<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 January 31, 1997
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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 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
---- ----
The number of common shares outstanding at January 31, 1997:
595,767, par value $1.05
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<PAGE> 2
SCIOTO DOWNS, INC.
CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of January 31, 1997
(unaudited) and 1996 (unaudited) and
October 31, 1996 1
Statements of Operations for three
months ended January 31, 1997 and
1996 (unaudited) 3
Statements of Cash Flows for the three
months ended January 31, 1997 and
1996 (unaudited) 4
Notes to the Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
PART II.OTHER INFORMATION
Item 1. Legal Proceedings 7
Item 2. Changes in Securities 7
Item 3. Defaults Upon Senior Securities 7
Item 4. Submission of Matters to a Vote of Security Holders 7
Item 5. Other Information 7
Item 6. Exhibits and Reports on Form 8-K 7
SIGNATURES 8
Report of Independent Accountants 11
<PAGE> 3
PART I.FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SCIOTO DOWNS, INC.
BALANCE SHEETS
January 31, 1997 (unaudited) and 1996 (unaudited) and October 31, 1996
<TABLE>
<CAPTION>
JANUARY 31, OCTOBER 31, JANUARY 31,
ASSETS 1997 1996 1996
----------------- ----------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 269,678 $ 621,591 $ 135,171
Accounts receivable 47,106 65,193
Prepaid expenses and other 57,163 36,453 89,550
Investment in joint venture 82,446 82,446 59,101
----------------- ----------------- ----------------
Total current assets 409,287 787,596 349,015
----------------- ----------------- ----------------
Property and equipment, at cost 19,312,086 19,269,763 19,123,743
Less accumulated depreciation 12,140,450 11,962,780 11,450,018
----------------- ----------------- ----------------
Total property and equipment 7,171,636 7,306,983 7,673,725
----------------- ----------------- ----------------
Total assets $ 7,580,923 $ 8,094,579 $ 8,022,740
================= ================= ================
</TABLE>
Continued
1
<PAGE> 4
PART I. FINANCIAL INFORMATION
SCIOTO DOWNS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 31, OCTOBER 31, JANUARY 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996 1996
----------------- ----------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Current liabilities:
Accounts payable, trade $ 22,421 $ 167,937 $ 35,962
Accounts payable, affiliates 63,851
Dividends payable 29,789
Current maturities, term debt 100,000 100,000 3,217,641
Deferred income taxes 4,449
Accrued expenses 164,412 205,308 159,971
Simulcast purse fund 202,995
----------------- ----------------- ----------------
Total current liabilities 553,679 503,034 3,418,023
----------------- ----------------- ----------------
Minimum pension liability 89,877 89,877 78,566
Net deferred income taxes 4,910 4,910 11,295
Term debt, net of current maturities 2,999,449 3,025,855
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 1,318,448 1,856,343 1,891,476
Pension liability adjustment, net of taxes (48,295) (48,295) (39,475)
----------------- ----------------- ----------------
Total stockholders' equity 3,933,008 4,470,903 4,514,856
----------------- ----------------- ----------------
Total liabilities and stockholders' equity $ 7,580,923 $ 8,094,579 $ 8,022,740
================= ================= ================
<FN>
The accompanying notes are an integral part of the financial statements.
2
</TABLE>
<PAGE> 5
SCIOTO DOWNS, INC.
STATEMENTS OF OPERATIONS
for the three months ended January 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Operating revenues, other $ 72,991 $ 6,957
----------------- ----------------
Operating expenses:
Salaries and wages 110,820 113,604
Depreciation 177,670 171,000
Other operating and general expense 261,997 198,184
----------------- ----------------
550,487 482,788
----------------- ----------------
Loss from operations (477,496) (475,831)
Interest expense, net (60,399) (57,486)
----------------- ----------------
Loss before income tax benefit (537,895) (533,317)
Income tax benefit of operating loss 177,000
----------------- ----------------
Net loss $ (537,895) $ (356,317)
================= ================
Net loss per common share $ (.90) $ (.60)
================= ================
Weighted average common shares outstanding 595,767 595,767
================= ================
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
3
<PAGE> 6
SCIOTO DOWNS, INC.
STATEMENTS OF CASH FLOWS
for the three months ended January 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (537,895) $ (356,317)
----------------- ----------------
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 177,670 179,736
Change in deferred income taxes (177,000)
Change in accounts receivable 47,106 5,867
Change in prepaid expenses and other (20,710) (20,336)
Change in accounts payable (81,665) (131,430)
Change in accrued expenses 162,099 (48,744)
----------------- ----------------
Total adjustments 284,500 (191,907)
----------------- ----------------
Net cash used in operating activities (253,395) (548,224)
----------------- ----------------
Cash flows from investing activities:
Purchase of property and equipment (42,323) (44,832)
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Net cash used in investing activities (42,323) (44,832)
----------------- ----------------
Cash flows from financing activities:
Dividend paid (29,789) (29,789)
Payments on term debt (26,406) (29,770)
----------------- ----------------
Net cash used in financing activities (56,195) (59,559)
----------------- ----------------
Net decrease in cash and cash equivalents (351,913) (652,615)
Cash and cash equivalents, beginning of period 621,591 787,786
----------------- ----------------
Cash and cash equivalents, end of period $ 269,678 $ 135,171
================= ================
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
4
<PAGE> 7
SCIOTO DOWNS, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
1.BASIS OF PRESENTATION:
The information furnished reflects all adjustments that 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 Scioto Downs' (the
Company) annual Form 10-K filing. All adjustments that are necessary for
a fair statement of results for the interim period are normal and
recurring. Reference should be made to the Company's 1996 Form 10-K for
additional disclosures, including a summary of the Company's accounting
policies.
The year-end balance sheet was derived from audited financial statements
but does not include all disclosures required by generally accepted
accounting principles.
2.LOSS PER SHARE:
Net loss per share is derived by dividing net loss by the weighted
average number of shares outstanding during the period.
3.INCOME TAXES:
No tax benefit has been recorded as it is not expected to be realized
by the Company.
5
<PAGE> 8
PART I.FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SCIOTO DOWNS, INC.
January 31, 1997 compared to October 31, 1996
Because of the seasonal nature of the business, the Company experiences net
operating losses during the first two quarters of the fiscal year. Additionally,
the Company uses the off-season to perform repairs and maintenance, as well as
facility improvements. During the first quarter of 1997, the Company continued
to service the debt on the Clubhouse via internal funds, which affects the
liquidity and cash flow of the Company. Additionally, the cash flow has been
positively affected in the first quarter due to the arrangement with Beulah
Park, whereby the Company receives a percentage of the commissions generated at
Beulah Park.
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.
THREE MONTHS ENDED JANUARY 31, 1997 COMPARED TO THREE MONTHS ENDED JANUARY 31,
1996
The loss before income tax benefit increased by approximately $4,600. This
minimal change is due mainly to an offset of income received through an
agreement with Beulah Park to share revenues derived from full card simulcasting
of approximately $67,000 by additional operating and interest expense of
approximately $67,000 and $3,000, respectively. The increase in other operating
and general expense is attributable to an increase of approximately $7,000 in
depreciation expense, $19,000 in publicity and advertising expense, $28,000 in
legal and accounting expense, and $13,000 in other general and operating
expenses. Interest expense increased due to a rate of 8.15% compared to a rate
of 6.875% in the preceding same period as a result of the refinancing of the
debt.
6
<PAGE> 9
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 January 31, 1997.
7
<PAGE> 10
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: March 14, 1997 BY: /s/ ROBERT S. STEELE,
-------------------- -------------------------------
Robert S. Steele, President
DATE: March 14, 1997 BY: /S/ CYRIL J. ELBERT
------------------ -------------------------------
Cyril J. Elbert, Controller
8
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-1-1996
<PERIOD-END> JAN-31-1997
<CASH> 269,678
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 409,287
<PP&E> 19,312,086
<DEPRECIATION> 12,140,450
<TOTAL-ASSETS> 7,580,923
<CURRENT-LIABILITIES> 553,679
<BONDS> 0
<COMMON> 625,555
0
0
<OTHER-SE> 3,307,453
<TOTAL-LIABILITY-AND-EQUITY> 7,580,923
<SALES> 158
<TOTAL-REVENUES> 72,991
<CGS> 0
<TOTAL-COSTS> 550,487
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 60,399
<INCOME-PRETAX> (537,895)
<INCOME-TAX> 0
<INCOME-CONTINUING> (537,895)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (537,895)
<EPS-PRIMARY> (.90)
<EPS-DILUTED> (.90)
</TABLE>
