<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, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to _____________________
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 [ ]
The number of common shares outstanding at September 10, 2000:
595,767, par value $1.05
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SCIOTO DOWNS, INC.
INDEX
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PAGES
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at July 31, 2000, October 31, 1999
and July 31, 1999 1-2
Statements of Operations for the three-month and nine-month
periods ended July 31, 2000 and 1999 3
Statements of Cash Flows for the nine months ended
July 31, 2000 and 1999 4
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6-7
Item 3. Quantitative and Qualitative Disclosures about Market Risk 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
SIGNATURES 9
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SCIOTO DOWNS, INC.
BALANCE SHEETS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31, JULY 31,
2000 1999 1999
------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
ASSETS
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 1,182,834 $ 1,235,461 $ 1,099,729
Restricted cash 351,339 288,591 541,021
Accounts receivable, net of allowance for
doubtful accounts of $127,864 at July 31,
2000 and October 31, 1999 180,569 53,614 196,563
Prepaid expenses and other 61,847 37,785 74,050
Deferred tax asset 47,058 -- 50,000
------------ ------------ ------------
Total current assets 1,823,647 1,615,451 1,961,363
------------ ------------ ------------
Property and equipment, at cost 20,334,726 20,110,895 20,127,970
Less accumulated depreciation (14,312,966) (13,902,577) (13,908,420)
------------ ------------ ------------
Total property and equipment, net 6,021,760 6,208,318 6,219,550
------------ ------------ ------------
Accounts receivable--related party 482,177 483,654 161,498
Investment in joint venture 90,812 60,812 97,126
------------ ------------ ------------
Total assets $ 8,418,396 $ 8,368,235 $ 8,439,537
============ ============ ============
</TABLE>
CONTINUED
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SCIOTO DOWNS, INC.
BALANCE SHEETS
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<TABLE>
<CAPTION>
JULY 31, OCTOBER 31, JULY 31,
2000 1999 1999
----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C>
Current liabilities:
Accounts payable--trade $ 177,078 $ 185,542 $ 159,784
Dividends payable -- -- 29,789
Current maturities, term debt 133,217 123,700 120,618
Accrued expenses 338,922 265,069 180,267
Purses payable and simulcast purse fund 718,369 346,517 736,144
----------- ----------- -----------
Total current liabilities 1,367,586 920,828 1,226,602
----------- ----------- -----------
Minimum pension liability 186,770 186,770 115,771
----------- ----------- -----------
Net deferred income taxes 30,637 30,637 43,342
----------- ----------- -----------
Term debt, net of current maturities 2,811,366 2,911,513 2,943,843
----------- ----------- -----------
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 1,475,950 1,772,400 1,515,934
Pension liability adjustment, net of taxes (116,768) (116,768) (68,810)
----------- ----------- -----------
Total stockholders' equity 4,022,037 4,318,487 4,109,979
----------- ----------- -----------
Total liabilities and stockholders' equity $ 8,418,396 $ 8,368,235 $ 8,439,537
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial
statements.
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<PAGE> 5
SCIOTO DOWNS, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED JULY 31, 2000 AND 1999
(UNAUDITED)
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<TABLE>
<CAPTION>
FOR THE THREE-MONTH FOR THE NINE-MONTH
PERIODS ENDED PERIODS ENDED
JULY 31, JULY 31,
----------------------------- -----------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating revenues:
Pari-mutuel commissions and breakage $ 6,025,407 $ 6,189,260 $ 6,025,407 $ 6,189,260
Less pari-mutuel taxes 925,064 973,408 925,064 973,408
----------- ----------- ----------- -----------
5,100,343 5,215,852 5,100,343 5,215,852
Export signal revenue 267,855 254,762 267,855 254,762
Admissions 115,542 212,674 115,542 212,674
Simulcasting shared revenue -- -- 68,891 70,180
Concessions, program, parking, and other 410,970 527,431 410,970 527,431
Entry fees and purse monies added by others 746,270 658,608 746,270 658,608
Rental income from leased facilities 145,305 128,345 145,305 154,345
Pari-mutuel tax abatement earned 201,110 259,455 201,110 259,455
Other operating revenues 42,930 15,555 86,805 32,102
----------- ----------- ----------- -----------
7,030,325 7,272,682 7,143,091 7,385,409
----------- ----------- ----------- -----------
Operating expenses:
Purses 2,957,929 3,327,719 2,957,929 3,327,719
Salaries and wages 896,020 835,906 1,150,455 1,102,658
Simulcasting fees 678,630 679,827 678,630 679,827
Depreciation and amortization 139,739 173,859 410,389 521,577
Other operating and general 1,455,709 1,274,116 2,148,913 1,932,831
----------- ----------- ----------- -----------
6,128,027 6,291,427 7,346,316 7,564,612
----------- ----------- ----------- -----------
Income (loss) from racing operations 902,298 981,255 (203,225) (179,203)
Interest expense (59,880) (60,731) (177,910) (189,854)
Dividend and interest income 40,417 10,429 67,415 30,919
----------- ----------- ----------- -----------
Income (loss) before income tax (expense) benefit 882,835 930,953 (313,720) (338,138)
Income tax (expense) benefit (132,426) (140,000) 47,058 50,000
----------- ----------- ----------- -----------
Net income (loss) $ 750,409 $ 790,953 $ (266,662) $ (288,138)
----------- ----------- ----------- -----------
Net income (loss) per common share $ 1.26 $ 1.33 $ (.45) $ (.48)
----------- ----------- ----------- -----------
Dividends per common share $ -- $ .05 $ -- $ .05
----------- ----------- ----------- -----------
Weighted average shares outstanding,
basic and diluted 595,767 595,767 595,767 595,767
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial
statements.
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SCIOTO DOWNS, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JULY 31, 2000 AND 1999 (UNAUDITED)
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<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss $ (266,662) $ (288,138)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 410,389 521,577
Deferred income taxes (47,058) (50,000)
Changes in current assets and liabilities:
Accounts receivable (125,478) (88,709)
Prepaid expenses and other (24,062) 3,679
Accounts and purses payable and simulcast purse fund 363,388 359,750
Accrued expenses 73,853 (37,644)
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Net cash provided by operating activities 384,370 420,515
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CASH FLOWS FROM INVESTING ACTIVITIES
Net restricted cash receipts (62,748) --
Purchases of property and equipment, net (223,831) (111,327)
Investment in joint venture (30,000) --
----------- -----------
Net cash used in investing activities (316,579) (111,327)
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Cash flows from financing activities
Payments on term debt (90,630) (141,889)
Cash dividends paid (29,788) (29,789)
----------- -----------
Net cash used in financing activities (120,418) (171,678)
----------- -----------
Net (decrease) increase in cash and cash equivalents (52,627) 137,510
Cash and cash equivalents, beginning of period 1,235,461 1,503,240
----------- -----------
Cash and cash equivalents, end of period $ 1,182,834 $ 1,640,750
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial
statements.
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SCIOTO DOWNS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE-MONTH AND NINE-MONTH PERIODS ENDED JULY 31, 2000 AND 1999
(UNAUDITED)
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1. BASIS OF PRESENTATION
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 report on Form 10-K. Reference should be made to
the Company's 1999 Form 10-K for additional disclosures, including a
summary of the Company's accounting policies.
The financial 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 year-end balance sheet was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles.
Certain reclassifications of prior period amounts have been made in the
financial statements to conform to the July 31, 2000 presentation.
2. INCOME TAXES
The Company's estimated annual effective tax rate differs from the
statutory rate due to the application of surtax exemptions.
3. COMMITMENTS AND CONTINGENCIES
At July 31, 2000 and October 31, 1999, the Company had an outstanding
receivable from its former concessionaire of $127,864. The Company is
in dispute with the former concessionaire and has fully reserved the
receivable as of July 31, 2000 and October 31, 1999. Under the
agreement with the former concessionaire, the Company is obligated to
purchase certain equipment and licenses if it terminates the agreement.
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SCIOTO DOWNS, INC.
OTHER INFORMATION
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PART I. FINANCIAL INFORMATION, continued
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 2000 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 period to
perform routine repairs and maintenance and facility
improvements. During the first and second quarters of 2000, the
Company continued to service the debt on the clubhouse and the
simulcasting equipment with funds generated during the 2000
racing season.
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 JULY 31, 2000 COMPARED TO THE THREE MONTHS
ENDED JULY 31, 1999
Income from racing operations was $902,298, which was a decrease
of $78,957 or 8.0%. The decrease resulted from a decrease in
operating revenue of $242,357, offset by a decline in operating
expenses of $163,400.
Operating revenues decreased primarily due to an overall decline
in commissions, breakage, admissions, and concessions of
$377,466, an increase of $87,662 from sires stakes entry fees and
an increase of $13,093 from the simulcasting export signal
revenue, which is an increase in the number of racetracks
receiving Scioto Downs' signal and paying commissions for doing
so.
Operating expenses decreased primarily due to a decrease of purse
expense of $369,790, offset by an increase in salaries and wages
of $60,114, resulting from an increase in overall wages.
The Company recorded income tax expense of $132,426 and $140,000
for the three months ended July 31, 2000 and 1999, respectively.
The expense has been recorded at the anticipated effective tax
rates for fiscal years 2000 and 1999, respectively.
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SCIOTO DOWNS, INC.
OTHER INFORMATION
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NINE MONTHS ENDED JULY 31, 2000 COMPARED TO THE NINE MONTHS ENDED
JULY 31, 1999
Net loss from racing operations was $203,225, which was an
increase of $24,022 or 13.4%. The increase resulted from a
decrease in operating revenues of $242,318 and a decline in
operating expenses of $218,296.
Operating revenues declined due to a decrease in admissions,
concessions, and rental income of $264,721. Net pari-mutuel
commissions and breakage decreased by $115,509.
Operating expenses decreased primarily due to a decline in purse
expense of $369,790 and an increase in salaries and wages of
$47,797 due to an increase in administrative staffing. Other
operating and general expenses increased $216,082 due mainly to
increases in the use of outside consultants in the implementation
of new Year 2000 compliant software, accounting fees and other
miscellaneous expense items. Simulcasting fees paid by the
Company decreased by $1,197. Interest expense decreased $11,944
due to the refinancing of the clubhouse and simulcasting
equipment note completed in April 1999.
The Company recorded an income tax benefit of $47,058 and $50,000
for the nine months ended July 31, 2000 and 1999, respectively.
The benefit has been recorded at the anticipated effective tax
rates for fiscal years 2000 and 1999, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operating activities was $384,370 for the nine
months ended July 31, 2000 as compared to cash provided by
operations of $420,515 for the nine months ended July 31, 1999.
The decrease of $36,145 in cash provided by operating activities
was a result of an increase in loss from racing operations of
$24,476.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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SCIOTO DOWNS, INC.
OTHER INFORMATION
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PART II. OTHER INFORMATION
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, 2000.
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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: September 14, 2000 BY: /s/ Edward T. Ryan
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Edward T. Ryan
President
DATE: September 14, 2000 BY: /s/ Richard J. Fiore
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Richard J. Fiore
Chief Financial Officer
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