Magna Posts Mixed Fourth Quarter, Strong Gains for 2001

Magna Entertainment reported a 28% gain in fourth quarter revenue, but losses in net income and earnings per share for the three-month period ending Dec. 31. For the year, the Canadian racing conglomerate reported a 25.5% increase in revenue, a jump in net income from $441,000 to $13.5 million, and an increase in diluted earnings per share from 1 cents to 16 cents.

"Our racetracks operate for prescribed periods each year," said Jim McAlpine, Magna's president and chief executive officer. "As a result, our racetrack revenue and operating results for any quarter will not be indicative of our revenues and operating results for the year. We expect that these seasonal fluctuations will reduce over time as the full impact of our acquisition and account wagering initiatives is realized."

The financial results for the recent fourth quarter reflects all of Magna's racetrack and related operations, while the same quarter of 2000 did not include live racing at Bay Meadows, the harness racing or telephone account wagering activity of MEC Pennsylvania, or activity at Portland Meadows.

Fourth quarter revenue was $95.5 million, up from $74.5 million for the same period of 2000. A loss of $1.1 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter was an improvement over a loss of nearly $9.7 million in 2000. Magna reported a net loss of $5 million for the quarter, but like EBITDA showed improvement over a loss of $9.1 million in 2000.

The company generated $12.3 million in cash from operations during the fourth quarter. Investments yielded $2.5 million in cash and the net cash proceeds from the sale of non-core real estate yielded $19.7 million.

Revenue for 2001 rose to $519.1 million from $413.6 million, and EBITDA, before the gains on real estate sales, rose 110% to $31.3 million.

Magna recently extended its loan on Santa Anita Park from Nov. 30 of this year to the same date in 2004. The outstanding balance of the loan is $59.9 million. The company also has plans to sell an additional 20 million shares of stock later this year and use the proceeds for acquisitions and capital improvements. Magna reportedly has expressed interest in Lone Star Park near Dallas, Texas, and is negotiating a potential lease of Suffolk Downs.

"We are continuing to pursue strategic acquisitions and make strategic investments in our racetracks and related operations, including entertainment operations, to grow and enhance our racing business," McAlpine.