Magna - one step away from bankruptcy ??

Frank Stronach's dreams of a global Web-connected gambling empire based on Santa
Anita and other famous racetracks acquired by his Magna Entertainment are going
down in flames. MEC's latest CFO decamped last week, hard on the heels of Paul
Cellucci, former U.S. ambassador to Canada, who was expected to glad-hand
recalcitrant state governors into allowing slots at MEC's U.S. tracks. MEC has
conceded to regulatory authorities that its "going concern" status is in
question. So how has an undeniable genius in both business and thoroughbred
breeding, who has won the Queen's Plate and counts among his honours U.S.
breeder of the year, managed to fall so far short of his vision? Our guess is
lack of attention



the text emboldend above, to an auditor, means that the companies income statement has shown consistent looses and has no way in the future to turn the losses around through current operations. when you say, in your audit report or in a report to the SEC you doubt the ability to be a "going concern"
that means you are currently insolvent and will shortly cease operating as a running company. this is serious,

does anybody have any data on there income statement ?

[Scurlogue Champ]

We studied Magna's financial statements in an Equine Finance class last year and while I don't recall any concrete numbers, I can assure you that they are

SCREWED up!!

Originally Posted by moodwalker

We studied Magna's financial statements in an Equine Finance class last year and while I don't recall any concrete numbers, I can assure you that they are

SCREWED up!!

this is serious, just how much time do they have before they file ??

[SentToStud]

Annual Financials
Mar 2006 Dec 2005 Dec 2004 Dec 2003 Dec 2002
Revenues $668 mil $625 mil $732 mil $709 mil $549 mil
Net Earnings $-99 mil $-105 mil $-96 mil $-105 mil $-14 mil
Net EPS $-0.92 $-0.98 $-0.89 $-0.98 $-0.14
Pre-tax Margin -16.2% -16.6% -13.3% -23.1% -4.2%
Net Margin -14.8% -16.9% -13.1% -14.8% -2.6%
EBITDA $-11 mil $-28 mil $-8 mil $17 mil $23 mil
Long-Term Debt $522 mil $517 mil $484 mil $340 mil $190 mil
Current Assets $ 273 mil $225 mil $149 mil $174 mil $163 mil
Current Liabilities $385 mil $324 mil $196 mil $184 mil $177 mil
Common Equity $468 mil $460 mil $579 mil $657 mil $721 mil


They're losing $9 million a month.

Originally Posted by SentToStud

Annual Financials
Mar 2006 Dec 2005 Dec 2004 Dec 2003 Dec 2002
Revenues $668 mil $625 mil $732 mil $709 mil $549 mil
Net Earnings $-99 mil $-105 mil $-96 mil $-105 mil $-14 mil
Net EPS $-0.92 $-0.98 $-0.89 $-0.98 $-0.14
Pre-tax Margin -16.2% -16.6% -13.3% -23.1% -4.2%
Net Margin -14.8% -16.9% -13.1% -14.8% -2.6%
EBITDA $-11 mil $-28 mil $-8 mil $17 mil $23 mil
Long-Term Debt $522 mil $517 mil $484 mil $340 mil $190 mil
Current Assets $ 273 mil $225 mil $149 mil $174 mil $163 mil
Current Liabilities $385 mil $324 mil $196 mil $184 mil $177 mil
Common Equity $468 mil $460 mil $579 mil $657 mil $721 mil


They're losing $9 million a month.

You are not taking into account the fortune they have made on their real estate.

[SentToStud]

Originally Posted by boldruler

You are not taking into account the fortune they have made on their real estate.

They're not my numbers.

And why wouldn't the freal estate ortune show up in assets? I assume it is and they're funding ongoing ops with cash. Right?

Anyway, Q earnings call next week, I believe.

Originally Posted by SentToStud

Annual Financials
Mar 2006 Dec 2005 Dec 2004 Dec 2003 Dec 2002
Revenues $668 mil $625 mil $732 mil $709 mil $549 mil
Net Earnings $-99 mil $-105 mil $-96 mil $-105 mil $-14 mil
Net EPS $-0.92 $-0.98 $-0.89 $-0.98 $-0.14
Pre-tax Margin -16.2% -16.6% -13.3% -23.1% -4.2%
Net Margin -14.8% -16.9% -13.1% -14.8% -2.6%
EBITDA $-11 mil $-28 mil $-8 mil $17 mil $23 mil
Long-Term Debt $522 mil $517 mil $484 mil $340 mil $190 mil
Current Assets $ 273 mil $225 mil $149 mil $174 mil $163 mil
Current Liabilities $385 mil $324 mil $196 mil $184 mil $177 mil
Common Equity $468 mil $460 mil $579 mil $657 mil $721 mil


They're losing $9 million a month.

thanks stud, it looks like there current expeneses are funded by credit, look at the increase in long term debt,
the rebuiding of gulfstream may push them into bankruptcy.

it looks like the only asset they have is their Net operating loss carryforward income tax benefit.
$400 MILLION DOLLARS in NOL carryforward is $125 million in prepaid tax.

Originally Posted by SentToStud

They're not my numbers.

And why wouldn't the freal estate ortune show up in assets? I assume it is and they're funding ongoing ops with cash. Right?

Anyway, Q earnings call next week, I believe.

The value of their real estate holdings is significantly higher than it shows on paper. They do this for tax reasons, just like people's homes are worth a lot more when they sell it than when they have it valued for tax reasons.

[SentToStud]

Originally Posted by Secretariat

thanks stud, it looks like there current expeneses are funded by credit, look at the increase in long term debt,
the rebuiding of gulfstream may push them into bankruptcy.

It's generally not a good situation when debt and liabilities are the only items growing.

this is just awefull ....
they need 100 million more to operate a year, or 9 million more revenue a month.

where they gonna get that ???

at 25% take out, they need to increase their gambling handle
36 million dollars a month.

or...

they need to cut 10 million a month in expenses,
or 2.5 million a week. what can they not spend 2.5 million a week on that they currently are spending.

this is not a healthy financial statement summary,
in fact this is a picture of a company that you do not want to invest in. you could not audit this company and attach any thing other than an qualified audit report with a going concern clause.

they need investors

uh oh.........

[jpops757]

MEC has accomplished what they want, a reason to go to the states for leagalization of slots for all of ther tracks. Another step in there goal of a 5 star casino that has a racetrack. Creative bookkeeping.

Originally Posted by jpops757

MEC has accomplished what they want, a reason to go to the states for leagalization of slots for all of ther tracks. Another step in there goal of a 5 star casino that has a racetrack. Creative bookkeeping.

when you say to others your company is not a going concern,
the days of crerative bookkeeping have passed you by already.
the creative bookkeepping prolly took place a couple years back,
now they are in trouble.

going concern to an auditor is like my house is on fire to a fireman

And people jump ugly on NYRA? You have got to be kidding me.

[Danzig]

didn't magna bid for nyra? cross them off the short list...

Frank is a genius. Man that man is a pretty good business guy. He will now go to the states and say I need gambling or I am going to sell the tracks to a real estate company to tear down and build houses, condos, or a business park. He owns the land and this is what is important. He holds all the cards in this matter. He will show them the statements and show them all the money he has put into the tracks and he will say, now it is on you (state) to give me gambling or I will have to sell. The states will give in and in about 5 years MEC will be operating in the red.

Originally Posted by eurobounce

Frank is a genius. Man that man is a pretty good business guy. He will now go to the states and say I need gambling or I am going to sell the tracks to a real estate company to tear down and build houses, condos, or a business park. He owns the land and this is what is important. He holds all the cards in this matter. He will show them the statements and show them all the money he has put into the tracks and he will say, now it is on you (state) to give me gambling or I will have to sell. The states will give in and in about 5 years MEC will be operating in the red.

Exactly. That real estate is the key to everything. The states need that gambling money and he can get whatever he wants as long as he knows that real estate can be sold at a huge profit. He got the government addicted to the gambling money and now he gets whatever he wants or they lose their gambling money. Brilliant!

wanna buy a brand new race track in south florida, CHEAP !

i can get ya a good deal on it !

Originally Posted by boldruler

Exactly. That real estate is the key to everything. The states need that gambling money and he can get whatever he wants as long as he knows that real estate can be sold at a huge profit. He got the government addicted to the gambling money and now he gets whatever he wants or they lose their gambling money. Brilliant!

i imagine the real estate is equal to the mortgage, he just took out a mortgage to build the place, and he has been borrowing 9 million a month since it was built.
i haven';t seen the balance sheet, but i doubt the underlying equity in the real estate is anything to drastic.
at most, a shot in the dark, hge could get $100,000,000 more than he what he spent on it. that would fund the track for 1 more year. than what ???

he should look into leasing the track, or maybe selling the rights for twenty years to AP for 5 grade1 races.
hmmm, thats an idea, sell the rights to the graded stakes..