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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
MARK ONE
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR
15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
[FEE REQUIRED]
For the fiscal year ended October 31, 1998
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
[NO FEE REQUIRED]
For the transition period to
from ---------------------------------------------
Commission file number 0-1365
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SCIOTO DOWNS, INC.
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(Exact name of Registrant as specified in ith charter)
Ohio 31-4440550
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
6000 South High Street, Columbus, Ohio 43207
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (614) 491-2515
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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FORM 10-K, CONTINUED
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT
Common Stock
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(Title of Class)
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 ninety (90) days.
YES X NO
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The aggregate market value of the Registrant's voting stock held by
nonaffiliated stockholders as of January 8, 1999 was $4,404,010 or $12.25 per
share.
Registrant has only one class of shares outstanding, namely, common
shares. The number of common shares outstanding as of January 8, 1999 was
595,767.
Portions of the following documents are incorporated by reference:
1. Portions of the Annual Report to Stockholders for the year ended
October 31, 1998 are incorporated by reference in Part II.
2. Portions of Scioto Downs, Inc.'s definitive Proxy Statement furnished
to stockholders in connection with the Annual Meeting of Stockholders
to be held February 23, 1999 are incorporated by reference in Part
III.
The Exhibit index is on page 10.
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PART I
ITEM 1. BUSINESS
The Registrant's sole business is the ownership and operation of a
harness horse racing facility located at 6000 South High Street, Columbus, Ohio.
Racing operations at the South High Street facility started in 1959 and there
has been no material change in the method of conducting this business. In
addition to the racetrack itself, there are parking, grandstand, clubhouse and
eating facilities for Registrant's customers and barn and stable facilities for
the horses. Revenue is derived primarily from commissions on parimutuel wagering
(net of parimutuel taxes), admission fees to enter the facilities and
concessions, programs and parking. In 1998, commissions on parimutuel wagering
net of parimutuel taxes represented 64% of revenues, in 1997 65%, and in 1996
61%. In 1998, admissions represented 2% of revenues, in 1997 2%, and in 1996 3%.
In 1998, revenues from concessions, parking and programs amounted to 10% of
revenues, in 1997 11%, and in 1996 12%. During each off-season period in 1998,
1997 and 1996, the Registrant employed 17 persons. During the last three years,
average daily attendance has declined from 3,295 in 1996 to 2,219 in 1997 and to
2,187 in 1998. However, during 1997 and 1998, because of the full-card
simulcasting program, Registrant did not track attendance for people entering
the facility prior to 6:00 p.m.
The number of races conducted during a live racing program varies from
9 races during the week to 11 or 12 races on weekends. The nearest racetrack
competition is Beulah Park, a thoroughbred horse racetrack approximately 6 miles
away. Beulah Park typically conducts live racing from the middle of September
until the first weekend of May, during which time Registrant is not open.
Registrant conducts its business pursuant to a permit issued annually
by the Ohio Racing Commission. All of the racing conducted by Registrant is
conducted in accordance with applicable Ohio statutes and the rules and
regulations of the Ohio Racing Commission. The Ohio Racing Commission regulates
and controls the forms of wagering that are permitted at the racetrack, the
procedures to be followed as to wagering, the wagering information to be
provided to the public, the number of races permitted during a racing program
and the days and time of day racing will be permitted. The Commission also
approves full- card simulcasting schedules. All persons who work at the
racetrack must be licensed by the Ohio Racing Commission. All owners, trainers,
drivers and other persons involved in the racing program must be licensed by the
Ohio Racing Commission. For the period covered by this report, Registrant was
issued a permit by the Ohio Racing Commission to conduct harness live racing at
its facilities for a period of 61 days together with full-card simulcasting on
those days and an additional 11 days (Sundays).
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Except on special occasions such as Memorial Day, July 4 and Labor Day,
Registrant conducts its racing at night 6 days a week. The 71 day period in 1998
commenced May 2nd and continued through July 11th. Registrant then leased its
facilities to Mid-America Racing Association, Inc. for 60 days of live racing,
which period ended September 19, 1998. Mid-America Racing conducted full-card
simulcasting on live racing days and on an additional 10 days (Sundays). This
lease generated 7% of total revenue in 1998. This lease is on file with the
Commission.
During 1998, major racing programs conducted at Registrant's facilities
included the Little Brown Jug Preview, the Scarlet O'Hara, the Pink Bonnet, the
Ohio Sires Stakes events and Ohio Fair stakes events. Forms of competition faced
by Registrant during its summer racing schedule include, in addition to the
normal summer events, professional baseball (minor league in Columbus and major
league in Cincinnati and Cleveland), outdoor music concerts and other similar
entertainment events. Riverboat gambling has been approved in Indiana and
land-based casinos have been approved in Michigan. At the present time there is
not sufficient information to determine if these gambling opportunities had a
noticeable effect upon the wagering conducted at Registrant's facility.
Legalized gambling in the form of the Ohio lottery has been in existence for
many years and has had an adverse effect upon wagering at Registrant's facility.
In 1997, the Ohio legislature approved legislation which permits full
card simulcasting at racetracks in Ohio. This legislation enables Ohio
racetracks to bring in to their facilities via television day and night full
race programs conducted at racetracks located outside the State of Ohio. As a
result of this legislation, during its regular racing meet from May to July,
Registrant, in addition to its regular live racing program in the evening shows
at its facility via television during the day and night races being conducted at
other tracks in Ohio and tracks outside of Ohio. Customers at Registrant's
facility are able to wager on all of these races.
As a result of this legislation, Registrant and its nearest racetrack
competitor Beulah Park could be open year round conducting both live racing and
bringing racing in from out of state in competition with each other. This
situation would not be advantageous to either track and, as a result, Registrant
and Beulah Park entered into an agreement to not be open at the same. Pursuant
to this agreement, during 1998 Beulah Park operated from the middle of September
to the first of May while Registrant was closed. During that period of time
revenues derived from simulcasting at Beulah Park at night when it is not
conducting live racing was, after deducting of certain expenses, shared with
Scioto Downs ($70,915 during 1998 and $49,874 during 1997). Overall, during
1998, as a result of full card simulcasting, wagering on live racing declined
and the additional wagering on simulcast races offset the decline in wagering on
live racing. No live racing or full card simulcasting has been conducted at
Registrant's facilities since September 19, 1998. The 1999 racing season will
commence May 1, 1999.
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During the racing season, the Registrant has employed approximately 350
people, most all of whom are parimutuel clerks employed during the hours the
track is open for simulcasting and live racing which is approximately twelve
noon to midnight. As a part of the full card simulcast racing program,
Registrant sends its live races via television to all other tracks in Ohio and
as many facilities outside the State of Ohio that it can contract with to
receive the signal, which could be as many as 25 facilities. Registrant will
receive a percentage (in most instances 3%) of the amount wagered on its races
at these other facilities outside the State of Ohio. Total export signal revenue
was $243,216 in 1998.
ITEM 2. PROPERTIES
Registrant's place of business is located at 6000 South High Street,
Columbus, Ohio. Registrant owns in fee approximately 173 acres of land at this
location. Situated thereon are the physical facilities necessary for the
operation of a harness horse racing business, including the race track,
grandstand with a capacity of 10,000, and enclosed clubhouse buildings with a
capacity of 1,500 for customers, in which are located eating and pari-mutuel
wagering facilities (including simulcasting), barns, a paddock, and related
facilities for the horses, drivers, and trainers. In addition, a substantial
(approximately 6,000-space) parking area is provided for customers. These
facilities are used fully during the racing season, which covered 141 days
commencing in May and ending in mid-September.
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ITEM 3. LEGAL PROCEEDINGS
Registrant is not a party to any material pending legal proceedings
other than routine litigation incidental to its business, most of which is
covered by insurance.
Registrant has no knowledge of any material pending legal proceedings
to which any director, officer or affiliate of the Registrant, any owner of
record or beneficiary of more than five percent of the voting securities of the
Registrant, or any associate of any such director, officer or security holder is
a party adverse to the Registrant or has a material interest adverse to the
Registrant.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
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PART II
The following items are incorporated herein by reference from the indicated
pages of the Annual Report to Stockholders for the fiscal year ended October 31,
1998:
ANNUAL REPORT TO
STOCKHOLDERS SEQUENTIAL PAGES
Item 5. MARKET FOR THE REGISTRANT'S
COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS 25
Item 6. SELECTED FINANCIAL DATA 24
Item 7. MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF
OPERATIONS 18-23
Item 7A. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK Not applicable
Item 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA 4-17
Item 9. CHANGES IN AND
DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE Not applicable
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PART III
ITEMS 10, 11, 12 and 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT;
EXECUTIVE COMPENSATION; SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT; AND CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Information called for by Items 10, 11, 12 and 13 is incorporated
herein by reference to the definitive Proxy Statement of the Registrant dated
February 4, 1999, relating to the Annual Meeting of Stockholders to be held on
February 23, 1999.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
SCIOTO DOWNS, INC.
Index to Financial Statements and Financial Statement Schedules
REFERENCE PAGE
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FORM 10-K ANNUAL REPORT
ANNUAL REPORT TO STOCKHOLDERS
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(a.) 1. Financial Statements
Data incorporated by reference from the attached
1998 Annual Report to Stockholders of
Scioto Downs, Inc.:
Report of Independent Accountants on
Financial Statements 17
Balance Sheets as of October 31, 1998 and 1997 4
Statements of Operations for the years ended
October 31, 1998, 1997 and 1996 6
Statements of Stockholders' Equity for the years
ended October 31, 1998, 1997 and 1996 7
Statements of Cash Flows for the years ended
October 31, 1998, 1997 and 1996 8
Notes to the Financial Statements 9
(a) 2. Financial Statement Schedules
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Financial statement schedules are omitted because they are not
required or are not applicable.
(a) 3. Exhibits
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See Index to Exhibits at Page 10.
Reports on Form 8-K
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No reports on Form 8-K have been filed during the last quarter of the
period covered by this report.
(c) See Index to Exhibits at Page 10.
(d) Not applicable or not required
(e) Not applicable.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
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By /s/ Robert S. Steele
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President, Chief Operating Officer,
Director
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Title
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Date: January 29, 1999 By /s/ Robert S. Steele
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President, Chief Operating Officer,
Director
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Title
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Date: January 29, 1999 By /s/ LaVerne A. Hill
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Vice President, Director
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Title
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Date: January 29, 1999 By /s/ William C. Heer
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Treasurer, Director
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Title
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Date: January 29, 1999 By /s/ John J. Chester
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Director
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Title
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Date: January 29, 1999 By /s/ John F. Fissell
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Director
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Title
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Date: January 29, 1999 By /s/ Robert E. Suchy
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Controller
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Title
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INDEX TO EXHIBITS ANNUAL REPORT ON FORM 10-K
for the year ended October 31, 1998
EXHIBIT NO. DESCRIPTION
3A Articles of Incorporation of the Registrant, as amended to date *
3B Code of Regulations of the Registrant, as amended to date *
10A Lease with Hilliard Raceway, Inc., now Mid-America Racing *
Association, Inc., and amendment thereto
10B Simulcasting agreement with Beulah Park *
13 Annual Report to Stockholders
27 Financial Data Schedule
* Previously filed with Securities and Exchange Commission
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