Colonial Downs Holdings Inc. Reports 1st Quarter Results
NEW KENT, Va.--(BUSINESS WIRE)--April 29, 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 first quarter ended March 31, 1998. The Company reported a net loss for the first quarter of 1998 of $952,000 or $.13 per share compared to earnings of $429,000 or $.12 per share for the same period in 1997. Total revenue in the first quarter of 1998 was $6,772,000 compared to $5,417,000 in the first quarter of 1997 an increase of 25%.
Results for the first quarter reflect lower than expected revenue from the two new racing centers as the ramp up of these operations is taking longer than anticipated. In addition, the Company is now incurring depreciation and interest expense related to the grandstand and its construction that it did not incur in the first quarter of 1997. While combined revenues in the Chesapeake and Richmond locations were down from the 1997 levels due to the opening of the Hampton Racing Center, increased operating efficiency resulted in a net income increase in these locations over 1997. Hampton was profitable during the quarter, but the Brunswick Racing Center lost money. The bulk of the Brunswick customer base is from North Carolina. Consequently, attendance is heaviest on weekends. To maximize profitability and efficiency, the Company has modified the Brunswick hours of operation. Starting on April 27 the Brunswick Racing Center will be closed on Mondays and Tuesdays.
Jeffrey P. Jacobs, President and Chief Executive Officer of the Company said, "Our economic model is based on our full compliment of six racing centers allowed under Virginia law open and operating. Currently, we only have four and this limits our ability to operate profitably. I am obviously not pleased with the situation Colonial Downs is in. However, we continue to search for ways, both internally and externally, to add profitability to the Company."
In related news, Mr. Jacobs announced that in order to minimize liquidity issues during Colonial Downs' initial years of operation, he is prepared to personally guarantee an interest-only $20 million refinancing of Colonial Downs' existing debt. No refinancing has yet been secured and there can be no assurances that it will be secured. Such refinancing, if and when completed, would eliminate the current $2 million per year required principal payments. Jacobs said, "Long-term, this state-wide monopoly is extremely viable. We simply need to open more racing centers, continue to put downward pressure on expenses, and continue to explore accretive opportunities."
The Track's harness meet opened on April 24, 1998. The opening day saw the winner of the Graduate Series race run the second fastest time in harness race history. |
