subject company
- Project a continuing value - value of business after the
projection period; growth assumption into perpetuity is
based on inflationary or overall economic growth
- Discount FCFs and continuing value to the present using
the rate of return that investors would require on an
investment in the company, resulting in an enterprise
value of the company
- Discount rates determined by a combination of
theoretical models, the required rates of return for
various classes of investors, and the judgment of Duff &
Phelps based on our experience in securities valuation
- Comparable Public Company Analysis analyzing seven gaming;
- Select a group of publicly traded companies that could
be considered comparable, in whole or in part, to the
subject company
- No single company will be exactly comparable to the
subject company
DUFF & PHELPS, LLC
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V. VALUATION ANALYSIS - DISCOUNTED CASH FLOW
- Our valuation results are summarized below:
- DCF overview
- Assumptions based on management's expectations;
- DCF includes adjustments primarily for one-time start-up
expenses for the new OTB facility, the addition of
business through account wagering, and expected cash
needs;
- Discount rate of 13.0% based on 95% equity and 5% debt
capital structure.
- DCF valuation analysis (figures rounded)
- Enterprise Value $16,900,000 - $18,700,000
- Equity Value $17,900,000 - $19,700,000
- VALUE PER SHARE $38.20 - $42.00
DISCOUNTED CASH FLOW ANALYSIS SUMMARY
($ IN 000S EXCEPT PER SHARE NUMBERS)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Discount Rate 13.50% 13.00% 12.50%
------- ------- -------
Enterprise Value $16,915 $17,750 $18,673
Less: Value of debt 369 369 369
Plus: Excess cash and equivalents 1,350 1,350 1,350
------- ------- -------
Equity Value $17,895 $18,731 $19,653
======= ======= =======
PRICE PER SHARE $ 38.19 $ 39.97 $ 41.94
</TABLE>
DUFF & PHELPS, LLC
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V. VALUATION ANALYSIS - COMPARABLE PUBLIC COMPANY
- Our comparable company analysis included seven companies we deemed
comparable to Fair Grounds, including Anchor Gaming, Autotote Corp.,
Canterbury Park Holding Corp., Churchill Downs, Inc., Colonial Downs
Holdings, Dover Downs Entertainment, and Penn National Gaming. The
table below summarizes the comparable companies.
- Fair Grounds is considerably smaller in terms of revenues than the
comparable group except for Canterbury Park and Colonial Downs.
While the Company is similar to Canterbury Park and Colonial Downs
in growth of revenues, it is near or at the bottom of the range in
revenue growth and when comparing EBITDA margins (excluding Jazz &
Heritage Festival income).
<TABLE>
<CAPTION>
LTM REVENUES
COMPANY DESCRIPTION ($ IN MILLIONS)
------------- -------------------------- ---------------
<S> <C> <C>
Anchor Gaming Diversified gaming company $446
Autotote Corp. Pari-mutuel equipment and services 213
Canterbury Park Horse racing facility 20
Churchill Downs Hosts Kentucky Derby 314
Colonial Downs Operates racetrack & OTB facilities 29
Dover Downs Owns racing, motorsport and gaming facilities 246
Penn National Operates gaming facilities 207
</TABLE>
DUFF & PHELPS, LLC
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V. VALUATION ANALYSIS - COMPARABLE PUBLIC COMPANY
- Duff & Phelps' comparable company analysis focused primarily on
multiples of earnings before interest, taxes, depreciation and
amortization ("EBITDA") as the most appropriate valuation benchmark.
- Our comparable company valuation conclusion valued Fair Grounds at
the lower end of the comparable public company range due to relative
differences in Fair Grounds' size, growth prospects, limited
diversity of its business lines, and profitability. The table on the
following page summarizes the comparable analysis and valuation
multiples selected for Fair Grounds.
DUFF & PHELPS, LLC
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V. VALUATION ANALYSIS - COMPARABLE PUBLIC COMPANY
COMPARABLE PUBLIC COMPANY VALUATION SUMMARY
($ IN 000'S)
<TABLE>
<CAPTION>
LTM Projected
EBITDA EBITDA
---------- ----------
<S> <C> <C>
Public Comparable Multiple Range 5.3x - 7.5x 5.0x - 6.5x
Median Public Comparable Multiple 7.1x 6.1x
Selected Fair Grounds Multiple 7.0x 6.0x
Fair Grounds Performance (a) $ 2,804 $ 3,503
- IMPLIED ENTERPRISE VALUE 19,626 21,016
- Note Payable (369) (369)
- PV of Deferred Income Tax Liability (2,060) (2,060)
+ Excess Cash and Equivalents 1,350 1,350
---------- ----------
= NET EQUITY VALUE $ 18,547 $ 19,937
EQUITY VALUE PER SHARE $ 39.60 $ 42.50
</TABLE>
(a) Includes the Jazz and Heritage Festival income. Adjusted for expenses
associated with a new OTB facility and account wagering.
- COMPARABLE COMPANY VALUATION ANALYSIS RANGE: $40.00 TO $43.00 PER SHARE
DUFF & PHELPS, LLC
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VI. CONCLUSION
- Based on the valuation analyses presented above, the value of the Company's
common stock ranges from approximately $38.00 to $42.00 per share.
FAIR GROUNDS CORPORATION
VALUATION CONCLUSION
($ IN 000'S EXCEPT PER SHARE NUMBERS)
<TABLE>
<CAPTION>
Equity Value Range
-------------------------
<S> <C> <C>
Discounted Cash Flow Analysis $ 17,895 $ 19,653
Comparable Company Analysis $ 19,937 $ 18,547
Duff & Phelps' Conclusion $ 18,000 $ 19,500
Shares Outstanding 468,580 468,580
EQUITY VALUE PER SHARE CONCLUSION $ 38.41 $ 41.62
</TABLE>
DUFF & PHELPS, LLC
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FAIR GROUNDS CORPORATION
ANALYSIS OF PUBLICLY TRADED COMPARABLE COMPANIES
MARKET DATA
($ IN MILLIONS EXCEPT PER SHARE)
AUGUST 1, 2000
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Stock Price
Common ----------------- Current Current
Stock 52 - Week Range Primary Indicated Dividend Dividend
Price High Low Market Dividend Yield Payout
====================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Anchor Gaming (SLOT) 54.000 64.438 31.000 NSDQ $0.00 0.0% 0.0%
Autotote Corp. (TTE) 4.000 5.750 2.188 ASE 0.00 0.0 0.0
Canterbury Park (TRAK) 8.625 11.938 4.813 NSDQ 0.00 0.0 0.0
Churchill Downs (CHDN) 23.000 29.000 20.000 NSDQ 0.50 2.2 36.0
Colonial Downs (CDWN) 0.813 2.000 0.750 NSDQ 0.00 0.0 0.0
Dover Downs (DVD) 11.375 20.000 10.938 NYSE 0.18 1.6 20.9
Penn National (PENN) 13.625 15.750 6.813 NSDQ 0.00 0.0 0.0
<CAPTION>
% Debt to
Shares Out- Equity Total Capitalized Capitalized
standing Value Debt Value* Value
=======================================================================================
<S> <C> <C> <C> <C> <C>
Anchor Gaming (SLOT) 11.539 $623 $231 $822 28.1%
Autotote Corp. (TTE) 36.848 147 171 315 54.3
Canterbury Park (TRAK) 3.439 30 0 28 1.6
Churchill Downs (CHDN) 9.854 227 170 386 43.9
Colonial Downs (CDWN) 7.267 6 18 21 84.0
Dover Downs (DVD) 37.428 426 36 449 8.0
Penn National (PENN) 14.926 203 95 287 33.2
---------------------------------------------------------------------------------------
S & P 500 1,438.100
DJ Industrial Avg 10,606.950
</TABLE>
-------------------------------------------------------------------------------
* Equity value plus debt, preferred stock, and minority interest, less cash
and equivalents.
Sources: Standard & Poor's Compustat Services, Inc.and First Call Corporation.
<PAGE> 15
FAIR GROUNDS CORPORATION
ANALYSIS OF PUBLICLY TRADED COMPARABLE COMPANIES
OPERATING PERFORMANCE
($ IN MILLIONS EXCEPT PER SHARE)
AUGUST 1, 2000
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
Earnings Per Share Operating Cash Flow*
------------------------------- --------------------------------- Latest Book Projected
Latest Projected 3-Year Latest Projected 3-Year 12 Months' Value LTM EPS for
12 Months Fiscal Year Average 12 Months Fiscal Year** Average Revenues Per Share Ended Year Ending
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Anchor Gaming (SLOT) $4.54 $5.96 $4.20 $154.2 $165.2 $100.6 $446 $21.97 Mar00 Jun01
Autotote Corp. (TTE) 0.16 NA -0.31 44.9 NA 34.0 213 -1.23 Apr00
Canterbury Park (TRAK) 0.02 NA 0.10 1.0 NA 1.3 20 2.59 Mar00
Churchill Downs (CHDN) 1.39 1.96 1.46 51.3 59.4 28.6 314 14.64 Jun00 Dec00
Colonial Downs (CDWN) -0.25 NA -0.29 2.9 NA 0.6 29 4.86 Mar00
Dover Downs (DVD) 0.86 1.01 0.66 64.1 72.1 41.3 246 5.82 Jun00 Dec00
Penn National (PENN) 1.05 1.36 0.47 40.0 48.4 23.9 207 4.69 Jun00 Dec00
----------------------------------------------------------------------------------------------------------------------------------
S & P 500 50.94 58.00
DJ Industrial Avg 499.06 507.00
</TABLE>
-------------------------------------------------------------------------------
* Operating income plus depreciation and amortization.
** As projected by Duff & Phelps, LLC.
Note: Excludes special items.
Sources: Standard & Poor's Compustat Services, Inc.and First Call Corporation.
<PAGE> 16
FAIR GROUNDS CORPORATION
ANALYSIS OF PUBLICLY TRADED COMPARABLE COMPANIES
VALUATION MULTIPLES
AUGUST 1, 2000
<TABLE>
<CAPTION>
Capitalized Value as a Multiple of
Price as a Multiple of --------------------------------------------
Earnings Per Share Operating Cash Flow Price as a
----------------------------------------------- -------------------------------- Multiple
LTM Latest of
Latest Projected 3-Year Relative to Latest Projected 3-Year 12 Months' Book
12 Months Fiscal Year Average S&P 500 12 Months Fiscal Year Average Revenues Value
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Anchor Gaming (SLOT) 11.9x 9.1x 12.9x 42.2x 5.3x 5.0x 8.2x 1.8x 2.5x
Autotote Corp. (TTE) 25.3 NA NM 89.7 7.0 NA 9.3 1.5 NM
Canterbury Park (TRAK) NM NA NM NM NM NA NM 1.4 3.3
Churchill Downs (CHDN) 16.5 11.7 15.8 58.6 7.5 6.5 13.5 1.2 1.6
Colonial Downs (CDWN) NM NA NM NM 7.2 NA NM 0.7 0.2
Dover Downs (DVD) 13.2 11.3 17.2 46.9 7.0 6.2 10.9 1.8 2.0
Penn National (PENN) 12.9 10.0 29.3 45.8 7.2 5.9 12.0 1.4 2.9
Range - High 25.3 11.7 29.3 89.7 7.5 6.5 13.5 1.8 3.3
Low 11.9 9.1 12.9 42.2 5.3 5.0 8.2 0.7 0.2
Mean 16.0 10.5 18.8 56.6 6.9 5.9 10.8 1.4 2.1
Median 13.2 10.6 16.5 46.9 7.1 6.1 10.9 1.4 2.2
----------------------------------------------------------------------------------------------------------------------------------
S & P 500 28.2 24.8
DJ Industrial Avg 21.3 20.9
</TABLE>
-------------------
* Operating income plus depreciation and amortization.
Sources: Standard & Poor's Compustat Services, Inc. and First Call Corporation.
<PAGE> 17
FAIR GROUNDS CORPORATION
COMPARATIVE FINANCIAL PERFORMANCE
FINANCIAL PROFILE
1999 - 2000
<TABLE>
<CAPTION>
ANCHOR AUTOTOTE CANTERBURY CHURCHILL COLONIAL
GAMING CORPORATION PARK DOWNS DOWNS
------ ----------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
Quarterend Month (LTM) Mar00 Apr00 Mar00 Jun00 Mar00
LTM (IN MILS EXCEPT PER SHARE)
Revenues $445.827 $213.043 $20.453 $314.207 $29.227
EBITDA 154.240 44.885 0.996 51.348 2.922
Pretax Income 102.749 6.907 0.245 23.850 -1.840
Net Income 55.002 5.979 0.088 13.895 -1.840
Net Per Share - Diluted 4.54 0.16 0.02 1.39 -0.25
Fiscal Yearend Month Jun99 Oct99 Dec99 Dec99 Dec99
1999 (IN MILS EXCEPT PER SHARE)
Revenues $248.931 $211.148 $20.331 $258.427 $29.351
EBITDA 118.695 40.537 1.341 43.819 3.540
Pretax Income 105.099 2.156 0.558 25.855 -1.139
Net Income 58.094 1.347 0.437 14.976 -1.139
Net Per Share - Diluted 4.67 0.04 0.13 1.72 -0.16
First Call Estimates Date 06/30/00 07/06/00
Next Fiscal Yearend Date 6/00 12/00
Projected Next Fiscal Year Net Per Share 5.34 1.69
Projected Second Fiscal Year Net Per Share 5.96 1.96
Range Next FY Net Per Share 5.30/5.36 1.68/1.70
Range Second FY Net Per Share 5.84/6.08 1.92/1.99
First Call # of Analyst Year 1 3 2
First Call # of Analyst Year 2 3 2
First Call LT Median Growth Rate 13 14.3
<CAPTION>
DOVER PENN FAIR
DOWNS NATIONAL GROUNDS
----- -------- -------
<S> <C> <C> <C>
Quarterend Month (LTM) Jun00 Jun00 Apr00
LTM (IN MILS EXCEPT PER SHARE)
Revenues $245.872 $207.276 $42.570
EBITDA 64.081 39.980 1.004
Pretax Income 54.472 25.102 0.566
Net Income 31.925 16.004 0.271
Net Per Share - Diluted 0.86 1.05 0.58
Fiscal Yearend Month Jun99 Dec99 Oct00
1999 (IN MILS EXCEPT PER SHARE)
Revenues $207.932 $170.360 $41.795
EBITDA 54.221 29.629 0.020
Pretax Income 45.771 13.795 -0.355
Net Income 26.891 8.720 -0.509
Net Per Share - Diluted 0.74 0.57 -1.09
First Call Estimates Date 07/25/00 07/26/00
Next Fiscal Yearend Date 6/01 12/00
Projected Next Fiscal Year Net Per Share 1.01 1.22
Projected Second Fiscal Year Net Per Share 1.18 1.36
Range Next FY Net Per Share 1.00/1.02 1.21/1.23
Range Second FY Net Per Share 1.15/1.20 1.35/1.37
First Call # of Analyst Year 1 5 2
First Call # of Analyst Year 2 2 2
First Call LT Median Growth Rate 20 32.1
</TABLE>
Note: Adjusted for special items.
Source: Standard & Poor's Compustat Services, Inc.
<PAGE> 18
FAIR GROUNDS CORPORATION
COMPARATIVE FINANCIAL PERFORMANCE
GROWTH
1995 - 2000
<TABLE>
<CAPTION>
ANCHOR AUTOTOTE CANTERBURY CHURCHILL COLONIAL DOVER PENN FAIR
GAMING CORPORATION PARK DOWNS DOWNS DOWNS NATIONAL GROUNDS
------ ----------- ---------- --------- -------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES (%)
LTM 77.6 13.7 5.9 88.9 -1.6 18.2 30.5 2.6
1999 7.3 32.5 5.9 75.4 -0.7 47.5 10.6 13.6
1998 50.9 1.3 5.5 23.9 24.9 38.6 38.1 18.7
1997 32.0 -10.7 4.8 10.2 NM 80.3 77.5 12.7
1996 19.6 15.0 NM 16.7 NA NA 8.9 19.4
1995 77.9 2.8 NM 40.2 NA NA 25.3 2.9
Five-Year CAGR 35.4 7.2 NA 31.4 NA NA 29.9 13.3
EBITDA (%)
LTM 25.6 39.5 -30.5 101.4 NM 18.2 61.1 NM
1999 -0.2 42.5 -4.1 91.4 NM 36.7 15.6 NM
1998 85.5 -13.8 20.4 20.7 NM 32.0 55.5 NM
1997 68.8 2.0 5.6 16.0 NM 59.3 51.3 NM
1996 35.4 44.3 NM 11.0 NA NA 19.2 NM
1995 71.3 43.0 NM 15.1 NA NA 79.0 NM
Five-Year CAGR 48.6 20.9 NA 27.9 NA NA 42.2 NA
NET INCOME (%)
LTM -19.9 NM -79.9 50.7 NM 18.7 153.0 NM
1999 -15.1 NM 0.7 42.4 NM 22.7 17.3 NM
1998 85.1 NM 219.1 15.0 NM 33.0 41.8 NM
1997 65.5 NM 91.5 13.3 NM 64.9 -4.8 -21.7
1996 39.8 NM NM 30.1 NA NA 10.3 NM
1995 53.2 NM NM 0.6 NA NA 83.8 NM
Five-Year CAGR 41.0 NA NA 19.4 NA NA 26.3 NA
DILUTED EARNINGS PER SHARE (%)
LTM -16.3 NM -83.3 15.8 NM 16.2 147.9 NM
1999 -10.1 NM -7.1 22.9 NM 5.7 18.7 NM
1998 90.5 NM 250.0 12.0 NM 29.6 42.6 NM
1997 48.3 NM 100.0 15.2 NM 56.5 -13.0 -23.8
1996 31.4 NM NM 32.3 NA NA 2.6 NM
1995 13.6 NM NM 0.6 NA NA 78.1 NM
Five-Year CAGR 30.5 NA NA 16.1 NA NA 21.9 NM
</TABLE>
Note: Adjusted for special items.
Source: Standard & Poor's Compustat Services, Inc.
<PAGE> 19
FAIR GROUNDS CORPORATION
COMPARATIVE FINANCIAL PERFORMANCE
PROFITABILITY RATIOS
1995 - 2000
<TABLE>
<CAPTION>
ANCHOR AUTOTOTE CANTERBURY CHURCHILL COLONIAL DOVER PENN FAIR
GAMING CORPORATION PARK DOWNS DOWNS DOWNS NATIONAL GROUNDS
------ ----------- ---------- --------- -------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROSS MARGINS (%)
LTM 51.9 33.8 4.9 24.2 25.4 30.9 19.3 13.2
1999 64.5 32.1 6.6 24.1 28.5 31.5 16.8 15.2
1998 66.2 34.3 7.3 23.1 14.4 31.3 16.4 13.0
1997 57.0 39.1 6.4 23.6 18.3 32.6 14.5 14.4
1996 50.7 36.1 6.3 23.3 14.7 37.5 17.3 14.2
1995 50.3 38.5 6.3 25.0 NA NA 15.8 11.1
Five-Year Average 57.8 36.0 6.6 23.8 NA NA 16.2 13.6
EBITDA MARGINS (%)
LTM 34.6 21.1 4.9 16.3 10.0 26.1 19.3 2.4
1999 47.7 19.2 6.6 17.0 12.1 26.1 17.4 0.0
1998 51.3 17.9 7.3 15.5 -6.8 28.1 16.6 -1.6
1997 41.7 21.0 6.4 15.9 0.8 29.6 14.8 1.2
1996 32.6 18.4 6.3 15.2 -2.2 33.4 17.3 -1.8
1995 28.8 14.6 0.4 15.9 NA NA 15.8 -6.8
Five-Year Average 40.4 18.2 5.4 15.9 NA NA 16.4 -1.8
EBIT MARGINS (%)
LTM 25.2 10.8 1.1 11.6 3.6 22.6 15.0 -1.4
1999 40.7 8.7 2.8 12.6 5.8 22.7 12.3 -4.2
1998 45.8 -0.7 2.6 11.6 -12.2 26.2 12.9 -6.6
1997 36.0 -2.4 1.7 12.1 -2.0 27.5 11.2 -3.9
1996 29.1 -4.8 1.7 11.4 -5.5 30.8 15.1 -8.4
1995 25.5 -8.5 -3.8 11.1 NA NA 14.3 -14.6
Five-Year Average 35.4 -1.5 1.0 11.8 NA NA 13.1 -7.5
NET INCOME MARGINS (%)
LTM 12.3 2.8 0.4 4.4 -6.3 13.0 7.7 0.6
1999 23.3 0.6 2.1 5.8 -3.9 12.9 5.1 -1.2
1998 29.5 -9.9 2.3 7.1 -17.9 15.5 4.8 -0.8
1997 24.0 -11.7 0.7 7.7 0.0 16.2 4.7 2.5
1996 19.2 -16.5 0.4 7.5 -7.6 17.7 8.8 3.6
1995 16.4 -25.4 -5.0 6.7 NA NA 8.7 -4.0
Five-Year Average 22.5 -12.6 0.1 7.0 NA NA 6.4 0.0
</TABLE>
Note: Adjusted for special items.
Source: Standard & Poor's Compustat Services, Inc.
<PAGE> 20
FAIR GROUNDS CORPORATION
COMPARATIVE FINANCIAL PERFORMANCE
RETURNS
1995 - 2000
<TABLE>
<CAPTION>
ANCHOR AUTOTOTE CANTERBURY CHURCHILL COLONIAL DOVER PENN FAIR
GAMING CORPORATION PARK DOWNS DOWNS DOWNS NATIONAL GROUNDS
------ ----------- ---------- --------- -------- ----- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RETURNS ON AVERAGE ASSETS (%)
LTM 15.5 9.7 1.0 6.6 -0.1 11.4 11.5 0.6
1999 15.6 6.8 4.7 7.7 0.9 16.0 8.3 -1.0
1998 31.9 -4.2 5.3 11.0 -6.1 26.7 8.0 -0.6
1997 21.3 -5.5 2.5 11.2 0.4 29.0 6.4 2.3
1996 18.9 -9.2 2.2 10.5 -7.0 NA 9.4 4.5
1995 24.0 -11.9 -7.7 8.9 NA NA 20.4 -3.2
Five-Year Average 22.4 -4.8 1.4 9.9 NA NA 10.5 0.4
RETURNS ON AVERAGE INVESTED CAPITAL (%)
LTM 17.6 13.3 1.2 8.4 -0.1 13.4 12.7 0.7
1999 18.1 9.9 5.4 9.4 1.0 19.3 9.1 -1.3
1998 35.8 -5.6 6.2 15.3 -7.3 34.8 8.7 -0.8
1997 23.0 -7.0 2.9 16.8 0.6 39.2 7.1 3.0
1996 20.6 -11.4 2.5 15.2 -13.3 NA 10.7 6.5
1995 26.4 -14.5 -9.6 12.1 NA NA 25.8 -5.3
Five-Year Average 24.8 -5.7 1.5 13.8 NA NA 12.3 0.4
RETURNS ON AVERAGE COMMON EQUITY (%)
LTM 22.8 NM 1.1 12.6 -5.1 16.4 24.3 0.8
1999 27.0 NM 5.8 14.7 -3.2 22.0 13.9 -1.8
1998 35.8 NM 6.8 17.7 -14.4 34.9 13.2 -1.2
1997 23.3 NM 2.3 18.1 0.0 41.8 12.8 4.6
1996 21.2 NM 1.2 17.1 -192.5 NA 22.6 8.6
1995 28.6 NM -14.4 14.0 NA NA 27.4 -8.2
Five-Year Average 27.2 NA 0.3 16.3 NA NA 18.0 0.4
</TABLE>
Note: Adjusted for special items.
Source: Standard & Poor's Compustat Services, Inc.
<PAGE> 21
FAIR GROUNDS CORPORATION
COMPARATIVE FINANCIAL PERFORMANCE
LATEST BALANCE SHEET DATA
2000
<TABLE>
<CAPTION>
ANCHOR AUTOTOTE CANTERBURY CHURCHILL COLONIAL DOVER PENN FAIR
GAMING CORPORATION PARK DOWNS DOWNS DOWNS NATIONAL GROUNDS
-------- ----------- ---------- --------- -------- -------- -------- --------
Mar00 Apr00 Mar00 Jun00 Mar00 Jun00 Mar00 Apr00
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Current Ratio 1.7 1.0 1.0 0.9 0.1 0.7 0.8 1.5
Quick Ratio 1.1 0.7 0.8 0.4 0.1 0.6 0.6 1.3
Total Assets (millions) $552.472 $172.438 $ 11.199 $423.687 $ 68.111 $316.778 $197.579 $ 46.383
Cash and Cash Equivalents 33.157 3.381 1.709 10.000 2.536 12.413 11.430 *1.350
Total Invested Capital (millions) $485.375 $127.692 $ 9.381 $329.373 $ 53.004 $269.983 $178.294 $ 41.179
Total Debt 230.569 171.247 0.462 169.562 17.664 36.125 95.452 0.500
Deferred Taxes 0.000 1.615 0.000 15.569 0.000 16.067 12.881 9.653
Minority Interest 1.322 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Preferred Stock 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Common Equity 253.484 -45.170 8.919 144.242 35.340 217.791 69.961 31.026
Total Invested Capital (percent)
Total Debt 48 134 5 51 33 13 54 1
Deferred Taxes 0 1 0 5 0 6 7 23
Minority Interest 0 0 0 0 0 0 0 0
Preferred Stock 0 0 0 0 0 0 0 0
Common Equity 52 -35 95 44 67 81 39 75
</TABLE>
Source: Standard & Poor's Compustat Services, Inc.
* Cash and equivalents less accrued liabilities.
<PAGE> 22
FAIR GROUNDS CORPORATION
COMPARATIVE COMBINED STATEMENT OF INCOME
YEARS ENDED OCTOBER 31, 1994 - 1999
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues
Pari-mutuel commissions $25,290,751 $23,751,342 $20,832,282 $18,944,758 $15,766,962
Breakage 698,018 518,822 481,554 439,204 355,283
Uncashed mutuel tickets 540,124 476,740 404,405 330,754 229,358
----------- ----------- ----------- ----------- -----------
Total 26,528,893 24,746,904 21,718,241 19,714,716 16,351,603
Less: pari-mutuel tax 3,330,231 3,164,575 2,792,092 2,570,018 2,204,735
----------- ----------- ----------- ----------- -----------
Commission income 23,198,662 21,582,329 18,926,149 17,144,698 14,146,868
Host track fees 10,311,004 7,100,025 5,733,544 4,410,727 3,878,400
----------- ----------- ----------- ----------- -----------
Total mutuel income 33,509,666 28,682,354 24,659,693 21,555,425 18,025,268
Concessions 2,272,073 2,194,788 1,485,227 1,467,187 1,596,941
Admissions (net of taxes) 697,627 753,069 296,870 351,569 339,319
Parking 56,606 45,090 20,581 14,967 14,401
Video poker 2,980,435 2,899,761 2,346,677 1,955,551 1,132,127
Programs and forms 1,455,005 1,598,562 1,491,628 1,474,947 1,317,547
Miscellaneous 823,189 611,467 679,583 676,854 605,428
----------- ----------- ----------- ----------- -----------
Total operating revenues 41,794,601 36,785,091 30,980,259 27,496,500 23,031,031
Racing expenses 35,427,824 31,994,071 26,509,588 23,580,253 20,452,404
----------- ----------- ----------- ----------- -----------
Gross profit 6,366,777 4,791,020 4,470,671 3,916,247 2,578,627
General and administrative expenses 6,346,577 5,367,499 4,102,538 4,419,333 4,144,792
----------- ----------- ----------- ----------- -----------
EBITDA 20,200 -576,479 368,133 -503,086 -1,566,165
Depreciation 1,763,051 1,847,867 1,589,041 1,810,257 1,797,256
----------- ----------- ----------- ----------- -----------
EBIT -1,742,851 -2,424,346 -1,220,908 -2,313,343 -3,363,421
Other income (expense)
Jazz and Heritage Festival income-net 1,249,042 1,376,973 1,048,753 1,534,971 1,153,749
Video poker franchise fee 0 0 1,921,362 2,888,962 703,488
Interest expense -19,783 -19,752 -266,435 -791,566 -12,318
Interest income 158,545 130,821 78,352 31,990 95,825
Other -988,789 -24,767 -35,147 -176,420 506,101
----------- ----------- ----------- ----------- -----------
Pretax income -1,343,836 -961,071 1,525,977 1,174,594 -916,576
Income tax provision (benefit) -236,256 -645,355 775,288 294,896 -300,460
----------- ----------- ----------- ----------- -----------
NET INCOME $-1,107,580 $ -315,716 $ 750,689 $ 879,698 $ -616,116
=========== =========== =========== =========== ===========
</TABLE>
Source: Audited financial statements.
<PAGE> 23
FAIR GROUNDS CORPORATION
MARGIN ANALYSIS
Years Ended October 31, 1994 - 1999
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Revenues
Pari-mutuel commissions 60.5% 64.6% 67.2% 68.9% 68.5% 72.6%
Breakage 1.7 1.4 1.6 1.6 1.5 1.5
Uncashed mutuel tickets 1.3 1.3 1.3 1.2 1.0 1.3
------ ------ ------ ------ ------ ------
Total 63.5 67.3 70.1 71.7 71.0 75.5
Less: pari-mutuel tax 8.0 8.6 9.0 9.3 9.6 10.8
------ ------ ------ ------ ------ ------
Commission income 55.5 58.7 61.1 62.4 61.4 64.6
Host track fees 24.7 19.3 18.5 16.0 16.8 11.1
------ ------ ------ ------ ------ ------
Total mutuel income 80.2 78.0 79.6 78.4 78.3 75.7
Concessions 5.4 6.0 4.8 5.3 6.9 7.3
Admissions (net of taxes) 1.7 2.0 1.0 1.3 1.5 2.1
Parking 0.1 0.1 0.1 0.1 0.1 0.2
Video poker 7.1 7.9 7.6 7.1 4.9 6.1
Programs and forms 3.5 4.3 4.8 5.4 5.7 6.5
Miscellaneous 2.0 1.7 2.2 2.5 2.6 2.2
------ ------ ------ ------ ------ ------
Total operating revenues 100.0 100.0 100.0 100.0 100.0 100.0
Racing expenses 84.8 87.0 85.6 85.8 88.8 90.9
------ ------ ------ ------ ------ ------
Gross profit 15.2 13.0 14.4 14.2 11.2 9.1
General and administrative expenses 15.2 14.6 13.2 16.1 18.0 17.4
------ ------ ------ ------ ------ ------
EBITDA 0.0 - 1.6 1.2 - 1.8 - 6.8 - 8.3
Depreciation 4.2 5.0 5.1 6.6 7.8 8.3
------ ------ ------ ------ ------ ------
EBIT - 4.2 - 6.6 - 3.9 - 8.4 - 14.6 - 16.6
Other income (expense)
Jazz and Heritage Festival income-net 3.0 3.7 3.4 5.6 5.0 5.0
Video poker franchise fee 0.0 0.0 6.2 10.5 3.1 0.0
Interest expense 0.0 - 0.1 - 0.9 - 2.9 - 0.1 - 1.3
Interest income 0.4 0.4 0.3 0.1 0.4 0.8
Other - 2.4 - 0.1 - 0.1 - 0.6 2.2 - 3.1
------ ------ ------ ------ ------ ------
Pretax income - 3.2 - 2.6 4.9 4.3 - 4.0 - 15.2
Income tax provision (benefit) - 0.6 - 1.8 2.5 1.1 - 1.3 - 8.4
------ ------ ------ ------ ------ ------
Net Income - 2.7% - 0.9% 2.4% 3.2% - 2.7% - 6.8%
====== ====== ====== ====== ====== ======
</TABLE>
<PAGE> 24
FAIR GROUNDS CORPORATION
COMPARATIVE COMBINED BALANCE SHEET
As of October 31, 1994 - 1999
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and equivalents $ 8,614,473 $ 7,695,948 $ 7,836,458 $ 6,398,863 $ 1,273,499 $ 8,039,310
Accounts receivable 1,079,222 1,078,638 1,348,530 866,816 854,281 593,200
Mutuel settlements 181,630 139,964 38,892 82,535 172,385 98,560
Investment securities available for sale 0 0 592,878 188,125 457,900 1,376,297
Insurance proceeds available 0 0 0 0 0 487,341
Inventories 125,156 118,357 95,303 84,248 80,565 73,858
Deferred income taxes 103,600 59,940 0 310,940 59,940 20,940
Refundable income taxes 0 0 0 0 0 566,289
Prepaid expenses 468,165 437,322 353,167 425,983 557,033 360,387
------------ ------------ ------------ ------------ ------------ ------------
Total current assets 10,572,246 9,530,169 10,265,228 8,357,510 3,455,603 11,616,182
Other assets 53,768 283,411 125,516 101,684 71,264 34,574
Property, plant and equipment-net 38,325,525 39,330,797 37,699,076 26,332,403 27,427,787 14,819,566
------------ ------------ ------------ ------------ ------------ ------------
TOTAL ASSETS $ 48,951,539 $ 49,144,377 $ 48,089,820 $ 34,791,597 $ 30,954,654 $ 26,470,322
============ ============ ============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable $ 109,613 $ 46,894 $ 5,318,903 $ 9,952,223 $ 3,706,143 $ 1,000,000
Accounts payable 849,288 1,552,141 2,254,381 651,621 5,761,215 2,205,309
Accrued liabilities 9,472,529 9,120,997 8,730,791 7,715,482 6,448,785 6,476,220
Deferred revenues 282,970 275,701 140,840 6,000 50,149 53,580
Income taxes payable 4,932 515,391 121,000 50,000 0 0
------------ ------------ ------------ ------------ ------------ ------------
Total current liabilities 10,719,332 11,511,124 16,565,915 18,375,326 15,966,292 9,735,109
Notes payable 0 0 0 0 0 1,000,000
Deferred income taxes 9,652,819 9,995,418 9,846,104 4,525,687 4,020,035 4,199,886
Stockholders' Equity
Common stock 1,525,092 1,525,092 1,525,092 1,525,092 1,525,092 1,525,092
Additional paid-in capital 1,936,702 1,936,702 1,936,702 1,936,702 1,942,350 1,942,350
Retained earnings 25,153,119 24,211,566 18,254,654 8,481,440 7,601,742 8,113,858
Unrealized loss on investment securities 0 0 -3,122 -17,125 -54,884 0
Less: Cost of treasury stock 35,525 35,525 35,525 35,525 45,973 45,973
------------ ------------ ------------ ------------ ------------ ------------
Net stockholders' equity 28,579,388 27,637,835 21,677,801 11,890,584 10,968,327 11,535,327
------------ ------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 48,951,539 $ 49,144,377 $ 48,089,820 $ 34,791,597 $ 30,954,654 $ 26,470,322
============ ============ ============ ============ ============ ============
Working Capital $ -147,086 $ -1,980,955 $ -6,300,687 $-10,017,816 $-12,510,689 $ 1,881,073
Current Ratio 1.0 0.8 0.6 0.5 0.2 1.2
</TABLE>
Source: Audited financial statements.
<PAGE> 25
FAIR GROUNDS CORPORATION
COMPARATIVE COMBINED CASH FLOW STATEMENT
Years Ended October 31, 1995 - 1999
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,410,133 $ 5,956,912 $ 9,773,214 $ 879,698 $ -512,116
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 1,763,051 1,847,867 1,589,041 1,810,257 1,797,256
Financing charge 988,789 0 0 0 0
Gain on sale of property 0 0 -115,602 -20,363 0
Provision (benefit) for deferred income taxes -407,805 -301,326 5,836,263 244,896 -218,851
Charge for accounting change 0 0 0 0 -104,000
Loss (gain) on sale of investment securities 0 -725 -398 37,080 10,282
Gain from fire -3,996,370 -9,900,000 -14,321,469 0 0
Change in assets and liabilities:
(Increase) decrease in:
Accounts receivable and mutuel settlements -42,250 168,820 -438,071 91,868 -328,198
Insurance proceeds receivable 0 0 0 0 487,341
Inventories -6,799 -23,054 -11,055 -3,683 -6,707
Refundable income taxes 0 0 0 0 566,289
Prepaid expenses -30,843 -84,155 72,816 131,050 -196,646
Cash and cash equivalents -7,447 2,525,484 -2,509,773 20,980 -154,909
Deposits and other assets 229,643 -157,895 -23,832 0 0
Increase (decrease) in:
Accounts payable and accrued liabilities -510,259 736,220 524,312 -5,541 3,582,759
Deferred purses 174,010 505,646 732,124 1,026,843 165,727
Deferred revenues 7,269 134,861 134,840 -44,149 -3,431
Income taxes payable -445,253 329,185 71,000 50,000 0
------------ ------------ ------------ ------------ ------------
Net cash provided by (used for) operating
activities -874,131 1,737,840 1,313,410 4,218,936 5,084,796
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures -757,779 -3,478,477 -12,965,686 -5,650,671 -14,625,149
Construction contract payable -58,732 -1,097,994 1,156,726 0 0
Purchase of securities available for sale 0 -750,000 -500,000 0 -763,872
Proceeds from sale of securities 0 1,346,725 108,852 270,454 1,714,052
Repayments on loans to affiliates 0 0 0 0 0
Deposits and other assets 0 0 0 -30,420 -36,690
Proceeds from sale of property 0 -1,111 126,371 91,964 0
Proceeds from fire litigation settlements 3,996,370 9,900,000 14,321,469 0 0
------------ ------------ ------------ ------------ ------------
Net cash provided by (used for) investing
activities 3,179,859 5,919,143 2,247,732 -5,318,673 -13,711,659
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid -468,580 0 0 0 0
Payment of financing charge -988,789 0 0 0 0
Proceeds from short-term borrowings 1,320,052 2,272,253 17,083,985 10,307,260 3,533,443
Principal repayments of short-term borrowings -1,257,333 -7,544,262 -21,717,305 -4,061,179 -1,827,300
------------ ------------ ------------ ------------ ------------
Net cash provided by (used for) financing
activities -1,394,650 -5,272,009 -4,633,320 6,246,081 1,706,143
------------ ------------ ------------ ------------ ------------
Net Increase (Decrease) in Cash $ 911,078 $ 2,384,974 $ -1,072,178 $ 5,146,344 $ -6,920,720
============ ============ ============ ============ ============
</TABLE>
Source: Audited financial statements.
<PAGE> 26
FAIR GROUNDS CORPORATION
COMPARATIVE COMBINED STATEMENT OF INCOME
THE LATEST TWELVE MONTHS ENDED APRIL 30, 1999 - 2000,
AND THE SIX MONTHS ENDED APRIL 30, 1998 - 2000
<TABLE>
<CAPTION>
LTM ENDED LTM ENDED SIX MONTHS ENDED APRIL 30,
APRIL 30, 2000 APRIL 30, 1999 2000 1999 1998
-------------- -------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues
Pari-mutuel commissions $24,895,210 $25,412,722 $15,658,553 $16,054,094 $14,392,714
Breakage 677,684 649,147 416,065 436,399 306,074
Uncashed mutuel tickets 520,222 517,904 154,122 174,024 132,860
----------- ----------- ----------- ----------- -----------
Total 26,093,116 26,579,773 16,228,740 16,664,517 14,831,648
Less: pari-mutuel tax 3,331,677 3,238,301 1,949,207 1,947,761 1,874,035
----------- ----------- ----------- ----------- -----------
Commission income 22,761,439 23,341,472 14,279,533 14,716,756 12,957,613
Host track fees 11,691,352 9,576,515 11,315,854 9,935,506 7,459,016
----------- ----------- ----------- ----------- -----------
Total mutuel income 34,452,791 32,917,987 25,595,387 24,652,262 20,416,629
Concessions 2,201,192 2,306,550 1,679,434 1,750,315 1,638,553
Admissions (net of taxes) 654,100 713,675 530,440 573,967 613,361
Parking 53,882 57,843 53,904 56,628 43,875
Video poker 3,010,758 2,936,504 909,447 879,124 842,381
Programs and forms 1,452,098 1,587,566 867,361 870,268 881,264
Miscellaneous 745,308 961,176 574,576 652,457 302,748
----------- ----------- ----------- ----------- -----------
Total operating revenues 42,570,129 41,481,301 30,210,549 29,435,021 24,738,811
Racing expenses 36,943,171 34,851,850 24,321,622 22,806,275 19,948,496
----------- ----------- ----------- ----------- -----------
Gross profit 5,626,958 6,629,451 5,888,927 6,628,746 4,790,315
General and administrative expenses 4,623,178 6,997,278 2,403,649 4,127,048 2,497,269
----------- ----------- ----------- ----------- -----------
EBITDA 1,003,780 -367,827 3,485,278 2,501,698 2,293,046
Depreciation 1,610,932 1,864,844 828,397 980,516 963,539
----------- ----------- ----------- ----------- -----------
EBIT -607,152 -2,232,671 2,656,881 1,521,182 1,329,507
Other income (expense)
Jazz and Heritage Festival income-net 1,064,900 1,904,925 870,504 1,054,646 526,694
Interest expense -20,050 -12,846 -10,576 -10,309 -17,215
Interest income 128,542 132,129 39,517 69,520 68,212
Other -988,789 -81,320 0 0 56,553
----------- ----------- ----------- ----------- -----------
Pretax income -422,549 -289,783 3,556,326 2,635,039 1,963,751
Income tax provision (benefit) -95,085 -197,273 1,315,841 1,174,670 726,588
----------- ----------- ----------- ----------- -----------
NET INCOME $ -327,464 $ -92,510 $ 2,240,485 $ 1,460,369 $ 1,237,163
=========== =========== =========== =========== ===========
</TABLE>
Source: Audited financial statements.
<PAGE> 27
FAIR GROUNDS CORPORATION
MARGIN ANALYSIS
THE LATEST TWELVE MONTHS ENDED APRIL 30, 1999 - 2000,
AND THE SIX MONTHS ENDED APRIL 30, 1998 - 2000
<TABLE>
<CAPTION>
LTM ENDED LTM ENDED SIX MONTHS ENDED APRIL 30,
APRIL 30, 2000 APRIL 30, 1999 2000 1999 1998
-------------- -------------- ------ ------ ------
<S> <C> <C> <C> <C> <C>
Revenues
Pari-mutuel commissions 58.5% 61.3% 51.8% 54.5% 58.2%
Breakage 1.6 1.6 1.4 1.5 1.2
Uncashed mutuel tickets 1.2 1.2 0.5 0.6 0.5
------ ------ ------ ------ ------
Total 61.3 64.1 53.7 56.6 60.0
Less: pari-mutuel tax 7.8 7.8 6.5 6.6 7.6
------ ------ ------ ------ ------
Commission income 53.5 56.3 47.3 50.0 52.4
Host track fees 27.5 23.1 37.5 33.8 30.2
------ ------ ------ ------ ------
Total mutuel income 80.9 79.4 84.7 83.8 82.5
Concessions 5.2 5.6 5.6 5.9 6.6
Admissions (net of taxes) 1.5 1.7 1.8 1.9 2.5
Parking 0.1 0.1 0.2 0.2 0.2
Video poker 7.1 7.1 3.0 3.0 3.4
Programs and forms 3.4 3.8 2.9 3.0 3.6
Miscellaneous 1.8 2.3 1.9 2.2 1.2
------ ------ ------ ------ ------
Total operating revenues 100.0 100.0 100.0 100.0 100.0
Racing expenses 86.8 84.0 80.5 77.5 80.6
------ ------ ------ ------ ------
Gross profit 13.2 16.0 19.5 22.5 19.4
General and administrative expenses 10.9 16.9 8.0 14.0 10.1
------ ------ ------ ------ ------
EBITDA 2.4 -0.9 11.5 8.5 9.3
Depreciation 3.8 4.5 2.7 3.3 3.9
------ ------ ------ ------ ------
EBIT -1.4 -5.4 8.8 5.2 5.4
Other income (expense)
Jazz and Heritage Festival income-net 2.5 4.6 2.9 3.6 2.1
Interest expense 0.0 0.0 0.0 0.0 -0.1
Interest income 0.3 0.3 0.1 0.2 0.3
Other -2.3 -0.2 0.0 0.0 0.2
------ ------ ------ ------ ------
Pretax income -1.0 -0.7 11.8 9.0 7.9
Income tax provision (benefit) -0.2 -0.5 4.4 4.0 2.9
------ ------ ------ ------ ------
NET INCOME -0.8% -0.2% 7.4% 5.0% 5.0%
====== ====== ====== ====== ======
</TABLE>
<PAGE> 28
FAIR GROUNDS CORPORATION
COMPARATIVE COMBINED BALANCE SHEET
As of April 30, 1999 - 2000
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
Current Assets
Cash and equivalents $ 5,695,017 $ 4,496,293
Accounts receivable 1,566,900 1,593,220
Mutuel settlements 274,598 389,990
Inventories 140,980 127,529
Deferred income taxes 103,600 59,940
Prepaid expenses 911,700 1,815,138
----------- -----------
Total current assets 8,692,795 8,482,110
Other assets 93,099 277,760
Property, plant and equipment-net 37,596,797 38,610,183
----------- -----------
TOTAL ASSETS $46,382,691 $47,370,053
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes payable $ 500,000 $ 635,985
Accounts payable 351,818 209,725
Accrued liabilities 3,415,193 2,796,799
Income taxes payable 1,436,885 2,647,328
----------- -----------
Total current liabilities 5,703,896 6,289,837
Deferred income taxes 9,652,819 7,043,865
Stockholders' Equity
Common stock 1,525,092 1,525,092
Additional paid-in capital 1,936,702 1,936,702
Retained earnings 27,599,707 30,610,082
Less: Cost of treasury stock 35,525 35,525
----------- -----------
Net stockholders' equity 31,025,976 34,036,351
----------- -----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $46,382,691 $47,370,053
=========== ===========
Working Capital $ 2,988,899 $ 2,192,273
Current Ratio 1.5 1.3
</TABLE>
Source: Audited financial statements.
<PAGE> 29
FAIR GROUNDS
DAILY STOCK PRICE AND VOLUME
6/30/99-6/30/00
[GRAPH]
