<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] JOINT QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________________ to ____________________
<TABLE>
<S> <C>
Commission File Number 1-9319 Commission File Number 1-9320
CALIFORNIA JOCKEY CLUB BAY MEADOWS OPERATING COMPANY
- --------------------------------------------------------- -----------------------------------------------------------
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
</TABLE>
<TABLE>
<S> <C> <C> <C>
Delaware 94-0358820 Delaware 94-2878485
- --------------------------------------------------------- -----------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer (State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.) incorporation or organization) Identification No.)
</TABLE>
<TABLE>
<S> <C>
94-0358820 94-2878485
- --------------------------------------------------------- -----------------------------------------------------------
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
</TABLE>
<TABLE>
<S> <C> <C> <C>
2600 S. Delaware Street, San Mateo, California 94403 2600 S. Delaware Street, San Mateo, California 94402
- ---------------------------------------------------------- -----------------------------------------------------------
(Address of principal executive offices) (Zip Code) (Address of principal executive offices) (Zip Code)
</TABLE>
<TABLE>
<S> <C>
(415) 573-4514 (415) 574-7223
- --------------------------------------------------------- -----------------------------------------------------------
(Registrant's telephone number, including area code) (Registrant's telephone number, including area code)
</TABLE>
<TABLE>
<S> <C>
Not Applicable Not Applicable
- ------------------------------------------------------- -------------------------------------------------------
(Former name, former address and former fiscal year, if (Former name, former address and former fiscal year, if
changed since last report) changed since last report)
</TABLE>
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 (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
--- ---
The number of shares outstanding of each registrant's classes of common stock,
par value $.01 per share, as of the close of business on May 10, 1996, was as
follows:
<TABLE>
<CAPTION>
Registrant Number of Shares
<S> <C>
California Jockey Club 5,763,257
Bay Meadows Operating Company 5,763,257
</TABLE>
- 1 -
<PAGE> 2
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CALIFORNIA JOCKEY CLUB AND
BAY MEADOWS OPERATING COMPANY AND SUBSIDIARY
SEPARATE AND COMBINED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BAY MEADOWS
CALIFORNIA OPERATING
JOCKEY COMPANY AND
CLUB SUBSIDIARY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C>
REVENUES:
Pari-mutuel revenue $ 22,833 $ 22,833
Producer fees 398 398
Admissions, programs, parking and other racing income 1,935 1,935
Concession sales 855 855
Rental of racing facility $ 2,212 140 $(2,212) 140
Interest and dividend income 123 86 (4) 205
Other income 3 445 448
---------- ---------- ------- ----------
Total 2,338 26,692 (2,216) 26,814
---------- ---------- ------- ----------
COSTS AND EXPENSES:
Purses and incentive awards 9,634 9,634
Commissions paid to guest tracks 1,599 1,599
Direct operating costs 8,071 8,071
Cost of concession sales 233 233
Depreciation and amortization 230 166 396
Racing facility rental 2,218 (2,212) 6
Marketing 611 611
General and administrative expense 177 1,025 (4) 1,198
---------- ---------- ------- ----------
Total 407 23,557 (2,216) 21,748
---------- ---------- ------- ----------
INCOME BEFORE INCOME TAX PROVISION 1,931 3,135 5,066
INCOME TAX PROVISION 1,258 1,258
---------- ---------- ------- ----------
NET INCOME $ 1,931 $ 1,877 $ -- $ 3,808
========== ========== ======= ==========
NET INCOME PER SHARE $ .34 $ .33 $ .66
========== ========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 5,763,257 5,763,257 5,763,257
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
- 2 -
<PAGE> 3
CALIFORNIA JOCKEY CLUB AND
BAY MEADOWS OPERATING COMPANY AND SUBSIDIARY
SEPARATE AND COMBINED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BAY MEADOWS
CALIFORNIA OPERATING
JOCKEY COMPANY AND
CLUB SUBSIDIARY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C>
REVENUES:
Pari-mutuel revenue $ 7,270 $ 7,270
Producer fees 145 145
Admissions, programs, parking and other racing income 1,184 1,184
Concession sales 457 457
Rental of racing facility $ 800 164 $(800) 164
Interest and dividend income 101 61 162
Other income 2 306 (3) 305
---------- ---------- ----- ----------
Total 903 9,587 (803) 9,687
---------- ---------- ----- ----------
COSTS AND EXPENSES:
Purses and incentive awards 2,889 2,889
Commissions paid to guest tracks 489 489
Direct operating costs 4,150 4,150
Cost of concession sales 158 158
Depreciation and amortization 241 159 400
Racing facility rental 801 (800) 1
Marketing 310 310
General and administrative expense 83 476 (3) 556
Card club costs 29 29
---------- ---------- ----- ----------
Total 324 9,461 (803) 8,982
---------- ---------- ----- ----------
INCOME BEFORE INCOME TAX PROVISION 579 126 705
INCOME TAX PROVISION 58 58
---------- ---------- ----- ----------
NET INCOME $ 579 $ 68 $-- $ 647
========== ========== ===== ==========
NET INCOME PER SHARE $ .10 $ .01 $ .11
========== ========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 5,753,257 5,753,257 5,753,257
========== ========== ==========
</TABLE>
See Notes to Financial Statements.
- 3 -
<PAGE> 4
CALIFORNIA JOCKEY CLUB AND
BAY MEADOWS OPERATING COMPANY AND SUBSIDIARY
COMBINED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 6,129 $ 7,307
Securities available for sale (at fair value) 1,525 1,187
Securities held to maturity (at cost) 7,340 7,077
Amounts held on deposit for Thoroughbred horse owners 2 3,056
Accounts receivable (net of allowance for doubtful accounts of
$132 in 1996 and $82 in 1995) 1,482 2,442
Prepaid expenses 530 377
-------- --------
Total current assets 17,008 21,446
-------- --------
PROPERTY, PLANT AND EQUIPMENT:
Land 2,962 2,645
Racing plant 23,705 23,906
Tennis facility 308 308
Equipment and leasehold equipment 10,724 10,088
-------- --------
Total 37,699 36,947
Accumulated depreciation and amortization (21,116) (20,759)
-------- --------
Property, plant and equipment - net 16,583 16,188
-------- --------
OTHER ASSETS (net of accumulated amortization of
$1,260 in 1996 and $1,221 in 1995) 185 223
-------- --------
DEFERRED INCOME TAXES 78 78
-------- --------
TOTAL ASSETS $ 33,854 $ 37,935
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,844 $ 4,676
Accrued liabilities 1,870 1,530
Accrued purses 549 1,014
Due to Thoroughbred horse owners 2 3,056
Income taxes payable 1,240 75
Uncashed pari-mutuel tickets and vouchers 96 4,477
-------- --------
Total current liabilities 6,601 14,828
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value, authorized 10,000,000 shares;
issued and outstanding 5,763,257 shares 116 116
Additional paid in capital 18,385 18,385
Retained earnings 8,625 4,817
Unrealized gain (loss) on securities available for sale 127 (211)
-------- --------
Total stockholders' equity 27,253 23,107
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 33,854 $ 37,935
======== ========
</TABLE>
See Notes to Financial Statements.
- 4 -
<PAGE> 5
CALIFORNIA JOCKEY CLUB AND
BAY MEADOWS OPERATING COMPANY AND SUBSIDIARY
COMBINED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 3,808 $ 647
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 396 400
Property transfer 201
Changes in operating assets and liabilities:
Accounts receivable 960 (380)
Amounts held on deposit for Thoroughbred horse owners 3,054 2,784
Income taxes receivable and payable 1,165 (372)
Prepaid expenses and other current assets (153) (516)
Accounts payable (1,832) (1,920)
Accrued liabilities 340 (706)
Accrued purses (465) (1,398)
Due to Thoroughbred horse owners (3,054) (2,784)
Uncashed pari-mutuel tickets and vouchers (4,381) (1,726)
------- -------
Net cash provided by (used in) operating activities 39 (5,971)
------- -------
INVESTING ACTIVITIES:
Purchase of securities held to maturity (3,638) (4,130)
Maturities of securities held to maturity 3,375 3,860
Purchase of property, plant and equipment (954) (626)
------- -------
Net cash used in investing activities (1,217) (896)
------- -------
DECREASE IN CASH AND CASH EQUIVALENTS (1,178) (6,867)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,307 9,356
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,129 $ 2,489
======= =======
</TABLE>
See Notes to Financial Statements.
- 5 -
<PAGE> 6
CALIFORNIA JOCKEY CLUB AND
BAY MEADOWS OPERATING COMPANY AND SUBSIDIARY
SEPARATE AND COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BAY MEADOWS
CALIFORNIA OPERATING
JOCKEY COMPANY AND
CLUB SUBSIDIARY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C>
Balance at January 1, 1996 $21,878 $1,229 $23,107
Net income 1,931 1,877 3,808
Unrealized gain on securities
available for sale 338 338
------- ------ -------
Balance at March 31, 1996 $24,147 $3,106 $27,253
======= ====== =======
</TABLE>
See Notes to Financial Statements.
- 6 -
<PAGE> 7
CALIFORNIA JOCKEY CLUB AND
BAY MEADOWS OPERATING COMPANY AND SUBSIDIARY
SEPARATE AND COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1995
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BAY MEADOWS
CALIFORNIA OPERATING
JOCKEY COMPANY AND
CLUB SUBSIDIARY ELIMINATIONS COMBINED
<S> <C> <C> <C> <C>
Balance at January 1, 1995 $21,970 $748 $22,718
Net income 579 68 647
Unrealized gain on securities
available for sale 175 175
------- ---- -------
Balance at March 31, 1995 $22,724 $816 $23,540
======= ==== =======
</TABLE>
See Notes to Financial Statements.
- 7 -
<PAGE> 8
CALIFORNIA JOCKEY CLUB
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,347 $ 989
Securities available for sale (at fair value) 1,525 1,187
Securities held to maturity (at cost) 7,340 7,077
Accounts receivable 8 7
Receivable from Bay Meadows Operating Company 2,008 569
-------- --------
Total current assets 12,228 9,829
-------- --------
PROPERTY, PLANT AND EQUIPMENT:
Land 2,962 2,645
Racing plant 23,705 23,906
Tennis facility 308 308
Equipment 456 456
-------- --------
Total 27,431 27,315
Accumulated depreciation (15,227) (14,997)
-------- --------
Property, plant and equipment - net 12,204 12,318
-------- --------
TOTAL ASSETS $ 24,432 $ 22,147
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 172 $ 129
Accrued liabilities 113 140
-------- --------
Total current liabilities 285 269
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value, authorized 10,000,000 shares;
issued and outstanding 5,763,257 shares 58 58
Additional paid in capital 17,597 17,597
Retained earnings 6,365 4,434
Unrealized gain (loss) on securities available for sale 127 (211)
-------- --------
Total stockholders' equity 24,147 21,878
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 24,432 $ 22,147
======== ========
</TABLE>
See Notes to Financial Statements.
- 8 -
<PAGE> 9
CALIFORNIA JOCKEY CLUB
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,931 $ 579
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 230 241
Property transfer 201
Changes in operating assets and liabilities:
Accounts receivable (1) 38
Receivable from Bay Meadows Operating Company (1,439) (589)
Prepaid expenses and other assets 28
Accounts payable 43 (81)
Accrued liabilities (27) 16
------- -----
Net cash provided by operating activities 938 232
------- -----
INVESTING ACTIVITIES:
Purchase of securities held to maturity (3,638) (4,130)
Maturities of securities held to maturity 3,375 3,860
Purchase of property, plant and equipment (317) (254)
------- -----
Net cash used in investing activities (580) (524)
------- -----
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 358 (292)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 989 412
------- -----
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,347 $ 120
======= =====
</TABLE>
See Notes to Financial Statements.
- 9 -
<PAGE> 10
BAY MEADOWS OPERATING COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,782 $ 6,318
Amounts held on deposit for Thoroughbred horse owners 2 3,056
Accounts receivable (net of allowance for doubtful accounts of $132 in 1996 and $82 in 1995) 1,474 2,435
Prepaid expenses and other current assets 530 377
-------- --------
Total current assets 6,788 12,186
-------- --------
PROPERTY, PLANT AND EQUIPMENT:
Equipment and leasehold improvements 10,268 9,631
Accumulated depreciation and amortization (5,889) (5,761)
-------- --------
Property, plant and equipment - net 4,379 3,870
-------- --------
OTHER ASSETS (net of accumulated amortization of $1,260 in 1996 and $1,221 in 1995) 185 223
-------- --------
DEFERRED INCOME TAXES 78 78
-------- --------
TOTAL ASSETS $ 11,430 $ 16,357
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,672 $ 4,547
Accrued liabilities 1,757 1,390
Accrued purses 549 1,014
Due to Thoroughbred horse owners 2 3,056
Payable to California Jockey Club 2,008 569
Income taxes payable 1,240 75
Uncashed pari-mutuel tickets and vouchers 96 4,477
-------- --------
Total current liabilities 8,324 15,128
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common Stock .01 par value authorized 10,000,000 shares; issued and outstanding:
5,763,257 shares 58 58
Additional paid in capital 788 788
Retained earnings 2,260 383
-------- --------
Total stockholders' equity 3,106 1,229
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,430 $ 16,357
======== ========
</TABLE>
See Notes to Financial Statements.
- 10 -
<PAGE> 11
BAY MEADOWS OPERATING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,877 $ 68
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 166 159
Changes in operating assets and liabilities:
Accounts receivable 961 (418)
Amounts held on deposit for Thoroughbred horse owners 3,054 2,784
Income taxes receivable and payable 1,165 (372)
Prepaid expenses and other assets (153) (544)
Accounts payable (1,875) (1,839)
Accrued liabilities 367 (722)
Accrued purses (465) (1,398)
Due to Thoroughbred horse owners (3,054) (2,784)
Payable to California Jockey Club 1,439 589
Uncashed pari-mutuel tickets and vouchers (4,381) (1,726)
------- -------
Net cash used in provided by operating activities (899) (6,203)
------- -------
NET CASH USED IN INVESTING ACTIVITIES - Purchase of
property, plant and equipment (637) (372)
------- -------
DECREASE IN CASH AND CASH EQUIVALENTS (1,536) (6,575)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,318 8,944
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,782 $ 2,369
======= =======
</TABLE>
See Notes to Financial Statements.
- 11 -
<PAGE> 12
CALIFORNIA JOCKEY CLUB AND BAY MEADOWS
OPERATING COMPANY AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited financial statements include condensed unaudited
financial statements of California Jockey Club ("Cal Jockey") and Bay
Meadows Operating Company ("Bay Meadows") on a combined basis and for each
company individually. All significant affiliate and intercompany balances
and transactions have been eliminated on the combined financial statements.
The accompanying condensed unaudited financial statements should be read in
conjunction with the companies' 1995 Annual Report. Net income per share is
computed as net income divided by weighted average shares outstanding.
Certain prior year amounts have been reclassified to conform to the 1996
presentation.
In the opinion of management, all adjustments (consisting of only recurring
adjustments) considered necessary for a fair presentation of the financial
condition and results of operations for Cal Jockey and Bay Meadows
individually, have been included in the financial statements. The results
of operations for the three months ended March 31, 1996, are not indicative
of the results that may be expected for the year ending December 31, 1996,
because of the seasonal nature of the operations.
- 12 -
<PAGE> 13
ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
Bay Meadows Operating Company ("Bay Meadows") has been allocated 118 racing
days for the year ending December 31, 1996 versus 108 racing days for 1995. Of
these days, Bay Meadows conducted 63 days of racing in the three months ended
March 31, 1996 versus 20 days in the same period in 1995. Historically, Bay
Meadows and California Jockey Club have derived a major portion of their
revenues from the racing meet.
California Jockey Club
Results of Operations: Quarter Ended March 31, 1996
Compared with Quarter Ended March 31, 1995
Total revenues for California Jockey Club ("Cal Jockey") increased $1,435,000
(259%) for the three months ended March 31, 1996, compared to the same period in
the prior year. Rental income derived from the leasing of its racing facility is
based on Bay Meadows' racing revenues and increased $1,412,000 as a result of 43
more racing days in the first three months of 1996 than in the same period in
1995.
Expenses for the three months ended March 31, 1996, increased $83,000 (26%),
primarily as a result of professional fees incurred in 1996.
Liquidity and Capital Resources
The liquid assets (cash and marketable securities) of Cal Jockey increased to
$10,212,000 at March 31, 1996, from $9,253,000 at December 31, 1995. This
increase was the result of the timing of the payments from Bay Meadows Operating
Company and the increase in the fair market value of the securities available
for sale. Cal Jockey has guaranteed a $6,000,000 line of credit that Bay Meadows
has with a bank, which expires on May 31, 1996. As of March 31, 1996, there were
no borrowings outstanding on this line of credit.
Cal Jockey anticipates that funds generated internally and its cash reserves
will be sufficient to meet its liquidity requirements for the foreseeable
future.
Bay Meadows Operating Company and Subsidiaries
Results of Operations: Quarter Ended March 31, 1996
Compared with Quarter Ended March 31, 1995
Total revenues increased $17,105,000 (259%) for the three months ended March 31,
1996 compared with the same period in 1995. This was due to an increase in
pari-mutuel revenues of $15,563,000. Pari-mutuel revenues increased due
primarily to there being 43 more racing days in the first three months of 1996
than in the same period in 1995.
Other revenues were positively impacted by the same factors which affected
pari-mutuel revenues. Admissions, program, parking and other racing income
increased $751,000, and concession sales increased $398,000. In addition,
interest income increased due to higher investment balances.
Total costs and expenses increased $14,096,000 (249%) for the three months ended
March 31, 1996, compared with the same period in the prior year. This was due to
increases in expenses associated with higher operating revenues, including (i)
purses and incentive awards ($6,745,000), (ii) commissions paid to guest
locations ($1,110,000), (iii) direct operating costs ($3,921,000) and (iv)
racing facility rental ($1,417,000).
- 13 -
<PAGE> 14
Liquidity and Capital Resources
The liquid assets (cash and cash equivalents) of Bay Meadows decreased to
$4,782,000 at March 31, 1996, from $6,318,000 at December 31, 1995. This
decrease is due to the conclusion of the racing meet. Bay Meadows is
dependent on Cal Jockey's assistance in securing a bank line of credit for
its working capital needs throughout the year. Bay Meadows has a $6,000,000 bank
line of credit that expires on May 31, 1996, for which Cal Jockey has guaranteed
all borrowings. As of March 31, 1996, there were no borrowings outstanding on
this line of credit. Management believes that Bay Meadows can meet its funding
needs for the foreseeable future through internally generated funds and the
utilization of the line of credit.
As of March 31, 1996, Bay Meadows' current liabilities exceeded its current
assets by $1,536,000. The current ratio (current assets to current liabilities)
was .82 to 1 at March 31, 1996, compared to .81 to 1 at December 31, 1995.
- 14 -
<PAGE> 15
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Bay Meadows and Cal Jockey are, in the ordinary course of business,
involved in litigation and other legal matters.
Cal Jockey is party to an administrative proceeding with the City
of San Mateo regarding the treatment of the waste water from the
Bay Meadows barn area (See Item 1 - "California Jockey Club - Water
Treatment System").
Bay Meadows Foundation v. Bay Meadows Operating Company and
California Jockey Club
On December 29, 1995, the Bay Meadows Foundation filed a complaint
in San Mateo Superior Court against Cal Jockey and Bay Meadows.
The complaint alleges failure to properly calculate and pay charity
proceeds as required by law and includes causes of action for
violation of statute, breach of fiduciary duty and imposition of a
constructive trust and accounting. Specifically, the complaint
alleges that Bay Meadows improperly deducted rent payments made to
its affiliate, Cal Jockey, from the charity net proceeds. The
complaint also seeks punitive damages and attorney's fees. On
March 25, 1996, Cal Jockey and Bay Meadows filed their answer to
the complaint. The answer denies the allegations of the complaint
and asserts affirmative defenses against the Bay Meadows
Foundation. Specifically, Cal Jockey and Bay Meadows maintain
that the deduction of rent payments was lawful and consistent with
both the administrative determination made by the California Horse
Racing Board ("CHRB") in 1991 that such rent payments were
deductible and the financial reporting instructions subsequently
promulgated by the CHRB. The parties are currently engaged in
civil discovery and Cal Jockey and Bay Meadows plan to vigorously
defend themseles against the lawsuit.
Pauline Madera v. Bay Meadows Operating Company and Morris Webb
On December 20, 1995, Ms. Madera, a current employee of Bay
Meadows Catering, filed a complaint for damages for sexual
battery, intentional infliction of emotional distress, negligent
infliction of emotional distress and sexual harassment in
violation of public policy. The complaint seeks unspecified
damages. Mr. Webb is a former employee of Bay Meadows Catering.
Defendant answered and removed the action to federal court.
Pursuant to federal rules, discovery is stayed until May 17, 1996,
when the parties will appear in court for the initial case
management conference. Neither Ms. Madera nor Mr. Webb were or
are employed in a management or supervisory position by Bay
Meadows. Bay Meadows plans to vigoursly defend against the lawsuit.
Management believes that pending legal actions against either of
the Companies are not expected to have a material impact on the
separate or combined financial statements of the Companies.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
- 15 -
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrants have duly caused this report to be signed on their
behalf by the undersigned, thereunto duly authorized.
DATED: May 14, 1996
CALIFORNIA JOCKEY CLUB
/s/ James M. Harris
-------------------------------------------
James M. Harris
President, Treasurer and Controller
(Principal Executive and Financial Officer)
BAY MEADOWS OPERATING COMPANY
/s/ F. Jack Liebau
-------------------------------------------
F. Jack Liebau
President and Chief Executive Officer
(Principal Executive Officer)
- 16 -
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000016343
<NAME> California Jockey Club and Bay Meadows Operating Company
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> CALIFORNIA JOCKEY CLUB
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