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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 JUNE 30, 2000
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 X No.
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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, 2000
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Common Stock, $0.10 par value 442,766
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<PAGE>
A. Summary of Financial Information
MID-STATE RACEWAY, INC.
PROFIT AND LOSS INFORMATION
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
------------------------------ ------------------------------- Year Ended
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999 December 31, 1999
23 Racing Days 47 Racing Days 23 Racing Days 49 Racing Days 114 Racing Days
-------------- -------------- -------------- --------------- ------------------
<S> <C> <C> <C> <C> <C>
Operating Revenues $ 2,109,783 $ 1,932,894 $ 3,111,365 $ 2,876,958 $ 5,994,965
Operating Expenses $ 2,436,159 2,262,416 3,336,905 3,074,710 7,073,820
----------- ----------- ----------- ----------- -----------
Income (loss) from operations (326,376) (329,522) (225,540) (197,752) (1,078,855)
----------- ----------- ----------- ----------- -----------
Other income (loss):
Aid from state and local governments 36,249 -- 36,249 -- 233,751
Investment income 14,947 7,027 35,426 7,994 6,598
Interest expense (43,453) (33,958) (85,734) (67,916) (146,708)
Settlement of lawsuits 22,753 -- 1,014,714 -- (380,000)
----------- ----------- ----------- ----------- -----------
Total other income (loss) 30,496 (26,931) 1,000,655 (59,922) (286,359)
----------- ----------- ----------- ----------- -----------
Income (loss) before provision for
taxes (295,880) (356,453) 775,115 (257,674) (1,365,214)
Provision for taxes -- -- -- -- 404
----------- ----------- ----------- ----------- -----------
Net income (loss) ($ 295,880) ($ 356,453) $ 775,115 ($ 257,674) ($1,365,214)
=========== =========== =========== =========== ===========
Income (loss) per common share * ($ 0.67) ($ 1.42) $ 1.75 ($ 1.03) ($ 4.89)
=========== =========== =========== =========== ===========
Cash dividend per share* $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00
=========== =========== =========== =========== ===========
</TABLE>
* Based on weighted average shares outstanding.
2
<PAGE>
A. (Continued)
MID-STATE RACEWAY, INC.
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
June 30, December 31,
2000 1999
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<S> <C> <C>
Cash Flows from Operating Activities:
Net income (loss) $ 775,115 ($1,368,967)
Adjustments to reconcile net income (loss) to net cash used
in operating activities:
Depreciation 86,430 191,984
Settlement of lawsuits (991,961) 380,000
Allowance for (recoveries) of doubtful accounts (87,000) 90,000
Changes in:
Restricted cash 24,930 (70,431)
Accounts and grants receivable 103,689 (167,011)
Prepaid expenses (151,371) 91,613
Other assets (36,511) 48,341
Real estate taxes payable 88,000 (72,000)
Accounts payable 287,807 481,302
Uncashed winning tickets (53,732) 4,134
Retention for capital improvements (78,679) 63,484
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Net cash used in operating activities (33,283) (327,551)
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Cash Flows from Investing Activities:
Purchase of available-for-sale investment securities (349,081) (196,119)
Purchase of properties and equipment (717,995) (505,042)
Purchase of hotel, net of Trustee claim (25,399) --
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Net cash used in investing activities (1,092,475) (701,161)
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Cash Flows from Financing Activities:
Proceeds from mortgage loan -- 250,000
Proceeds from line of credit 125,385 --
Net proceeds from sale of stock -- 1,455,000
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Net cash provided by financing activities 125,385 1,705,000
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Net increase (decrease) in cash (1,000,373) 676,288
Cash, beginning of period 1,113,529 437,241
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Cash, end of period $ 113,156 $ 1,113,529
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</TABLE>
3
<PAGE>
A. (Continued)
Management Analyses of Profit and Loss Information
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The Company's net loss from operations of $225,540 for the six (6) months ended
June 30, 2000 represents an increase from the loss from operations of $27,788
over the same period last year (14% increase). Following are significant factors
in this increase in loss from operations:
1 Mid-State Raceway, Inc. ("MSR") operates the harness racing track at Vernon
Downs. MSR generated a loss from operations of $44,863 for the six (6)
months ended June 30, 2000 versus a loss from operations of $197,752 for
the same period last year, a decrease of 77%. A significant factor in this
decrease was a decrease in the number of live racing days during the six
(6) months ended June 30, 2000 versus the number of live racing days for
the same period last year (23 days versus 49 days ,respectively). Despite
management's efforts to control costs, operating expenses for the three (3)
months ended June 30, 2000 increased $173,743 over the same period last
year (8% increase).
2 Mid-State Development Corporation ("MDC"), a wholly-owned subsidiary of
MSR, has taken over the operation of concessions (food and beverage) at the
harness racing track owned by MSR. Significant start-up costs incurred by
MSD during the six (6) months ended June 30, 2000 resulted in an operating
loss from concessions of $172,830.
3 MDC has also taken over the operation of special events (snocross,
motorcycle racing, concerts, rodeos, etc.) at Vernon Downs. During the
first quarter of 2000, the production division of MDC promoted 2 special
events which generated a net profit of $28,419. Two (2) special events
promoted in the second quarter of 2000 resulted in a net loss of $121,940.
Overall, the production division operations resulted in a net loss for the
six (6) months ended June 30, 2000 of $249,155.
4 MDC took over effective control of the Comfort Suites Hotel in May of 2000.
MDC is currently renovating the restaurant and betting room at the Hotel
and has plans to renovate the 7th floor of the Hotel to provide suites for
high rollers who they expect to attract to the facility. High Mountain
Associates claims it has a valid mortgage on the Hotel property with a
principal balance due of approximately $6,000,000. The Company disputes
this claim because at the time the mortgage was given, the owner of the
Hotel did not own the underlying land for the Hotel and accordingly, the
mortgage is not a valid lien on the Hotel land and building. The Trustee in
the Bennett bankruptcy also claims ownership of the Hotel. Currently, the
Company, the Trustee in the Bennett bankruptcy and High Mountain Associates
are in negotiations regarding High Mountain's mortgage claim and the
Trustee's claim. No legal action has been brought by any party and the
Company is optimistic that the claims can be settled with the Company
paying fair market value for the Hotel building, net of land and land
improvements, in settlement of the Trustee's and High Mountain's claims.
Since MDC has taken control of operations, the Hotel has generated net
income from operations of approximately $241,000 (for the period May16-June
30, 2000).
The increase in other income of $1,060,577 for the six (6) months ended June
30, 2000 versus the same period last year was largely the result of the
settlement of a lawsuit against MSR. In March 1998, a lawsuit was brought
against MSR alleging Breach of Contract and Fiduciary Duty with the
Company's decision to eliminate its Supplemental Retirement Benefit Plan.
In February 2000, the lawsuit was settled for the issuance of 4,380 shares
of the Company's stock to the remaining beneficiaries under the Plan. The
settlement of the lawsuit resulted in income to the Company in the first
quarter of 2000 in the amount of $991,961 due to the elimination of a
deferred liability in the amount of $1,013,861 in connection with the
Supplemental Retirement Plan, which was terminated.
4
<PAGE>
A. (Continued)
Management Analyses of Profit and Loss Information
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The average live handle ( Vernon Downs live racing, OTB &ITW and simulcasting
while live racing) increased from $195,604 to $214,592 during the respective six
(6) months ended June 30, 1999 and 2000. While the total attendance for the six
(6) months ended June 30, 2000 was down slightly, the per capita on-track
wagering is 28% above last year's level. Total wagering on harness and
thoroughbred simulcasting during the six (6) months ended June 30, 2000
decreased by $662,470 over the same period in 1999 primarily due to fewer live
racing days.
Expansion of the track to 7/8ths of a mile has been successfully completed at
the end of the second quarter in 2000. It is expected that wagering will
increase as a result of the expanded track and stables are now entering higher
quality horses in races at the track. It is also anticipated that betting at the
Hotel will substantially increase as a result of the planned improvements to the
Hotel.
Recent legislation in New York State allows MSR to institute a point system to
reward its high roller bettors. The point system can be used to attract high
rollers in much the same way casinos attract high rollers. The point system
combined with renovations to the Hotel and the planned high roller program is
expected to substantially increase simulcasting and live racing revenues. Recent
legislation also makes it unlikely that Batavia Downs, a harness racing facility
in Batavia, New York, which is about 150 miles from the Company's track, will
re-open in the near future. This will likely increase attendance and handle at
the track.
Liqiudity and Capital Resources
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In the first three (3) quarters of 2000, the funding of business operations and
capital requirements for the Company will be substantially sourced from existing
resources. The Company anticipates that it will borrow up to $4,000,000 in the
fourth quarter of 2000 to fund ongoing capital improvements, provide working
capital necessary to institute planned programs and events, and to replace the
existing mortgages on the property.
The Company's current ratio at June 30, 2000 was approximately 1.3:1.
5
<PAGE>
B. Capitalization and Shareholders' Equity
MID-STATE RACEWAY, INC.
BALANCE SHEETS
June 30, 2000 and December 31, 1999
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 2000 1999
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<S> <C> <C>
Current Assets
Cash and cash equivalents $ 113,156 $ 1,113,529
Cash restricted for purses, capital improvements and
uncashed winning tickets 132,979 157,909
Grant receivable -- 233,751
Accounts receivable, net of allowance for doubtful
accounts of $25,000 in 2000 and $112,000 in 1999 556,926 339,864
Investments 524,886 200,125
Other current assets 312,635 161,264
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Total current assets 1,640,582 2,206,442
Property, Plant and Equipment
Land, racing plant and equipment 17,267,042 13,223,647
Other Properties 121,671 121,671
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17,388,713 13,345,318
Less accumulated depreciation 11,280,728 11,194,298
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6,107,985 2,151,020
Other Assets 65,776 29,265
$ 7,814,343 $ 4,386,727
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 1,251,877 $ 964,070
Current portion of real estate taxes payable 36,000 72,000
Uncashed winning tickets 9,660 63,392
Retention for capital improvements 5,593 84,272
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Total current liabilities 1,303,130 1,183,734
Real estate taxes payable, less current portion 154,000 30,000
Mortgages payable 1,250,000 1,250,000
Line of credit outstanding 125,385 --
Trustee claim 2,826,479 --
Deferred retirement benefits -- 1,013,861
Shareholders' equity
Common stock, par value $.10 per share; authorized 10,000,000 shares;
issued and outstanding 442,766 in 2000, 438,386 in 1999 44,277 43,839
Additional paid-in-capital 2,536,531 2,041,547
Accumulated deficit (405,145) (1,180,260)
Accumulated other comprehensive income (20,314) 4,006
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Total shareholders' equity 2,155,349 909,132
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$ 7,814,343 $ 4,386,727
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</TABLE>
6
<PAGE>
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 June 30, 2000.
Item 7 - Submission of Matters to a Vote of Securities Holders
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There were no matters that were required to be submitted to a vote of securities
holders for the three months ended June 30, 2000.
Signatures
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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: 08/15/00 /s/ JOHN J. SIGNORELLI
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John J. Signorelli, President &
Chief Executive Officer
Date: 08/15/00 /s/ JAMES R. WISE
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James R. Wise, Treasurer and
Principal Financial and Accounting Officer
7
