<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
XXX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
- --- OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997.
___ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO__________.
Commission File Number 0-24554
Canterbury Park Holding Corporation
-----------------------------------------------------------
(Exact name of business issuer as specified in its charter)
Minnesota 41-1775532
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1100 Canterbury Road, Shakopee, Minnesota 55379
----------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(612) 445-7223
--------------------------------
(Issuer's Telephone Number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such report), and (2) has been
subject to such filing requirements for the past 90 days. YES X NO ___
The Company had 2,983,882 shares of common stock, $.01 par value per share,
outstanding as of November 4, 1997.
<PAGE>
Canterbury Park Holding Corporation
INDEX
Page
-----
PART 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Unaudited Consolidated Balance Sheets as of
September 30, 1997 and December 31, 1996 . . . . . 3
Unaudited Consolidated Statements of Operations
for the periods ended September 30, 1997
and 1996 . . . . . . . . . . . . . . . . . . . . . 4
Unaudited Consolidated Statements of Cash
Flows for the periods ended September 30,
1997 and 1996. . . . . . . . . . . . . . . . . . . 5
Notes to Unaudited Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS . . . . . . . 7
PART II. OTHER INFORMATION. . . . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . 13
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CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996 (UNAUDITED)
===============================================================================
SEPTEMBER 30, DECEMBER 31,
1997 1996
ASSETS
CURRENT ASSETS
Cash $ 177,130 $ 296,671
Accounts receivable, net of allowance
for uncollectible accounts 387,063 186,834
Inventory 78,121 72,731
Deposits 20,000 20,000
Prepaid expenses 95,167 81,367
-------------- -------------
Total current assets 757,481 657,603
PROPERTY AND EQUIPMENT, net of accumulated
depreciation of $2,594,429 and
$1,981,468, respectively 9,248,754 8,631,754
INTANGIBLE ASSETS, net of accumulated
amortization of $13,327 and $9,925,
respectively 11,041 12,775
-------------- -------------
$ 10,017,276 $ 9,302,132
-------------- -------------
-------------- -------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 985,885 $ 623,930
Accrued wages and payroll taxes 181,308 161,272
Accrued interest 93,619 149,387
Advance from shareholder (Note 2) 1,835,093 1,609,754
Accrued property taxes 466,288 370,916
Payable to horsepersons 668,855 560,555
-------------- -------------
Total current liabilities 4,231,048 3,475,814
COMMITMENTS AND CONTINGENCIES (Note 3)
SHAREHOLDERS' EQUITY
Common stock, $.01 par value, 10,000,000
shares authorized, 2,979,382 and
2,961,382, respectively, shares
issued and outstanding 29,794 29,614
Additional paid-in capital 8,000,827 7,879,551
Unearned Compensation (44,087)
Accumulated deficit (2,200,306) (2,082,847)
-------------- -------------
Total shareholders' equity 5,786,228 5,826,318
-------------- -------------
$ 10,017,276 $ 9,302,132
-------------- -------------
-------------- -------------
See notes to consolidated financial statements.
3
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CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
PERIODS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
===============================================================================
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
OPERATING REVENUES:
Pari-mutuel $ 4,272,658 $ 4,162,694 $ 11,267,142 $ 10,875,363
Concessions 951,398 784,873 2,116,747 1,887,049
Admissions and parking 205,809 228,581 502,836 529,024
Programs and racing forms 246,656 275,702 639,151 692,315
Other operating revenue 105,130 117,355 282,323 272,449
------------- ------------- -------------- -------------
5,781,651 5,569,205 14,808,199 14,256,200
OPERATING EXPENSES:
Pari-mutuel expenses
Statutory purses 1,665,296 1,647,661 3,257,901 3,064,650
Host track fees 443,147 426,583 1,428,055 1,375,368
Pari-mutuel taxes 15,679 19,735 36,665 414,031
Minnesota breeders' fund 204,717 202,148 558,848 545,315
Salaries and benefits 1,390,702 1,363,753 3,579,708 3,337,689
Cost of concession sales 276,554 235,192 621,153 554,175
Cost of publication sales 277,888 301,283 719,144 772,122
Depreciation and amortization 216,820 202,515 640,086 597,959
Utilities 220,792 194,085 536,795 517,044
Repairs, maintenance and supplies 92,123 113,434 357,570 339,234
Property taxes 93,860 95,985 284,001 287,955
Advertising and marketing 271,138 260,475 825,042 910,619
Other operating expenses 828,550 649,561 1,970,889 1,652,754
------------- ------------- -------------- -------------
5,997,266 5,712,410 14,815,857 14,368,915
NONOPERATING (EXPENSES)
REVENUES:
Interest expense (39,980) (57,827) (110,536) (172,984)
Other, net 182 111 735 6,085
------------- ------------- -------------- -------------
(39,798) (57,716) (109,801) (166,899)
------------- ------------- -------------- -------------
LOSS BEFORE INCOME TAX (255,413) (200,921) (117,459) (279,614)
INCOME TAX
------------- ------------- -------------- -------------
NET LOSS $ (255,413) $ (200,921) $ (117,459) $ (279,614)
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
NET LOSS PER COMMON &
COMMON EQUIVALENT SHARE $ (.09) $ (.07) $ (.04) $ (.09)
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
WEIGHTED AVERAGE NUMBER OF COMMON & COMMON
EQUIVALENT SHARES OUTSTANDING 2,974,632 2,954,045 2,969,686 2,945,626
------------- ------------- -------------- -------------
------------- ------------- -------------- -------------
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
PERIODS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
==============================================================================
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (117,459) $ (279,614)
Adjustments to reconcile net loss to net
cash provided by operations:
Depreciation and amortization 640,086 597,959
Amortization of unearned compensation 44,088
Loss on sale of property and equipment 10,917
Increase in accounts receivable (200,229) (29,446)
(Increase) decrease in other current
assets (19,190) 54,538
Increase in accounts payable and
accrued expenses 381,991 24,216
(Decrease) increase in accrued interest (55,768) 62,747
Increase in accrued property taxes 95,372 95,439
Increase (decrease) in payable to
horsepersons 108,300 (70,946)
-------------- -----------
Net cash provided by operations 888,108 454,893
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (369,474) (323,979)
Additions to land (934,927)
Additions to intangible assets (1,668)
Proceeds from sale of property
and equipment 39,800 67,500
-------------- -----------
Net cash used in investing activities (1,266,269) (256,479)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from (payments on) advance from
shareholder, net 225,339 (476,728)
Proceeds on exercise of options 33,281 28,613
-------------- -----------
Net cash provided by (used in)
financing activities 258,620 (448,115)
NET DECREASE IN CASH (119,541) (249,701)
CASH AT BEGINNING OF PERIOD 296,671 388,571
-------------- -----------
CASH AT END OF PERIOD $ 177,130 $ 138,870
-------------- -----------
-------------- -----------
See notes to consolidated financial statements.
5
<PAGE>
CANTERBURY PARK HOLDING CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PERIODS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
===============================================================================
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The summary of significant accounting policies is included in the notes to
consolidated financial statements in the 1996 Annual Report on form 10-KSB.
EARNINGS PER SHARE - In February 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 128 (SFAS 128)
"Earnings Per Share," which is effective for periods ending after December
15, 1997. SFAS 128 revises the standards for computing and presenting
earnings per share (EPS). The Company will continue to apply APB Opinion
No. 15 to compute the EPS through the effective date. EPS for the three
and nine months ended September 30, 1997 computed under SFAS 128 would not
have been materially different.
UNAUDITED FINANCIAL STATEMENTS - The consolidated balance sheet as of
September 30, 1997, the consolidated statements of operations for the
three and nine months ended September 30, 1997 and 1996, the consolidated
statements of cash flows for the nine months ended September 30, 1997 and
1996, and the related information contained in these notes have been
prepared by management without audit. In the opinion of management, all
accruals (consisting of normal recurring accruals) which are necessary for
a fair presentation of financial position and results of operations for
such periods have been made. Results for an interim period should not be
considered as indicative of results for a full year.
2. RELATED-PARTY TRANSACTIONS
At September 30, 1997, the Company had a $3,000,000 line of credit
arrangement with the Company's largest shareholder, of which $1,835,093 was
outstanding. The interest rate for borrowings under the line of credit was
the prime rate at September 30, 1997. Management believes that funds
available under this line of credit, or any other line of credit which
replaces it, along with funds generated from simulcast operations, will be
sufficient to satisfy its liquidity and capital resource requirements
during 1997. If the line of credit is not replaced, the Company's largest
shareholder has agreed not to terminate this line of credit prior to March
31, 1998.
3. CONTINGENCIES
In accordance with an Earn Out Note, given to the prior owner of the
racetrack as part of the consideration paid by the Company to acquire the
racetrack, if (i) off-track betting becomes legally permissible in the
State of Minnesota and (ii) the Company begins to conduct off-track betting
with respect to or in connection with its operations, the Company will be
required to pay to the IMR Fund, L.P. the greater of $700,000 per operating
year, as defined, or 20% of the net pretax profit, as defined, for each of
five operating years. At the date (if any) that these two conditions are
met, the five minimum payments will be discounted back to their present
value and the sum of those discounted payments will be recorded as an
increase to the purchase price. The purchase price will be further
increased if payments become due under the 20% of Net Pre-Tax Profit
calculation. The first payment is to be made 90 days after the end of the
third operating year in which off-track betting is conducted by the
Company. Remaining payments would be made within 90 days of the end of
each of the next four operating years.
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS
GENERAL
Canterbury Park Holding Corporation (the "Company") owns and operates
Canterbury Park, the only pari-mutuel horse racing facility in the State of
Minnesota (the "Racetrack"). The Company's revenues for the period from January
1, 1997 to September 30, 1997 were derived primarily from pari-mutuel take-out
on races simulcast to Canterbury Park from racetracks throughout the country
during 267 days of simulcast racing and from 56 days of live racing conducted at
Canterbury Park. In 1997 the Company intends to conduct over 350 simulcast
racing days. The Company conducted 53 days of live racing featuring
thoroughbred and quarter horse racing at Canterbury Park during its live racing
meet from May 17, 1997 to August 17, 1997. In addition, the Company conducted
three days of live harness racing over the 1997 Labor Day weekend. During live
race meets, the Company earns pari-mutuel take-out on live races at the
Racetrack and earns additional pari-mutuel revenue from broadcasting its live
races to out-of-state racetracks around the country.
In addition to pari-mutuel revenues, the Company generates revenues from
admissions, advertising, parking, publication sales, concessions, special events
and other sources of revenue.
RESULTS OF OPERATIONS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30,
1997 AND 1996:
Operating revenues increased approximately 3.9% during the nine months
ended September 30, 1997, compared to the nine months ended September 30, 1996.
The increase is due primarily to higher pari-mutuel revenues, but also to higher
concession sales and higher space rental revenues.
Pari-mutuel revenue is higher due primarily to higher on-track and
import handle during the first nine months and the third quarter of 1997
compared to the same periods in 1996. As illustrated in the table on the
following page, total handle for the nine months ended September 30, 1997
increased approximately 6% to $65.8 million from $62.3 million for the nine
months ended September 30, 1996. The 1.5% increase in on-track handle is due
primarily to an increase in both live and simulcast days in 1997. The 28%
increase in out-of-state handle for the 1997 period is due to continued
efforts to "sell" live races to out-of-state locations. While the gains in
out-of-state handle represent a positive trend, the Company's profit margin
on wagers placed on Canterbury Park live races at out-of-state locations is
substantially less than the margin on wagers placed at Canterbury Park.
Concession revenues increased approximately 21% and 12% for the three and
nine month periods ended September 30, 1997, respectively, compared to the same
periods in 1996. The increase is due primarily to special events in the months
of August and September of 1997 and to three additional live racing days in the
third quarter of 1997. On August 20, 1997, Canterbury Park hosted Lilith Fair,
a concert drawing over 30,000 people to the Racetrack. Concession revenues for
Lilith Fair exceeded $130,000.
7
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As illustrated in the table below, on-track simulcast wagering on days
when live and simulcast racing are conducted increased to $12.5 million from
$10.4 million during the 1996 live race meet. At the same time, on-track live
racing handle decreased from $12.3 million for the nine months ended September
30, 1996 to $11.3 million for the nine months ended September 30, 1997. This
decrease resulted despite five additional live racing days in 1997. On-track
per capita simulcast wagering on live racing days was $66 per patron in 1997
compared to $54 per patron in 1996. On-track per capita wagering on live racing
during the 1997 live meet was $59 compared to $64 during the 1996 live meet.
The shift from live racing handle to simulcast racing handle on days when both
types of racing are conducted is due to smaller fields of horses during the 1997
live meet and consequently a lower quality of racing than existed during the
live meet of 1996. Canterbury Park met with stiff competition for quality
horses from the Prairie Meadows racetrack in Iowa which was able to offer
substantially larger purses than the Company during 1997.
SUMMARY OF OPERATING DATA:
NINE MONTHS NINE MONTHS
ENDED ENDED
SEPT. 30, 1997 SEPT. 30, 1996
RACING DAYS
Simulcast only days 211 183
Live and simulcast days 56 51
--------------- ---------------
Total Racing Days 267 234
ATTENDANCE
Simulcast only days 91,197 93,969
Live and simulcast days 190,564 192,481
--------------- ---------------
Total Attendance 281,761 286,450
ON-TRACK HANDLE
Simulcast only days $ 29,330,000 $ 29,714,000
Live and simulcast days
Live racing 11,321,000 12,251,000
Simulcast racing 12,494,000 10,396,000
OUT-OF-STATE LIVE HANDLE 12,635,000 9,895,000
--------------- ---------------
Total Handle $ 65,780,000 $ 62,256,000
AVERAGE DAILY ATTENDANCE
Simulcast only days 432 513
Live and simulcast days 3,403 3,774
ON-TRACK PER CAPITA WAGERING
Simulcast only days $ 322 $ 316
Live and simulcast days 125 118
ON-TRACK AVERAGE DAILY HANDLE
Simulcast only days $ 139,005 $ 162,372
Live and simulcast days 425,268 444,059
8
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Since February of 1997, the Company has conducted simulcast racing seven
days a week, compared to six days per week during the first nine months of
1996. This change was in response to patron requests to provide simulcast
racing on Tuesdays. While attendance on Tuesdays has met management's
expectations, average attendance on these Tuesdays was lower than the average
attendance on all other days, thus contributing to the lower average daily
attendance and handle figures for 1997 compared to 1996.
One of the Company's largest single expense items is horsepersons'
purses, which Minnesota law requires to be set aside from pari-mutuel
revenues. Statutory purse expense increased $ 193,251 or 6.3% for the nine
months ended September 30, 1997 compared to the same period in 1996. This
increase is due to slightly higher on-track wagering compared to 1996, but is
due primarily to the legislation exempting the first $12 million of take-out
from the State of Minnesota pari-mutuel tax. This legislation which became
effective in Minnesota beginning July 1, 1996 is effective until July 1, 1999
and benefits the horsepersons' purse fund, as well as the Company. The
effect of this legislation during the first nine months of 1997 was to
increase the Racetrack's net pari-mutuel revenue, thereby increasing the
amounts paid to the horsepersons for purses. During the quarterly interim
periods since July 1, 1996, pari-mutuel taxes have been estimated and an
estimated annual effective tax rate had been applied to pari-mutuel take-out.
Total pari-mutuel tax expense incurred for the nine month period ended
September 30, 1997 was $36,665, compared to $414,031 for the respective
period ended September 30, 1996.
The legislation described above also provided that winning pari-mutuel
tickets which are not cashed within one year of the end of the respective
race meet will become the property of the Company. The legislation expires
December 31, 1999. The Company is recording revenue associated with the
uncashed winning tickets at the time that management can reasonably estimate,
based on historical experience, the amount of additional winning tickets from
a race meet that will be presented for payment. Revenue recognized from
uncashed winning tickets for the nine months ended September 30, 1997 and
September 30, 1996 was $149,000 and $74,000, respectively. The 1996 amount
represents only six months that the legislation was in effect.
The legislative changes enacted in 1996, which expire in 1999, have enabled
the Company to make changes necessary to improve customer service and upgrade
the Racetrack. These changes have resulted in increased salary and benefit
expenses as well as increased expenditures for repairs and maintenance during
the nine months ended September 30, 1997.
Other operating expenses for the three month and nine month periods ended
September 30, 1997 have increased approximately $179,000 and $318,000,
respectively, over the same periods in 1996, due primarily to expenditures
related to various proposals considered by the 1997 Minnesota Legislature which
would permit the Minnesota State Lottery to operate video lottery terminals at
the Canterbury Park Racetrack. The various proposals were primarily designed to
provide a source of financing for a new outdoor baseball stadium for the
Minnesota Twins. Expenses related to legislative efforts totaled approximately
$151,000 and $263,000 for the three and nine month periods ended September 30,
1997, respectively. Expenditures include amounts paid for direct mailings,
media advertising and legislative lobbying. In addition, the Company has
engaged various consultants to develop a market study as well as a
9
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comprehensive operating and architectural plan to assist the Company in
determining the viability and potential profitability of additional gaming at
Canterbury Park.
Net interest expense decreased 31% and 36% for the three-month and
nine-month periods ending September 30, 1997, respectively, compared to the
comparable periods in 1996. Positive cash flows from operations have allowed
the Company to reduce its average balance on a line of credit with Mr. Curtis
Sampson, the Company's Chairman and largest shareholder, from $1.8 million
for the first nine months of 1996 to $975,000 for the nine months ended
September 30, 1997. However, the balance as of September 30, 1997 is higher
than at December 31, 1996, due to the acquisition of undeveloped land on
August 18, 1997 which resulted in an increase in the outstanding balance
under the line-of-credit of approximately $925,000. The average interest
rate on the line of credit was 10.08% year-to-date in 1997 compared to 10.28%
for the same period in 1996. The average daily balance of amounts payable to
horsepersons was approximately $621,000 for the nine months ended September
30, 1997 compared to approximately $445,000 for the nine months ended
September 30, 1996. The weighted average interest rate on amounts due to
horsepersons was 7.98% during the first nine months of 1997 compared to an
average of 8.28% for the same period in 1996.
The net loss for the nine months ended September 30, 1997 was $117,459
compared to a loss of $279,614 for the nine months ended September 30, 1996.
The net loss of $255,413 during the quarter ended September 30, 1997 compares to
a loss of $200,921 for the quarter ended September 30, 1996. The larger loss in
the three-month period is attributable primarily to expenses related to the
legislative efforts.
While the Company has posted decreased losses during the nine month period
ended September 30, 1997 compared to the same period in 1996, operating results
are lower than anticipated due primarily to costs of legislative efforts as
previously mentioned. Higher pari-mutuel and net concession revenues plus lower
pari-mutuel taxes are partially offset by higher statutory purse expense,
higher salaries & benefits, and legislative expenses.
LIQUIDITY AND CAPITAL RESOURCES
During the period January 1, 1997 through September 30, 1997, cash provided
by operating activities was $888,108, which resulted principally from
depreciation and amortization of $640,086, and an increase in accounts payable
and accrued expenses of $381,991. Other items providing cash from operations
included an increase in the payable to horsepersons of $108,300, and an increase
in property taxes payable of $95,372. These items were partially offset by a
net loss of $117,459, an increase in accounts receivable and other current
assets of $219,419 and a decrease in accrued interest of $55,768.
Net cash used in investing activities for the nine months ended September
30, 1997 of $1,266,269 represents primarily the acquisition of a 30 acre tract
of undeveloped land adjacent to the Racetrack on August 18, 1997 at a cost of
$934,927. The company had other property, equipment and building improvement
additions of $369,474.
During the period January 1, 1997 through September 30, 1997, cash provided
by financing activities was $258,620, which was primarily the net result of an
advance on the Company's line of credit with Mr. Curtis Sampson of $925,000
related to the purchase of land and net payments on the line of credit of
$699,661 from operating cash flow.
10
<PAGE>
Under its agreement with the horsepersons' associations the Company is
required to segregate purse funds received from simulcasting for future payment
as purses for live racing or for other uses of the horsepersons. Pursuant to
this agreement, during the nine months ended September 30, 1997, the Company has
transferred into a trust account or paid directly to the horsepersons
approximately $3,188,000. At September 30, 1997, the Company had an additional
$657,554 liability to the horsepersons which will be paid with interest in 1997
in accordance with the agreement.
The Company believes that the funds to be generated from operations
together with funds available under its $3,000,000 line of credit with Mr.
Sampson will be sufficient to satisfy its liquidity and capital resource
requirements for the next twelve months. The Company anticipates that it may
pay down a portion of the borrowings under the line of credit with funds
generated from operations and borrow additional amounts under the line of credit
as funds are needed for working capital purposes. The Company is also
attempting to obtain a credit facility from an institutional lender to replace
the line of credit with Mr. Sampson. Mr. Sampson has advised the Company that
if it is unable to obtain a credit facility from an institutional lender, then
he will keep his line of credit in place until at least March 31, 1998. As of
November 4, 1997, borrowings under the line of credit were approximately
$2,025,000. The Company is also actively pursuing a conventional mortgage as an
alternative means of financing the August 18th land acquisition.
OPERATING PLAN:
At September 30, 1997, the Company has concluded its 1997 live race meet
which consisted of a 26-day mixed meet of Thoroughbred and Quarter Horse racing,
and a 27-day Thoroughbred-only meet, and three days of live harness racing over
Labor Day weekend.
The Company's ability to operate profitably during the remainder of 1997
will largely depend on its ability to maintain levels of attendance and wagering
handle for simulcast racing at levels similar to 1996. The Company will also
need to maintain operating expenses at levels similar to 1996. In addition, the
Company is emphasizing the expansion of special events in order to maximize the
potential of the facility year-round. Legislation which became effective in
1996 relating to the pari-mutuel tax and uncashed winning tickets has
supplemented cash flows in 1997, the first full fiscal year that the legislation
has been in effect.
Legislation which would permit the Minnesota State Lottery to operate up to
1,500 video lottery terminals (VLT's) at Canterbury Park was introduced during
the 1997 session of the Minnesota Legislature. This proposal was primarily
structured to provide a source of financing for a new outdoor baseball stadium
for the Minnesota Twins. However, the legislative session ended in May without
resolution of the issue. The stadium issue was studied by a special committee
which reported to the legislature during a special session which convened on
October 23, 1997. The committee recommended VLT's at Canterbury Park as the
primary funding source for the construction of the stadium. Public polling has
indicated that public support is strong for funding the stadium using income
from VLT's at Canterbury Park. The special session recessed without agreement
on the stadium issue on October 23, 1997, although Legislators are expected to
reconvene on November 13, 1997. Company management is uncertain whether any
stadium funding legislation authorizing additional gaming
11
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at the Racetrack will be enacted and, if enacted, the Company is unable to
provide any estimates as to the financial impact this legislation would have
on the Company.
FACTORS AFFECTING FUTURE PERFORMANCE:
From time to time, in reports filed with the Securities and Exchange
Commission, in press releases, and in other communications to shareholders or
the investing public, the Company may comment on anticipated future financial
performance. Such forward-looking statements, including statements contained
in this Report on Form 10-QSB, are subject to risks and uncertainties which
may adversely affect future financial performance, including, but not limited
to, fluctuations in attendance at the Racetrack, changes in the level of
wagering by patrons, legislative and regulatory changes, the impact of
wagering products introduced by competitors, higher than expected expenses,
and other risks applicable to the horse racing industry generally.
12
<PAGE>
PART II
OTHER INFORMATION
Item 1. 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
None
(b) Reports on Form 8-K
Canterbury Park Holding Corporation filed a Form 8-K
dated August 18, 1997 to report the acquisition of
undeveloped land for a purchase price of $925,000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly cause this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Canterbury Park Holding Corporation
Dated: November 7, 1997 /s/ Randall D. Sampson
-----------------------------------------
Randall D. Sampson,
President, Chief Executive Officer and
Treasurer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
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