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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 25049
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QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTER ENDED JUNE 30, 1997
Commission File Number -- 0-1607
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MID-STATE RACEWAY, INC.
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(Exact Name of Registrant as Specified in Charter)
NEW YORK 15-0555258
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(State of Incorporation) (I.R.S. Employer Identification No.)
VERNON, NEW YORK 13476
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(Address of Principal Executive Offices) (Zip Code)
(315) 829-2201
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(Registrant's Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to the filing requirements for
at least the past 90 days. Yes No X.
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Indicate the number of shares outstanding of each of the issuers' classes of
common stock, as of the close of the period covered by this report.
CLASS OUTSTANDING AT JUNE 30, 1997
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Common Stock, $0.10 par value 250,386
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<PAGE>
<TABLE>
A. SUMMARY OF FINANCIAL INFORMATION
MID-STATE RACEWAY, INC.
PROFIT AND LOSS INFORMATION
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED YEAR ENDED
-------------------------------- --------------------------------- -----------------
JUNE 30 1997 JUNE 30, 1996 JUNE 30, 1997 JUNE 30, 1996 DECEMBER 31, 1996
32 RACING DAYS 49 RACING DAYS 32 RACING DAYS 66 RACING DAYS 115 RACING DAYS
-------------- -------------- -------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Operating Revenue .................... $1,490,005 $2,513,819 $2,555,557 $3,615,639 $ 6,729,080
Operating Expense .................... 1,766,449 3,038,687 2,935,236 4,282,853 8,139,585
---------- ---------- ---------- ---------- ----------
Income (Loss) from Operations ........ (276,444) (542,868) (379,679) (667,214) (1,410,505)
---------- ---------- ---------- ---------- ----------
Other Income:
Commissions for Capital Improvements $ 29,765 45,826 30,775 59,260 146,224
Investment Income .................. 106 4,420 250 5,860 6,367
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Total Other Income .............. 29,871 50,246 31,025 65,120 152,591
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Income before provision for
Taxes on income .................... (246,573) (474,622) (348,654) (602,094) (1,257,914)
Provision (Credit for Taxes
on income .......................... 0 0 0 0 103,524
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) .................... ($ 246,573) ($ 474,622) ($ 348,654) ($ 602,094) ($ 1,361,438)
========== ========== ========== ========== ===========
Earnings per weighted average
shares outstanding ................. $ (0.98) $ (1.90) $ (1.39) $ (2.40) $ (5.44)
========== ========== ========== ========== ===========
Cash dividend per share .............. $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
========== ========== ========== ========== ===========
</TABLE>
2
<PAGE>
A. SUMMARY OF FINANCIAL INFORMATION (Continued)
MID-STATE RACEWAY, INC.
STATEMENT OF CASH FLOW
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1997 1996
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Increase (Decrease) in Cash and Cash Equivalents
Cash Flows from Operating Activities:
Net Income .................................. ($348,654) ($1,361,438)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation ............................ 120,000 245,805
Net amortization/accretion of investments 0 4,705
Deferred income taxes ................... 0 100,000
Allowance for doubtful accounts ......... 0 30,000
Changes in:
Restricted cash ........................... 151,835 (33,143)
Accounts receivable ....................... (1,000) 101,532
Prepaid expenses .......................... (85,276) 122,182
Other assets .............................. 0 6,500
Accounts payable .......................... 22,449 629,150
Purse funds ............................... (100,585) 4,040
Uncashed winning tickets .................. (51,250) 29,103
Refundable income taxes ................... 0 19,328
Deferred retirement benefits .............. 0 (5,950)
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Net cash used in operating activities .......... (92,480) (108,186)
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Cash Flows from Investing Activities:
Proceeds from maturities and sales of
available-for-sale investment securities ... 91,039 456,989
Purchase of available-for-sale investments
securities ................................. 0 (285,000)
Purchase of properties and equipment ......... (35,889) (378,829)
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Net cash provided by investing activities ...... 55,150 (206,840)
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Net change in cash and cash equivalents ........ (37,330) (315,026)
Cash and cash equivalents, beginning of period . 236,541 551,567
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Cash and cash equivalents, end of period ....... $ 199,211 $ 236,541
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3
<PAGE>
A. SUMMARY OF FINANCIAL INFORMATION (Continued)
MANAGEMENT ANALYSES OF PROFIT AND LOSS INFORMATION
The Company's net loss from operations, of $348,654 for the six months ended
June 30, 1997, decreased $253,440 over the same period last year. A significant
factor in the reduction of the operating loss was the reduction of live racing
during the first half of 1997. The 1996 live racing schedule consisted of 115
live race dates, 66 of which were run in the six months ended June 30, 1996. The
current year's live racing season was negotiated with the New York State Racing
and Wagering Board to consist of 90 live racing days, beginning on April 18,
1997 and continuing through November 8, 1997. As the past several years have
displayed negative trends in both attendance and handle on live racing, to the
point where live racing has become unprofitable, the Company's management has
decided that a reduction in the number of scheduled live races must be
accomplished in order to safeguard the Company's survival. The period ended June
30, 1997 consisted of 32 live race dates; 34 fewer than the same period last
year.
Wagering on live racing decreased an average of $31,791 per day. While the
average daily attendance is down only 7.6%, the per capita wagering is 22.4%
below last years level. Total wagering on thoroughbred and harness simulcasts
during the six months ended June 30, 1997 decreased by $1,806,071 (20%) over the
same period as last year. This is the first consistent decrease in simulcast
handle since the inception of full card simulcasting in the summer of 1994.
These factors indicate the position of the local economy, and the impact of
competition from the 1993 opening of Turning Stone Casino, the New York State
Lottery and from Off-Track Betting Corporations. These competing factors come at
a time when the Central New York region is reeling economically from the loss of
tens of thousands of jobs.
With declining handles generating fewer revenues, and the January 1997 defeat of
the proposed casino legislation that would have allowed slot machines at Vernon
Downs, track management continues to focus on the reduction of operating
expenses, and proposed legislative action to aid New York's harness industry,
including Vernon Downs. Reductions of expenses are being recognized through such
efforts as downsizing of employees in several departments, concessions from
unions in wages, health care benefits, vacations and retirement benefits.
LIQUIDITY AND CAPITAL RESOURCES
In 1997, the funding of financing activities and capital requirements for
Mid-State Raceway's business will be substantially sourced by cash from
operations, although the Company's financial condition may require alternative
sources for cash requirements. The Company's current ratio at June 30, 1997 was
approximately one to two.
4
<PAGE>
B. CAPITALIZATION AND SHAREHOLDER'S EQUITY
MID-STATE RACEWAY, INC.
BALANCE SHEET
June 30, 1997 and December 31, 1996
JUNE 30, DECEMBER 31,
ASSETS 1997 1996
----------- -----------
Current Assets
Cash and cash equivalents .................. $ 199,211 $ 236,541
Cash restricted for purses & uncashed
winning tickets .......................... 38,707 190,542
Investments ................................ 12,135 14,075
Accounts receivable, net of allowance
for doubtful account of $30,000 in
1997 and 1996 ............................. 202,541 201,541
Prepaid insurance, taxes and other
expenses .................................. 136,742 51,466
----------- -----------
Total current assets ................. 589,336 694,165
Property, Plant and Equipment
Land, racing plant and equipment ........... 12,574,505 12,538,616
Other Properties ........................... 121,672 121,672
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12,696,177 12,660,288
Less accumulated depreciation .............. 10,713,768 10,593,768
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1,982,409 2,066,520
Other Assets
Investments .................................. 0 89,100
Deferred income taxes ........................ 325,902 325,902
Other assets ................................. 128,160 128,160
----------- -----------
454,062 543,162
$ 3,025,807 $ 3,303,847
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable ........................... $ 1,110,963 $ 888,514
Current deferred retirement expense......... 107,565 107,565
Uncashed winning tickets ................... 36,082 87,332
Early closing and stake purse funds ........ 2,625 103,210
----------- -----------
Total current liabilities ............ 1,257,235 1,186,621
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Deferred retirement expense .................. 908,011 908,011
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Shareholders' equity
Common stock, par value $0.10 per share,
authorized 10,000,000 shares; issued and
outstanding 250,386 shares ............... 25,039 25,039
Additional paid-in-capital ................. 225,347 225,347
Retained earnings .......................... 607,880 956,534
Unrealized loss on marketable securities ... 2,295 2,295
----------- -----------
Total shareholders' equity ................. 860,561 1,209,215
----------- -----------
$ 3,025,807 $ 3,303,847
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5
<PAGE>
PART II - OTHER INFORMATION
Item 1 through 5 -- Not applicable
Item 6 -- Exhibits and Reports on Form 8-K
Reports on Form 8-K -- There were no reports on Form 8-K filed for the
three months ended June 30, 1997.
SIGNATURES
Pursuant to the requirement 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.
MID-STATE RACEWAY, INC.
Date: 08/08/97 /s/ FRANK O. WHITE, JR.
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Frank O. White, Jr.
President and Chief Executive Officer
Date: 08/08/97 /s/ THOMAS P. HEGEMAN
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Thomas P. Hegeman
Treasurer and Principal Financial &
Accounting Officer
6
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 237,918
<SECURITIES> 12,135
<RECEIVABLES> 232,541
<ALLOWANCES> 30,000
<INVENTORY> 0
<CURRENT-ASSETS> 589,336
<PP&E> 12,696,177
<DEPRECIATION> 10,713,768
<TOTAL-ASSETS> 3,025,807
<CURRENT-LIABILITIES> 1,257,235
<BONDS> 0
0
0
<COMMON> 25,039
<OTHER-SE> 835,522
<TOTAL-LIABILITY-AND-EQUITY> 3,025,807
<SALES> 0
<TOTAL-REVENUES> 1,490,005
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,766,449
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (246,573)
<INCOME-TAX> 0
<INCOME-CONTINUING> (246,573)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (246,573)
<EPS-PRIMARY> (0.98)
<EPS-DILUTED> 0
</TABLE>
