<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, 1998
--------------------------
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
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The number of common shares outstanding at March 16, 1998:
595,767, par value $1.05
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SCIOTO DOWNS, INC.
INDEX
<CAPTION>
PAGES
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at January 31, 1998 (Unaudited), October 31, 1997
and January 31, 1997 (Unaudited) 1-2
Statements of Operations for the three month periods ended
January 31, 1998 and 1997 (Unaudited) 3
Statements of Cash Flows for the three month periods ended
January 31, 1998 and 1997 (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
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<TABLE>
PART I.FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SCIOTO DOWNS, INC.
BALANCE SHEETS
January 31, 1998 (unaudited) and 1997 (unaudited) and October 31, 1997
<CAPTION>
JANUARY 31, OCTOBER 31, JANUARY 31,
ASSETS 1998 1997 1997
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 672,602 $ 924,176 $ 269,678
Accounts receivable, affiliate 135,208 283,866
Prepaid expenses and other 59,815 59,815 57,163
Investment in joint venture 95,089 95,089 82,446
Deferred income taxes 171,000
----------- ----------- -----------
Total current assets 1,133,714 1,362,946 409,287
----------- ----------- -----------
Property and equipment, at cost 20,009,893 19,916,643 19,312,086
Less accumulated depreciation 12,866,386 12,691,406 12,140,450
----------- ----------- -----------
Total property and equipment 7,143,507 7,225,237 7,171,636
----------- ----------- -----------
Total assets $ 8,277,221 $ 8,588,183 $ 7,580,923
=========== =========== ===========
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CONTINUED
1
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<TABLE>
PART I. FINANCIAL INFORMATION
SCIOTO DOWNS, INC.
BALANCE SHEETS
<CAPTION>
JANUARY 31, OCTOBER 31, JANUARY 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1997 1997
----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Current liabilities:
Accounts payable $ 274,735 $ 178,016 $ 86,272
Dividends payable 29,789
Current maturities, term debt 276,924 253,548 100,000
Accrued expenses 131,981 181,403 164,412
Simulcast purse fund 234,921 85,746 202,995
----------- ----------- -----------
Total current liabilities 918,561 728,502 553,679
----------- ----------- -----------
Minimum pension liability 105,121 105,121 89,877
Net deferred income taxes 28,994 28,994 4,910
Term debt, net of current maturities 3,149,146 3,242,001 2,999,449
Stockholders' equity:
Common stock, $1.05 par value per share; 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 1,472,324 1,880,490 1,318,448
Pension liability adjustment, net of taxes (59,780) (59,780) (48,295)
----------- ----------- -----------
Total stockholders' equity 4,075,399 4,483,565 3,933,008
----------- ----------- -----------
Total liabilities and stockholders' equity $ 8,277,221 $ 8,588,183 $ 7,580,923
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
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<TABLE>
SCIOTO DOWNS, INC.
STATEMENTS OF OPERATIONS
for the three months ended January 31, 1998 and 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
Operating revenues, other $ 19,903 $ 72,991
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Operating expenses:
Salaries and wages 119,787 110,820
Depreciation 174,980 177,670
Other operating and general expense 238,434 261,997
--------- ---------
533,201 550,487
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Loss from operations (513,298) (477,496)
Net interest expense (65,868) (60,399)
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Net loss before income tax benefit (579,166) (537,895)
Income tax benefit 171,000
--------- ---------
Net loss $(408,166) $(537,895)
========= =========
Net loss per common share - basic and diluted $ (.69) $ (.90)
========= =========
Weighted average common shares outstanding 595,767 595,767
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
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<TABLE>
SCIOTO DOWNS, INC.
STATEMENTS OF CASH FLOWS
for the three months ended January 31, 1998 and 1997
(Unaudited)
<CAPTION>
1998 1997
<S> <C> <C>
Cash flows used in operating activities:
Net loss $(408,166) $(537,895)
--------- ---------
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation 174,980 177,670
Deferred income taxes (171,000)
Change in accounts receivable 148,658 47,106
Change in prepaid expenses and other (20,710)
Change in accounts payable 96,719 (81,665)
Change in accrued expenses and simulcast purse fund 99,753 162,099
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Total adjustments 349,110 284,500
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Net cash used in operating activities (59,056) (253,395)
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Cash flows from investing activities:
Purchase of equipment (93,250) (42,323)
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Net cash used in investing activities (93,250) (42,323)
--------- ---------
Cash flows from financing activities:
Dividends paid (29,789) (29,789)
Payments on term debt (69,479) (26,406)
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Net cash used in financing activities (99,268) (56,195)
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Net decrease in cash and cash equivalents (251,574) (351,913)
Cash and cash equivalents, beginning of period 924,176 621,591
--------- ---------
Cash and cash equivalents, end of period $ 672,602 $ 269,678
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
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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 1997 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 for both basic and diluted is derived by dividing net
loss by the weighted average number of shares outstanding during the
period.
3. INCOME TAXES:
The Company has recorded a deferred income tax benefit at the anticipated
effective tax rate for fiscal year 1998.
5
<PAGE> 8
SCIOTO DOWNS, INC.
PART I.FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This Management Discussion and Analysis of Financial Condition and Results of
Operations and other parts of this report contain forward-looking statements
that involve risks and uncertainties. The Company's actual results in 1998 and
future periods may differ significantly from the prospects discussed in the
forward-looking statements.
GENERAL
Due to the seasonal nature of the business, the Company experiences net
operating losses during the first two quarters of the fiscal year. In addition,
the Company uses this same time to perform routine repairs and maintenance and
facility improvements. During the first quarter of 1998, the Company continued
to service the debt on the Clubhouse and the recently purchased simulcasting
equipment via internal funds, which affects the liquidity and cash flow of the
Company.
The racing season at Scioto Downs annually falls within the third quarter,
ending in July. The majority of rental income from leasing the facility to
Mid-America Racing Association is earned during the fourth quarter of the year,
ending in October.
THREE MONTHS ENDED JANUARY 31, 1998 COMPARED TO THREE MONTHS ENDED JANUARY 31,
1997
Operating revenues decreased by $53,088 to $19,903 for the three months ended
January 31, 1998 from $72,991 for the three months ended January 31, 1997. The
decrease was due primarily to a change in the agreement with Beulah Park. Beulah
Park will pay reduced shared revenues to Scioto Downs during the three months
ended January 31, 1998. Scioto Downs, however, will pay reduced amounts to
Beulah Park during its racing season because of the modified agreement.
Operating expense decreased by $17,286 due to decreases in general office and
other expenses. Net interest expense increased by $5,469, which is due to the
simulcasting equipment financing.
6
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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 January 31, 1998.
7
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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: March 16, 1998 BY:
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Robert S. Steele, President
DATE: March 16, 1998 BY:
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Robert E. Suchy, Controller
8
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> JAN-31-1998
<EXCHANGE-RATE> 1
<CASH> 672,602
<SECURITIES> 0
<RECEIVABLES> 135,208
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,133,714
<PP&E> 20,009,893
<DEPRECIATION> 12,866,386
<TOTAL-ASSETS> 8,277,221
<CURRENT-LIABILITIES> 918,561
<BONDS> 0
0
0
<COMMON> 625,555
<OTHER-SE> 3,449,844
<TOTAL-LIABILITY-AND-EQUITY> 8,277,221
<SALES> 0
<TOTAL-REVENUES> 19,903
<CGS> 0
<TOTAL-COSTS> 533,201
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65,868
<INCOME-PRETAX> (579,166)
<INCOME-TAX> (171,000)
<INCOME-CONTINUING> (408,166)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (408,166)
<EPS-PRIMARY> (0.69)
<EPS-DILUTED> (0.69)
</TABLE>
