UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 (I.R.S. Employer
incorporation 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)
Indicate by check mark whether the registrant (l) 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
As of August 14, 1996 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, were
outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
June 30, December 31,
1996 1995
(Unaudited)
Current assets:
Cash $ 676,796 $ 450,987
Restricted cash 924,600 1,401,799
Accounts receivable 1,005,431 796,085
Prepaid expenses and other
current assets 349,262 270,685
Total current assets 2,956,089 2,919,556
Land 348,066 348,066
Buildings 19,481,284 19,397,281
Machinery and equipment 4,994,627 4,936,976
Leasehold improvements 10,774,702 10,694,678
35,598,679 35,377,001
Less: accumulated depreciation
and amortization (19,395,464) (18,765,247)
Net property, plant
and equipment 16,203,215 16,611,754
Other assets:
Goodwill, less accumulated
amortization of $ 312,000
and $240,000 408,000 480,000
Investment in
unconsolidated subsidiary 4,874,501 4,901,401
Accounts receivable
from officers, employees
and related party 327,097 318,005
Other assets, less accumulated
amortization of $916,682 and
$818,614 274,421 376,909
Total other assets 5,884,019 6,076,315
Total assets $25,043,323 $25,607,625
The accompanying notes are an integral part of these
consolidated condensed financial statements.
<PAGE>
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' DEFICIT
June 30, December 31,
1996 1995
(Unaudited)
Current liabilities:
Current portion of
long-term debt $ 5,985,824 $ 5,853,754
Long-term obligations
in default 1,537,472 1,751,235
Subordinated notes payable 285,000 285,000
Accounts payable and
other accrued expenses 15,121,659 14,944,406
Outstanding pari-mutuel
tickets 708,749 564,880
Total current liabilities 23,638,704 23,399,275
Long-term debt,
less current maturities 5,310,771 5,773,651
Other long-term liabilities 1,090,452 1,347,425
Total liabilities 30,039,927 30,520,351
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 (10,085,771) (10,009,155)
Note receivable from
related party ( 323,335) ( 316,073)
Minimum pension
liability adjustment ( 6,561) ( 6,561)
Less cost of 1,593,199
common and 600
class B common
shares in treasury ( 7,964,782) ( 7,964,782)
Total stockholders' deficit ( 4,996,604) ( 4,912,726)
Total liabilities, minority
interest and stockholders'
deficit $ 25,043,323 $25,607,625
The accompanying notes are an integral part of these
consolidated condensed financial statements.
<PAGE>
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
For the three months ended June 30, l996 and l995
(Unaudited)
1996 1995
Operating revenue:
Parimutuel commissions $ 7,485,054 $ 7,237,135
Concessions 848,436 879,711
Other operating 700,291 633,634
Total operating revenue 9,033,781 8,750,480
Operating expenses:
Wages, taxes and benefits 2,559,368 2,737,909
Purses 2,351,929 2,524,627
Cost of food and beverage 326,720 305,165
Administrative 683,592 769,424
General operating 2,233,585 2,534,165
Depreciation and amortization 405,340 401,124
Total operating expenses 8,560,534 9,272,414
Income (loss)
from operations 473,247 ( 521,934)
Other income/(expenses):
Interest expense ( 238,205) ( 130,451)
Equity income (loss) in
unconsolidated subsidiary 36,600 ( 30,525)
Other income 88,333 88,330
( 113,272) ( 72,646)
Income loss before
provision for income taxes 359,975 ( 594,580)
Provision for income tax - ( 30,000)
Net income (loss) $ 359,975 $( 564,580)
Net income (loss) per share $ .29 $( .45)
Weighted average common
shares outstanding 1,255,225 1,255,225
The accompanying notes are an integral part of these
consolidated condensed financial statements.
<PAGE>
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
For the six months ended June 30, l996 and l995
(Unaudited)
1996 1995
Operating revenue:
Parimutuel commissions $ 13,298,121 $13,308,147
Concessions 1,390,267 1,435,035
Other operating 1,202,856 1,163,912
Total operating revenue 15,891,244 15,907,094
Operating expenses:
Wages, taxes and benefits 4,918,604 5,057,510
Purses 4,043,036 4,014,982
Cost of food and beverage 508,244 489,475
Administrative 1,219,830 1,392,977
General operating 4,186,120 4,588,014
Depreciation and amortization 804,935 809,981
Total operating expenses 15,680,769 16,352,939
Income (loss) from
operations 210,475 ( 445,845)
Other income/(expenses):
Interest expense ( 436,857) ( 367,695)
Equity income (loss) in
unconsolidated subsidiary ( 26,900) ( 65,490)
Other income 176,666 176,664
( 287,091) ( 256,521)
Loss before provision
for income taxes ( 76,616) ( 702,366)
Provision for income tax - -
Net loss $( 76,616) $( 702,366)
Net loss per share $( .06) $( .56)
Weighted average common
shares outstanding 1,255,225 1,255,225
The accompanying notes are an integral part of these
consolidated condensed financial statements.
<PAGE>
THE WESTWOOD GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT)
for the years ended December 31, 1996, 1995 and 1994
Class B Additional
Common Common Paid-In Accumulated
Stock Stock Capital (Deficit)
Balance, December 31,
1994 $19,364 $9,126 $13,355,355 $(7,954,721)
Net loss - - - (2,054,434)
Interest - - - -
Minimum pension
liability adj. - - - -
Balance, December 31,
1995 19,364 9,126 13,355,355 (10,009,155)
Net loss - - - ( 76,616)
Interest - - - -
Balance, December 31,
1996 $19,364 $9,126 $13,355,355 $(10,085,771)
<PAGE>
THE WESTWOOD GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT)
for the years ended December 31, 1996, 1995 and 1994
(continued)
Minimum
Note Receivable Pension Total
From Related Liability Treasury Stockholders'
Party Adj. Stock Equity(Deficit)
Balance, December 31,
1994 $(301,551) $( 115,182) $(7,964,782) $ ( 2,952,391)
Net loss - - - ( 2,054,434)
Interest
( 14,522) - - ( 14,522)
Minimum pension
liability adj. 108,621 - 108,621
Balance, December 31,
1995 (316,073) ( 6,561) (7,964,782) ( 4,912,726)
Net loss - - - ( 76,616)
Interest
( 7,262) - - ( 7,262)
Balance, December 31,
1996 $(323,335) $( 6,561) $(7,964,782) $( 4,996,604)
<PAGE>
THE WESTWOOD GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1996 and l995
(Unaudited)
1996 1995
Cash Flows From Operating Activities:
Net loss $( 76,616)$ ( 702,366)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities -
Depreciation and amortization 804,935 809,981
Equity in loss of
unconsolidated subsidiary 26,900 65,490
Deferred revenue ( 176,666) ( 176,668)
Amortization of note ( 79,217) ( 79,215)
Changes in operating assets
and liabilities -
Restricted Cash 477,199 28,509
Receivables ( 209,346) ( 240,939)
Prepaid expenses
and other current assets ( 94,931) ( 136,077)
Other assets ( 230) ( 581)
Accounts payable
and other accrued
liabilities, including
interest and taxes 321,123 1,271,248
Other long-term liabilities ( 80,307) ( 1,024,885)
Total adjustments 989,460 516,863
Net cash provided by
(used in)
operating activities 912,844 ( 185,503)
Cash Flows From Investing Activities:
Additions to property,
plant and equipment ( 221,678) ( 253,700)
Net cash used in investing
activities $( 221,678) $( 253,700)
Cash Flows From Financing Activities:
Proceeds from long-term debt $ 300,000 $ -
Principal payments of debt ( 765,357) ( 210,432)
Net cash (used in)
financing activities ( 465,357) ( 210,432)
Net increase, (decrease) in cash 225,809 ( 649,635)
Cash at beginning of period 450,987 812,424
Cash at end of period $ 676,796 $ 162,789
Supplemental Disclosures of Cash
Flow Information:
Cash paid during the period for-
Interest: $ 481,462 $ 321,128
Income taxes $ 18,208 $ -
The accompanying notes are an integral part of these consolidated
condensed financial statements.
<PAGE>
THE WESTWOOD GROUP INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
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 June 30, 1996, and the results of its
operations for the three months and six months ended June
30, 1996 and 1995 and the statement of cash flows for the Six
months ended June 30, 1996 and 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 three and six months ended, June 30, 1996 and
1995 include the accounts of the Company and its wholly-owned
subsidiaries.
Financial Statements for the Year Ended December 31, 1995
The consolidated balance sheet at December 31, 1995 is
presented for comparative purposes and was taken from the audited
consolidated financial statements for the year ended December 31,
1995. 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.
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 of approximately $76,616 and $702,366 in the six months
ended June 30, 1996 and 1995, respectively. The net loss from
operations in 1996 includes a non cash charge for depreciation
and amortization of $805,000.
<PAGE>
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 3);
- Restructuring certain assets including the
identification of assets to be held for
disposition;
- 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.
<PAGE>
3. Debt
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 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 June
30, 1996 is $4,439,844.
<PAGE>
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,
which was paid in full. 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 Company has
not made the minimum quarterly payments in 1996 and is currently
in default of this obligation. All distributions of the Foxboro
Park Capital Improvements Trust Fund have been paid towards this
obligation and the Company is currently renegotiating this
agreement. The outstanding balance included in the current
portion of long term debt at June 30, 1996 is $1,137,472.
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 Company has received an extension of terms
through August 31, 1996 and is currently in the process of
renewing the loan agreement. The outstanding balance included in
current portion of long term debt at June 30, 1996 is $3,272,233.
In March 1995, the Company and the bank reached an
agreement to restructure a $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% and the Company has provided additional collateral
through a second mortgage on certain real property. The Company
is in compliance with all other terms of the note and has made
all required payments. The Company has received an extension of
terms through August 31, 1996 and is currently renegotiating a
renewal of the loan agreement. The outstanding balance included
in current portion of long term debt as of June 30, 1996 is
$1,840,000.
<PAGE>
Included in the current portion of long term debt is
outstanding indebtedness under a margin agreement of
approximately $110,686 at June 30, 1996. 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
June 30, 1996 is $76,651.
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 current portion of long term debt
at June 30, 1996 is $192,000.
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%. On June 4, 1996, the Note was amended extending
payment terms requiring the quarterly payments to begin on April
1, 1998. The outstanding balance included in long term debt at
June 30, 1996 is $970,000.
In January 1996, the Company entered into a short term
borrowing arrangement in the form of a Note Payable in the amount
of $300,000. The note requires 16 weekly payments commencing
January 21, 1996 of $19,119.91 including principal and interest
at 12%. The balance was paid in full during 1996.
<PAGE>
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 1996 and 1995. The
Company's investment in BBRG is accounted for under the equity
method.
Financial Information June 30, December 31,
(In thousands) 1996 1995
Balance sheet data
Current assets $ 3,129 $ 5,236
Noncurrent assets 40,728 40,864
Current liabilities 11,790 13,363
Noncurrent liabilities 7,487 8,010
Net equity 24,580 24,727
26 weeks ended
June 30, June 25,
1996 1995
Earnings data
Net sales $ 42,648 $ 45,013
Gross profit 4,743 4,565
Net income (loss) ( 151) ( 354)
Company's equity in net income
(loss) of BBRG $( 27) $( 65)
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>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Three months ended June 30, 1996 compared to three months ended
June 30, 1995
Wonderland Park
The table below illustrates certain key statistics for
Wonderland Park, the Company's greyhound racing operation, for
the three months ended June 30, 1996 and l995.
1996 1995
Live performances 117 133
Simulcast days 91 91
Parimutuel handle (thousands)
Live-on track $12,664 $17,456
Live-simulcast 5,405 7,979
Guest-simulcast 13,684 12,860
Total $31,753 $38,295
Total attendance 144,579 177,043
Average per capita wagering $ 182 $ 171
Foxboro Park
The table below presents certain key statistics for
Foxboro Park for the three months ended June 30, 1996 and l995.
1996 1995
Total live performances 61 41
Total simulcast days 89 88
Parimutuel handle (thousands)
Live-on track $ 2,776 $ 2,857
Live-off track 12,843 6,517
Guest-simulcast 12,182 10,377
Total $27,801 $19,751
Total attendance 75,087 72,977
Average per capita wagering $ 199 $ 182
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Six months ended June 30, 1996 compared to six months ended June
30, 1995
Wonderland Park
The table below illustrates certain key statistics for
Wonderland Park, the Company's greyhound racing operation, for
the six months ended June 30, 1996 and l995.
1996 1995
Live performances 225 260
Simulcast days 181 181
Parimutuel handle (thousands)
Live-on track $23,356 $32,789
Live-simulcast 9,317 13,948
Guest-simulcast 27,113 26,112
Total $59,786 $72,849
Total attendance 268,498 332,564
Average per capita wagering $ 188 $ 177
Foxboro Park
The table below presents certain key statistics for
Foxboro Park for the six months ended June 30, 1996 and l995.
1996 1995
Total live performances 61 41
Total simulcast days 180 178
Parimutuel handle (thousands)
Live-on track $ 2,776 $ 2,857
Live-off track 12,843 6,517
Guest-simulcast 23,295 20,758
Total $38,914 $30,132
Total attendance 120,684 115,830
Average per capita wagering $ 216 $ 204
<PAGE>
Operating Revenue
Revenue from parimutuel commissions increased to $7.49
million for the three months ended June 30, 1996 compared to
$7.24 million from the three months ended June 30, 1995. This
increase is attributable to the increase in Live-Simulcast Handle
at Foxboro Park of over $6 million, from the comparable three
months in 1995. Foxboro Park continues a strong marketing
effort to sell its signal to premier Thoroughbred and Harness
facilities throughout the country, which has resulted in an
increase in revenues. In addition, Foxboro Park has stabilized
its On-Track Handle by continuing to provide premier simulcast
racing to its patrons. As such, Foxboro Park has been able to
increase its Parimutuel commissions for the three months ended
June 30, 1996 to $3 million from $2.6 million in the comparable
period in 1995. In addition, Wonderland Park has been able to
stabilize the effect of its decreased Handle by adjusting to a
more favorable take out structure. As such, Parimutuel
commissions at Wonderland Park has decreased slightly for
the three months ended June 30, 1996 to $4.45 million compared
$4.6 million for the three months ended June 30, 1995.
This increase in parimutuel commissions for the three months
ended June 30, 1996 compared to June 30, 1996 has offset the slow
start in the first quarter of 1996. As such, parimutuel
commissions has remained consistent for the six months ended June
30, 1996 compared to the six months ended June 30, 1995 at $13.3
million.
Parimutuel commission for the six months ended June 30,
1996 included approximately $178,700 deposited each into the
Greyhound Promotional Trust Fund and the Greyhound Capital
Improvements Trust Fund. Additionally, revenue for this period
includes approximately $61,652 deposited into the Harness and
Thoroughbred Promotional Trust Funds combined and $181,039
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 remained consistent for the six months
ended June 30, 1996 from 1995 at approximately $1.4 million.
This level of consistent revenues is encouraging given the
inclement weather and reduction in attendance. These results
were attributable to better product offerings and an increased
effort by management to improve customer service and
satisfaction.
Other operating revenues consist of admissions, parking,
lottery and other revenue directly related to the racing
performances. Other operating revenues increased by
approximately $40,000 for the six months ended June 30, 1996
compared to 1995.
<PAGE>
Operating Expenses
Operating expenses of $8.5 Million for the three months
ended June 30, 1996 decreased by approximately $700,000 from
$9.2 Million for the three months ended June 30, 1995. This
decrease is attributable to a decrease in purse expense of
$173,000 as a result of a decrease in handle results at
Wonderland resulting in a decrease in statutory purse expense.
In addition, the Company was able to obtain a reduction of;
Wages, Administrative and General and Operating expenses of
approximately $560,000. This reduction was a direct result of
managements efforts toward cost containment. These savings led
to a decrease in operating expenses to $15.7 Million for the six
months ended June 30, 1996 from $16.3 Million in 1995.
Interest Expense
Interest expense increased to approximately $230,000
in the three months ended June 30, 1996, from $130,000 in the
three months ended June 30, 1995. During 1995, the Company
eliminated a significant portion of interest relating to the
restructuring of long term obligations resulting in immediate
savings during the restructure period. (See Liquidity and Capital
Resources - General). Consequently in 1996, the Company has begun
servicing these obligations and has resumed interest
accumulation. In addition, certain obligations have periodic
increases in interest rates which have resulted in increased
interest expense. This has resulted in an increase in interest
expense for the six months ended June 30, 1996 to approximately
$437,000 from $367,000 in 1995.
Depreciation and Amortization
Depreciation and amortization has remained consistent
between years and any fluctuation is attributable to the purchase
of fixed asset additions. The Company continues to replace
capital items as they become obsolete. Depreciation and
amortization are expensed on a straight line basis over the
estimated life of the asset.
Other Income
Other income of approximately $88,333 for the three months
ended June 30, 1996 and $176,666 for the six months ended June
30, 1996 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.
<PAGE>
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 $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% and the Company has provided additional collateral through a
second mortgage on certain real property. The Company is in
compliance with all other terms of the note and has made all
required payments. The Company has received an extension of
terms through August 31, 1996 and is currently renegotiating a
renewal of the loan agreement.
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 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. The Company had a shortfall
for the quarter ended, December 31, 1995. The Company has only
remitted payments in the amount of the distributions of the
Capital Improvements Trust Fund and is currently negotiating to
restructure the minimum payment requirements.
<PAGE>
Racing Operations
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.
<PAGE>
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
None
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.00 Financial data schedules.
(b) Reports on Form 8-K.
None.
<PAGE> 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 August 14, 1996 /s/ Richard P. Dalton
Richard P. Dalton
President
Date August 14, 1996 /s/ Richard G. Egan, Jr.
Richard G. Egan, Jr.
Chief Financial Officer,
Treasurer
Date August 14, 1996 /s/ Anthony V. Boschetto
Anthony V. Boschetto
Controller
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<PERIOD-END> JUN-30-1996
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