08/05/2008 11:00PM

Magna loses $21.3M in second quarter


Magna Entertainment Corp., the struggling racetrack owner and operator, had a net loss of $21.3 million in the second quarter of 2008, a slight improvement over its 2007 second-quarter results, according to financial statements released late on Tuesday night.

The net loss was a $2.1 million improvement over a net loss of $23.4 million in the second quarter last year, but the result brought Magna's loss this year to $67.7 million, or $11.60 per share. The company has lost more than $550 million since being formed in 1999, and its accountants continue to prepare the company's financial statements under a "going-concern" warning. The warning is an acknowledgment that the company cannot continue to operate unless Magna makes significant improvements to its financial performance.

Magna's stock opened on Wednesday at $7.20. The company recently authorized a 1-to-20 reverse split of its stock in order to get the share price over $1 and comply with trading requirements of the Nasdaq stock market. Its market capitalization is $42 million.

Revenues in the quarter were $166.9 million, a slight decline from revenues of $167.4 million in the second quarter of 2007. Expenses rose from $183.6 million in the second quarter of 2007 to $188.7 million in the second quarter this year.

According to the company's balance sheet, Magna has $181.3 million in debt due this year. Of that total, $170.2 million is due to its parent, MI Developments. The company has another $373.7 million in long-term debt.

Last year, Magna announced a plan to pay down its long-term debt by the end of 2008 by selling some of its properties. The company reached an agreement earlier this year to sell Great Lakes Downs, an unprofitable track in Michigan that the company had already closed, but Magna has yet to reach any other deals to sell its tracks.

In a release, Blake Tohana, the company's chief financial officer, said that the company does not "expect to complete our plan on the originally contemplated time schedule." Tohana also said that the company is "continuing to pursue other asset sale opportunities."

Magna owns Santa Anita Park, Golden Gate Fields, Gulfstream Park, Laurel Park, Pimlico Race Course, and several other smaller tracks. In addition, the company owns the assets of Lone Star Park in Texas, though not the land under the track, and owns and operates an account-wagering operation, XpressBet, and a horse racing television channel, HRTV, in partnership with Churchill Downs Inc.