Magna Improves Historically Slow Third Quarter

Magna Entertainment showed some improvement during the third quarter ending Sept. 30, historically the company's weakest period of the year.

Revenue for the Ontario-based racing conglomerate increased 31.1% to $65.8 million, up from $50.2 million for the same quarter a year ago. Earnings before interest, taxes, depreciation, and amortization (EBITDA) improved from a loss of nearly $7.8 million for the third quarter of 2000 to a loss of almost $2.9 million. Diluted earnings per share for the quarter was a losing 7 cents per share compared with a 6-cent per share loss for the same period of 2000.

For first nine months of the year, Magna reported a 24.9% increase in revenue to $423.6 million and a 40% increase in EBITDA to $35.7 million. Diluted earnings per share increased 83% to 22 cents per share up from 12 cents per share for the first nine months of 2000.

Magna Entertainment president and chief executive officer Jim McAlpine said the company was pleased with the improvements seen over the nine-month period and was not surprised by the weaknesses of the third quarter, which includes the fewest live racing days among Magna's eight racetracks. He said the ongoing consolidation of racetrack operations and the selling of non-core real estate helped increase EBITDA, but that those improvements were offset some by the closing of tracks and off-track betting outlets in response to the Sept. 11 terrorist attacks and the weaker United State economy.

"For the balance of 2001, we expect to see further improvements in our operating and financial performance as we achieve greater synergies and economies of scale, realize improved seasonal performance resulting from live racing at Bay Meadows and the operations of MEC Pennsylvania in the fourth quarter, and benefit from the sale of non-core real estate," McAlpine said.

McAlpine said the company continues to look for other acquisitions and has plans to expand its "Call-A-Bet" telephone wagering system and offer account wagering through the Internet.