<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, 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
- ------------------------------- ---------------------------------
(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 14, 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 January 31, 2000, October 31, 1999
and January 31, 1999 1-2
Statements of Operations for the three month periods ended
January 31, 2000 and 1999 3
Statements of Cash Flows for the three month periods ended
January 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
Item 3. Quantitative and Qualitative Disclosures about Market Risk 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
<PAGE> 3
SCIOTO DOWNS, INC.
BALANCE SHEETS
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
JANUARY 31, OCTOBER 31, JANUARY 31,
2000 1999 1999
------------------ ------------------ -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 475,697 $ 1,235,461 $ 506,610
Restricted cash 624,881 288,591 454,391
Accounts receivable, net of allowance for
doubtful accounts of $127,864 at
January 31, 2000 and October 31, 1999 - 53,614 21,741
Prepaid expenses and other 50,546 37,785 72,436
Deferred income taxes 78,000 - 89,000
------------------ ------------------ -----------------
Total current assets 1,229,124 1,615,451 1,144,178
------------------ ------------------ -----------------
Property and equipment, at cost 20,207,977 20,110,895 20,040,185
Less accumulated depreciation 14,035,264 13,902,577 13,560,702
------------------ ------------------ -----------------
Total property and equipment 6,172,713 6,208,318 6,479,483
------------------ ------------------ -----------------
Accounts receivable - related party 548,013 483,654 268,117
Investment in joint venture 60,812 60,812 97,126
------------------ ------------------ -----------------
Total assets $ 8,010,662 $ 8,368,235 $ 7,988,904
------------------ ------------------ -----------------
</TABLE>
CONTINUED
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<PAGE> 4
SCIOTO DOWNS, INC.
BALANCE SHEETS
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<TABLE>
<CAPTION>
JANUARY 31, OCTOBER 31, JANUARY 31,
2000 1999 1999
---------------- ---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable, trade $ 66,182 $ 185,542 $ 48,228
Current maturities, term debt 130,917 123,700 285,047
Accrued expenses 208,766 265,069 185,601
Purses payable and simulcast purse fund 666,698 346,517 539,661
---------------- ---------------- ----------------
Total current liabilities 1,072,563 920,828 1,058,537
---------------- ---------------- ----------------
Minimum pension liability 186,770 186,770 115,771
Deferred income taxes 30,637 30,637 43,342
Term debt, net of current maturities 2,876,397 2,911,513 2,845,725
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 of stock 2,037,300 2,037,300 2,037,300
Retained earnings 1,298,208 1,772,400 1,331,484
Pension liability adjustment, net of taxes (116,768) (116,768) (68,810)
---------------- ---------------- ----------------
Total stockholders' equity 3,844,295 4,318,487 3,925,529
---------------- ---------------- ----------------
Total liabilities and stockholders' equity $8,010,662 $8,368,235 $7,988,904
---------------- ---------------- ----------------
</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 MONTHS ENDED JANUARY 31, 2000 AND 1999 (UNAUDITED)
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<TABLE>
<CAPTION>
2000 1999
Operating revenues, other $ 38,917 $ 24,767
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<S> <C> <C>
Operating expenses:
Salaries and wages 114,372 134,038
Depreciation 132,687 173,859
Other operating and general expense 268,174 251,541
--------------- ----------------
515,233 559,438
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Loss from operations (476,316) (534,671)
Net interest expense (46,088) (56,706)
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Net loss before income tax benefit (522,404) (591,377)
Income tax benefit 78,000 89,000
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Net loss $ (444,404) $ (502,377)
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Net loss per common share - basic and diluted $ (.75) $ (.84)
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Weighted average common shares outstanding--basic and diluted 595,767 595,767
--------------- ----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 6
SCIOTO DOWNS, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JANUARY 31, 2000 AND 1999 (UNAUDITED)
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<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (444,404) $ (502,377)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 132,687 173,859
Changes in assets and liabilities:
Deferred income taxes (78,000) (89,000)
Accounts receivable 53,614 (20,506)
Accounts receivable, related party (64,359) -
Prepaid expenses and other (12,761) 5,293
Accounts payable and purses payable and simulcast purse fund 200,823 7,105
Accrued expenses (56,303) 12,296
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Net cash used in operating activities (268,703) (413,330)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Net restricted cash receipts (336,290) -
Purchase of equipment (97,084) (23,542)
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Net cash used in investing activities (433,374) (23,542)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (29,788) (29,789)
Payments on term debt (27,899) (75,578)
------------- --------------
Net cash used in financing activities (57,687) (105,367)
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Net decrease in cash and cash equivalents (759,764) (542,239)
Cash and cash equivalents, beginning of period 1,235,461 1,048,849
------------- --------------
Cash and cash equivalents, end of period $ 475,697 $ 506,610
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</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 7
SCIOTO DOWNS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED JANUARY 31, 2000 AND 1999 (UNAUDITED)
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1. BASIS OF PRESENTATION
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.
Operating results for the quarter ended January 31, 2000 reflect
adjustments to reduce previously recorded estimates of operating
expenses of approximately $117,000.
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 year-end balance sheet was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles.
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 January 31, 2000 and October 31, 1999, the Company has an
outstanding receivable from its concessionaire of $127,864. The Company
is in dispute with the concessionaire and has fully reserved the
receivable as of January 31, 2000 and October 31, 1999. Under the
agreement with the concessionaire, the Company is obligated to purchase
certain equipment and licenses if it terminates the agreement. The
purchase price would be $365,222 and $433,967 as of January 31, 2000
and October 31, 1999, respectively. As of March 8, 2000, the
concessionaire has proposed termination of the contract. Ongoing
negotiations with the concessionaire are taking place.
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<PAGE> 8
SCIOTO DOWNS, INC.
MANAGEMENT'S DISCUSSION
FOR THE THREE MONTHS ENDED JANUARY 31, 2000 AND 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION, cont.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Management's 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 quarter of 2000, the Company continued to service
the debt on the Clubhouse and the simulcasting equipment with
funds generated during the 1999 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 JANUARY 31, 2000 COMPARED TO THREE MONTHS ENDED
JANUARY 31, 1999
Salaries and wages decreased by $19,666 to $114,372 for the three
months ended January 31, 2000 from $134,038 for the three months
ended January 31, 1999. The decrease was due primarily to having
one less office employee. Operating and general expense increased
by $16,633 due mainly to increases in utilities, professional
fees, and pension expense. Included in the net increase in
operating and general expense is a recovery of approximated
$54,000 in simulcasting purse pool funds from the Ohio Racing
Commission.
The income tax benefit decreased to $78,000 from $89,000 for the
three months ended January 31, 2000 and 1999, respectively, as a
result of the decrease in net loss before taxes. The Company
provides for income taxes based on the effective tax rate expected
for the full year.
ITEM 3. QUANTITIAVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
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<PAGE> 9
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 - Exhibit #27 - Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed
during the quarter ended January 31, 2000.
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<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.
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Registrant
DATE: March 15, 2000 BY: Robert S. Steele
-------------------------- ----------------------------
Robert S. Steele, President
DATE: March 15, 2000 BY: Richard J. Fiore
-------------------------- ----------------------------
Richard J. Fiore
Chief Financial Officer
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-2000
<PERIOD-START> NOV-01-1999
<PERIOD-END> JAN-31-1999
<CASH> 1,100,598
<SECURITIES> 0
<RECEIVABLES> 127,864
<ALLOWANCES> (127,864)
<INVENTORY> 0
<CURRENT-ASSETS> 1,229,124
<PP&E> 20,807,977
<DEPRECIATION> 14,035,264
<TOTAL-ASSETS> 8,010,662
<CURRENT-LIABILITIES> 1,072,563
<BONDS> 0
0
0
<COMMON> 625,555
<OTHER-SE> 3,218,740
<TOTAL-LIABILITY-AND-EQUITY> 8,010,662
<SALES> 0
<TOTAL-REVENUES> 38,917
<CGS> 0
<TOTAL-COSTS> 515,233
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 46,000
<INCOME-PRETAX> (522,404)
<INCOME-TAX> (70,000)
<INCOME-CONTINUING> (444,400)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (444,404)
<EPS-BASIC> (.75)
<EPS-DILUTED> (.75)
</TABLE>
