Magna Entertainment Corp. Tuesday reported a net loss of $103.2 million for the fourth quarter of 2003, or 96 cents a share, which includes a previously announced non-cash write-down of $81.7 million on its assets.
The fourth quarter losses compare to $24.4 million, or 23 cents a share, during the fourth quarter of 2002. The write-downs on "long-lived and intangible assets" include the racing licenses and other assets related to Gulfstream Park, Maryland Jockey Club, Portland Meadows, Remington Park, and Thistledown. The fourth quarter also suffered from $4.9 million in interest expenses on the company's subordinated notes as well as depreciation on acquisitions made at the close of 2002.
Fourth quarter revenue was $146 million as compared to $106.8 million for the corresponding quarter in 2002 while earnings before taxes, interest, and amortization rose from a loss of $32.8 million in 2002 to a $148.2 million loss in the final quarter of 2003.
Said MEC chief executive officer Jim McAlpine: "Despite encountering numerous challenges during 2003, MEC made significant strides toward our goal of creating a global entertainment company built around horse racing, including the achievement of revenue growth of 29%, from $549 million in 2002 to $709 million in 2003.
"As announced on October 30, we have developed a multi-part action plan aimed at improving our future financial results. We initiated this action plan during the fourth quarter and took specific steps to reduce expenses by $5.0 million on an annualized basis. While we will realize those savings in 2004, the severance and other costs necessary to achieve them burdened the results of our fourth quarter.
"Throughout 2003, we also incurred significant pre- development expenses, related primarily to the pursuit of alternative gaming opportunities in states where we currently operate racetracks, including Maryland, Michigan, Oklahoma and Pennsylvania. In assessing our fourth quarter results, one must consider the impact of the severance costs and pre- development expenses, which were incurred to benefit 2004 and future years, as well as the non-cash write-downs of long-lived and intangible assets which were announced earlier this month.
"Our Continuous Improvement Team has recently completed its review of operations at three of our racetracks. Their recommendations are currently being implemented and the resulting financial benefits will be realized in 2004 and beyond."
For the year, Magna lost $105 million as compared to $14.4 million 2002. Revenues increased from $549.2 million in 2002 to $708.9 million.
The increase in revenue resulted primarily from the acquisitions of Lone Star Park, the Maryland Jockey Club and Flamboro Downs. However, MEC announced revenue was partially offset by "decreased revenues at certain of our racetracks as a result of lower average daily attendance, inclement weather, particularly in the northeast region of the United States, resulting in fewer live race days and a generally weak U.S. economy."