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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 April 30, 2000
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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 ____________________
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 June 14, 2000:
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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
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Item 1. Financial Statements
Balance Sheets at April 30, 2000, October 31, 1999
and April 30, 1999 1-2
Statements of Operations for the three-month and six-month periods
ended April 30, 2000 and 1999 3
Statements of Cash Flows for the six-month periods ended
April 30, 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
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<TABLE>
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SCIOTO DOWNS, INC.
BALANCE SHEETS
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
APRIL 30, OCTOBER 31, APRIL 30,
2000 1999 1999
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(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 276,604 $ 1,235,461 $ 188,647
Restricted cash 1,023,649 288,591 814,415
Accounts receivable, net of allowance for doubtful
accounts of $127,864 at April 30, 2000
and October 31, 1999 6,875 53,614 22,061
Prepaid expenses and other 61,402 37,785 85,098
Deferred income taxes 179,484 - 190,000
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Total current assets 1,548,014 1,615,451 1,300,221
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Property and equipment, at cost 20,258,859 20,110,895 20,068,129
Less accumulated depreciation (14,173,227) (13,902,577) 13,734,561
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Total property and equipment, net 6,085,632 6,208,318 6,333,568
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Accounts receivable-related party 411,351 483,654 45,565
Investments in joint venture 90,812 60,812 97,126
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Total assets $ 8,135,809 $ 8,368,235 $ 7,776,480
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CONTINUED
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<TABLE>
<CAPTION>
SCIOTO DOWNS, INC.
BALANCE SHEETS
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APRIL 30, OCTOBER 31, APRIL 30,
2000 1999 1999
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(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable, trade $ 214,865 $ 185,542 $ -
Current maturities, term debt 130,612 123,700 288,829
Accrued expenses 244,667 265,069 220,811
Deferred revenue 163,243 - 157,673
Purses payable and simulcast purse fund 1,047,735 346,517 796,261
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Total current liabilities 1,801,122 920,828 1,463,574
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Minimum pension liability 186,770 186,770 115,771
Deferred income taxes 30,637 30,637 43,342
Term debt, net of current maturities 2,845,651 2,911,513 2,804,978
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 725,542 1,772,400 754,770
Pension liability adjustment, net of taxes (116,768) (116,768) (68,810)
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Total stockholders' equity 3,271,629 4,318,487 3,348,815
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Total liabilities and stockholders' equity $ 8,135,809 $ 8,368,235 $ 7,776,480
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The accompanying notes are an integral part of these financial statements.
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<CAPTION>
SCIOTO DOWNS, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED APRIL 30, 2000 AND 1999
(UNAUDITED)
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FOR THE THREE-MONTH FOR THE SIX-MONTH
PERIODS ENDED PERIODS ENDED
APRIL 30, APRIL 30,
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2000 1999 2000 1999
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Operating revenues:
Simulcasting revenues $ 68,891 $ 65,101 $ 68,891 $ 70,180
Other operating revenues 4,958 17,780 43,875 42,547
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73,849 82,881 112,766 112,727
Operating expenses:
Salaries and wages 140,063 132,714 254,435 266,752
Depreciation 137,963 173,859 270,650 347,718
Other operating and general expenses 425,030 407,174 693,204 658,715
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703,056 713,747 1,218,289 1,273,185
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Loss from operations (629,207) (630,866) (1,105,523) (1,160,458)
Net interest expense (44,944) (47,227) (91,032) (108,633)
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Net loss before income tax benefit (674,151) (678,093) (1,196,555) (1,269,091)
Income tax benefit 101,484 101,000 179,484 190,000
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Net loss $ (572,667) $ (577,093) $ (1,017,071) $ (1,079,091)
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Net loss per common share - basic and diluted $ (.96) $ (.97) $ (1.71) $ (1.81)
============ =========== ============ ============
Weighted average common shares
outstanding--basic and diluted 595,767 595,767 595,767 595,767
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</TABLE>
The accompanying notes are an integral part of these financial statements.
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<CAPTION>
SCIOTO DOWNS, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED APRIL 30, 2000 AND 1999 (UNAUDITED)
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2000 1999
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss $ (1,017,071) $ (1,079,091)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 270,650 347,718
Deferred income taxes (179,484) (190,000)
Changes in current assets and liabilities:
Accounts receivable 119,042 201,726
Prepaid expenses and other (23,617) (7,369)
Accounts payable 29,323 (41,123)
Deferred revenue 163,243 157,673
Accrued expenses (20,402) 2,900
Purses payable and simulcast purse fund 701,218 301,206
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Net cash provided by (used in) operating activities 42,902 (306,360)
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CASH FLOWS FROM INVESTING ACTIVITIES
Net restricted cash receipts (735,058) (360,024)
Purchase of equipment (147,964) (51,486)
Investment in joint venture (30,000) -
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Net cash used in investing activities (913,022) (411,510)
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CASH FLOWS FROM FINANCING ACTIVITIES
Payments on term debt (58,950) (112,543)
Dividends paid (29,787) (29,789)
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Net cash used in financing activities (88,737) (142,332)
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Net decrease in cash and cash equivalents (958,857) (860,202)
Cash and cash equivalents, beginning of period 1,235,461 1,048,849
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Cash and cash equivalents, end of period $ 276,604 $ 188,647
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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 SIX-MONTH PERIODS ENDED APRIL 30, 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.
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.
Certain reclassifications of prior period amounts have been made in the
financial statements to conform to the April 30, 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. The Company
recognizes the tax benefit of losses incurred in interim periods
outside the racing season, in anticipation of third and fourth quarter
income. The Company recognizes allowances against deferred tax assets
when it is more likely than not the assets will not be realized.
3. COMMITMENTS AND CONTINGENCIES
At April 30, 2000 and October 31, 1999, the Company has 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 April 30, 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, CONT.
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
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 APRIL 30, 2000 COMPARED TO THE THREE MONTHS
ENDED APRIL 30, 1999
The net loss from operations before income tax benefit was
$674,151, which was a decrease of $3,942 from the three months
ended April 30, 1999. The decrease is due to an increase in
other miscellaneous income of $12,822, an increase in salaries
and wages relating to higher salaries versus the April 1999
quarter, a reduction in depreciation expense because of
certain assets being fully depreciated and an increase of
$17,856 in other operating and general expenses.
SIX MONTHS ENDED APRIL 30, 2000 COMPARED TO THE SIX MONTHS
ENDED APRIL 30, 1999
The net loss from operations before income tax benefit was
$1,196,555, which decreased from the six months ended April
30, 1999 by $72,536. The decrease in the net loss before taxes
is principally due to a reduction in depreciation expense of
$77,068 because of certain assets being fully depreciated
versus the prior year, and an increase in other operating and
general expenses of $34,489.
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 - Exhibit #27 - Financial Data Schedule.
(b) Reports on Form 8-K - No reports on Form 8-K
were filed during the quarter ended April
30, 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.
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Registrant
DATE: June 14, 2000 BY: /s/ Edward T. Ryan
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Edward T. Ryan, President
DATE: June 14, 2000 BY: /s/ Richard J. Fiore
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Richard J. Fiore
Chief Financial Officer
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