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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, 1996
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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
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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, 1996:
595,767, par value $1.05
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SCIOTO DOWNS, INC.
INDEX
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<S> <C>
PAGES
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PART I.FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets as of July 31, 1996 (unaudited), October 31, 1995, and
July 31, 1995 (unaudited) 2-3
Statements of Operations for the three-month and nine-month periods ended
July 31, 1996 and 1995 (unaudited) 4-5
Statements of Cash Flows for the nine-month periods ended
July 31, 1996 and 1995 (unaudited) 6
Notes to the Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-9
PART II. OTHER INFORMATION 10
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 11
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PART I.FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SCIOTO DOWNS, INC.
BALANCE SHEETS
at July 31, 1996 (unaudited), October 31, 1995, and July 31, 1995 (unaudited)
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<CAPTION>
ASSETS July 31, 1996 October 31, July 31, 1995
(Unaudited) 1995 (Unaudited)
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<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 624,517 $ 787,786 $ 866,176
Accounts receivable, affiliate 176,389 71,060 107,774
Prepaid expenses and other 79,097 77,950 128,628
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Total current assets 880,003 936,796 1,102,578
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Property and equipment, at cost 19,240,774 19,078,911 19,056,784
Less accumulated depreciation 11,792,018 11,279,018 11,099,935
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Total property and equipment 7,448,756 7,799,893 7,956,849
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Investment in joint venture 59,101 59,101 43,396
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Total assets $ 8,387,860 $ 8,795,790 $ 9,102,823
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CONTINUED 2
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<TABLE>
<CAPTION>
PART I.
ITEM 1. FINANCIAL STATEMENTS
SCIOTO DOWNS, INC.
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY July 31, 1996 October 31, July 31, 1995
(Unaudited) 1995 (Unaudited)
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<S> <C> <C>
Current liabilities:
Accounts payable, trade $ 167,392 $ 19,699
Purses payable $ 197,118 323,881
Dividends payable 29,789
Accrued expenses 170,166 208,715 143,157
Current maturities, term debt 3,155,287 3,247,411 100,000
Deferred income taxes 1,952 11,880 15,683
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Total current liabilities 3,524,523 3,665,187 602,420
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Minimum pension liability 78,566 78,566 83,123
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Deferred income taxes 113,792 180,864 261,869
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Term debt, net of current maturities 3,176,655
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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 2,047,599 2,247,793 2,356,934
Pension liability adjustment, net of taxes (39,475) (39,475) (41,033)
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Total stockholders' equity 4,670,979 4,871,173 4,978,756
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Total liabilities and stockholders' equity $ 8,387,860 $ 8,795,790 $ 9,102,823
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</TABLE>
The accompanying notes are an integral part of the financial statements.
3
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SCIOTO DOWNS, INC.
STATEMENTS OF OPERATIONS
for the three-month and nine-month periods ended July 31, 1996 and 1995
(unaudited)
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<CAPTION>
For the Three-Month Periods For the Nine-Month Periods
Ended July 31, Ended July 31,
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Operating revenues:
Pari-mutuel commissions and breakage $ 4,375,622 $ 4,690,408 $ 4,375,622 $ 4,690,408
Less pari-mutuel taxes 771,643 842,511 771,643 842,511
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3,603,979 3,847,897 3,603,979 3,847,897
Admissions 149,870 168,549 179,990 196,643
Concessions, program and other 610,926 668,792 655,782 698,445
Entry fees and purse monies added by
others 764,004 874,212 764,004 874,212
Rental income from leased facilities 94,139 86,674 94,139 86,674
Pari-mutuel tax abatement earned 187,557 195,419 187,557 195,419
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5,410,475 5,841,543 5,485,451 5,899,290
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Operating expenses:
Purses 2,517,117 2,610,737 2,517,117 2,610,737
Salaries and wages 704,060 687,444 938,882 909,033
Depreciation 171,000 171,500 513,000 514,500
Other operating and general expense 1,086,769 1,246,258 1,585,197 1,743,167
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4,478,946 4,715,939 5,554,196 5,777,437
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Income (loss) from racing operations 931,529 1,125,604 (68,745) 121,853
Interest expense, net 59,702 60,769 178,688 191,355
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Income (loss) before income tax
benefit (expense) 871,827 1,064,835 (247,433) (69,502)
</TABLE>
CONTINUED
4
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SCIOTO DOWNS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three-Month Periods For the Nine-Month Periods
Ended July 31, Ended July 31,
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Income tax (expense) benefit $ (270,000) $ (354,000) $ 77,000 $ 19,000
=========== =========== =========== ===========
Net income (loss) $ 601,827 $ 710,835 $ (170,433) $ (50,502)
=========== =========== =========== ===========
Net income (loss) per common share $ 1.01 $ 1.19 $ (0.29) $ (0.08)
=========== =========== =========== ===========
Dividends per common share $ 0.05 $ 0.05 $ 0.05 $ 0.05
=========== =========== =========== ===========
Weighted-average common shares
outstanding 595,767 595,767 595,767 595,767
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
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SCIOTO DOWNS, INC.
STATEMENTS OF CASH FLOWS
for the nine-month periods ended July 31, 1996 and 1995
(unaudited)
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<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (170,433) $ (50,502)
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Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 539,188 514,500
Change in accounts receivable (105,329) (77,810)
Change in prepaid expenses (27,335) (7,624)
Change in accounts and purses payable 29,726 207,934
Change in accrued expenses (38,549) (62,123)
Change in deferred income taxes (77,000) (19,000)
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Total adjustments 320,701 555,877
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Net cash provided by operating activities 150,268 505,375
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Cash flows used in investing activities:
Purchases of property and equipment, net (161,863) (178,185)
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Cash flows used in financing activities:
Payments on term debt (92,124) (86,560)
Cash dividends paid (59,550) (59,539)
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Net cash used in financing activities (151,674) (146,099)
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Net (decrease) increase in cash and cash equivalents (163,269) 181,091
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Cash and cash equivalents, beginning of period 787,786 685,085
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Cash and cash equivalents, end of period $ 624,517 $ 866,176
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Supplemental disclosures of cash flow information: Cash paid during the period:
Interest $ 172,825 $ 176,908
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The accompanying notes are an integral part of the financial statements.
6
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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. All such adjustments are of a normal recurring nature.
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 Scioto Downs, Inc.'s (the
Company) annual Form 10-K filing. Reference should be made to the
Company's 1995 Form 10-K for additional disclosures, including a summary
of the Company's accounting policies.
The year-end condensed balance sheet was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles.
Certain items have been reclassified in the accompanying financial
statements for prior periods to conform with the presentation in the
current period.
2. INCOME (LOSS) PER SHARE:
Net income (loss) per share is derived by dividing net income (loss) by
the weighted average number of shares outstanding during the period.
7
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SCIOTO DOWNS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
THREE-MONTH AND NINE-MONTH PERIODS ENDED JULY 31, 1996 COMPARED TO THE
THREE-MONTH AND NINE-MONTH PERIODS ENDED JULY 31, 1995
Revenues from pari-mutuel commissions and breakage decreased $314,786 or 6.7%,
due mainly to an 8.6% decrease in attendance caused by the poor weather during
the racing meet. Entry fees and purse monies added by others decreased 12.6% or
$110,208 due mainly to a reduction in the number of horses entered in races.
Admissions, concessions, program and other decreased $59,316 or 7.1% due to the
decrease in attendance.
Other operating and general expenses decreased $157,970 or 9.1% overall for the
nine months ended July 31, 1996. This reduction consists mainly of decreases in
simulcasting and purse expense, as well as publicity and advertising.
Simulcasting expenses decreased $27,566 or 24.3% based on the decrease in handle
during the racing meet since simulcast expense is a percentage of handle. Purse
expense decreased $93,620 or 3.6% as a direct product of lower commissions, as
well as a reduction in the number of horses entered into races. Advertising also
decreased $61,716 or 18.9% due mainly to a restructuring of the advertising
budgets.
Interest expense is a result of debt required to finance the construction of the
clubhouse enclosure. The decrease of $12,667 is a result of the reduced
principal balance of the debt.
JULY 31, 1996 COMPARED TO OCTOBER 31, 1995
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, 1996.
8
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SCIOTO DOWNS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS, CONTINUED
RECENT DEVELOPMENTS AND OUTLOOK
Legislation to allow "full card simulcasting" will take effect after the close
of the 1996 racing season. This would allow an unlimited number of out-of-state
races to be simulcast at a track or parlor during the track's race meet dates.
This will also allow simulcasting of thoroughbred, as well as harness racing.
This legislation will provide for increased utilization of current facilities
and an opportunity to increase handle by offering additional diversified
products.
9
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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 July 31, 1996.
10
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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.
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Registrant
DATE: September 10, 1996 BY: /s/ Robert S. Steele
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Robert S. Steele, President
DATE: September 10, 1996 BY: /s/ William C. Heer
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William C. Heer, Treasurer
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> JUL-31-1996
<CASH> 624,517
<SECURITIES> 0
<RECEIVABLES> 176,389
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 880,003
<PP&E> 19,240,774
<DEPRECIATION> 11,792,018
<TOTAL-ASSETS> 8,387,860
<CURRENT-LIABILITIES> 3,524,523
<BONDS> 0
<COMMON> 625,555
0
0
<OTHER-SE> 4,045,424
<TOTAL-LIABILITY-AND-EQUITY> 8,387,860
<SALES> 218,927
<TOTAL-REVENUES> 5,485,451
<CGS> 89,437
<TOTAL-COSTS> 5,554,196
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 178,688
<INCOME-PRETAX> (247,433)
<INCOME-TAX> 77,000
<INCOME-CONTINUING> (170,433)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (170,433)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> (.29)
</TABLE>