SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
QUARTERLY REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
FOR THE QUARTER ENDED MARCH 31, 1998
Commission File Number - 0-1607
MID-STATE RACEWAY, INC.
(Exact Name of Registrant as Specified in Charter)
New York 15-0555258
(State of Incorporation) (I.R.S. Employer Identification No.)
Vernon, New York 13476
(Address of Principal Executive Offices) (Zip Code)
(315) 829-2201
(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 March 31, 1998
- ----- -----------------------------
Common Stock, $0.10 par value 250,386
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A. SUMMARY OF FINANCIAL INFORMATION
MID-STATE RACEWAY, INC.
PROFIT AND LOSS INFORMATION
Three Months Three Months
Ended Ended Year Ended
March 31, 1998 March 31, 1997 December 31, 1997
0 Racing Days 0 Racing Days 77 Racing Days
--------------- ---------------- -----------------
<S> <C> <C> <C>
Operating Revenues $ 928,268 $ 1,065,552 $ 5,381,327
Operating Expenses $ 1,011,087 $ 1,168,787 $ 5,992,916
----------- ----------- -----------
Loss from operations (82,819) (103,235) (611,589)
----------- ----------- -----------
Other income:
Commissions for Capital Improvements 0 1,010 81,952
Investment Income (loss) 0 144 (21,470)
Gain on sale of other properties 391,070 0 0
----------- ----------- -----------
Total Other Income 391,070 1,154 60,482
----------- ----------- -----------
Loss before provision for
Taxes 308,251 (102,081) (551,107)
Provision (Credit) for
Taxes 0 0 329,758
----------- ----------- -----------
NET INCOME (LOSS) $ 308,251 $ (102,081) $ (880,865)
=========== =========== ===========
Income (Loss) per weighted average shares outstanding $ 1.23 $ (0.41) $ (3.52)
=========== =========== ===========
Cash dividend per share $ 0.00 $ 0.00 $ 0.00
=========== =========== ===========
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2
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A. (CONTINUED)
MID-STATE RACEWAY, INC.
STATEMENT OF CASH FLOW
FOR THE THREE FOR THE
MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
1998 1997
INCREASE (DECREASE) IN CASH ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income (loss) $ 308,251 $(880,865)
Adjustments to reconcile net income (loss) to
cash provided by (used in) in operating activities:
Depreciation 46,733 233,356
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 52,827 128,332
Accounts receivable 70,588 39,880
Prepaid expenses (70,436) 27,371
Other assets 0 22,257
Accounts payable 78,470 146,413
Purse funds 0 (103,210)
Uncashed winning tickets (52,827) (25,122)
Deferred retirement benefits 0 (1,715)
--------- ---------
Net cash provided by (used in) operating activities 42,536 (112,183)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and sales of
available-for-sale investment securities 0 104,093
Proceeds from sale of other properties and equipment 391,071 1,200
Purchase of properties and equipment (9,697) (33,654)
--------- ---------
Net cash provided by investing activities 381,374 71,639
--------- ---------
Net change in cash 423,910 (40,544)
Cash, beginning of period 195,997 236,541
--------- ---------
Cash, end of period $ 619,907 $ 195,997
========= =========
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3
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A. (CONTINUED)
MANAGEMENT ANALYSES OF PROFIT AND LOSS INFORMATION
The Company's net loss from operations of $82,819 for the quarter ended March
31, 1998 decreased $20,416 over the same period last year. A significant factor
on the reduction of the operating loss was a decrease in operating expenses of
13.5%. Track management continues to focus on the reduction of operating
expenses. 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.
The net income of $308,251 for the quarter ended March 31, 1998 versus a net
loss of $102,081 for the same period last year was the result of the Company
selling 126 acres of surplus vacant land on Collamer Road in Onondaga County to
E.L. Management of Syracuse Corp. for a net gain of #391,070. Edward Leffler, a
Director of the Company, is the sole shareholder of E.L. Management of Syracuse
Corp.
Total wagering on thoroughbred and harness simulcasts during the quarter ended
March 31, 1998 increased by $488,395 (13.5%) over the same period as last year.
This is the first quarterly increase in simulcast handle since 1996.
Subsequent events
In 1998, the Company was fined $416,000 by the New York State Racing and
Wagering Board (the "Board") for instances of non-compliance, and has been
directed to reimburse the Company's capital improvement fund for any
unqualified capital expenditures. However, the Board is indicating its
willingness to abate the fine if the Company demonstrates compliance during the
1998 racing season. Management expects that appropriate compliance will be
demonstrated and that, accordingly, the fines will be abated. However, there can
be no assurance that the fines will be abated. The Company also believes that
qualified capital expenditures exceed the amount provided by the capital
improvement fund and that, accordingly, no reimbursement of unexpended funds
will be required.
The Company continues to take action and explore its options to raise operating
capital, including but not limited to the following:
a. The Company is pursuing loans and grants from various from various
local and state agencies
b. The Company has closed on a One Million Dollar (1,000,000) loan
secured by a mortgage on its race track property in Vernon, New York.
4
<PAGE>
A. (CONTINUED)
MANAGEMENT ANALYSES OF PROFIT AND LOSS INFORMATION
Subsequent Events (Continued)
The Company will continue to explore any additional options to raise any
additional necessary funds for the Company's operations.
In addition to exploring funding options as set forth above, the Company plans
to do or has done the following to improve its financial condition and improve
the efficiency of its operations:
a. Hire new management.
b. Replace the food service concessioner.
c. Increase the number of events using the facility.
d. Eliminate expenditures not necessary to the operation of the facility
including certain deferred compensation payments.
There can be no assurance that efforts to improve the Company's financial
condition will be successful.
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, sale of non-operating assets, mortgage loans, and loans and/or
grants from government agencies. The Company's current ratio at March, 31, 1998
was approximately one to one and one-half.
5
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<CAPTION>
B. CAPITALIZATION AND SHAREHOLDERS' EQUITY
MID-STATE RACEWAY, INC.
BALANCE SHEET
MARCH 31, 1998 AND DECEMBER 31, 1997
MARCH 31, DECEMBER 31,
ASSETS 1998 1997
----------- ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 619,907 $ 195,997
Cash restricted for uncashed winning tickets 9,383 62,210
Accounts receivable, net of allowance for doubtful
accounts of $7,000 in 1998 and 1997 116,428 187,016
Prepaid insurance, taxes and other expenses 92,176 21,740
----------- -----------
Total current assets 837,894 466,963
PROPERTY, PLANT AND EQUIPMENT
Land, racing plant and equipment 12,565,662 12,555,965
Other Properties 121,671 121,672
----------- -----------
12,687,333 12,677,637
Less accumulated depreciation 10,866,813 10,820,080
----------- -----------
1,820,520 1,857,557
OTHER ASSETS 105,903 105,903
$ 2,764,317 $ 2,430,423
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 1,106,767 $ 1,028,297
Current deferred retirement expense 107,565 107,565
Uncashed winning tickets 9,383 62,210
----------- -----------
Total current liabilities 1,223,715 1,198,072
DEFERRED RETIREMENT BENEFITS 906,296 906,296
----------- -----------
SHAREHOLDER'S 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 383,920 75,669
----------- -----------
Total shareholder' equity 634,306 326,055
----------- -----------
$ 2,764,317 $ 2,430,423
=========== ===========
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6
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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 March 31, 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: 05/20/98 /s/ JUSTICE M. CHENEY
-------- -----------------------------------
Justice M. Cheney,
President and Chief Executive Officer
Date: 05/20/98 /s/ JAMES R. WISE
-----------------------------------
James R. Wise, Treasurer & Principal
Financial and Accounting Officer
7
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 692,290
<SECURITIES> 0
<RECEIVABLES> 123,428
<ALLOWANCES> 7,000
<INVENTORY> 0
<CURRENT-ASSETS> 837,894
<PP&E> 12,687,333
<DEPRECIATION> 10,866,813
<TOTAL-ASSETS> 2,764,317
<CURRENT-LIABILITIES> 1,223,715
<BONDS> 0
0
0
<COMMON> 25,039
<OTHER-SE> 609,267
<TOTAL-LIABILITY-AND-EQUITY> 2,764,317
<SALES> 0
<TOTAL-REVENUES> 1,319,338
<CGS> 0
<TOTAL-COSTS> 1,011,087
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 308,251
<INCOME-TAX> 0
<INCOME-CONTINUING> 308,251
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 308,251
<EPS-PRIMARY> 1.23
<EPS-DILUTED> 0.00
</TABLE>
