Colonial Holdings, Inc. Announces 2nd Quarter Results.Business Editors NEW KENT, Va.--(BUSINESS WIRE)--Aug. 14, 2000 Colonial Holdings, Inc. (Nasdaq:CDWN) (formerly Colonial Downs Colonial Downs is a horse racing track in New Kent, Virginia adjacent to Interstate 64, halfway between Richmond, Virginia and Williamsburg, Virginia. History and information The track opened on September 1, 1997. More than 13,000 attended the track on opening day. Holdings, Inc.) which, through its subsidiaries, holds the only licenses to own and operate a pari-mutuel pari-mutuel Betting pool in which those who bet on competitors finishing in the first three places share the total amount bet minus a percentage for the management. First introduced in France c. horseracing course and satellite racing centers in Virginia Virginia, state, United States Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). , today reported results of operations for the second quarter ended June 30, 2000. For the six months ended June 30, 2000, the Company reported a net loss of $515,000 or $0.07 per share compared with a net loss of loss of $516,000, or $0.07 per share for the same period in 1999. Revenues for the first six months of 2000 were $13,873,000 compared with $14,256,000 for the same period in 1999. The Company reported a net loss for the second quarter of 2000 of $328,000 or $0.05 per share compared to a loss of $1,031,000 or $0.14 per share for the same period in 1999, a decrease of 68%. Total revenue in the second quarter of 2000 was $6,975,000 compared to $7,233,000 in the second quarter of 1999, a decrease of 4%. Results for the three month period ended June 30, 2000 reflect a reduction in revenues because the Company conducted live standardbred Standardbred Breed of light horse developed in the U.S., primarily for harness racing. The foundation sire was an English Thoroughbred imported in 1788; his progeny were bred with other breeds, especially the Morgan, to produce speedy trotters and pacers. racing during one month of the corresponding period in 1999 and did not conduct live racing in the three and six month periods ended June 30, 2000. The increase in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. is primarily due to an increase in purse PURSE. In Turkey the sum of five hundred dollars is called a purse. Merch. Dict. h.t. expense resulting from the new agreement with the Virginia Horsemen's Benevolent be·nev·o·lent adj. 1. Characterized by or suggestive of doing good. 2. Of, concerned with, or organized for the benefit of charity. and Protective Association, Inc. Purse expenses were approximately $200,000 and $1,000,000 higher for the three and six months ended June 30, 2000, respectively, than for the corresponding period of the prior year. Other direct expenses were $306,000 and $276,000 lower during these periods because no live racing was conducted in 2000 versus one month of live standardbred racing in 1999. Selling, general and administrative expenses declined due primarily to reductions in professional fees and live racing related expenses. Interest expense declined primarily due to the provision for interest of $285,000 recorded in June 1999 related to the Norglass arbitration award An arbitration award (or arbitral award) is a determination on the merits by an arbitration tribunal in an arbitration, and is analogous to a judgment in a court of law. . In August 2000 the Company entered into an agreement with CD Entertainment Ltd., an affiliate of the Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of the Company, to refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. the $15 million in loans from PNC PNC Purdue University North Central (Westville, Indiana) PnC Point 'n Click PNC Police National Computer PNC People's National Congress (Guyana) PNC People's National Congress Bank that came due on June 30, 2000. The refinanced former PNC debt and the Company's existing debt to related parties have been consolidated into a $25.7 million credit facility with a term of five years and an interest rate of LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). plus 3%. The Company plans to draw on the credit facility's available balance to payoff the $1.85 million Norglass debt and provide supplemental short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. working capital. Under the terms of the credit facility, principal payments of $1 million each are due on June 30, 2002, 2003 and 2004 with the balance due on June 30, 2005. In addition, the Company has agreed to make an additional annual principal payment contingent upon Adj. 1. contingent upon - determined by conditions or circumstances that follow; "arms sales contingent on the approval of congress" contingent on, dependant on, dependant upon, dependent on, dependent upon, depending on, contingent the Company's annual cash flow, commencing in 2002. The Company also recently announced an agreement in principle with JALOU II Inc. ("JALOU"), an affiliate of the Chairman and CEO of the Company, to manage video poker Video poker is a casino game based on five-card draw poker. It is played on a computerized console which is a similar size to a slot machine. History Video poker first became commercially viable when it became economical to combine a television-like monitor with a truckstop assets in Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. on
its behalf. JALOU has entered into option agreements to acquire two
existing truckstops in Louisiana as well as several that are under
development. Each truckstop provides fuel, food and beverage F&B is a common abbreviation in the United States and Commonwealth countries, including Hong Kong. F&B is typically the widely accepted abbreviation for "Food and Beverage," which is the sector/industry that specializes in the conceptualization, the making of, and delivery of foods. services
and has 50 video poker machines. Under the proposed management contract,
the Company will manage the truckstops for a fee based on total revenue
and earnings before interest, taxes and amortization (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ). It is
anticipated that JALOU will close the truckstop acquisitions late in the
third quarter of 2000, subject to licensing in Louisiana and financing.
The truckstops will be managed by Colonial Holdings Management, Inc., a
newly formed wholly owned subsidiary Wholly Owned SubsidiaryA subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of the Company, which will seek to develop management fee income in a variety of industries. Ian M. Stewart, President of the Company said, "The second quarter financial performance of the Company is in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with our expectations. The refinancing Refinancing An extension and/or increase in amount of existing debt. of the majority of our debt on a long term basis is a very important step in positioning the Company for future growth. The management agreement with JALOU which we recently announced will diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. the Company's operations as we seek to expand the Company in the future beyond pari-mutuel wagering wa·ger n. 1. a. An agreement under which each bettor pledges a certain amount to the other depending on the outcome of an unsettled matter. b. A matter bet on; a gamble. 2. in Virginia." Colonial Holdings fourth thoroughbred Thoroughbred Light breed of racing and jumping horse descended from three desert stallions brought to England between 1689 and 1724. Thoroughbreds have a delicate head, slim body, broad chest, and short back. Most are bay, chestnut, brown, black, or gray. meet to be held at Colonial Downs in New Kent, VA will commence on September 4, Labor Day Labor Day, holiday celebrated in the United States and Canada on the first Monday in September to honor the laborer. It was inaugurated by the Knights of Labor in 1882 and made a national holiday by the U.S. Congress in 1894. , and conclude on October 17, 2000. The Company will host races on Friday through Tuesday afternoons at 3:00 pm. The highlight of the meet will be the third annual Virginia Derby The Virginia Derby is an American Thoroughbred horse race held annually since 1998 at Colonial Downs race track in New Kent County, Virginia. A Grade II event, it is raced on turf at a distance of 10 Furlongs (1¼ miles) and is open to three-year-old horses. on October 7th. The purse for the Derby alone will be $200,000. Colonial Holdings, Inc. is a Virginia corporation organized in November 1996 to pursue opportunities for pari-mutuel horse race wagering in Virginia. Effective August 7, 2000, the Company changed its name from Colonial Downs Holdings, Inc. to Colonial Holdings, Inc. to reflect its effort to diversify the Company's operations. The Company through its subsidiaries holds the only unlimited licenses to own and operate a pari-mutuel horseracing course and satellite wagering facilities/racing centers in Virginia. Colonial Holdings, Inc. became a publicly-held company in March 1997 and trades on the NASDAQ Small Cap System under the symbol CDWN. This earnings release contains certain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that inherently involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors. Statements regarding results of operations, refinancing of the debt and management contracts with JALOU, and certain other statements contained in this release are forward-looking statements and, as such, involve known and unknown risks, and uncertainties, and other factors which may cause the actual results, performance, or achievements 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, acts by parties outside the control of the Company, including the Maryland Jockey
In sport, a jockey is one who rides horses in thoroughbred horse racing or steeplechase racing, primarily as a profession. Club and the Virginia Racing Commission, political trends, the effects of adverse general economic conditions, and governmental regulation, including licensing of JALOU in Louisiana. The forward-looking statements contained herein speak only as of the date of this release.
COLONIAL HOLDINGS, INC.
STATEMENTS OF OPERATIONS
(In Thousands, Except per share data)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
-------- -------- -------- --------
Revenues
Pari-mutuel and
simulcasting
commissions $ 6,610 $ 6,700 $ 13,133 $ 13,321
Other 365 533 740 935
-------- -------- -------- --------
Total revenues 6,975 7,233 13,873 14,256
Operating expenses
Direct operating
expenses
Purses, fees, and
pari-mutuel taxes 2,893 2,639 5,682 4,651
Simulcast and other
direct expenses 2,522 2,882 4,906 5,213
-------- -------- -------- --------
Total direct operating
expenses 5,415 5,521 10,588 9,864
Selling, general and
administrative expenses 824 1,377 1,605 2,493
Depreciation and
amortization 425 409 849 814
-------- -------- -------- --------
Total operating
expenses 6,664 7,307 13,042 13,171
-------- -------- -------- --------
Earnings (loss) from
operations 311 (74) 831 1,085
Interest expense, net (639) (957) (1,346) (1,601)
-------- -------- -------- --------
Loss before income taxes (328) (1,031) (515) (516)
Provision for (benefit
from) income taxes -- -- -- --
-------- -------- -------- --------
Net loss $ (328) $ (1,031) $ (515) $ (516)
-------- -------- -------- --------
-------- -------- -------- --------
Earnings (loss) per
share data:
Basic and diluted loss
per share $ (0.05) $ (0.14) $ (0.07) $ (0.07)
Weighted average number
of shares outstanding 7,260 7,260 7,260 7,260
COLONIAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Data)
(Unaudited)
June 30, December 31,
ASSETS 2000 1999
Current assets:
Cash and cash equivalents $ 2,083 $ 1,313
Horsemen's deposits 1,842 659
Accounts receivable 310 253
Prepaid expenses and other assets 385 114
Total current assets 4,620 2,339
Property, plant and equipment
Land and improvements 15,585 15,554
Buildings and improvements 48,467 48,472
Equipment, furnishings, and fixtures 2,864 2,853
Leasehold improvements 1,124 1,124
68,040 68,003
Less accumulated depreciation 4,592 3,817
Property, plant and equipment, net 63,448 64,186
Licensing and organization costs, net of
accumulated amortization of $333 and $311,
respectively 734 729
Other assets 94 151
Total assets $ 68,896 $ 67,405
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,837 $ 2,764
Purses due horsemen 2,744 182
Accrued liabilities and other 1,974 1,184
Current maturities of long-term debt
and capital lease obligations 790 15,974
Current maturities of long-term debt
- related parties -- 8,800
Total current liabilities 7,345 28,904
Long-term debt and capital lease obligations 18,365 1,750
Notes payable - related parties 8,175 1,225
Total liabilities 33,885 31,879
Commitments and contingencies
Stockholders' equity
Class A, common stock, $0.01 par value;
12,000 shares authorized; 5,025 shares
issued and outstanding 50 50
Class B, common stock, $0.01 par value;
3,000 shares authorized; 2,242 shares
issued and outstanding 23 23
Additional paid-in capital 42,873 42,873
Accumulated deficit (7,935) (7,420)
Total stockholders' equity 35,011 35,526
Total liabilities and stockholders' equity $ 68,896 $ 67,405
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