Colonial Downs Holdings Inc. Reports 4th Quarter and 1997 Results
NEW KENT, Va.--(BUSINESS WIRE)--March 30, 1998--Colonial Downs Holdings, Inc. (NASDAQ: NMS: CDWN) which holds the only unlimited licenses to own and operate a pari-mutuel horse racing course and satellite wagering facilities in Virginia, today reported results of operations for the fourth quarter and fiscal year ended December 31, 1997. The Company reported revenues of $23,647,617 for the year ended December 31, 1997 compared with revenues of $8,527,310 for 1996, an increase of 177%. Revenues for the fourth quarter were $6,033,617, compared with $2,823,310 for the same period in 1996. The net loss in the fourth quarter was $974,000 as compared with a net loss of $237,415 in the same period in 1996.
Net income for 1997 was $7,863 or $.01 per share compared with a net loss of $645,415 or $0.22 per share for 1996.
The increase in revenue during these periods as compared with the same periods a year ago result from the operation of two racing centers (Chesapeake & Richmond) for the entire twelve months of 1997 as well as two others (Hampton & Brunswick) that opened in December 1997, and one month of operation of live thoroughbred horse racing at the Colonial Downs Race Track compared to only operating the Chesapeake Racing Center, which opened on February 17, 1996, and the Richmond Racing Center which opened in December 1996, during the corresponding period in 1996. The fourth quarter losses are the result of several factors. These factors include $600,000 in referendum expenses and one-time marketing costs associated with promoting the opening of the track. In addition, the Company commenced depreciating the grandstand in the fourth quarter and expensing the interest cost on the construction loans which had formerly been capitalized during the construction period.
Commenting on the results and other matters, Chairman and Chief Executive Officer Jeffery P. Jacobs said, "Overall, we had mixed success in our start-up year. We had a very aggressive agenda in 1997. We faced numerous legal and legislatively imposed obstacles. We opened the track, we had a good thoroughbred meet, and opened two more racing centers. Through our referendum efforts, we were able to tell our story to many Virginians. In the process, we maintained a breakeven year. I think, overall, it was a good start-up year."
Regarding the Racing Centers: "We expanded our racing center network to a total of four in 1997. Chesapeake and Richmond continue to provide strong results week in and week out. Hampton is continuing to grow; in time, I expect it to be doing as well as Chesapeake. Brunswick is coming along. Unfortunately, the ramp up of our new racing centers is taking longer than anticipated. This will have an adverse impact on our first quarter 1998 results."
Regarding Colonial Downs' dispute with its general contractor, Norglass, Inc.: "Our dispute with our general contractor is in the early steps of arbitration. We expect this to take several months before some resolution is reached. In the meantime, we have paid virtually all of the subcontractors directly and we are confident that we will recover these funds as a result of our arbitration."
Regarding the Virginia Derby: "We will host the first Virginia Derby in October of this year. We are excited about the potential of the Virginia Derby. It will be a great event for Virginians and I believe it will also be very profitable. An event of this type is a natural progression for any organization in the horse racing industry. We are glad that we will be able to offer this in our second year of thoroughbred racing."
In addition to the 1997 results, the Company also announced that the Board of Directors has authorized management as well as certain board members to aggressively investigate strategic acquisitions to enhance shareholder value. The Company will explore acquisition opportunities primarily in the entertainment industry and review all other options available. The Board has also formed a committee of independent board members to negotiate with Mr. Jacobs regarding opportunities for combining other entertainment related assets he controls. According to Mr. Jacobs, "Until all six racing centers are open, Colonial Downs will essentially operate as it did last year, approximately at a breakeven pace. In order to continue to grow shareholder value in the meantime, we will aggressively pursue accretive acquisition opportunities on behalf of Colonial Downs."
Statements regarding additional satellite wagering facilities' opening dates, referendums, disputes with Norglass, Inc., the Virginia Derby, and certain other statements contained in this news release are forward-looking statements and, as such, involve known and unknown risks, uncertainties and other factors which may cause the actual results of the Company to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such potential risks, uncertainties and factors include but are not limited to the risk of construction delays including unforeseen environmental, engineering or geological problems, permitting, governmental regulations, including licensing of additional satellite wagering centers and approvals by the Virginia Racing Commission, competition from other sporting events and forms of entertainment, and the success of planned marketing and promotional efforts. Investors are also directed to consider other risks and uncertainties discussed in documents filed by the Company with the Securities and Exchange Commission. |
