MI Developments Announces 2005 First Quarter Results AURORA, ON,
May 4 /PRNewswire-FirstCall/ -- MI Developments Inc. (TSX:
MIM.SV.A, MIM.MV.B; NYSE: MIM) ("MID" or the "Company") today
announced its results for the three months ended March 31, 2005.
All figures are in U.S. dollars unless otherwise noted.
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(in thousands, except per share figures) REAL ESTATE BUSINESS(1)
THREE MONTHS ENDED MARCH 31, ----------------------------- 2005
2004 --------------- ------------- Revenues $ 36,484 $ 32,257 Net
income(2) $ 16,414 $ 11,269 Funds from operations ("FFO")(2),(3) $
26,493 $ 20,935 Diluted FFO per share(2),(3) $ 0.55 $ 0.43
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(in thousands, except per share figures) MID CONSOLIDATED(1) THREE
MONTHS ENDED MARCH 31, ----------------------------- 2005 2004
--------------- ------------- Revenues Real Estate Business $
36,484 $ 32,257 Magna Entertainment Corp. ("MEC") 254,028 292,674
Eliminations (510) - ------------------------ $ 290,002 $ 324,931
------------------------ ------------------------ Net income (loss)
Real Estate Business(2) $ 16,414 $ 11,269 MEC (2,799) 6,252
Eliminations (433) - ------------------------ $ 13,182 $ 17,521
------------------------ ------------------------ Diluted earnings
per share $ 0.27 $ 0.36
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(1) Transactions between the Real Estate Business and MEC have not
been eliminated in the presentation of each segment's results of
operations. However, the effects of transactions between these two
segments are eliminated in the consolidated results of operations
of the Company. (2) The Real Estate Business' results for the three
months ended March 31, 2004 reflect the impact of costs related to
employee settlement expenses of $3.9 million ($3.0 million net of
income taxes). Excluding these expenses, net income was $14.3
million, FFO was $23.9 million(3), and diluted FFO per share was
$0.50(3) for the Real Estate Business for the three months ended
March 31, 2004. (3) The Real Property Association of Canada
("RealPac") announced a change in its published definition of FFO
for financial periods commencing January 1, 2005, which change has
been adopted by the Company. FFO for 2004 has been restated to
conform with this new definition. Prior to adoption of this new
definition, the calculation of FFO excluded stock-based
compensation expense and the straight- line rent adjustment. FFO
for 2005 and the restated FFO for 2004 now include these two
components. FFO and diluted FFO per share previously reported for
the first quarter of 2004 were $22.4 million ($24.0 million
excluding the employee settlement expenses) and $0.46 per share
($0.50 per share excluding the employee settlement expenses),
respectively. FFO and diluted FFO per share are measures widely
used by analysts and investors in evaluating the operating
performance of real estate companies. However, FFO does not have a
standardized meaning under Canadian generally accepted accounting
principles ("GAAP") and therefore may not be comparable to similar
measures presented by other companies. Please refer to
"Reconciliation of Non-GAAP to GAAP Financial Measures" below.
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REAL ESTATE BUSINESS -------------------- Operating and Development
Highlights In respect of our core rental portfolio, we brought
$32.2 million, or 451 thousand square feet, of Magna related
facilities on-stream during the first quarter of 2005. Properties
coming on-stream in the first quarter included the remaining 221
thousand square feet of the 938 thousand square foot facility in
Bowling Green, Kentucky. At March 31, 2005, MID's construction
group had three properties under development: one in each of
Canada, Mexico, and Austria. Once completed, these developments
will add a total of 356 thousand square feet to our income-
producing portfolio. The total anticipated project costs related to
these projects are approximately $26.3 million, of which $16.3
million had been spent as of March 31, 2005. At March 31, 2005, the
Real Estate Business had 26.1 million square feet of leaseable
area, with annualized lease payments of $144.5 million,
representing a return of 10.4% on the gross carrying value of our
income- producing property portfolio. Three Months Ended March 31,
2005 For the three months ended March 31, 2005, revenues were $36.5
million, an increase of $4.2 million or 13% over revenues for the
three months ended March 31, 2004 of $32.3 million. The higher
revenues reflect $2.1 million of increases from completed
development projects coming on-stream, an increase of $1.4 million
due to the weaker U.S. dollar, contractual rent increases of $0.8
million, and $0.5 million of interest income earned from MEC,
partially offset by the effect of vacancies and other items, which
decreased revenues by $0.6 million. FFO in the three months ended
March 31, 2005 was $26.5 million, or $0.55 per share, an increase
of 11% compared to FFO in the prior year's comparable period,
adjusted for the impact of employee settlement costs. The increase
in FFO of $2.6 million is due to the revenue increase of $4.2
million and a $1.3 million decrease in current income tax expense,
partially offset by a $1.0 million increase in general and
administrative expenses and an increase in net interest expense of
$1.9 million. Net income for the first quarter of 2005 was $16.4
million, an increase of $5.1 million or 46% over the prior year
amount of $11.3 million. The increase resulted from increased
revenues of $4.2 million, a $2.9 million reduction in general and
administrative expenses, increased gains on disposal of real estate
of $0.2 million and reduced income tax expense of $0.6 million.
These increases to net income were partially offset by an increase
in depreciation and amortization of $0.9 million and increased net
interest expense of $1.9 million. General and administrative
expenses for the three months ended March 31, 2005 were $5.4
million, compared to $8.3 million for the three months ended March
31, 2004, a decrease of $2.9 million. General and administrative
expenses for the first quarter of fiscal 2005 include $1.8 million
of costs incurred in association with MID's review of, and
subsequent recommendation by its Board of Directors to vote
against, two proposals made by a shareholder. General and
administrative expenses for the first quarter of 2004 included $3.9
million of employee settlement costs. Excluding these items,
general and administrative expenses decreased by $0.8 million from
$4.4 million in the first quarter of 2004 to $3.6 million in the
first quarter of 2005, primarily due to lower salaries and
benefits. The increase in net interest expense relates to interest
incurred on the Company's Senior Unsecured Debentures of Cdn.
$265.0 million issued in December 2004, partially offset by $0.4
million of interest capitalized related to projects under
development and $1.4 million of interest income. Excluding the
impact of the $3.9 million of employee settlement expenses incurred
in the first quarter of 2004, the Real Estate Business' effective
tax rate decreased from 26.8% in the first quarter of 2004 to 18.5%
in the first quarter of 2005. The decrease in the effective tax
rate is due primarily to changes in the amount of taxable income
earned in the various countries in which the Real Estate Business
operates and tax rate reductions in Germany and Austria. MAGNA
ENTERTAINMENT CORP. (MEC) ------------------------------- MEC's
racetracks operate for prescribed periods each year. As a result,
racing revenues and operating results for any quarter will not be
indicative of MEC's revenues and operating results for the year.
MEC's financial results for the first quarter of 2005 reflect the
full quarter's operations for all of MEC's racetracks and related
pari-mutuel wagering operations. The comparative results for the
first quarter of 2004 do not reflect the operations of Magna
Racino(TM), which opened on April 4, 2004. Revenues for the first
quarter of 2005 decreased 13% to $254.0 million from the prior
year. The decrease in revenue for the three months ended March 31,
2005 is primarily attributable to the decrease in live race days at
Golden Gate Fields due to a change in the racing calendar, lower
levels of wagering at Santa Anita Park primarily due to excessive
rainfall, the expiry of the Bay Meadows lease, and the
redevelopment of Gulfstream Park. Earnings Before Interest, Taxes,
Depreciation and Amortization ("EBITDA"), excluding the impact of
dilution gains (losses) and minority interest, was $13.4 million in
the three months ended March 31, 2005, compared to $34.5 million in
the prior year. The $21.1 million decline in EBITDA for the three
months ended March 31, 2005 is primarily attributable to the $38.6
million reduction in revenue, partially offset by a related $17.7
million reduction in purses, awards and other costs. MEC incurred a
net loss for the three months ended March 31, 2005 of $2.8 million
compared to net income of $6.2 million in the prior year. The
decrease in net income of $9.0 million is primarily due to the
reduced EBITDA as noted previously, higher interest expense
primarily as a result of increased borrowings in MEC's European and
golf operations, and increased depreciation expense related
primarily to fixed assets of the Magna Racino(TM), partially offset
by a decrease in income tax expense. At the end of the first
quarter of 2005, the market value of MID's shareholding in MEC was
$393.3 million, based on the closing price of $6.26 per share for
MEC Class A Subordinated Voting Stock (NASDAQ:MECA) on that date.
OTHER MATTERS ------------- Dividends MID's Board of Directors has
declared a dividend on MID's Class A Subordinate Voting Shares and
Class B Shares for the first quarter ended March 31, 2005. A
dividend of $0.15 per share is payable on or after June 15, 2005 to
shareholders of record at the close of business on May 31, 2005.
CONFERENCE CALL --------------- A conference call will be held for
interested analysts and shareholders to discuss the first quarter
results on May 5, 2005 at 10:00 am EST (Toronto time). The number
to use for this call is 1-800-814-4890. The number for overseas
callers is 416-640-4127. Please call 10 minutes prior to the start
of the conference call. MID will also webcast the conference call
at http://www.midevelopments.com/. The conference call will be
chaired by John D. Simonetti, Chief Executive Officer. For anyone
unable to listen to the scheduled call, the rebroadcast numbers
will be: North America - 1-877-289-8525 and Overseas - 416-640-1917
(reservation number is 21122009 followed by the number sign) and
the rebroadcast will be available until May 12, 2005. ABOUT MID
--------- MID is a real estate operating company engaged in the
ownership, management, leasing, development and acquisition of
industrial and commercial real estate properties located in North
America and Europe. Virtually all of its income-producing
properties are under lease to Magna and its subsidiaries. MID also
holds a controlling investment in MEC, a publicly-traded company
that, based on revenues, is North America's number one owner and
operator of horse racetracks, and one of the world's leading
suppliers, via simulcasting, of live racing content to the growing
inter-track, off-track and account wagering markets. RECONCILIATION
OF NON-GAAP TO GAAP FINANCIAL MEASURES REAL ESTATE BUSINESS
RECONCILIATION OF NET INCOME TO FUNDS FROM OPERATIONS (U.S. dollars
in thousands, except per share figures) (Unaudited) Three Months
Ended March 31, ---------------------------- 2004 2005 Restated(2)
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Net income(1) $ 16,414 $ 11,269 Add back (deduct) non-cash items:
Depreciation and amortization 9,272 8,354 Future income taxes(3)
905 1,180 (Gain) loss on disposal of real estate (98) 132
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Funds from operations(1) $ 26,493 $ 20,935
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Funds from operations per share Basic and diluted(1) $ 0.55 $ 0.43
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Average number of shares outstanding (thousands) Basic 48,227
48,137 Diluted 48,299 48,195
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(1) The Real Estate Business' results for the three months ended
March 31, 2004 reflect the impact of costs related to employee
settlement expenses of $3.9 million ($3.0 million net of income
taxes). Excluding these expenses, net income was $14.3 million, FFO
was $23.9 million(2), and diluted FFO per share was $0.50(2) for
the Real Estate Business for the three months ended March 31, 2004.
(2) RealPac announced a change in its published definition of FFO
for financial periods commencing January 1, 2005, which change has
been adopted by the Company. The FFO for 2004 has been restated to
conform with this new definition. Prior to adoption of this new
definition, the calculation of FFO excluded stock-based
compensation expense and the straight-line rent adjustment. FFO for
2005 and the restated FFO for 2004 now include these two
components. FFO and diluted FFO per share previously reported for
the first quarter of 2004 were $22.4 million ($24.0 million
excluding the employee settlement expenses) and $0.46 per share
($0.50 per share excluding the employee settlement expenses),
respectively. (3) In the United States of America, the definition
of FFO prescribed by the National Association of Real Estate
Investment Trusts ("NAREIT") does not add back (deduct) future
income tax expense (recovery). There are no other significant
differences between the Canadian definition of FFO, as prescribed
by RealPac, and the United States definition prescribed by NAREIT.
FORWARD-LOOKING STATEMENTS -------------------------- The contents
of this press release contain "forward looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements may include, among others, statements regarding MID's
future plans, costs, objectives or economic performance, or the
assumptions underlying any of the foregoing. In this press release,
MID uses words such as "will", "expect", "should" and similar
expressions to identify forward-looking statements. Forward-looking
statements should not be read as guarantees of future performance
or results, and will not necessarily be accurate indications of
whether or the times at or by which such future performance will be
achieved. Forward-looking statements are based on information
available at the time and/or management's good-faith belief with
respect to future events and are subject to known and unknown
risks, uncertainties and other unpredictable factors, many of which
are beyond the Company's control, that could cause actual results
to differ materially from such forward-looking statements. Such
risks are set forth under "Risk Factors" in MID's Annual
Information Form for 2004, attached as Exhibit 1 to MID's Annual
Report on Form 40-F for the year ended December 31, 2004. MID
expressly disclaims any intention and undertakes no obligation to
update or revise any forward-looking statements contained in this
press release to reflect subsequent information, events or
circumstances or otherwise. Consolidated Statements of Income
(Loss) (U.S. dollars in thousands, except per share figures)
(Unaudited)
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Real Estate Magna Consolidated Business Entertainment Corp.
------------------- ------------------- ------------------- Three
Months Ended Three Months Ended Three Months Ended March 31, March
31, March 31, ------------------- -------------------
------------------- 2005 2004 2005 2004 2005 2004
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Revenues Rental revenue $ 35,974 $ 32,257 $ 35,974 $ 32,257 $ - $ -
Racing and other 254,028 292,674 - - 254,028 292,674 Interest
income from MEC (note 12) - - 510 - - -
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290,002 324,931 36,484 32,257 254,028 292,674
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Operating costs and expenses Purses, awards and other 136,695
154,388 - - 136,695 154,388 Operating costs 86,198 89,858 - -
86,198 89,858 General and administrative (note 12) 23,071 24,813
5,459 8,327 17,689 16,486 Depreciation and amortization 19,303
16,774 9,272 8,354 10,031 8,420 Interest expense (income), net
10,360 5,414 1,717 (135) 8,643 5,549
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Operating income (loss) 14,375 33,684 20,036 15,711 (5,228) 17,973
Gain (loss) on disposal of real estate 98 2,465 98 (132) - 2,597
Dilution gains (losses) 7 (143) - - 7 (143)
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Income (loss) before income taxes and minority interest 14,480
36,006 20,134 15,579 (5,221) 20,427 Income tax expense (recovery)
3,286 13,959 3,720 4,310 (434) 9,649 Minority interest (1,988)
4,526 - - (1,988) 4,526
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Net income (loss) $ 13,182 $ 17,521 $ 16,414 $ 11,269 $ (2,799) $
6,252
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Basic and diluted earnings per Class A Subordinate Voting or Class
B Share (note 3) $ 0.27 $ 0.36 ---------------------------------
--------------------------------- Average number of Class A
Subordinate Voting and Class B Shares outstanding during the period
(in thousands) (note 3) Basic 48,227 48,137 Diluted 48,299 48,195
--------------------------------- ---------------------------------
See accompanying notes Consolidated Statements of Changes in
Deficit (U.S. dollars in thousands) (Unaudited) Three months ended
March 31, ------------------- 2005 2004
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Deficit, beginning of period (79,932) (53,622) Net income 13,182
17,521 Dividends (4,343) (4,334)
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Deficit, end of period $ (71,093) $ (40,435)
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See accompanying notes Consolidated Statements of Cash Flows (U.S.
dollars in thousands) (Unaudited)
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Real Estate Magna Consolidated Business Entertainment Corp.
------------------- ------------------- ------------------- Three
months ended Three months ended Three months ended March 31, March
31, March 31, ------------------- -------------------
------------------- 2005 2004 2005 2004 2005 2004
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OPERATING ACTIVITIES Net income (loss) $ 13,182 $ 17,521 $ 16,414 $
11,269 $ (2,799) $ 6,252 Items not involving current cash flows
(note 10) 14,408 22,734 9,841 11,251 4,057 11,483 Changes in
non-cash balances (note 10) (5,859) 6,751 7,023 13,769 (12,882)
(7,018)
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Cash provided by (used in) operating activities 21,731 47,006
33,278 36,289 (11,624) 10,717
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INVESTMENT ACTIVITIES Property and fixed asset additions (45,429)
(34,553) (23,030) (6,291) (22,399) (28,262) Proceeds on disposal of
real estate properties 3,785 5,278 2,175 1,265 1,610 4,013 Other
assets additions (122) (500) (14) (51) (108) (449) Loan receivable
from MEC (note 12) - - (11,366) - - -
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Cash used in investment activities (41,766) (29,775) (32,235)
(5,077) (20,897) (24,698)
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FINANCING ACTIVITIES Increase (decrease) in bank indebtedness (500)
2,000 - - (500) 2,000 Issuance of long-term debt 11,027 18,381 - -
11,027 18,381 Repayment of long-term debt (1,820) (1,468) (75) (78)
(1,745) (1,390) Loan payable to MID, net (note 12) - - - - 11,443 -
Issuance of shares 1,799 721 1,799 721 - - Minority investment in
subsidiary - 852 - - - 852 Dividends paid - (4,334) - (4,334) - -
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Cash provided by (used in) financing activities 10,506 16,152 1,724
(3,691) 20,225 19,843
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Effect of exchange rate changes on cash and cash equivalents
(3,459) (1,331) (2,799) (454) (660) (877)
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Net increase (decrease) in cash and cash equivalents during the
period (12,988) 32,052 (32) 27,067 (12,956) 4,985 Cash and cash
equivalents, beginning of period 289,690 129,894 228,874 30,087
60,816 99,807
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Cash and cash equivalents, end of period $276,702 $161,946 $228,842
$ 57,154 $ 47,860 $104,792
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See accompanying notes Consolidated Balance Sheets (U.S. dollars in
thousands) (Unaudited) Consolidated Real Estate Business
------------------------- ------------------------- March 31,
December 31, March 31, December 31, As at 2005 2004 2005 2004
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ASSETS
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Current assets: Cash and cash equivalents $ 276,702 $ 289,690 $
228,842 $ 228,874 Restricted cash 31,799 26,575 - - Accounts
receivable 68,702 61,484 10,344 12,356 Income taxes receivable -
2,073 - - Prepaid expenses and other 21,144 16,570 851 212
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398,347 396,392 240,037 241,442
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Real estate properties, net (note 4) 2,244,959 2,269,842 1,333,573
1,357,700 Fixed assets, net 54,299 56,161 507 532 Racing licenses
240,229 240,893 - - Other assets, net (note 12) 16,230 18,348 2,372
2,430 Loan receivable from MEC (note 12) - - 38,302 26,426 Deferred
rent receivable 13,684 13,851 13,684 13,851 Future tax assets
48,222 44,379 8,365 9,134
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$ 3,015,970 $ 3,039,866 $ 1,636,840 $ 1,651,515
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current liabilities: Bank indebtedness (note 5) $ 27,000 $ 27,500 $
- $ - Accounts payable and accrued liabilities 168,383 176,756
38,871 39,520 Income taxes payable 7,627 5,907 5,691 5,907
Dividends payable 4,343 - 4,343 - Long-term debt due within one
year 23,527 18,076 316 313 Deferred revenue 32,017 29,434 - -
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262,897 257,673 49,221 45,740
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Long-term debt (notes 6, 14) 248,092 248,003 6,364 6,505 Senior
unsecured debentures 217,244 219,228 217,244 219,228 Note
obligations 211,060 211,062 - - Loan payable to MID (note 12) - - -
- Future tax liabilities 170,169 169,781 33,229 33,325 Minority
interest 249,248 253,726 - -
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1,358,710 1,359,473 306,058 304,798
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Shareholders' equity: Class A Subordinate Voting Shares (note 7)
1,557,016 1,554,779 Class B Shares (note 7) 17,893 17,893
Contributed surplus (note 8) 2,037 2,387 Deficit (71,093) (79,932)
Currency translation adjustment 151,407 185,266
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1,657,260 1,680,393 1,330,782 1,346,717
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$ 3,015,970 $ 3,039,866 $ 1,636,840 $ 1,651,515
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Magna Entertainment Corp. ------------------------- March 31,
December 31, As at 2005 2004
----------------------------------------------- ASSETS
----------------------------------------------- Current assets:
Cash and cash equivalents $ 47,860 $ 60,816 Restricted cash 31,799
26,575 Accounts receivable 58,358 49,128 Income taxes receivable -
2,073 Prepaid expenses and other 20,293 16,358
----------------------------------------------- 158,310 154,950
----------------------------------------------- Real estate
properties, net (note 4) 912,062 912,243 Fixed assets, net 53,792
55,629 Racing licenses 240,229 240,893 Other assets, net (note 12)
16,661 18,863 Loan receivable from MEC (note 12) - - Deferred rent
receivable - - Future tax assets 39,857 35,245
----------------------------------------------- $ 1,420,911 $
1,417,823 -----------------------------------------------
----------------------------------------------- LIABILITIES AND
SHAREHOLDERS' EQUITY
----------------------------------------------- Current
liabilities: Bank indebtedness (note 5) $ 27,000 $ 27,500 Accounts
payable and accrued liabilities 129,512 137,236 Income taxes
payable 1,936 - Dividends payable - - Long-term debt due within one
year 23,211 17,763 Deferred revenue 32,017 29,434
----------------------------------------------- 213,676 211,933
----------------------------------------------- Long-term debt
(notes 6, 14) 241,728 241,498 Senior unsecured debentures - - Note
obligations 211,060 211,062 Loan payable to MID (note 12) 38,302
26,426 Future tax liabilities 136,940 136,456 Minority interest
249,248 253,726 -----------------------------------------------
1,090,954 1,081,101 -----------------------------------------------
Shareholders' equity: Class A Subordinate Voting Shares (note 7)
Class B Shares (note 7) Contributed surplus (note 8) Deficit
Currency translation adjustment
----------------------------------------------- 329,957 336,722
----------------------------------------------- $ 1,420,911 $
1,417,823 -----------------------------------------------
----------------------------------------------- Commitments and
contingencies (note 13) See accompanying notes Notes to Interim
Consolidated Financial Statements (All amounts in U.S. dollars and
all tabular amounts in thousands unless otherwise noted) (All
amounts as at March 31, 2005 and 2004 and for the three months
ended March 31, 2005 and 2004 are unaudited) 1. BASIS OF
PRESENTATION The unaudited interim consolidated financial
statements have been prepared in U.S. dollars following the
accounting policies as set out in the annual consolidated financial
statements for the year ended December 31, 2004, except as
disclosed in note 2. The unaudited interim consolidated financial
statements include the accounts of MI Developments Inc. and its
subsidiaries (collectively "MID" or the "Company"). MID is the
former real estate division of Magna International Inc. ("Magna")
and became a separate, publicly traded company on September 2,
2003. The Company holds an investment in Magna Entertainment Corp.
("MEC"), an owner and operator of horse racetracks and a supplier
of live racing content to the inter-track, off-track, and account
wagering markets. The Company owns approximately 59% of MEC's total
equity, representing 96% of the total votes attached to its
outstanding stock. MEC's results are consolidated with the
Company's results, with minority ownership accounted for as
minority interest. The unaudited interim consolidated financial
statements do not conform in all respects to the requirements of
generally accepted accounting principles for annual financial
statements. Accordingly, these unaudited interim consolidated
financial statements should be read in conjunction with the 2004
annual consolidated financial statements. In the opinion of
management, the unaudited interim consolidated financial statements
reflect all adjustments, which consist only of normal and recurring
adjustments, necessary to present fairly the financial position at
March 31, 2005 and 2004 and the results of operations and cash
flows for the three month periods March 31, 2005 and 2004. MEC's
racing business is seasonal in nature. MEC's racing revenues and
operating results for any quarter will not be indicative of the
racing revenues and operating results for the year. A
disproportionate share of annual revenues and net income (loss) is
earned in the first quarter of each year. Financial data and
related measurements are presented on the unaudited interim
consolidated statements of income (loss), unaudited interim
consolidated statements of cash flows, and unaudited interim
consolidated balance sheets in two categories, "Real Estate
Business" and "Magna Entertainment Corp.", which correspond to the
Company's reporting segments as described in note 11 to the
unaudited interim consolidated financial statements. Related party
transactions and balances between the "Real Estate Business" and
"Magna Entertainment Corp." have not been eliminated in the
presentation of each segment's financial data and related
measurements. However, the effects of transactions between these
two segments, which are further described in note 12, are
eliminated in the consolidated results of operations and financial
position of the Company. 2. ACCOUNTING CHANGE Consolidation of
Variable Interest Entities In September 2004, The Canadian
Institute of Chartered Accountants approved Accounting Guideline
15, "Consolidation of Variable Interest Entities" ("AcG-15").
AcG-15 provides guidance on the application of consolidation
principles to certain entities that are subject to control on a
basis other than ownership of voting interests. AcG-15 applies to
annual and interim periods beginning on or after November 1, 2004.
The adoption of AcG-15 did not have an impact on the Company's
consolidated financial statements. 3. EARNINGS PER SHARE Diluted
earnings per share for the three months ended March 31, 2005 and
2004 are computed as follows: Three months Three months ended ended
March 31, March 31, 2005 2004
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Net income $ 13,182 $ 17,521
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Weighted average number of Class A Subordinate Voting and Class B
Shares outstanding during the period (thousands) 48,227 48,137
Stock options (thousands) 72 58
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48,299 48,195
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Diluted earnings per Class A Subordinate Voting or Class B Shares $
0.27 $ 0.36
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The computation of diluted earnings per share for the three months
ended March 31, 2004 excludes the effect of the potential exercise
of 100,000 options to acquire Class A Subordinate Voting Shares
because the effect would be anti-dilutive. 4. REAL ESTATE
PROPERTIES Real estate properties consist of: March 31, December
31, 2005 2004
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Real Estate Business Income-producing properties under operating
leases Land $ 196,175 $ 198,940 Buildings, parking lots and
roadways - cost 1,188,515 1,186,112 Buildings, parking lots and
roadways - accumulated depreciation (199,723) (195,654)
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1,184,967 1,189,398
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Development properties Land and improvements 102,779 105,408
Properties under development 16,311 31,477
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119,090 136,885
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Properties held for sale 29,516 31,417
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1,333,573 1,357,700
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MEC Revenue-producing racetrack properties Land and improvements
218,360 219,028 Buildings - cost 446,750 426,947 Buildings -
accumulated depreciation (78,719) (73,269) Construction in progress
94,238 104,596
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680,629 677,302
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Excess racetrack properties 97,562 98,332
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Development properties Land and improvements 49,500 49,400
Properties under development 1,428 1,222
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50,928 50,622
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Revenue-producing non-racetrack properties Land and improvements
36,605 37,543 Buildings - cost 54,871 56,957 Buildings -
accumulated depreciation (11,042) (11,025)
-------------------------------------------------------------------------
80,434 83,475
-------------------------------------------------------------------------
Properties held for sale 2,509 2,512
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912,062 912,243
-------------------------------------------------------------------------
Eliminations (note 12) (676) (101)
-------------------------------------------------------------------------
Consolidated $ 2,244,959 $ 2,269,842
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5. BANK INDEBTEDNESS MEC has a senior secured revolving credit
facility in the amount of $50.0 million. The credit facility is
available by way of U.S. dollar loans and letters of credit for
general corporate purposes. Loans under the facility are secured by
a first charge on the assets of Golden Gate Fields and a second
charge on the assets of Santa Anita Park, and are guaranteed by
certain of MEC's subsidiaries that own and operate Golden Gate
Fields and Santa Anita Park. At March 31, 2005, MEC had borrowings
under the facility of $27.0 million (December 31, 2004 - $27.5
million) and had issued letters of credit totalling $22.6 million
(December 31, 2004 - $21.9 million) under the credit facility, such
that $0.4 million was unused and available. The credit facility
expires on October 10, 2005, and may be extended with the consent
of both parties. The loans under the credit facility bear interest
at either the U.S. base rate or the London Interbank Offered Rate
("LIBOR") plus a margin based on MEC's ratio of debt to earnings
before interest, income taxes, depreciation and amortization. The
weighted average interest rate on the loans outstanding under the
credit facility as at March 31, 2005 was 6.3% (December 31, 2004 -
6.0%). On February 18, 2005, MEC amended its credit agreement
including the financial covenants for this facility. At March 31,
2005, MEC was not in compliance with certain of the financial
covenants contained in the amended credit agreement. A waiver for
the financial covenants breach at March 31, 2005 was obtained from
the lender on April 26, 2005. MEC has also obtained a waiver in the
event that it is in breach of certain of the financial covenants at
June 30, 2005, which is the next and only remaining quarterly
reporting date required under the facility prior to its expiration
on October 10, 2005. MEC is currently negotiating with the lender
to amend the credit agreement, including the financial covenants
for this facility. 6. LONG-TERM DEBT On February 18, 2005, one of
MEC's Canadian subsidiaries entered into a financing arrangement,
that is secured by an assignment of a portion of the future amounts
receivable under the Magna Golf Club access agreement. MEC received
proceeds of $11.1 million (Cdn. $13.7 million) that are repayable
in three annual instalments of Cdn. $5.0 million commencing January
1, 2006 until the third instalment has been made in 2008. The
interest rate implicit in the arrangement is 5.1%. 7. SHARE CAPITAL
Changes in Class A Subordinate Voting Shares and Class B Shares are
shown in the following table: Class A Subordinate Voting Shares
Class B Shares Total -------------------- ------------------
-------------------- Stated Stated Stated Number Value Number Value
Number Value
-------------------------------------------------------------------------
Shares issued and outstanding, December 31, 2003 47,582,083
$1,552,901 548,238 $17,893 48,130,321 $1,570,794 Issued on exercise
of stock options 30,000 910 - - 30,000 910
-------------------------------------------------------------------------
Issued and outstanding, March 31, 2004, June 30, 2004, and
September 30, 2004 47,612,083 1,553,811 548,238 17,893 48,160,321
1,571,704 Issued on exercise of stock options 30,000 968 - - 30,000
968
-------------------------------------------------------------------------
Shares issued and outstanding, December 31, 2004 47,642,083
1,554,779 548,238 17,893 48,190,321 1,572,672 Issued on exercise of
stock options 70,000 2,237 - - 70,000 2,237
-------------------------------------------------------------------------
Shares issued and outstanding, March 31, 2005 47,712,083 $1,557,016
548,238 $17,893 48,260,321 $1,574,909
-------------------------------------------------------------------------
-------------------------------------------------------------------------
8. CONTRIBUTED SURPLUS Changes in the Company's contributed surplus
are shown in the following table:
-------------------------------------------------------------------------
Contributed surplus, January 1, 2005 $ 2,387 Stock-based
compensation 88 Transfer to share capital on exercise of stock
options (438)
-------------------------------------------------------------------------
Contributed surplus, March 31, 2005 $ 2,037
-------------------------------------------------------------------------
-------------------------------------------------------------------------
9. STOCK-BASED COMPENSATION (a) On August 29, 2003, MID's Board of
Directors approved the Incentive Stock Option Plan (the "MID
Plan"), which allows for the grant of stock options or stock
appreciation rights to directors, officers, employees and
consultants. A maximum of 2.72 million MID Class A Subordinate
Voting Shares are available to be issued under the MID Plan. MID
grants stock options to certain directors, officers, key employees
and consultants to purchase MID's Class A Subordinate Voting
Shares. 1/5th of options vest on the date of grant, and remaining
options vest over a period of 4 years at a rate of 1/5th on each
anniversary of the date of grant. Options expire on the tenth
anniversary of the date of grant, subject to earlier cancellation
in the events specified in the stock option agreement entered into
by MID with each recipient of options. Activity in MID's option
plan was as follows: 2005 2004 -------------------
-------------------- Weighted Weighted Average Average Exercise
Exercise Price Price Number (Cdn. $) Number (Cdn. $)
---------------------------------------------------------------------
Stock options outstanding, January 1 490,000 33.16 575,000 31.85
Granted - - 100,000 39.26 Exercised (70,000) 31.85 (30,000) 31.85
---------------------------------------------------------------------
Stock options outstanding, March 31 420,000 33.38 645,000 33.05
---------------------------------------------------------------------
---------------------------------------------------------------------
Stock options exercisable, March 31 146,000 32.73 225,000 32.54
---------------------------------------------------------------------
---------------------------------------------------------------------
During the three months ended March 31, 2004, there were 100,000
MID stock options granted with a weighted average fair value of
$7.57 per option. These 100,000 MID stock options were subsequently
cancelled during the three months ended September 30, 2004. The
fair value of MID stock options granted was estimated at the date
of grant using the Black-Scholes option pricing model with the
following weighted average assumptions: Three months ended March
31, -------------------- 2005 2004
---------------------------------------------------------------------
Risk-free interest rate - 3.0% Expected dividend yield - 1.20%
Expected volatility of MID's Class A Subordinate Voting Stock -
30.2% Weighted average expected life (years) - 4.0
---------------------------------------------------------------------
---------------------------------------------------------------------
During the three months ended March 31, 2005, the Real Estate
Business recognized $0.1 million (2004 - $1.6 million) of
stock-based compensation expense. (b) MEC has a Long-term Incentive
Plan (the "MEC Plan"), adopted in 2000, which allows for the grant
of non-qualified stock options, incentive stock options, stock
appreciation rights, restricted stock, bonus stock and performance
shares to directors, officers, employees, consultants, independent
contractors and agents. A maximum of 7.6 million shares of MEC's
Class A Subordinate Voting Stock are available to be issued under
the MEC Plan, of which 6.3 million are available for issuance
pursuant to stock options and tandem stock appreciation rights and
1.3 million are available for issuance pursuant to any other type
of award under the MEC Plan. MEC grants stock options to certain
directors, officers, key employees and consultants to purchase
shares of MEC's Class A Subordinate Voting Stock. All of such stock
options give the grantee the right to purchase Class A Subordinate
Voting Stock of MEC at a price no less than the fair market value
of such stock at the date of grant. Generally, stock options under
the MEC Plan vest over a period of two to six years from the date
of grant at rates of 1/7th to 1/3rd per year and expire on or
before the tenth anniversary of the date of grant, subject to
earlier cancellation upon the occurrence of certain events
specified in the stock option agreements entered into by MEC with
each recipient of options. Activity in MEC's option plan was as
follows: 2005 2004 ------------------- --------------------
Weighted Weighted Average Average Exercise Exercise Number Price $
Number Price $
---------------------------------------------------------------------
Stock options outstanding, January 1 4,500,500 6.18 4,841,500 6.14
Granted 490,000 6.40 150,000 6.33 Exercised - - (175,000) 4.87
Forfeited (145,000) 6.76 (144,000) 6.94
---------------------------------------------------------------------
Stock options outstanding, March 31 4,845,500 6.19 4,672,500 6.16
---------------------------------------------------------------------
---------------------------------------------------------------------
Stock options exercisable, March 31 4,089,430 6.12 3,863,311 6.10
---------------------------------------------------------------------
---------------------------------------------------------------------
During the three months ended March 31, 2005, there were 490,000
(2004 - 150,000) MEC stock options granted with a weighted average
fair value of $3.00 (2004 - $2.25) per option. The fair value of
MEC stock options granted was estimated at the date of grant using
the Black-Scholes option pricing model with the following weighted
average assumptions: Three months ended March 31,
-------------------- 2005 2004
---------------------------------------------------------------------
Risk-free interest rate 4.0% 3.0% Expected dividend yield - 0.84%
Expected volatility of MEC's Class A Subordinate Voting Stock 55.1%
57.8% Weighted average expected life (years) 4.0 4.0
---------------------------------------------------------------------
---------------------------------------------------------------------
During the three months ended March 31, 2005, MEC recognized $0.2
million (2004 - $0.2 million) of stock-based compensation expense.
10. DETAILS OF CASH FROM OPERATING ACTIVITIES (a) Items not
involving current cash flows: Three months ended March 31,
-------------------- 2005 2004
---------------------------------------------------------------------
Real Estate Business Depreciation and amortization $ 9,272 $ 8,354
Interest income from MEC (510) - Future income taxes 905 1,180
Stock-based compensation expense 88 1,640 (Gain) loss on disposal
of real estate (98) 132 Straight-line rent adjustment 115 (174)
Other 69 119
---------------------------------------------------------------------
9,841 11,251
---------------------------------------------------------------------
MEC Gain on disposal of real estate - (2,597) Depreciation and
amortization 10,031 8,420 Future income taxes (4,254) 464
Stock-based compensation expense 294 298 Minority interest (1,988)
4,526 Dilution (gains) losses (7) 143 Other (19) 229
---------------------------------------------------------------------
4,057 11,483
---------------------------------------------------------------------
Eliminations (note 12) 510 -
---------------------------------------------------------------------
Consolidated $ 14,408 $ 22,734
---------------------------------------------------------------------
---------------------------------------------------------------------
(b) Changes in non-cash balances: Three months ended March 31,
-------------------- 2005 2004
---------------------------------------------------------------------
Real Estate Business Accounts receivable $ 1,597 $ 6,299 Prepaid
expenses and other (648) 82 Accounts payable and accrued
liabilities 6,190 7,563 Income taxes payable (116) (175)
---------------------------------------------------------------------
7,023 13,769
---------------------------------------------------------------------
MEC Restricted cash (5,242) (17,238) Accounts receivable (8,820)
(28,077) Prepaid expenses and other (5,059) (10,425) Accounts
payable and accrued liabilities 208 30,627 Deferred revenue 2,378
8,447 Income taxes receivable/payable 3,653 9,648
---------------------------------------------------------------------
(12,882) (7,018)
---------------------------------------------------------------------
Consolidated $ (5,859) $ 6,751
---------------------------------------------------------------------
---------------------------------------------------------------------
11. SEGMENTED INFORMATION The Company's reportable segments reflect
how the Company is organized and managed by senior management. The
Company's operations are segmented in the Company's internal
financial reports between wholly owned operations (the Real Estate
Business) and publicly traded operations (MEC). The segregation of
operations between wholly owned and publicly traded operations
recognizes the fact that, in the case of the Real Estate Business,
the Company's management has direct responsibility for the key
operating, financing and resource allocation decisions, whereas, in
the case of MEC, such responsibility resides with MEC's separate
board of directors and executive management. The Company's
reporting segments are as follows: Real Estate Business The Real
Estate Business owns real estate assets in Canada, Austria, the
United States, Germany, Mexico, the United Kingdom, Poland, the
Czech Republic, Belgium and Spain. Substantially all these real
estate assets are leased to, or are under development for
subsequent lease to, Magna's automotive operating units. The Real
Estate Business also owns certain properties that are being held
for future development or sale. MEC MEC operates or manages eleven
thoroughbred racetracks, two standardbred racetracks, and two
racetracks that run both thoroughbred and standardbred meets, as
well as the simulcast wagering venues at these tracks. In addition,
MEC operates off-track betting facilities, XpressBet(R), a United
States national Internet and telephone account wagering business,
and MagnaBet(TM), a European account wagering service. MEC also
owns and operates HorseRacing TV(TM), a network focused on
horseracing, and owns a 30% equity investment in AmTote
International, Inc., a provider of totalisator services to the
pari-mutuel industry. In 2004, MEC launched RaceONTV(TM) in Europe
to provide North American racing content from MEC's racetracks and
other U.S. racetracks that have agreed to participate in MEC's
international distribution network to locations outside North
America. To support certain of MEC's thoroughbred racetracks, MEC
owns and operates three thoroughbred training centers in the Unites
States. MEC also owns and operates production facilities in Austria
and in North Carolina for StreuFex(TM), a straw-based horse bedding
product. In addition to racetracks, MEC's real estate portfolio
includes two golf courses and related recreational facilities in
Austria and Canada, and three residential developments in various
stages of development in Austria, the United States and Canada. The
Company's interim consolidated statements of income (loss),
consolidated statements of cash flows, and consolidated balance
sheets have been arranged so as to provide detailed, discrete
financial information on the Real Estate Business and MEC reporting
segments. 12. TRANSACTIONS WITH RELATED PARTIES Mr. F. Stronach,
Magna's Chairman of the Board, and three other members of his
family are trustees of the Stronach Trust. The Stronach Trust
controls the Company through the right to direct the votes
attaching to 66% of the Company's Class B Shares. The Stronach
Trust also controls Magna through the right to direct the votes
attaching to 66% of Magna's Class B Shares. Since the Company and
Magna are under the common control of the Stronach Trust, they are
considered to be related parties for accounting purposes. Loan
receivable from MEC On December 9, 2004, a subsidiary of MID
entered into a loan agreement to provide project financing
facilities to subsidiaries of MEC of $115.0 million for the
reconstruction of facilities at Gulfstream Park racetrack in
Florida and $77.0 million for the reconstruction and development of
The Meadows racetrack and slot facility in Pennsylvania. As at
March 31, 2005, there was a balance of $38.3 million (December 31,
2004 - $26.4 million) due under the Gulfstream Park project
facility including $0.6 million (December 31, 2004 - $0.1 million)
of accrued interest. No amount had been advanced under The Meadows
project facility as at March 31, 2005. Approximately $3.0 million
of costs were incurred in fiscal 2004 by MEC in association with
the project financing. At the MEC segment level, these costs were
recognized as deferred financing costs and are being amortized into
capitalized interest over the life of the project financing. At a
consolidated level, such costs were charged to general and
administrative expenses in fiscal 2004. All interest relating to
the project financing, including any capitalization thereof by MEC,
and any adjustments to the deferred financing costs are eliminated
from the Company's consolidated results of operation and financial
position. 13. COMMITMENTS AND CONTINGENCIES (a) In the ordinary
course of business activities, the Company may be contingently
liable for litigation and claims with, among others, customers,
suppliers and former employees. Management believes that adequate
provisions have been recorded in the accounts where required.
Although it is not possible to accurately estimate the extent of
potential costs and losses, if any, management believes, but can
provide no assurance, that the ultimate resolution of such
contingencies would not have a material adverse effect on the
financial position of the Company. (b) MEC generates a substantial
amount of its revenues from wagering activities and, therefore, it
is subject to the risks inherent in the ownership and operation of
a racetrack. These include, among others, the risks normally
associated with changes in the general economic climate, trends in
the gaming industry, including competition from other gaming
institutions and state lottery commissions, and changes in tax laws
and gaming laws. (c) At March 31, 2005, the Company had $7.6
million (Real Estate Business - $3.1 million; MEC - $4.5 million)
of letters of credit issued with various financial institutions to
guarantee various construction projects related to activity of the
Company. These letters of credit are secured by cash deposits of
the Company. (d) MEC has provided indemnities related to surety
bonds and letters of credit issued in the process of obtaining
licenses and permits at certain racetracks and to guarantee various
construction projects related to activity of its subsidiaries. As
at March 31, 2005, these indemnities amounted to $4.3 million with
expiration dates through March 31, 2006. (e) At March 31, 2005, the
Company's contractual commitments related to construction and
development projects outstanding amounted to approximately $87.8
million (Real Estate Business - $17.8 million; MEC - $70.0
million). (f) The Maryland Jockey Club is a party to an agreement
(the "Maryland Operating Agreement") with Cloverleaf Enterprises,
Inc. ("Cloverleaf"), the current owner of Rosecroft Raceway
("Rosecroft"), a standardbred track located in Prince George's
County in Maryland. The Maryland Operating Agreement replaced a
previous agreement (the "Maryland Revenue Sharing Agreement"),
which was effective as of January 1, 2000 and expired on April 18,
2004. The Maryland Operating Agreement has been in effect since
June 9, 2004, and expired on April 30, 2005, however both parties
intend to informally operate under its terms until a new
arrangement can be finalized. The Maryland Revenue Sharing
Agreement enabled wagering to be conducted, both day and evening,
on live and simulcast thoroughbred and harness races at Pimlico,
Laurel Park and Rosecroft and the three Maryland off-track betting
facilities operated by them. Under the agreement, wagering revenue
from these sources was pooled and certain expenses and obligations
were pooled and paid from those revenues to generate net wagering
revenue. This net wagering revenue was then distributed 80% to The
Maryland Jockey Club and 20% to Rosecroft. Commencing April 19,
2004, The Maryland Jockey Club and Rosecroft are no longer pooling
their wagering revenue and distributing net wagering revenue as
they did under the Maryland Revenue Sharing Agreement. From April
19, 2004 until June 9, 2004, they operated under a state law which
precluded The Maryland Jockey Club from operating after 6:15 p.m.
without Rosecroft's consent, and the federal Interstate Horseracing
Act, which provides that, without the consent of The Maryland
Jockey Club, Rosecroft cannot accept simulcast wagering on horse
racing during the times that Pimlico or Laurel Park are running
live races. Since coming into effect on June 9, 2004, The Maryland
Operating Agreement has enabled Pimlico, Laurel Park and Rosecroft
to conduct simulcast wagering on thoroughbred and harness race
signals during the day and evening hours without restriction. Under
the Maryland Operating Agreement, Cloverleaf agrees to pay the
thoroughbred industry a 12% premium on pari-mutuel wagering (net of
refunds) conducted at Rosecroft on all thoroughbred race signals,
and The Maryland Jockey Club agrees to pay Cloverleaf a 12% premium
on pari-mutuel wagering (net of refunds) conducted at Pimlico and
Laurel Park on all standardbred race signals. Under the Maryland
Operating Agreement, the parties have agreed to make a good faith
effort to reach a long-term agreement on cross- breed simulcasting
and off-track betting facilities in the State of Maryland. Without
an arrangement similar in effect to the Maryland Revenue Sharing
Agreement or the Maryland Operating Agreement, there would be a
material decline in the revenues, earnings and purses of The
Maryland Jockey Club. At this time, MEC is uncertain as to the
likelihood of renewal of this agreement on comparable terms. (g)
MEC is considering a redevelopment of the entire stable area at
Laurel Park (the "Laurel Park Redevelopment"). In the event this
redevelopment was to proceed as currently contemplated, the Laurel
Park Redevelopment would include the construction of new barns,
dormitories and grooms' quarters. The aggregate carrying value at
March 31, 2005 of the assets that would be demolished if the Laurel
Park Redevelopment is completed is approximately $3.1 million. If
MEC decides to proceed with the Laurel Park Redevelopment and
obtains the approval of its Board of Directors, a reduction in the
expected life of the existing assets would occur and a write-down
would be necessary. If MEC proceeds, the project would be scheduled
to minimize any interference with Laurel Park's racing season;
however, with a project of this magnitude, there will likely be a
temporary disruption of Laurel Park's operations during a racing
season and there is a risk that the redevelopment will not be
completed according to schedule. Any interference with the racing
operations would result in a reduction in the revenues and earnings
generated at Laurel Park during that season. (h) MEC is considering
a redevelopment of the clubhouse/grandstand at The Meadows ("The
Meadows Redevelopment"). In the event MEC obtains a slot machine
license for The Meadows and this development were to proceed as
currently contemplated, The Meadows Redevelopment would include the
construction of a new clubhouse/grandstand with a facility to house
slot machines. The aggregate carrying value at March 31, 2005 of
the assets that would be demolished if The Meadows Redevelopment is
completed is approximately $8.3 million. If MEC decides to proceed
with The Meadows Redevelopment and obtains approval of its Board of
Directors, a reduction in the expected life of the existing assets
would occur and a write-down would be necessary. If MEC proceeds,
MEC's goal would be to minimize any interference with The Meadows'
operations, however, with a project of this magnitude, there will
likely be a temporary disruption of The Meadows' operations and
there is a risk that the redevelopment will not be completed
according to schedule. Any interference with the racing operations
would result in a reduction in the revenues and earnings at The
Meadows during that season. (i) In October 2003, MEC signed a
Letter of Intent to explore the possibility of a joint venture
between Forest City Enterprises, Inc. ("Forest City") and various
affiliates of MEC, anticipating the ownership and development of a
portion of the Gulfstream Park racetrack property. In April 2004,
MEC signed a Pre-Development Management Agreement (the
"Agreement"), which governs the activities of the parties and
obligates the parties to work together to plan, design, entitle,
pre-lease, contract to construct and finance a project. The
Agreement also contemplates a conceptual development and business
plan for the project. Upon execution of this Agreement, Forest City
paid $1.0 million to MEC in consideration for its right to work
exclusively with MEC on this project and to secure the performance
of its obligations under the Agreement. Forest City and MEC then
collectively developed a business plan and Forest City provided an
additional $1.0 million to MEC. These two deposits have been
included in MEC's accounts payable and accrued liabilities on the
Company's consolidated balance sheets. Under certain conditions,
these deposits may be refundable to Forest City. Under the terms of
the Letter of Intent and also the Agreement, MEC may be responsible
for additional equity contributions; however to March 31, 2005, MEC
has not made any such contributions. (j) In April 2004, MEC signed
a Letter of Intent to explore the possibility of joint ventures
between Caruso Affiliates Holdings and various affiliates of MEC to
develop certain undeveloped lands surrounding Santa Anita Park and
Golden Gate Fields racetracks. Upon execution of this Letter of
Intent, MEC established a joint account to be used for the purpose
of co-funding the development of a business plan for each of these
projects, with the goal of entering into Operating Agreements by
May 31, 2005. Up to March 31, 2005, MEC has contributed $1.0
million to this initiative, of which $0.6 million was contributed
in the three months ending March 31, 2005. The deposits have been
included in MEC's other assets on the Company's consolidated
balance sheets. MEC is continuing to explore these developmental
opportunities, but to March 31, 2005 has not entered into
definitive Operating Agreements on either of these potential
developments. Under the terms of the Letter of Intent, MEC may be
responsible for additional equity contributions; however to March
31, 2005, MEC has not made any such contributions. 14. SUBSEQUENT
EVENTS On April 5, 2005, one of MEC's Canadian subsidiaries entered
into a loan agreement, that is secured by an assignment of the
future amounts receivable under the Magna Golf Club access
agreement for the years 2009 through 2014. The amount of the loan
is $16.9 million (Cdn. $20.5 million) and are repayable in six
annual repayments of Cdn. $5.0 million commencing January 1, 2009
until the last instalment has been made in 2014. The loan bears
interest at a rate of 6.4% per annum. DATASOURCE: MI Developments
Inc. CONTACT: Doug Tatters, Executive Vice-President and Chief
Financial Officer, at (905) 726-7507. For teleconferencing
questions, please contact Deborah Fox at (905) 726-7626.
Copyright