<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 April 30, 1995
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OR
[] 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
- - ----------------------------- -----------------------------
(State or other jurisdiction (IRS Employer
incorporation or organization) Identification No.)
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 April 30, 1995:
595,767, par value $1.05
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<TABLE>
SCIOTO DOWNS, INC.
INDEX
PAGES
PART I. FINANCIAL INFORMATION
<CAPTION>
<S> <C>
Item 1. Financial Statements
Balance Sheets at April 30, 1995 (Unaudited), October 31, 1994,
and April 30, 1994 (Unaudited) 2-3
Statements of Operations for the three-month and six-month periods ended
April 30, 1995 and 1994 (Unaudited) 4-5
Statements of Cash Flows for the six-month periods ended April 30, 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
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
SCIOTO DOWNS, INC.
BALANCE SHEETS
April 30, 1995 (unaudited) and 1994 (unaudited) and October 31, 1994
APRIL 30, OCTOBER 31, APRIL 30,
ASSETS 1995 1994 1994
------------ ------------ ------------
(Unaudited) (Unaudited)
<CAPTION>
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 5,001 $ 685,085 $ 32,883
Accounts receivable, affiliate 41,557 29,964 23,591
Prepaid expenses and other 141,864 121,004 177,353
Refundable income taxes (Note 3) 1,702
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Total current assets 188,422 836,053 235,529
------------ ------------ ------------
Property and equipment, at cost 18,854,759 18,829,086 18,775,591
Less accumulated depreciation 10,928,435 10,585,435 10,228,032
------------ ------------ ------------
Total property and equipment 7,926,324 8,243,651 8,547,559
Construction in progress 98,943 49,513
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8,025,267 8,293,164 8,547,559
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Net deferred income taxes 94,679
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Investment in joint venture 43,396 43,396 22,378
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Total assets $ 8,351,764 $ 9,172,613 $ 8,805,466
============ ============ ============
</TABLE>
2
<PAGE> 4
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
SCIOTO DOWNS, INC.
BALANCE SHEETS, CONTINUED
APRIL 30, OCTOBER 31, APRIL 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1995 1994 1994
------------ ------------ ------------
(Unaudited) (Unaudited)
<CAPTION>
<S> <C> <C> <C>
Current liabilities:
Accounts payable, trade $ 38,458 $ 135,646 $ 52,494
Dividends payable 29,789
Accrued expenses 194,514 205,280 195,716
Deferred revenue 158,750 83,400
Short-term borrowings 255,000 435,000
Current maturities, term debt 100,000 100,000 100,000
Deferred income taxes 18,231 22,520
------------ ------------ ------------
Total current liabilities 764,953 493,235 866,610
------------ ------------ ------------
Minimum pension liability 83,123 83,123
------------ ------------ ------------
Net deferred income taxes 274,032 16,702
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Term debt, net of current maturities 3,206,017 3,263,215 3,317,873
------------ ------------ ------------
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 1,675,849 2,437,186 1,941,426
Pension liability adjustment, net of taxes (41,033) (41,033)
------------ ------------ ------------
Total stockholders' equity 4,297,671 5,059,008 4,604,281
------------ ------------ ------------
Total liabilities and stockholders' equity $ 8,351,764 $ 9,172,613 $ 8,805,466
============ ============ ============
<FN>
The accompanying notes are an integral part of the unaudited financial statements.
</TABLE>
3
<PAGE> 5
<TABLE>
SCIOTO DOWNS, INC.
STATEMENTS OF OPERATIONS
for the three-month and six-month periods ended April 30, 1995 and 1994
(Unaudited)
FOR THE THREE-MONTH PERIODS FOR THE SIX-MONTH PERIODS
ENDED APRIL 30, ENDED APRIL 30,
---------------------------- ----------------------------
1995 1994 1995 1994
------------ ----------- ----------- ------------
<CAPTION>
<S> <C> <C> <C> <C>
Operating revenues:
Admissions $ 27,784 $ 27,965 $ 28,094 $ 27,965
Concessions, program, and other 25,111 23,864 29,653 35,093
------------ ----------- ----------- ------------
52,895 51,829 57,747 63,058
------------ ----------- ----------- ------------
Operating expenses:
Salaries and wages 107,505 111,047 221,589 225,791
Depreciation 171,500 176,000 343,000 352,000
Other operating and general
expense 304,208 338,641 496,909 538,735
------------ ----------- ----------- ------------
583,213 625,688 1,061,498 1,116,526
------------ ----------- ----------- ------------
Loss from operations (530,318) (573,859) (1,003,751) (1,053,468)
Interest expense, net (70,019) (72,413) (130,586) (145,990)
------------ ----------- ----------- ------------
Loss before income tax benefit
and cumulative effect of
change in accounting
principle (600,337) (646,272) (1,134,337) (1,199,458)
Cumulative effect of change in
accounting for income taxes
(Note 3) 41,000
Income tax benefit of operating loss
(Note 3) 193,000 219,000 373,000 405,000
------------ ----------- ----------- ------------
Net loss $ (407,337) $ (427,272) $ (761,337) $ (753,458)
============ =========== =========== ============
</TABLE>
4
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<TABLE>
SCIOTO DOWNS, INC.
STATEMENTS OF OPERATIONS, CONTINUED
(Unaudited)
FOR THE THREE-MONTH PERIODS FOR THE SIX-MONTH PERIODS
ENDED APRIL 30, ENDED APRIL 30,
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1995 1994 1995 1994
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<CAPTION>
<S> <C> <C> <C> <C>
Earnings (loss) per common share:
Loss before cumulative effect of
change in accounting principle $ (.68) $ (.71) $ (1.28) $ (1.33)
Cumulative effect of change in
accounting for income taxes .07
------------ ---------- ----------- -----------
Net loss per common share $ (.68) $ (.71) $ (1.28) $ (1.26)
============ ========== =========== ===========
Weighted average common
shares outstanding 595,767 595,767 595,767 595,767
============ ========== =========== ===========
<FN>
The accompanying notes are an integral part of the unaudited financial statements.
</TABLE>
5
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<TABLE>
SCIOTO DOWNS, INC.
STATEMENTS OF CASH FLOWS
for the six-month periods ended April 30, 1995 and 1994
(Unaudited)
1995 1994
<CAPTION>
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (761,337) $ (753,458)
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Adjustments to reconcile net loss to net cash used in operating
activities:
Cumulative effect of change in accounting for income taxes (41,000)
Depreciation and amortization 360,472 352,000
Change in accounts receivable (11,593) (12,963)
Change in prepaid expenses and other (38,332) (125,394)
Change in refundable income taxes 57,728
Change in accounts payable (97,188) (31,094)
Change in deferred revenue 158,750 83,400
Change in accrued expenses (10,766) (19,033)
Change in deferred income taxes (373,000) (405,000)
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Total adjustments (11,657) (141,356)
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Net cash used in operating activities (772,994) (894,814)
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Cash flows from investing activities:
Purchase of property and equipment, net (25,673) (95,216)
Additions to construction in progress (49,430)
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Net cash used in investing activities (75,103) (95,216)
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Cash flows used in financing activities:
Payments on term debt (57,198) (51,447)
Cash dividends (29,789) (29,789)
Proceeds from short-term borrowings 255,000 435,000
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Net cash provided by financing activities 168,013 353,764
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Net decrease in cash and cash equivalents (680,084) (636,266)
Cash and cash equivalents, beginning of period 685,085 669,149
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Cash and cash equivalents, end of period $ 5,001 $ 32,883
============= =============
Supplemental disclosures of cash flow information:
Cash paid (received) during the period for:
Income taxes refunded $ 0 $ (57,728)
============= =============
Interest $ 116,094 $ 130,929
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<FN>
The accompanying notes are an integral part of the unaudited financial statements.
</TABLE>
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. LOSS PER SHARE:
Net loss per share is derived by dividing net loss by the average
number of shares outstanding during the period.
3. INCOME TAXES:
A deferred income tax benefit of $373,000 was recognized through the
second quarter of 1995.
<TABLE>
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and tax liabilities at April
30, 1995 are as follows:
<CAPTION>
<S> <C>
Deferred tax assets arising from:
AMT credit/net operating loss
carryovers $ 729,115
Valuation allowance (113,679)
Pension liability adjustment 21,150
-------------
Total deferred tax assets $ 636,586
=============
Deferred tax liabilities arising from:
Depreciation $ 541,907
Other, net 18,231
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Total deferred tax liabilities $ 560,138
=============
</TABLE>
7
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SCIOTO DOWNS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THREE-MONTH AND SIX-MONTH PERIODS ENDED APRIL 30, 1995 COMPARED TO THE
THREE-MONTH AND SIX-MONTH PERIODS ENDED APRIL 30, 1994
The majority of the racing season at Scioto Downs annually falls within the
third quarter ending July 31. As a result, the Company historically experiences
net operating losses during the first two quarters of the fiscal year. Income
during the current periods consists mainly of advanced sales of nonrefundable
reserved grandstand seats, box seats and parking.
Other income decreased by $5,440 due to a decrease in off-season party
commission from the concessionaire. The decrease in salaries expense by $4,202
is mainly due to a decrease in administrative salary expense. Other operating
and general decreased by approximately $41,800 due to the timing of certain
expenditures, as well as a decrease in the following: fuel oil of $9,012, due
to a warmer winter, travel and entertainment of $10,317, due to the timing of
certain events, health insurance of $8,983, due to a fewer number of employees
in the off-season and legal of $3,700, due to decreased involvement of legal
counsel regarding the off-track betting bill.
APRIL 30, 1995 COMPARED TO OCTOBER 31, 1994
Due to the seasonal nature of the business, the Company experienced net
operating losses during the first two quarters of the fiscal year. Cash and
short-term borrowings were used during the first two quarters of fiscal 1995,
primarily to pay for operating expenses incurred. Additionally, deferred
revenue increased as the Company received cash that will subsequently be paid
as purses to horsemen in the third quarter.
The majority of the 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 ending 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) Exhibits - None
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter ended April 30, 1995.
9
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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: , 1995 BY: /s/ Robert S. Steele
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Robert S. Steele, President
DATE: , 1995 BY: /s/ Timothy V. Luther
------------------------------ -------------------------------
Timothy V. Luther, Controller
10
<PAGE> 12
COOPERS
& LYBRAND
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Scioto Downs, Inc.
Columbus, Ohio
We have made a review of the balance sheets of Scioto Downs, Inc. as of April
30, 1995 and 1994, the related statements of operations for the three-month and
six-month periods then ended, and the related statements of cash flows for the
six-month periods then ended, in accordance with standards established by the
American Institute of Certified Public Accountants. These unaudited financial
statements are the responsibility of the Company's management.
A review of interm financial information consists principally of obtaining
an understanding of the system for the preparation of interm financial
information, applying analytical review procedures to financial data, and
making inquiries of persons responsible for financial and accounting matters.
It is substantially less in scope than an audit in accordance with generally
accepted auditing standards, the objective of which is the expression of an
opinion regarding the financial statements as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of October 31, 1994 and the related statements
of operations, cash flows, and stockholders' equity for the year then ended (not
presented herein), and in our report, dated December 2, 1994, we expressed an
unqualified opinion on those financial statements. In our opinion, the
accompanying balance sheet as of October 31, 1994 is fairly presented, in all
material respects, in relation to the financial statements from which it has
been derived.
Coopers & Lybrand L.L.P.
Columbus, Ohio
May 19, 1995
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> NOV-1-1994
<PERIOD-END> APR-30-1995
<CASH> 5,001
<SECURITIES> 0
<RECEIVABLES> 41,557
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 188,422
<PP&E> 18,854,759
<DEPRECIATION> 10,928,435
<TOTAL-ASSETS> 8,351,764
<CURRENT-LIABILITIES> 764,953
<BONDS> 0
<COMMON> 625,555
0
0
<OTHER-SE> 3,672,116
<TOTAL-LIABILITY-AND-EQUITY> 8,351,764
<SALES> 0
<TOTAL-REVENUES> 57,747
<CGS> 0
<TOTAL-COSTS> 1,061,498
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 130,586
<INCOME-PRETAX> (1,134,337)
<INCOME-TAX> (373,000)
<INCOME-CONTINUING> (761,337)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (761,337)
<EPS-PRIMARY> (1.28)
<EPS-DILUTED> (1.28)
</TABLE>
