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MEC reports results

Frank Stronach, MEC's Chairman and Chief Executive Officer commented: "Despite difficult economic conditions in the U.S., our EBITDA from continuing operations improved by $1.2 million in the second quarter of 2008 compared to the same period last year. This improvement was primarily due to improved results at Gulfstream Park, Santa Anita Park and our real estate operations partially offset by disappointing results at The Maryland Jockey Club. We are also encouraged by the results at XpressBet®, which increased its handle by 21%, and Remington Park, which increased its slot revenues by 17%, both compared to the same quarter last year. Notwithstanding this modest improvement in EBITDA for the quarter, we recognize the need for further significant improvement in our operating results, as we also focus on dramatically reducing our debt levels."

Blake Tohana, MEC's Executive Vice-President and Chief Financial Officer, commented: "Although we continue to take steps to implement our debt elimination plan, U.S. real estate and credit markets have continued to demonstrate weakness in 2008 and we do not expect to complete our plan on the originally contemplated time schedule. However, we remain firmly committed to reducing debt and interest expense. We closed the sale of Great Lakes Downs in July 2008 and are continuing to pursue other asset sale opportunities."

Our racetracks operate for prescribed periods each year. As a result, our racing revenues and operating results for any quarter will not be indicative of our racing revenues and operating results for the year.

Revenues from continuing operations were $166.3 million for the three months ended June 30, 2008, a decrease of $1.1 million or 0.7% compared to $167.4 million for the three months ended June 30, 2007. The decreased revenues from continuing operations were primarily due to:

- Maryland revenues below the prior year period by $4.4 million primarily due to decreased handle and wagering revenues at this year's Preakness®, and decreased average daily attendance and handle during the race meets at both Laurel Park and Pimlico; and

- California revenues below the prior year period by $4.0 million due to 5 fewer live race days at Golden Gate Fields with a change in the racing calendar which shifted live race days to the third and fourth quarters of 2008, partially offset by increased non-wagering revenues at Santa Anita Park from special events and facility rentals; partially offset by:

- Florida revenues above the prior year period by $5.5 million primarily due to increased gross gaming revenues at Gulfstream Park from improved slot and poker operations, and increased wagering revenues from the introduction of year round simulcasting at Gulfstream Park at the end of the 2008 race meet; and

- Real estate and other operations revenues above the prior year period by $2.3 million due to increased housing unit sales at our European residential housing development.

Revenues were $397.3 million in the six months ended June 30, 2008, a decrease of $24.4 million or 5.8% compared to $421.6 million for the six months ended June 30, 2007. The decreased revenues in the six months ended June 30, 2008 compared to the prior year period are primarily due to the same factors impacting the three months ended June 30, 2008 as well as California revenues below the prior year period by $21.2 million due to the net loss of 8 live race days at Santa Anita Park due to excessive rain and track drainage issues with the new synthetic racing surface that was installed in the fall of 2007.

EBITDA from continuing operations was $5.2 million for the three months ended June 30, 2008, an increase of $1.2 million or 31.3% compared to $4.0 million for the three months ended June 30, 2007. The increased EBITDA from continuing operations was primarily due to:

- Florida operations above the prior year period by $2.5 million due to increased gaming and simulcasting revenues at Gulfstream Park as noted above, combined with reduced operating costs and improved food and beverage operations; and

- Real estate and other operations above the prior year period by $2.0 million due to increased revenues at our European residential housing development as noted above; partially offset by:

- Maryland operations below the prior year period by $4.2 million due to decreased revenues at The Maryland Jockey Club as noted above, combined with increased severance costs and the December 31, 2007 expiry of expense contribution agreements with the Maryland Thoroughbred Horsemen's Association and the Maryland Breeders' Association.

EBITDA of $21.1 million for the six months ended June 30, 2008, decreased $7.5 million from $28.5 million in the six months ended June 30, 2007 primarily due to:

- California operations below the prior year period by $3.9 million for the reasons noted above which decreased revenues at Santa Anita Park and Golden Gate Fields;

- Maryland operations below the prior year period by $5.9 million for the reasons noted above which decreased revenues and EBITDA at Laurel Park and Pimlico in the three months ended June 30, 2008; and

- A write-down of long-lived assets of $5.0 million relating to an impairment charge related to the Dixon, California real estate property in the six months ended June 30, 2008, which represented the excess of the carrying value of the asset over the estimated fair value less selling costs.

During the three months ended June 30, 2008, cash used for operating activities of continuing operations was $22.3 million, which decreased $25.2 million from cash provided from operating activities of continuing operations of $2.9 million in the three months ended June 30, 2007, primarily due to an increase in cash used for non-cash working capital balances. In the three months ended June 30, 2008, cash used for non-cash working capital balances of $11.9 million is primarily due to a decrease in accounts payable and other accrued liabilities, partially offset by a decrease in restricted cash at June 30, 2008 compared to the respective balances at March 31, 2008. Cash provided from investing activities of continuing operations in the three months ended June 30, 2008 was $24.7 million, including $31.5 million of proceeds received on the sale of real estate to a related party, $3.3 million of proceeds on the disposal of fixed assets, partially offset by $5.7 million of other asset additions and $4.4 million of real estate property and fixed asset additions. Cash provided from financing activities of continuing operations during the three months ended June 30, 2008 of $2.7 million includes net borrowings of $11.6 million from our controlling shareholder, partially offset by net repayments of $5.7 million of long-term debt and $3.3 million of bank indebtedness.

Although we continue to take steps to implement our debt elimination plan, real estate and credit markets have continued to demonstrate weakness to date in 2008 and we do not expect that we will be able to complete asset sales at acceptable prices as quickly or for amounts as originally contemplated. Also, given the announcement of the reorganization proposal for MI Developments Inc. ("MID"), our controlling shareholder, and pending determination of whether it will proceed, we are in the process of reconsidering whether to sell certain of the assets that were originally identified for disposition under the debt elimination plan. As a result of these developments, combined with our upcoming debt maturities and our operational funding requirements, we will again need to seek extensions or additional funds in the short-term from one or more possible sources. The availability of such extensions or additional funds from existing lenders, including our controlling shareholder, or from other sources is not assured and, if available, the terms thereof are not determinable at this time.

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