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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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QUARTERLY REPORT
Pursusant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
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 13467
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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___.
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, 1998
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Common Stock, $0.10 par value 250,386
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<TABLE>
<CAPTION>
A. SUMMARY OF FINANCIAL INFORMATION
MID-STATE RACEWAY, INC.
PROFIT AND LOSS INFORMATION
Three Months Nine Months
Ended Ended Year Ended
------------------------------ ------------------------------- ------------------
Sept. 30, 1998 Sept. 30, 1997 Sept. 30, 1998 Sept. 30, 1997 December 31, 1997
52 Racing Days 37 Racing Days 102 Racing Days 69 Racing Days 77 Racing Days
-------------- -------------- --------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Operating Revenue ............................ $ 1,940,421 $ 1,687,435 $ 4,931,732 $ 4,242,992 $ 5,381,327
Operating Expense ............................ 2,348,755 1,951,094 5,792,014 4,886,330 5,992,916
----------- ----------- ----------- ----------- -----------
Income (Loss) from Operations ........... (408,334) (263,659) (860,282) (643,338) (611,589)
----------- ----------- ----------- ----------- -----------
Other Income:
Commissions for Capital Improvements ....... $ 0 35,403 0 66,178 81,952
Interest expense ........................... (33,958) 0 (45,278) 0 0
Investment income .......................... 0 125 0 375 (21,470)
Gain on sale of other properties ........... 0 0 389,812 0 0
----------- ----------- ----------- ----------- -----------
Total other income ..................... (33,958) 35,528 344,534 66,553 60,482
----------- ----------- ----------- ----------- -----------
Loss before provision for Taxes on income .... (442,292) (228,131) (515,748) (576,785) (551,107)
----------- ----------- ----------- ----------- -----------
Provision (Credit) for Taxes on income ....... 0 0 0 0 329,758
----------- ----------- ----------- ----------- -----------
NET INCOME (LOSS) ....................... ($ 442,292) ($ 228,131) ($ 515,748) ($ 576,785) ($ 880,865)
=========== =========== =========== =========== ===========
Loss per weighted average shares outstanding . ($ 1.77) ($ 0.91) ($ 2.06) ($ 2.30) ($ 3.52)
=========== =========== =========== =========== ===========
Cash dividend per share ...................... $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
=========== =========== =========== =========== ===========
</TABLE>
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A. SUMMARY OF FINANCIAL INFORMATION--(Continued
MID-STATE RACEWAY, INC.
STATEMENT OF CASH FLOW
For the nine For the
Months Ended Year Ended
September 30, December 31,
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ....................................... ($ 515,748) ($ 880,865)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation ................................... 140,198 233,356
Net amortization/accretion of investments ...... 0 26
Deferred income taxes .......................... 0 327,432
Recoveries of doubtful accounts ................ 0 (23,000)
Gain on sale of investment securities .......... 0 (4,769)
Gain on sale of other properties ............... (391,070) 0
Loss on disposal of equipment .................. 0 1,431
Changes in:
Restricted cash ................................ (127,353) 128,332
Accounts receivable ............................ (74,808) 39,880
Prepaid expenses ............................... (181,645) 27,371
Other assets ................................... (108,640) 22,257
Accounts payable and accrued expenses .......... (210,876) 146,413
Purse funds .................................... 0 (103,210)
Uncashed winning tickets and
capital improvement fund ..................... 42,572 (25,122)
Other current liabilities ...................... 165,837 0
Delinquent property taxes ...................... 192,000 0
Deferred retirement benefits ................... 0 (1,715)
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Net cash used in operating activities ....... (1,069,533) (112,183)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and sales of
available-for-sale investment securities ..... 0 104,093
Proceeds from first mortgage loan .............. 1,000,000 0
Proceeds from second mortgage loan ............. 250,000 0
Proceeds from sale of other properties
and equipment ................................ 391,071 1,200
Purchase of properties and equipment ........... (129,406) (33,654)
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Net cash provided by investing activities ........ 1,511,665 71,639
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Net change in cash and cash equivalents .......... 442,132 (40,544)
Cash and cash equivalents, beginning of period ... 195,997 236,541
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Cash and cash equivalents, end of period .......... $ 638,129 $ 195,997
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<PAGE>
A. SUMMARY OF FINANCIAL INFORMATION--(Continued)
MANAGEMENT ANALYSES OF PROFIT AND LOSS INFORMATION
The Company's net loss from operations of $860,282 for the nine months ended
September 30, 1998, increased $216,944 over the same period last year. A
significant factor in the increase of the loss from operations was the increase
in the number of live racing days during the first three quarters of 1998. The
1997 live racing schedule consisted of 77 live race dates, 69 of which were run
in the nine months ended September 30, 1997. The current year's live racing
schedule, which was approved by The New York Stae Racing and Wagering Board
(NYSRWB), originally consisted of 125 live racing days beginning April 3, 1998
and continuing through November 28, 1998. On August 27, 1998, the Company
received approval from the NYSRWB to adjust its 1998 live racing days to 122
with the last race date scheduled for October 31, 1998. The nine month period
ended September 30, 1998 consisted of 102 live racing days, 33 more than the
comparable period in 1997.
Wagering on live racing decreased an average of $1,788 per day. While the
average daily attendance is down by 6.5%, the per capita average wagering is
5.3% above last year's level. Total wagering on thoroughbred and harness
simulcasts during the nine months ended September 30, 1998 increased by
$2,465,433 (23.3%) over the same period in 1997. The significant increase in
full card simulcasting in 1998 offset to a large extent the negative trends in
both attendance and handle displayed by live racing.
Management continues to focus on the reduction of operating expenses, increased
publicity, promotions and advertising to attract a larger number of patrons and
events using the facility, and proposed legislation to aid New York State's
harness track industry including Vernon Downs. In addition, the introduction of
the "A-B-C" classification system has produced more competitive racing and
larger payoffs since being put into service in late July, 1998 and the new home
stretch "Passing Lane" has made for more exciting finishes.
LIQUIDITY AND CAPITAL RESOURCES
In 1998, the funding of business operations and capital requirements for
Mid-State Raceway's business will be substantially sourced by cash from
operations and loans and/or grants from local and State government agencies. In
addition to the $1 million first mortgage loan obtained during the second
quarter of 1998, the Company obtained a $250,000 loan secured by a second
mortgage on its race track property from a local government agency. The agency
has agreed to convert the second mortgage loan into an outright grant if the
live racing season is completed in accordance with the schedule approved by the
NYSRWB.
The Company's current ratio at September 30, 1998 was approximately .9 to 1.
4
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B. CAPITALIZATION AND SHAREHOLDER'S EQUITY
MID-STATE RACEWAY, INC.
BALANCE SHEET
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
SEPTEMBER 30, DECEMBER 31,
1998 1997
ASSETS ------------ ------------
CURRENT ASSETS
Cash and cash equivalents ........................ $ 638,129 $ 195,997
Cash restricted for purses, Capital Improvements
and uncashed winning tickets ................... 189,563 62,210
Accounts receivable, net of allowance for doubtful
accounts of $7,000 in 1998 and 1997 ............ 261,824 187,016
Prepaid insurance, taxes and other expenses ...... 203,385 21,740
----------- -----------
Total current assets ......................... 1,292,901 466,963
PROPERTY, PLANT AND EQUIPMENT
Land, racing plant and equipment ................. 12,685,371 12,555,965
Other Properties ................................. 121,671 121,672
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12,807,042 12,677,637
Less accumulated depreciation .................... 10,960,278 10,820,080
----------- -----------
1,846,764 1,857,557
OTHER ASSETS ....................................... 214,543 105,903
$ 3,354,208 $ 2,430,423
=========== ===========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses ............ $ 817,421 $ 1,028,297
Current deferred retirement expense .............. 107,565 107,565
Second mortgage loan payable ..................... 250,000 0
Current portion-delinquent real estate taxes ..... 18,000 0
Uncashed winning tickets and deferred revenue .... 104,782 62,210
Other current liabilities ....................... 165,837 0
----------- -----------
Total current liabilities ..................... 1,463,605 1,198,072
DEFERRED RETIREMENT EXPENSE ........................ 906,296 906,296
FIRST MORTGAGE LOAN PAYABLE ........................ 1,000,000 0
LONG-TERM PORTION-DELINQUENT REAL ESTATE TAXES ..... 174,000 0
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock, par value $0.10 per share,
authorized 10,000,000 shares; issued
and outstanding 250,386 shares ................. 25,039 25,039
Additional paid-in-capital ....................... 225,347 225,347
Retained (deficit) earnings ...................... (440,079) 75,669
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Total shareholders' (deficit) equity ......... (189,693) 326,055
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$ 3,354,208 $ 2,430,423
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5
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PART II - OTHER INFORMATION
Item 1 through 5 -- Not applicable
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Item 6 -- Exhibits and Reports on Form 8-K
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Reports on Form 8-K - There were no reports on Form 8-K filed for the three
months ended September 30, 1998.
SIGNATURES
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.
MID-STATE RACEWAY, INC.
Date: 11/10/98 /S/ JUSTICE M. CHENEY
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Justice M. Cheney, President
& Chief Executive Officer
Date: 11/10/98 /S/ JAMES R. WISE
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James R. Wise, Treasurer and Principal
Financial and Accounting Officer
6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 827,692
<SECURITIES> 0
<RECEIVABLES> 268,824
<ALLOWANCES> 7,000
<INVENTORY> 0
<CURRENT-ASSETS> 1,292,901
<PP&E> 12,685,371
<DEPRECIATION> 10,960,278
<TOTAL-ASSETS> 3,354,208
<CURRENT-LIABILITIES> 1,463,605
<BONDS> 0
0
0
<COMMON> 25,039
<OTHER-SE> (214,732)
<TOTAL-LIABILITY-AND-EQUITY> 3,354,208
<SALES> 0
<TOTAL-REVENUES> 1,940,421
<CGS> 0
<TOTAL-COSTS> 2,348,755
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,958
<INCOME-PRETAX> (442,292)
<INCOME-TAX> 0
<INCOME-CONTINUING> (442,292)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (442,292)
<EPS-PRIMARY> (1.77)
<EPS-DILUTED> 0.00
</TABLE>
