<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1995
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OR
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-1365
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SCIOTO DOWNS, INC.
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(Exact name of registrant as specified in its charter)
OHIO 31-4440550
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
6000 SOUTH HIGH STREET, COLUMBUS, OHIO 43207
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(Address of principal executive offices) (Zip Code)
(614) 491-2515
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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The number of common shares outstanding at July 31, 1995:
595,767, par value $1.05
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SCIOTO DOWNS, INC.
INDEX
PAGES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at July 31, 1995 (Unaudited), October 31,
1994, and July 31, 1994 (Unaudited) 2-3
Statements of Operations for the three-month and nine-month
periods ended July 31, 1995 and 1994 (Unaudited) 4-5
Statements of Cash Flows for the nine-month periods ended
July 31, 1995 and 1994 (Unaudited) 6
Notes to the Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION 9
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES 10
1
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SCIOTO DOWNS, INC.
BALANCE SHEETS
July 31, 1995 (unaudited) and 1994 (unaudited) and October 31, 1994
<TABLE>
<CAPTION>
OCTOBER 31,
ASSETS JULY 31, 1995 1994 JULY 31, 1994
------------- ------------ -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 866,176 $ 685,085 $ 671,600
Accounts receivable, trade 46,667 10,792 22,352
Accounts receivable, affiliate 61,107 19,172 27,945
Prepaid expenses and other 128,628 121,004 150,014
Refundable income taxes (Note 3) 1,702
------------- ----------- -------------
Total current assets 1,102,578 836,053 873,613
------------- ----------- -------------
Property and equipment, at cost 19,056,784 18,829,086 18,813,919
Less accumulated depreciation 11,099,935 10,585,435 10,403,032
------------- ----------- -------------
Total property and equipment 7,956,849 8,243,651 8,410,887
------------- ----------- -------------
Construction in progress 49,513
------------- ----------- -------------
Investment in joint venture 43,396 43,396 22,378
------------- ----------- -------------
Total assets $ 9,102,823 $ 9,172,613 $ 9,306,878
------------- ----------- --------------
</TABLE>
2
<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SCIOTO DOWNS, INC.
BALANCE SHEETS, CONTINUED
<TABLE>
<CAPTION> OCTOBER 31,
LIABILITIES AND STOCKHOLDERS' EQUITY JULY 31, 1995 1994 JULY 31, 1994
------------- ----------- -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Current liabilities:
Accounts payable $ 19,699 $ 67,234 $ 18,017
Purses payable 323,881 68,412 129,304
Dividends payable 29,789
Accrued expenses 143,157 205,280 147,251
Current maturities, term debt 100,000 100,000 100,000
Deferred income taxes 15,683 22,520
------------- ----------- -------------
Total current liabilities 602,420 493,235 394,572
------------- ----------- -------------
Minimum pension liability 83,123 83,123
------------- ----------- -------------
Net deferred income taxes 261,869 274,032 369,702
------------- ----------- -------------
Term debt, net of current maturities 3,176,655 3,263,215 3,290,458
------------- ----------- -------------
Stockholders' equity:
Common stock, $1.05 par value; issued and
outstanding, 595,767 shares 625,555 625,555 625,555
Capital in excess of par value 2,037,300 2,037,300 2,037,300
Retained earnings 2,356,934 2,437,186 2,589,291
Pension liability adjustment, net of taxes (41,033) (41,033)
------------- ---------- -------------
Total stockholders' equity 4,978,756 5,059,008 5,252,146
------------- ----------- -------------
Total liabilities and stockholders' equity $ 9,102,823 $ 9,172,613 $ 9,306,878
============= =========== =============
The accompanying notes are an integral part of the unaudited financial statements.
</TABLE>
3
<PAGE> 5
SCIOTO DOWNS, INC.
STATEMENTS OF OPERATIONS
for the three-month and nine-month periods ended July 31, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION> FOR THE THREE-MONTH FOR THE NINE-MONTH
PERIODS ENDED JULY 31, PERIODS ENDED JULY 31,
---------------------- ----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Operating revenues:
Pari-mutuel commissions and breakage $4,690,408 $4,660,088 $4,690,408 $4,660,088
Less pari-mutuel taxes 842,511 1,076,533 842,511 1,076,533
---------- ---------- ---------- ----------
3,847,897 3,583,555 3,847,897 3,583,555
Admissions 168,549 179,666 196,643 207,631
Concessions, program, and other 668,792 687,235 698,445 722,328
Entry fees and purse monies added by
others 874,212 810,099 874,212 810,099
Rental income from leased facilities 86,674 84,720 86,674 84,720
Pari-mutuel tax abatement earned 195,419 194,403 195,419 194,403
---------- ---------- ---------- ----------
5,841,543 5,539,678 5,899,290 5,602,736
---------- ---------- ---------- ----------
Operating expenses:
Purses 2,610,737 2,501,032 2,610,737 2,501,032
Salaries and wages 687,444 706,751 909,033 932,542
Depreciation 171,500 175,000 514,500 527,000
Other operating and general expense 1,246,258 1,054,915 1,743,167 1,593,650
---------- ---------- ---------- ----------
4,715,939 4,437,698 5,777,437 5,554,224
---------- ---------- ---------- ----------
Income from racing operations 1,125,604 1,101,980 121,853 48,512
Interest expense, net 60,769 71,327 191,355 217,317
---------- ---------- ---------- ----------
Income (loss) before income tax
benefit (expense) and
cumulative effect of change in
accounting principle 1,064,835 1,030,653 (69,502) (168,805)
</TABLE>
4
<PAGE> 6
SCIOTO DOWNS, INC.
STATEMENTS OF OPERATIONS, CONTINUED
<TABLE>
<CAPTION>
FOR THE THREE-MONTH FOR THE NINE-MONTH
PERIODS ENDED JULY 31, PERIODS ENDED JULY 31,
-------------------------------- --------------------------------
1995 1994 1995 1994
------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C>
Income tax (expense) benefit of operating
income (loss) (Note 3) $ (354,000) $ (353,000) $ 19,000 $ 52,000
Cumulative effect of change in accounting
for income taxes (Note 3) 41,000
-------------- ---------------- -------------- ---------------
Net income (loss) $ 710,835 $ 677,653 $ (50,502) $ (75,805)
============== ================ ============== ===============
Earnings (loss) per common share:
Income (loss) before cumulative effect
of change in accounting principle $ 1.19 $ 1.14 $ (0.08) $ (0.19)
Cumulative effect of change in
accounting for income taxes 0.06
-------------- ---------------- -------------- ---------------
Net income (loss) per common share $ 1.19 $ 1.14 $ (0.08) $ (0.13)
============== ================ ============== ===============
Dividends per common share $ 0.05 $ 0.05 $ 0.05 $ 0.05
============= =============== ============== ===============
Average common shares outstanding 595,767 595,767 595,767 595,767
============== ================ ============== ===============
</TABLE>
The accompanying notes are an integral part of the unaudited financial
statements.
5
<PAGE> 7
SCIOTO DOWNS, INC.
STATEMENTS OF CASH FLOWS
for the nine-month periods ended July 31, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (50,502) $ (75,805)
-------------- -------------
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation 514,500 527,000
Change in accounts receivable (77,810) (39,669)
Change in prepaid expenses (7,624) (98,055)
Change in refundable income taxes 57,728
Change in accounts and purses payable 207,934 33,944
Change in accrued expenses (62,123) (67,498)
Change in deferred income taxes (19,000) (93,000)
-------------- -------------
Total adjustments 555,877 320,450
------------- --------------
Net cash provided by operating activities 505,375 244,645
-------------- -------------
Cash flows used in investing activities:
Purchases of property and equipment, net (178,185) (133,544)
-------------- -------------
Cash flows used in financing activities:
Payments on term debt (86,560) (78,862)
Cash dividends (59,539) (29,788)
------------- -------------
Net cash used in financing activities (146,099) (108,650)
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Net increase in cash and cash equivalents 181,091 2,451
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Cash and cash equivalents, beginning of period 685,085 669,149
------------- -------------
Cash and cash equivalents, end of period $ 866,176 $ 671,600
============== =============
Supplemental disclosures of cash flow information:
Cash (received) paid during the period:
Income taxes paid (refunded) $ 0 $ (57,728)
============== =============
Interest $ 176,908 $ 193,626
============== =============
</TABLE>
The accompanying notes are an integral part of the unaudited financial
statements.
6
<PAGE> 8
SCIOTO DOWNS, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
The information furnished reflects all adjustments which are, in the
opinion of management, necessary to present a fair statement of the
results for the interim periods on a basis consistent with that of
prior periods.
The accompanying unaudited financial statements are presented in
accordance with the requirements of Form 10-Q and, consequently, do
not include all the disclosures normally required by generally accepted
accounting principles or those normally made in the Company's annual
Form 10-K filing. Reference should be made to the Company's 1994 Form
10-K for additional disclosures, including a summary of the Company's
accounting policies.
2. INCOME (LOSS) PER SHARE:
Net income (loss) per share is derived by dividing net income (loss) by
the average number of shares outstanding during the period.
3. INCOME TAXES:
A deferred income tax benefit of $12,000 was recognized through the
third quarter of 1995.
The tax effects of temporary differences that give rise to
significant portions of deferred tax assets and tax liabilities at July
31, 1995 are as follows:
<TABLE>
<S> <C>
Deferred tax assets arising from:
AMT credit/net operating loss
carryovers $ 331,589
Valuation allowance (70,661)
Pension liability adjustment 21,150
-----------
Total deferred tax assets $ 282,078
===========
Deferred tax liabilities arising from:
Depreciation $ 543,947
Other, net 15,683
-----------
Total deferred tax liabilities $ 559,630
===========
</TABLE>
7
<PAGE> 9
SCIOTO DOWNS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THREE-MONTH AND NINE-MONTH PERIODS ENDED JULY 31, 1995 COMPARED TO THE
THREE-MONTH AND NINE-MONTH PERIODS ENDED JULY 31, 1994
Revenues from pari-mutuel commissions and breakage increased slightly at .1% or
$30,320 despite a 5.8% decrease in attendance as a result of increased wagering
from simulcasting two to four races per night in the 1995 season. Thus, per
capita (average wagering per person) increased 6.3% from $94.46 in 1994 to
$100.44 in 1995. Admissions income decreased by $10,988 due to a decrease in
attendance. Pari-mutuel taxes decreased $234,022 or 22% due mainly to a new
state tax law. Consequently, purse expense increased $109,705 since, by
agreement with the horsemen, purses are calculated based on commissions net of
pari-mutuel taxes. Entry fees and purse monies added by others increased by
$64,113, due to a higher number of horses entered in stake events during the
current race meet. Concessions, program, and other decreased primarily due to
the decrease in attendance.
Interest expense is a result of debt required the finance the construction
of the clubhouse enclosure. The decrease of $25,962 is a result of the reduced
principal balance of the debt.
Other operating and general expenses increased by $149,517 or 9.4% for the
nine months, primarily as a result of increased simulcasting expenses of
$80,633 and minor increases in publicity, utilities, repairs and maintenance,
and other miscellaneous expenses.
JULY 31, 1995 COMPARED TO OCTOBER 31, 1994
Cash and cash equivalents amounted to $866,176 at July 31, 1995 compared to
$685,085 at October 31, 1994. Cash was generated during the period by
racing-related operations. Cash was used during the first nine months of fiscal
1995 to service the debt incurred for the construction of the clubhouse
enclosure and the acquisition of property and equipment.
The racing season at Scioto Downs annually falls within the third quarter
ending in July. The majority of rental income from leasing the racing
facility to Mid-America Racing Association is earned during the fourth quarter
of the year ending in October. It is anticipated that the high depreciation and
interest expense relating to the clubhouse facility will result in a net loss
for the year ended October 31, 1995.
8
<PAGE> 10
PART II. OTHER INFORMATION
SCIOTO DOWNS, INC.
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibit 27
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended July 31, 1995.
9
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SCIOTO DOWNS, INC.
---------------------------
Registrant
DATE: August 30, 1995 BY: /s/ Robert S. Steele
--------------------------- ----------------------------
Robert S. Steele, President
DATE: August 30, 1995 BY: /s/ Timothy V. Luther
--------------------------- ----------------------------
Timothy V. Luther, Controller
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-01-1994
<PERIOD-END> JUL-31-1995
<CASH> 866,176
<SECURITIES> 0
<RECEIVABLES> 107,774
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,102,578
<PP&E> 19,056,784
<DEPRECIATION> 11,099,935
<TOTAL-ASSETS> 9,102,823
<CURRENT-LIABILITIES> 602,420
<BONDS> 0
<COMMON> 625,555
0
0
<OTHER-SE> 4,353,201
<TOTAL-LIABILITY-AND-EQUITY> 9,102,823
<SALES> 209,981
<TOTAL-REVENUES> 5,899,290
<CGS> 101,095
<TOTAL-COSTS> 5,777,437
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 191,355
<INCOME-PRETAX> (69,502)
<INCOME-TAX> (19,000)
<INCOME-CONTINUING> (50,502)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (50,502)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
