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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 SEPTEMBER 30, 1997
Commission File Number -- 0-1607
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.
--- ---
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 SEPTEMBER 30, 1997
- ----------------------------- ---------------------------------
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 NINE MONTHS ENDED YEAR ENDED
-------------------------- -------------------------- ------------
SEP. 30, SEP. 30, SEP. 30, SEP. 30, DECEMBER 31,
1997 1996 1997 1996 1996
37 RACING 41 RACING 69 RACING 107 RACING 115 RACING
DAYS DAYS DAYS DAYS DAYS
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operating Revenue ........................... $1,687,435 $3,413,369 $4,242,992 $5,927,188 $6,729,080
Operating Expense ........................... 1,951,094 4,160,104 4,886,330 7,198,791 8,139,585
---------- ---------- ---------- ---------- ----------
Income (Loss) from Operations ............... (263,659) (746,735) (643,338) (1,271,603) (1,410,505)
---------- ---------- ---------- ---------- ----------
Other Income:
Commissions from Capital Improvements ..... 35,403 57,110 66,178 102,936 146,224
Investment Income ......................... 125 5,540 375 9,960 6,367
---------- ---------- ---------- ---------- ----------
Total Other Income .................. 35,528 62,650 66,553 112,896 152,591
---------- ---------- ---------- ---------- ----------
Income before provision for Taxes
on Income ................................. (228,131) (684,085) (576,785) (1,158,707) (1,257,914)
Provision (Credit) for Taxes
on Income ................................. 0 0 0 0 103,524
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) ........................... ($ 228,131) ($ 684,085) ($ 576,785) ($1,158,707) ($1,361,438)
========== ========== ========== ========== ==========
Earnings per weighted average
shares outstanding ........................ ($0.91) ($2.73) ($2.30) ($4.63) ($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 NINE FOR THE
MONTHS ENDED YEAR ENDED
SEP. 30, DECEMBER 31,
1997 1996
---------- ------------
Increase (Decrease) in Cash and Cash Equivalents
Cash Flows from Operating Activities:
Net Income ...................................... ($576,785) ($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 ............................. 138,985 (33,143)
Accounts receivable ......................... 53,444 101,532
Prepaid expenses ............................ (34,619) 122,182
Other assets ................................ 0 6,500
Accounts payable ............................ 433,644 629,150
Purse funds ................................. (103,210) 4,040
Uncashed winning tickets .................... (35,775) 29,103
Refundable income taxes ..................... 0 19,328
Deferred retirement benefits ................ 0 (5,950)
-------- ----------
Net cash used in operating activities ............. (4,315) (108,186)
-------- ----------
Cash Flows from Investing Activities:
Proceeds from maturities and sales of
available-for-sale investment securities ...... 95,420 456,989
Purchase of available-for-sale
investment securities ......................... 0 (285,000)
Purchase of properties and equipment ............ (35,889) (378,829)
-------- ----------
Net cash provided by investing activities ......... 59,531 (206,840)
-------- ----------
Net change in cash and cash equivalents ........... 55,216 (315,026)
Cash and cash equivalents, beginning
of period ....................................... 236,541 551,567
-------- ----------
Cash and cash equivalents, end of period .......... $291,757 $ 236,541
======== ==========
3
<PAGE>
A. SUMMARY OF FINANCIAL INFORMATION (Continued)
MANAGEMENT ANALYSES OF PROFIT AND LOSS INFORMATION
The Company's net loss from operations, of $643,338 for the nine months ended
September 30, 1997, decreased $581,922 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 three quarters of 1997. The 1996 live racing
schedule consisted of 115 live race dates, 107 of which were run in the nine
months ended September 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 September 30, 1997 consisted of 69 live
race dates; 38 fewer than the same period last year. During the third quarter of
1997, track management negotiated a further reduction of 13 live race dates with
the NYS Racing & Wagering Board, allowing for the season to end on October 25,
1997.
Wagering on live racing decreased an average of $28,190 per day. While the
average daily attendance is down 12.1%, the per capita wagering is 15.9% below
last years level. Total wagering on thoroughbred and harness simulcasts during
the nine months ended September 30, 1997 decreased by $2,394,368 (18.5%) 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 flows from
operations, although the Company's financial condition may require alternative
sources for cash requirements. The Company's current ratio at September 30, 1997
was approximately 0.4 : 1.
4
<PAGE>
B. CAPITALIZATION AND SHAREHOLDER'S EQUITY
MID-STATE RACEWAY, INC.
BALANCE SHEET
September 30, 1997 and December 31, 1996
SEPT. 30, DECEMBER 31,
1997 1996
---------- ----------
ASSETS
Current Assets
Cash and cash equivalents ..................... $ 291,757 $ 236,541
Cash restricted for purses & uncashed
winning tickets ............................. 51,557 190,542
Investments ................................... 7,754 14,075
Accounts receivable, net of allowance
for doubtful accounts of $30,000 in 1997
and 1996 .................................... 148,097 201,541
Prepaid insurance, taxes and other expenses ... 86,085 51,466
---------- ----------
Total current assets .................... 585,250 694,165
Property, Plant and Equipment
Land, racing plant and equipment .............. 12,574,505 12,538,616
Other Properties .............................. 121,672 212,672
---------- ----------
12,696,177 12,660,288
Less accumulated depreciation ................. 10,713,768 10,593,768
---------- ----------
1,982,409 2,066,520
Other Assets
Investments ................................... 89,100
Deferred income taxes ......................... 325,902 325,902
Other assets .................................. 128,160 128,160
---------- ----------
454,062 543,162
$3,021,721 $3,303,847
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable .............................. $1,322,158 $ 888,514
Current deferred retirement expense ........... 107,565 107,565
Uncashed winning tickets ...................... 51,557 87,332
Early closing and stake purse funds ........... 103,210
---------- ----------
Total current liabilities ............... 1,418,280 1,186,621
---------- ----------
Deferred retirement expense ..................... 908,011 908,011
---------- ----------
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 ............................. 379,749 956,534
Unrealized loss on marketable securities ...... 2,295 2,295
---------- ----------
Total shareholders' equity .............. 632,430 1,209,215
---------- ----------
$3,021,721 $3,303,847
========== ==========
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 September 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: 10/21/97 /s/ FRANK O. WHITE, JR.
--------------------------------------
Frank O. White, Jr.
President and Chief Executive Officer
Date: 10/21/97 /s/ THOMAS P. HEGEMAN
--------------------------------------
Thomas P. Hegeman
Treasurer and Principal Financial &
Accounting Officer
6
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 343,314
<SECURITIES> 7,754
<RECEIVABLES> 178,092
<ALLOWANCES> 30,000
<INVENTORY> 0
<CURRENT-ASSETS> 585,250
<PP&E> 12,696,177
<DEPRECIATION> 10,713,768
<TOTAL-ASSETS> 3,021,721
<CURRENT-LIABILITIES> 1,418,280
<BONDS> 0
0
0
<COMMON> 25,039
<OTHER-SE> 607,391
<TOTAL-LIABILITY-AND-EQUITY> 3,021,721
<SALES> 0
<TOTAL-REVENUES> 1,687,435
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,951,094
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (228,131)
<INCOME-TAX> 0
<INCOME-CONTINUING> (228,131)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (228,131)
<EPS-PRIMARY> (0.91)
<EPS-DILUTED> 0
</TABLE>
