10-K 1 l92444ae10-k.txt SCIOTO DOWNS, INC. FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-K ANNUAL REPORT FOR THE FISCAL YEAR ENDED OCTOBER 31, 2001 SCIOTO DOWNS, INC. COLUMBUS, OHIO EMPLOYER I.D. NO. 31-4440550 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, 2001 --------------------------------------------------- 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 -------------------------------------------------- SCIOTO DOWNS, INC. ------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Ohio 31-4440550 --------------------------------- ------------------------------------ (State or other jurisdiction of (IRS Employer Identification Number) incorporation or organization) 6000 South High Street, Columbus, Ohio 43207 ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (614) 491-2515 ------------------------ Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered ---------------------- --------------------------------------------- FORM 10-K, CONTINUED SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT Common Stock -------------------------------------------------------------------------------- (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 -------- ------- The aggregate market value of the Registrant's voting stock held by nonaffiliated stockholders as of January 9, 2002 was $4,581,576 or $12.90 per share. Registrant has only one class of shares outstanding, namely, common shares. The number of common shares outstanding as of January 9, 2002 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, 2001 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 28, 2002 are incorporated by reference in Part III. The Exhibit index is on page 11. PART I ITEM 1. BUSINESS The Registrant's sole business is the ownership and operation of a harness horseracing 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 the Registrant's customers and barn and stable facilities for the horses. Revenue is derived primarily from commissions on pari-mutuel wagering (net of pari-mutuel taxes), admission fees to enter the facilities and concessions, programs and parking. In 2001, commissions on pari-mutuel wagering net of pari-mutuel taxes represented 72% of revenues, in 2000 65%, and in 1999 65%. In 2001, admissions represented 1% of revenues, in 2000 1%, and in 1999 2%. In 2001, revenues from concessions, parking and programs amounted to 7% of revenues, in 2000 10%, and in 1999 10%. During the last three years, average daily attendance has declined from 2,151 in 1999 to 1,927 in 2000 and to 1,900 in 2001. However, 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 six 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 for live racing. 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 105 days, together with full-card simulcasting on those days and an additional 31 days, (Sundays and Mondays). Except on special occasions, such as Memorial Day, July 4 and Labor Day, Registrant conducts its racing at night. The 136-day racing period in 2001 commenced May 4, 2001 and continued through 2 July 17, 2001 and re-commenced on August 1, 2001 through September 29, 2001. Registrant leased its facilities to Mid-America Racing Association, Inc., which conducted full-card simulcasting for ten live racing days and had an additional four dark days prior to its acquisition effective by the Registrant. On August 1, 2001, Registrant purchased all of the outstanding shares of Mid-America Racing Association, Inc., which owns a racing permit entitling it to conduct harness horseracing. Registrant commenced operations on August 1, 2001 under the Mid-America Racing Association, Inc. permit through September 30, 2001. The lease of racing facilities between Mid-America Racing Association, Inc. and the Registrant was terminated as of the acquisition date. During 2001, 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. Legalized gaming has been approved at specific locations in Indiana, Kentucky, West Virginia, New York, and 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. 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 inside and outside the state of Ohio. During its regular racing meet from May to July, Registrant 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 simulcast programs in competition with each other. As a result, Registrant and Beulah Park entered into an agreement not to be open at the same time. Pursuant to this agreement, during 1999 Beulah Park operated from the middle of September to the first of May while Registrant was closed. During this period of time, simulcasting revenues derived from simulcasting at Beulah Park when it is not conducting live racing was, after deducting of certain expenses, shared with the Registrant. The Registrant terminated its simulcasting agreement with Beulah Park in September 2000. Overall, during 2001wagering on live racing continued to decline, and the additional wagering on simulcast races offset the decline in wagering on live racing. No live racing has been conducted at Registrant's facilities since September 29, 2001. During 2001, the Registrant implemented a plan to utilize its facilities during the non-live and live racing seasons to generate additional revenue and cash flow. Beginning January 1, 2001, the Registrant 3 commenced year-round simulcasting with the permission of the Ohio State Racing Commission. The Registrant operated full-card simulcasting operations from January 1, 2001 through May 3, 2001, and re-commenced on September 30, 2001, following the live racing season. In addition, the Registrant has expanded the rental of its facilities and storage areas to various entities. Prior to 2001, small trade shows and the Standard Bred Yearling sale were the only significant sources of additional revenue from the horseracing operations. Other revenue sources are being researched for the future. Existing live racing, pari-mutuel wagering and other operations are contingent upon the continued governmental approval of these operations as forms of legalized gaming. All current and proposed operations are subject to extensive regulations and could be subjected at any time to additional or more restrictive regulations, or banned entirely. Any significant increase in governmental regulation could materially adversely affect the business, financial condition, and results of operations. Future expansion of gaming operations will likely require additional licenses, registrations, permits and approvals. The licensing process can be both lengthy and costly, and there is no assurance of success. During racing seasons, the Registrant employed approximately 350 people, most all of whom are pari-mutuel 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 receives 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 $511,857 in 2001, $273,628 in 2000 and $241,959 in 1999. 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 horseracing business, including the race track, grandstand with a capacity of 10,000, and enclosed clubhouse buildings with a capacity for 1,500 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 covers 136 days commencing in May and ending September 30. 4 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. 5 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, 2001: ANNUAL REPORT TO STOCKHOLDERS SEQUENTIAL PAGES Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 21 Item 6. SELECTED FINANCIAL DATA 22 Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 17 Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 3 Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable 6 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 3, 2001, relating to the Annual Meeting of Stockholders to be held on February 28, 2001. 7 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K SCIOTO DOWNS, INC. Index to Consolidated Financial Statements and Financial Statement Schedules 8

REFERENCE PAGE --------------------------------------------- FORM 10-K ANNUAL REPORT ANNUAL REPORT TO STOCKHOLDERS ~~SEQUENTIAL~~--------------------- ~~PAGES~~---------------------- ~~Item~~(a.) 51. ~~MARKET~~Consolidated ~~FOR~~Financial ~~THE~~Statements ~~REGISTRANT~~--------------------------------------------------------------- Data incorporated by reference from the attached 2001 Annual Report to Stockholders of Scioto Downs, Inc.: Report of Independent Accountants 1 Consolidated Balance Sheets at October 31, 2001 and 2000 2 Consolidated Statements of Operations for the years ended October 31, 2001, 2000 and 1999 4 Consolidated Statements of Stockholders'S ~~COMMON~~Equity ~~EQUITY~~for ~~AND~~the ~~RELATED~~years ~~STOCKHOLDER~~ended ~~MATTERS~~October 2131, ~~Item~~2001, 2000 and 1999 5 Consolidated Statements of Cash Flows for the years ended October 31, 2001, 2000 and 1999 6. ~~SELECTED~~Notes ~~FINANCIAL~~to ~~DATA~~Consolidated 22Financial ~~Item~~Statements 7 (a) 2. ~~MANAGEMENT'S~~Financial ~~DISCUSSION~~Statement ~~AND~~Schedules ~~ANALYSIS~~--------------------------------------------------------------- OFFinancial ~~FINANCIAL~~statement ~~CONDITION~~schedules ~~AND~~are ~~RESULTS~~omitted OFbecause ~~OPERATIONS~~they 17are ~~Item~~not 7Arequired or are not applicable. ~~QUANTITATIVE~~(a) ~~AND~~3. ~~QUALITATIVE~~Exhibits ~~DISCLOSURES~~--------------------------------------------------------------- ~~ABOUT~~See ~~MARKET~~Index ~~RISK~~to ~~Not~~Exhibits ~~applicable~~at ~~Item~~Page 12. (b) Reports on Form 8-K --------------------------------------------------------------- Scioto Downs, Inc. ~~FINANCIAL~~filed ~~STATEMENTS~~a ~~AND~~current ~~SUPPLEMENTARY~~report ~~DATA~~on 3Form ~~Item~~8-K 9dated August 17, 2001, amended by Form 8-K/A filed on October 15, 2001, reporting the closing of the transactions pursuant to the agreement of the acquisition of all of the outstanding stock of Mid-America Racing Association, Inc. ~~CHANGES~~Pursuant INto ~~AND~~the ~~DISAGREEMENTS~~Form ~~WITH~~8-K/A, ~~ACCOUNTANTS~~financial ONstatements ~~ACCOUNTING~~were ~~AND~~filed ~~FINANCIAL~~for ~~DISCLOSURE~~Mid-America Racing Association, Inc. as of and for the years ended October 31, 2000 and 1999, unaudited financial statements as of and for the nine months ended July 31, 2001 and 2000, and unaudited proforma financial statements of Scioto Downs, Inc. combined with Mid-America Racing Association, Inc. as of and for the nine months ended July 31, 2001 and for the year ended October 31, 2000. (c) See Index to Exhibits at Page 12. (d) Not applicable or not required (e) Not applicable.

9 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) -------------------------------------- By /s/ Edward T. Ryan -------------------------------------- President, Chief Operating Officer, -------------------------------------- Title Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant, and in the capacities and on the dates indicated. ----------------------------------------------- Date: January 28, 2002 By /s/ Edward T. Ryan ----------------------------------------------- President, Chief Operating Officer, ----------------------------------------------- Title ----------------------------------------------- Date: January 28, 2002 By /s/ LaVerne A. Hill ----------------------------------------------- Vice President, Director ----------------------------------------------- Title ----------------------------------------------- Date: January 28, 2002 By /s/ William C. Heer ----------------------------------------------- Treasurer, Director ----------------------------------------------- Title ----------------------------------------------- Date: January 28, 2002 By /s/ Richard H. McClelland ----------------------------------------------- Director ----------------------------------------------- Title ----------------------------------------------- Date: January 28, 2002 By /s/ John F. Fissell ----------------------------------------------- Director ----------------------------------------------- Title ----------------------------------------------- Date: January 28, 2002 By /s/ Richard J. Fiore ----------------------------------------------- Chief Financial Officer ----------------------------------------------- Title 10 INDEX TO EXHIBITS ANNUAL REPORT ON FORM 10-K for the year ended October 31, 2001 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 * Previously filed with Securities and Exchange Commission 11

REFERENCE PAGE ----------------------------------------- FORM 10-K ANNUAL REPORT ANNUAL REPORT TO STOCKHOLDERS ------------------- ------------------- (a.) 1. Financial Statements Data incorporated by reference from the attached 2000 Annual Report to Stockholders of Scioto Downs, Inc.: Report of Independent Accountants on Financial Statements 17 Balance Sheets as of October 31, 2000 and 1999 4 Statements of Operations for the years ended October 31, 2000, 1999 and 1998 6 Statements of Stockholders' Equity for the years ended October 31, 2000, 1999 and 1998 7 Statements of Cash Flows for the years ended October 31, 2000, 1999 and 1998 8 Notes to the Financial Statements 9 (a) 2. Financial Statement Schedules ------------------------------------------------- Financial statement schedules are omitted because they are not required or are not applicable. (a) 3. Exhibits ------------------------------------------------- See Index to Exhibits at Page 10. Reports on Form 8-K ------------------------------------------------- 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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