UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission File Number: 0-1590
THE WESTWOOD GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-1983910
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
190 V.F.W. Parkway, Revere, Massachusetts 02151
(Address of principal executive offices) (Zip Code)
617-284-2600
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since
last report)
Indicated 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 the
registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes ______ NO X
As of May 15, 1995 343,210 shares of the Registrant's common stock, par value
$.01 per share and 912,015 shares of the Registrant's Class B common
stock, par value $.01 per share, was outstanding.
PAGE 1 OF 20
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
1995 1994
(Unaudited)
Current assets:
Cash $ 230,779 $ 812,424
Restricted cash 1,472,889 1,399,726
Accounts receivable 1,379,313 689,741
Prepaid expenses and other
current assets 231,946 244,739
Total current assets 3,314,927 3,146,630
Land 348,066 348,066
Buildings 19,445,754 19,237,102
Machinery and equipment 4,930,201 4,782,061
Leasehold improvements 10,590,379 10,596,672
35,314,400 34,963,901
Less: accumulated depreciation
and amortization (18,502,515) (17,567,344)
Net property, plant and equipment 16,811,885 17,396,557
Other assets:
Goodwill, less accumulated
amortization of $204,000 and
$96,000 516,000 624,000
Intangible assets, less accumulated
amortization of $50,000 and $33,333 - 16,666
Investment in unconsolidated subsidiary 5,393,020 5,453,631
Accounts receivable from officers,
employees and related party 313,459 480,578
Other assets 442,930 705,212
Total other assets 6,665,409 7,280,087
Total assets $26,792,221 $27,823,274
The accompanying notes are an integral part of these consolidated financial
statements.
PAGE 2 OF 20
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THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' DEFICIT
September 30, December 31,
1995 1994
(Unaudited)
Current liabilities:
Current portion of long-term debt $ 6,522,164 $ 2,213,307
Long-term obligations in default 400,000 2,504,168
Subordinated notes payable 285,000 285,000
Accounts payable and other accrued expenses 12,829,325 12,168,689
Outstanding pari-mutuel tickets 1,446,340 1,239,251
Total current liabilities 21,482,829 18,410,415
Long-term debt, less current maturities 6,649,332 9,549,586
Other long-term liabilities 2,448,709 2,815,664
Total liabilities 30,580,870 30,775,665
Commitments and contingencies
Stockholders' deficit:
Common Stock, $.01 par value;
Authorized 5,000,000 shares
1,936,409 shares issued and
outstanding 19,364 19,364
Class B Common stock, $.01 par value;
Authorized 5,000,000 shares;
912,615 shares issued and
outstanding 9,126 9,126
Additional paid-in capital 13,355,355 13,355,355
Accumulated deficit (8,780,087) (7,954,721)
Note receivable from related party (312,443) (301,551)
Minimum pension liability adjustment (115,182) (115,182)
Less cost of 1,593,199 common and 600
class B common shares in treasury (7,964,782) (7,964,782)
Total stockholders' deficit (3,788,649) (2,952,391)
Total liabilities, minority
interest and stockholders'
deficit $26,792,221 $27,823,274
The accompanying notes are an integral part of these consolidated financial
statements.
PAGE 3 OF 20
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THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended September 30, l995 and l994
(Unaudited)
1995 1994
Operating revenue:
Parimutuel commissions $ 7,823,253 $ 8,069,877
Concessions 1,126,463 1,408,120
Other operating 303,742 384,011
Total operating revenue 9,253,458 9,862,008
Operating expenses:
Wages, taxes and benefits 2,892,077 3,182,344
Purses 2,582,920 3,233,241
Cost of food and beverage 402,755 394,742
Administrative, general and operating 2,871,694 3,660,846
Depreciation and amortization 413,860 422,344
Total operating expenses 9,163,306 10,893,517
Income (loss) from operations 90,152 ( 1,031,509)
Other income/(expenses):
Interest (expense) income, net (306,367) ( 445,335)
Equity income (loss) in
unconsolidated subsidiary 4,879 52,540
Other income 88,334 88,334
Net gain on investment - 51,115
(213,154) ( 253,346)
Loss before provision for income
taxes (123,002) ( 1,284,855)
Provision for income tax - -
Net loss $ (123,002) $(1,284,855)
Net loss per share $ ( .10) $ (1.02)
Weighted average common
shares outstanding 1,255,225 1,255,225
The accompanying notes are an integral part of these consolidated financial
statements.
PAGE 4 OF 20
<PAGE>
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the nine months ended September 30, l995 and l994
(Unaudited)
1995 1994
Operating revenue:
Parimutuel commissions $21,131,400 $ 21,258,369
Concessions 2,838,901 3,004,914
Other operating 1,190,251 1,035,198
Total operating revenue 25,160,552 25,298,481
Operating expenses:
Wages, taxes and benefits 7,949,587 8,502,434
Purses 6,597,902 7,663,609
Cost of food and beverage 892,230 778,186
Administrative, general and operating 8,852,685 9,726,674
Depreciation and amortization 1,223,841 1,247,748
Total operating expenses 25,516,245 27,918,651
Income (loss) from operations ( 355,693) ( 2,620,170)
Other income/(expenses):
Interest expense (income) ( 674,062) ( 2,028,308)
Equity income (loss) in
unconsolidated subsidiary ( 60,611) 222,307
Other income 265,000 265,000
Net gain on investment - 347,458
( 469,673) ( 1,193,543)
Loss before provision for
income taxes and extraordinary item ( 825,366) ( 3,813,713)
Provision for income tax - -
Income (Loss) before extraordinary item ( 825,366) ( 3,813,713)
Extraordinary item-gain on elimination
of debt, net - 15,266,601
Net income (loss) $( 825,366) $ 11,452,888
Income (loss) per share
Loss before extraordinary item $( .66) $ ( 3.04)
Extraordinary item - 12.16
Net income (loss) per share $( .66) $ 9.12
Weighted average common
shares outstanding 1,255,225 1,255,225
The accompanying notes are an integral part of these consolidated financial
statements.
PAGE 5 OF 20
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THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1995 and l994
(Unaudited)
1995 1994
Cash Flows From Operating Activities:
Net income (loss) $( 825,366) $ 11,452,888
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities -
Depreciation and amortization 1,223,841 1,247,748
Equity in (income) loss of
unconsolidated subsidiary 60,611 ( 222,307)
Deferred revenue ( 265,000) -
Amortization of restructured note ( 118,823) -
Extraordinary gain on elimination of
debt, net (15,266,601)
Changes in operating assets and liabilities
Restricted Cash ( 73,163) ( 292,158)
Receivables ( 689,572) ( 291,280)
Prepaid expenses
and other current assets 169,019 ( 119,518)
Other assets 98,279 ( 137,949)
Accounts payable
and other accrued liabilities,
including interest and taxes 867,725 4,048,395
Other long-term liabilities ( 101,955) ( 335,716)
Total adjustments 1,170,962 (11,369,386)
Net cash provided by, (used in)
operating activities 345,596 83,502
Cash Flows From Investing Activities:
Additions to property, plant and equipment ( 350,499) ( 198,296)
Net sales of marketable securities - 96,343
Other - 100,000
Net cash used in
investing activities $( 350,499) $( 1,953)
(Continued)
The accompanying notes are an integral part of these consolidated financial
statements.
PAGE 6 OF 20
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THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1995 and l994
(Unaudited)
(Continued)
1995 1994
Cash Flows From Financing Activities:
Proceeds from long-term debt $ - $ 300,000
Principal payments of debt ( 576,742) (395,640)
Net cash used in
financing activities ( 576,742) (95,640)
Net decrease in cash
and cash equivalents ( 581,645) (14,091)
Cash and cash equivalents at
beginning of period 812,424 354,391
Cash and cash equivalents at
end of period $ 230,779 $ 340,300
Supplemental Disclosures of Cash
Flow Information:
Cash paid during the period for-
Interest: $ 542,878 $ 676,017
Income taxes $ 114,892 $ -
Non-cash investing and financing
activities: Acquisition of
Concessions operation by incurring
direct liabilities of the operation. $ - $ 770,000
The accompanying notes are an integral part of these consolidated financial
statements.
PAGE 7 OF 20
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1. Summary of Significant Accounting Policies
Interim Results
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting of normal recurring accruals and deferrals) necessary to
present fairly the Company's consolidated financial position as of
September 30, 1995, and the results of its operations for the nine
and three month periods ended September 30, 1995 and 1994 and the
statement of cash flows for the nine months ended September 30,
1995. See the Company's Annual Report on Form 10-K for a summary of
the significant accounting policies applied in the preparation of
the accompanying consolidated financial statements.
Principles of Consolidation
The accompanying consolidated financial statements as
of, and for the nine and three months ended, September 30, 1995 and
1994 include the accounts of the Company and its wholly-owned
subsidiaries. During 1994, the Company and Back Bay Restaurant
Group, Inc. ("BBRG"), jointly pursued a series of transactions, the
effect of which resulted in the control of BBRG no longer resting
with the Company; the Company had previously owned 42.9% of BBRG.
Accordingly, the Company's investment in BBRG for the nine and three
months ended September 30, 1995 and 1994 has been accounted for
under the equity method. (See Note 4 Investment in Affiliate).
Financial Statements for the Year Ended December 31, 1994
The consolidated balance sheet at December 31, 1994 is
presented for comparative purposes and was taken from the audited
consolidated financial statements for the year ended December 31,
1994. Certain prior year amounts have been reclassified to conform
with current period presentation.
Debt
Long-term obligations which are in default have been
classified as current liabilities. See Note 3 for debt defaults.
PAGE 8 OF 20
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Income (Loss) per Common Share
Income (loss) per share amounts are based on the
weighted average number of common and Class B common shares and
common share equivalents outstanding (if dilutive) during each
period. Common share equivalents consist of dilutive stock options
and warrants under the treasury stock method.
2. Results of Operations and Management's Plans
The Company's consolidated condensed financial
statements have been prepared on the basis that it will be able to
continue in existence. The Company incurred a consolidated net
loss from operations of approximately $355,693 and $2,620,170 in the
nine months ended September 30, 1995 and 1994, respectively. The
net loss from operations in 1995 includes a non cash charge for
depreciation and amortization of $1,223,841. The improvement in the
nine months ended September 30, 1995 compared to the corresponding
period in 1994 is primarily due to a decrease in operating expenses
of approximately $2.4 million. The decrease in operating expenses
is attributable to the reorganization plan discussed below.
For the period beginning in November 1992 through
February 1995, the Company engaged the professional services of a
corporate advisor (the "Advisor") to assist management in the
planning and execution of a corporate reorganization. Since their
engagement, the Advisor has undertaken the following activities in
conjunction with and on behalf of management:
- Managing the Company within its cash constraints,
including the creation of a cash flow forecasting
system;
- Developing an immediate short-term cost reduction and
cash generation program;
- Reorganizing operations and renegotiating
certain service contracts and agreements
in order to achieve operational efficiencies;
- Negotiating with existing and potential
lenders and creditors in an effort to
restructure the Company's debt and to secure
new sources of capital (See Note 4);
- Restructuring certain assets including the
identification of assets to be held for
disposition;
PAGE 9 OF 20
<PAGE>
- Assisting the Board of Directors as requested.
- Since such engagement, the Company has retired or
restructured approximately $32.5 million of debt,
eliminated non-performing non-core assets, and
significantly reduced certain operating expenses. The
Company continues to pursue ways of improving
operations, and of retiring or restructuring its
remaining indebtedness.
3. Debt
In May 1994, holders of approximately $19,300,000 of the
Company's 14.25% Subordinated Notes (the "Notes") exchanged them for
approximately 887,000 shares of BBRG common stock.
The shares were exchanged in full settlement of
principal, accumulated interest and default premiums due in respect
of such Notes. The transaction resulted in an extraordinary gain of
approximately $15,266,000 net of applicable income taxes. The net
extraordinary gain includes forgiveness of interest and indebtedness
reduced by related expenses and the write-off of remaining bond
issuance fees. The net gain applicable to the forgiveness of
indebtedness was further reduced by related expenses during the
period October 1, 1994 through December 31, 1994. The net gain
included in the results of operation for the year ended December 31,
1994 was approximately $11,159,000. Holders of approximately
$285,000 of the Notes elected not to participate in the exchange.
These Notes remain in default.
In June l993, the Company defaulted on its obligation
under a non-recourse promissory note (the "Promissory Note") which
was collateralized by a second mortgage on a building owned by the
Company. The Promissory Note, which matured in June 1993, required
a combined payment of principal and interest totalling $400,000.
The Company remains in default on such obligation.
In October 1994, the Company entered into a Loan
Restructuring Agreement with the Mortgagee of property located at
284 Newbury St. The new agreement ("Loan Restructure Agreement")
reduced the principal amount from approximately $4.5 million to $4.1
million and released outstanding interest of approximately $400,000.
In consideration of the above, the Company has assigned all of the
rents it receives from BBRG to the Mortgagee. The Loan Restructure
Agreement requires interest only payments through Maturity on
September 1, 1998. Interest charged at 5.50% thru October 1995 and
8.29% thereafter.
As part of the Loan Restructure Agreement, the Company
maintains a non-recourse guarantee in the amount of $400,000, which
PAGE 10 OF 20
<PAGE>
is collateralized by 30,000 of the Company's shares of BBRG. The
guarantee is reduced by $50,000 per year for three years beginning
March 1996. In addition, the Company has pledged 15,000 of its BBRG
shares to the Mortgagee as indemnification against past due real
estate taxes owed to the City of Boston. Such shares will be
released to the Company on a pro-rata basis as the past due real
estate taxes are satisfied. The Company is amortizing the interest
forgiven over the term of the new note. The outstanding balance
included in long term debt at September 30, 1995 is $4,500,000.
In May 1994, the Company settled certain litigation
regarding the Creditor Trust Agreement and entered into a Settlement
Agreement of approximately $2.2 million. Under the Settlement
Agreement, the balance was divided into two non-interest bearing
notes.
The first note included a principal balance of $200,000
and four equal monthly installments through September 15, 1994. The
second note included a principal balance of $2 million, and requires
minimum quarterly payments of $105,000 in 1994, $145,000 in 1995,
$150,000 in 1996 and $230,000 through maturity in September 1997.
The Company has pledged 100% of the distributions of the Foxboro
Park Capital Improvement Trust Funds as payment towards these
amounts. The outstanding balance included in long term debt at
September 30, 1995 is $1,351,000.
In December 1994, the Company entered into an amended
loan agreement restructuring a $4.5 million term loan agreement
dated November 1993. The new agreement was divided into two new
notes. The first note included a principal balance of $1.0 million
which was paid in full. The second note in the amount of $3.5
million, requires monthly payments of interest only, until June 1995
at an annual rate of 8.75% and, thereafter, monthly payments of
principal and interest of $42,298 until maturity in June 1996. The
outstanding balance included in current portion of long term debt at
September 30, 1995 is $3,450,000.
In March 1995, the Company and the bank reached an
agreement to restructure the $2,000,000 Term Note which was in
default at December 31, 1994. The agreement became effective in
April 1995. The new terms provide for the pledge of 401,000 shares
of BBRG common stock, (the "Collateral") and for the maintenance of
a loan to collateral value ratio of 75%. The new terms also provide
for interest only payments until August 31, 1995 and principal
payments of $16,000 per month, plus interest, thereafter until
maturity on June 1, 1996. The interest rate will be fixed at 10%
for the remainder of the Term Note.
In March 1995, the loan to collateral value ratio fell
below 75%. The Company has not received any notice of default from
PAGE 11 OF 20
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the bank. The Company is in compliance with all other terms of the
note and has made all required payments. The outstanding balance
included in current portion of long term debt as of September 30,
1995 is $1,963,000.
Included in the current portion of long term debt is
outstanding indebtedness under a margin agreement of approximately
$165,000 and $402,000 at September 30, 1995 and 1994, respectively.
The indebtedness is collateralized by 88,000 shares of BBRG common
stock.
In April 1995, the Company reached an agreement to
modify and extend a 5% Promissory Note in the amount of $110,000.
The terms of the new agreement require sixty (60) monthly payments
of principal and interest of $2,003. The annual interest rate is
7.5%, but is increased to 12% in the event of a default. The
outstanding balance included in long term debt at September 30, 1995
is $90,165.
In May 1995, the Company reached an agreement with a
related party to restructure a 6% Promissory Note (the "Note") in
the amount of $318,000. The new terms provide for the pledge of an
additional 60,000 shares of BBRG common stock. The new terms also
provide for principal payments, plus interest at 3/4 of 1% per
month, of $9,000 per month until April 1996 and $12,000 per month
from May 1996 until maturity in November 1996. The outstanding
balance included in long term debt at September 30, 1995 is
$282,000.
In December 1994, as part of the agreement to sell land
owned collectively by the Company and the Revere Realty Group, Inc.,
the Company was loaned $300,000 evidenced by a promissory Note and
Second Mortgage. In conjunction with the loan, a portion of the
sales price in the amount of $300,000 was contingent upon the buyer
obtaining certain permits for construction. The proceeds from this
contingent payment are to be used to extinguish the obligation on
the related loan. During August 1995, the buyer received the
applicable permits and the Company is seeking relief of this
obligation.
In May 1994, the Company entered into an agreement with
BBRG to transfer the operations under the Concessions Agreement and
the Management Agreement to the Company in return for a six year
term note in the amount of $970,000. In April 1995 the Note was
amended requiring equal quarterly payments of principal and interest
beginning April 1, 1996 of approximately $36,000 with interest at
6%. The outstanding balance included in long term debt at September
30, 1995 is $970,000.
PAGE 12 OF 20
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4. Investment in Affiliate
The following unaudited financial information summarizes
the financial position and results of operations of BBRG, as of and
for the periods ended September 24, 1995 and 1994. The Company's
investment in BBRG is accounted for under the equity method. (See
Note 1 Principles of Consolidation).
Financial Information September 24 December 25,
(In thousands) 1995 1994
Balance sheet data
Current assets $ 4,759 $ 4,486
Noncurrent assets 42,358 42,828
Current liabilities 17,927 9,665
Noncurrent liabilities 1,973 10,112
Net equity 27,212 27,537
Periods Ended September 24,
1995 1994
Earnings data
Net sales $ 67,587 $62,151
Gross profit 26,536 25,019
Net income (loss) (325) 1,070
Company's equity in net income
(loss) of BBRG $ ( 60) $ 223
The Company maintained and operated its restaurant and
concession facilities at Wonderland through BBRG, pursuant to a
concessions agreement (the "Concessions Agreement") which became
effective in 1992. The Company entered into an agreement with BBRG
to transfer the operations under the Concessions Agreement which
became effective on May 2, 1994.<PAGE>
PAGE 13 OF 20
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Three months ended September 30, 1995 compared to three months ended
September 30, 1994
Wonderland Park
The table below illustrates certain key statistics for
Wonderland Park, the Company's greyhound racing operation, for the
three months ended September 30, 1995 and l994.
1995 1994
Live performances 132 133
Simulcast days 91 91
Parimutuel handle (thousands)
Live-on track $17,181 $20,327
Live-simulcast 8,279 890
Guest-simulcast 13,150 11,970
Total $38,610 $33,187
Total attendance 174,558 219,919
Average per capita wagering $ 174 $ 147
Foxboro Park
The table below presents certain key statistics for
Foxboro Park for the three months ended September 30, 1995 and l994.
1995 1994
Total live performances 55 59
Total simulcast days 90 91
Parimutuel handle (thousands)
Live-on track $ 2,597 $ 3,412
Live-off track 7,918 6,659
Guest-simulcast 15,764 14,319
Total $26,279 $24,390
Total attendance 78,307 69,577
Average per capita wagering $ 234 $ 255
PAGE 14 OF 20
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Nine months ended September 30, 1995 compared to nine months ended
September 30, 1994
Wonderland Park
The table below illustrates certain key statistics for
Wonderland Park, the Company's greyhound racing operation, for the
nine months ended September 30, 1995 and l994.
1995 1994
Live performances 392 385
Simulcast days 272 271
Parimutuel handle (thousands)
Live-on track $ 49,970 $55,998
Live-simulcast 22,227 890
Guest-simulcast 39,262 33,242
Total $111,459 $90,130
Total attendance 507,122 582,448
Average per capita wagering $ 176 $ 153
Foxboro Park
The table below presents certain key statistics for
Foxboro Park for the nine months ended September 30, 1995 and l994.
1995 1994
Total live performances 96 128
Total simulcast days 268 267
Parimutuel handle (thousands)
Live-on track $ 5,554 $ 8,224
Live-off track 14,735 11,770
Guest-simulcast 37,209 36,043
Total $57,498 $56,037
Total attendance 194,137 164,958
Average per capita wagering $ 220 $ 268
Operating Revenue
Revenue from parimutuel commissions decreased to
approximately $7.8 million for the three months ended September 30,
1995 from $8.1 million in the comparable period in l994, a decrease
of $300,000 or 3.7%. This decrease is attributable to the decrease
in live handles at Wonderland, as a result of the reduction in
attendance. At Foxboro, the live handle decreased as a result in
the reduction of number of live performances. The total handle
results increased for the three months ended September 30, 1995
compared to the comparable period in 1994 due to an increase in the
live, off track simulcast wagering. The commission rate on live,
PAGE 15 OF 20
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off track wagering is significantly lower than the commission earned
on live and guest handle amounts.
Revenue from parimutuel commissions for the nine months
ended September 30, 1995 had a slight decrease from the same period
in 1994 of approximately $126,000 or .5%. This decrease is
attributable to the reduction in on-track wagering as evidenced by
the reduction in live handle, for this same period. Consistent with
industry trends, a significant portion of the Company's handle
results is obtained from simulcast wagering at off-track locations.
The Company's commissions from these off-track handles is
approximately 30% of the commission from on-track handles. The
Company continues to simulcast its product to various locations
throughout the country in order to expand its customer base and
maximize revenues.
Parimutuel commission revenue for the nine months ended
September 30, 1995 includes approximately $331,000 deposited each
into the Greyhound Promotional Trust Fund and the Greyhound Capital
Improvements Trust Fund. Additionally, revenue for this period
includes approximately $110,000 deposited into the Harness and
Thoroughbred Promotional Trust Funds combined and $319,000 deposited
into the Harness and Thoroughbred Capital Improvement Trust funds
combined. These funds are dedicated to reimbursement of promotional
expenses and capital improvements, respectively, incurred by
Wonderland Park and Foxboro Park.
Concessions revenue decreased to approximately
$1,126,000 for the three months ended September 30, 1995 from
$1,428,000 in the comparable period in 1994, a decrease of $286,000
or 20%. In addition, concessions revenue decreased to approximately
$2,839,000 for the nine months ended September 30, 1995 from
$3,005,000 in the comparable period in 1994, a decrease of $166,000
or 5.5%. These decreases are attributable to a reduction in the
number of live performances at Foxboro and a reduction in the
attendance at Wonderland.
Other operating revenues consist of admissions, parking,
lottery and other revenue directly related to the racing
performances. Other operating revenues increased to approximately
$1,190,000 in the nine months ending September 30, 1995 compared to
$1,035,000 for the comparable period in 1994, an increase of
$155,000 or 15%.
Operating Expenses
Operating expenses of $9,163,000 for the three months
ended June 30, 1995 decreased from the comparable period in l994 of
$10,893,000, a reduction of $1,730,000 or 15.9%. This decrease is
attributable to a reduction in the number of performances at Foxboro
as well as additional efforts to reduce costs. Purse expenses
decreased by approximately $651,000.
The Company paid approximately $1 million in additional
purses at Foxboro Harness in 1994. This was done in conjunction
with a promotional effort to improve the level of racing and market
the live racing product to tracks throughout the country. The
result of this effort was to increase off-track handles at Foxboro
Park in 1995 by $2.9 million. In 1995 the Company is paying the
purses at statutory requirements. In addition, the Company has
taken additional cost savings measures and reduced payroll by
$290,000 and other operating expenses by $155,000.
PAGE 16 OF 20
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Interest Expense
Interest expense decreased to approximately $307,000 in
the three months ended September 30, 1995, from $445,000 in the
three months ended September 30, 1994. Interest expense for the
nine months ended September 30, 1995 decreased to approximately
$675,000 from $2,028,000 for the respective period in 1994. The
decrease is primarily due to the elimination of interest associated
with the majority of the Company's 14.25% Subordinated Notes and
restructuring of other long term obligations. (See Liquidity and
Capital Resources-General).
Depreciation and Amortization
Depreciation and amortization decreased slightly to
approximately $414,000 in the three months ended September 30, 1995,
from $422,000 in the comparable period in l994. Depreciation and
amortization are expensed on a straight line basis over the
estimated life of the asset.
Other Income
Other income of approximately $265,000 is attributable
to the amortization of deferred revenue related to advances made to
the Company by a vendor in consideration of the exclusive right to
supply specified equipment to Wonderland and Foxboro.
Liquidity and Capital Resources
Historically, the Company's primary sources of capital
to finance its businesses have been its cash flow from operations
and credit facilities. The Company's capital needs are primarily
for the maintenance and enhancement of the racing facilities at
Wonderland Park and Foxboro Park, and for debt service requirements,
including those relating to debt incurred in connection with capital
expenditures at Foxboro Park during l992.
General
In May 1994 holders of approximately 98.6%, or
$19,300,000, of the Company's 14.25% Subordinated Notes (the
"Notes") delivered them to the Company in consideration for
approximately 887,000 shares of BBRG common stock. The shares were
exchanged in full settlement of principal, accumulated interest and
default premiums due in respect of such Notes. Holders of
approximately $285,000 of the Notes elected not to participate in
the exchange and these notes remain in default.
The Company has outstanding a bank line of credit in the
amount of $2,000,000 (the "Term Note"). The Term Note was
collateralized by a pledge of approximately 336,000 of the Company's
shares of BBRG common stock (the "Collateral").
In March 1995, the Company and the bank reached an
agreement to restructure the Term Note. The agreement became
effective in April 1995. The new terms provide for the pledge of an
additional 65,000 shares of BBRG common stock and for the
maintenance of a loan to collateral value ratio of 75%. The new
terms also provide for interest only payments until August 31, 1995
and principal payments of $16,000 per month, plus interest,
thereafter until maturity on June 1, 1996. The interest rate will
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be fixed at 10% for the remainder of the Term Note.
In March 1995, the loan to collateral value ratio fell
below 75%. The Company has not, however, made any reductions to the
principal balance of the Term Note, nor has received any notice of
default from the bank.
In June l993, 284 Newbury defaulted on its obligation
under a non-recourse promissory note (the "Promissory Note") which
was collateralized by a second mortgage on the building owned by 284
Newbury. The Promissory Note, which matured in June, required a
combined payment of principal and interest totalling $400,000. 284
Newbury remains in default on such obligation.
In November 1992 the Company engaged the professional
services of a related party to assist management in the planning and
execution of a financial and operational reorganization of the
Company. The reorganization was substantially complete at December
31, 1994. During such engagement, the Company retired or
restructured approximately $32.5 million of debt, eliminated non-
performing non-core assets, and significantly reduced certain
operating expenses. The Company continues to pursue ways of
improving operations, and of retiring or restructuring its
remaining indebtedness
Racing Operations
In May 1994, Foxboro settled certain litigation
regarding the Foxboro Creditor Trust Agreement and entered into a
Settlement of Litigation Agreement with the Trustee (the "Settlement
Agreement"). The outstanding note (the" Note") requires the payment
of 100% of the distributions from Foxboro's Harness Horse and
Running Horse Capital Improvements Trust Funds ("Trust Funds"). To
the extent that quarterly payments in respect of the calendar years
1994, 1995, 1996 and the period January 1, 1997 through August 31,
1997 aggregate less than $105,000, $145,000, $150,000 and $230,000,
respectively, Foxboro shall be required to make up
the shortfall.
For the quarter ended December 31, 1994, the shortfall
was approximately $26,500, which payment was made by Foxboro in
March 1995. For the quarter ended September 30, 1995, the shortfall
was approximately $130,000, which payment will be made by Foxboro
before December 31, 1995, as required by the Settlement Agreement.
For the quarter ended December 31, 1995, the shortfall is expected
to be approximately $145,000, which will be paid from the Capital
Improvements Trust Fund by March of 1996.
In order to meet the requirements for renewal of racing
licenses in 1996, the Company's racing subsidiaries must demonstrate
that they are financially stable entities, capable of disposing of
their obligations on a timely basis. Although management is
optimistic that it will be able to demonstrate financial stability
in their applications for 1996 racing licenses, there can be no
assurance that the Racing Commission will continue to grant licenses
to conduct racing on the schedules presently maintained at
Wonderland and Foxboro Park.
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PART II - OTHER INFORMATION
Item l. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
Proxy Statement and Notice of Annual Meeting of
Stockholders, filed on September 18, 1995.
Incorporated by reference.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.80 Modification and Extension of Note between
the Company and Charles Sarkis
collectively, and Garden Square Shoppes,
Ltd., dated April 10, 1995.
10.81 Secured Promissory Note and related Pledge
Agreement between the Company and The
McCarthy Family Trust - 1989, dated
January 18, 1995.
10.82 Secured Promissory Note and related Pledge
Agreement between the Company and
Corporate Rebuilding Managers, L.P., dated
January 18, 1995.
27.00 Financial data schedules.
(b) Reports on Form 8-K.
None.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of
l934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
THE WESTWOOD GROUP, INC.
Date November 14, 1995 /s/ Richard P. Dalton
Richard P. Dalton
President
Date November 14, 1995 /s/ Richard G. Egan, Jr.
Richard G. Egan, Jr.
Chief Financial Officer,
Treasurer
Date November 14, 1995 /s/ Anthony V. Boschetto
Anthony V. Boschetto
Controller
PAGE 20 OF 20
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