President`s Message

Transcription

President`s Message

MISSION STATEMENT
“To provide our patrons with clean, comfortable,
modern facilities, reliablke raacing transmission,
data and friendly customer service”
Mea Knapp
President/CEO
Suffolk Regional
Off-Track Betting Corporation
“To maximize revenue and control expenses,
increase our contribution to Suffolk County and all
other required jurisdictions.”
Dominic Baranello
Vice President
Suffolk Regional
Off-Track Betting Corporation
President’s Message
The year 2002 was a good one for Suffolk Regional OffTrack Betting Corporation. Handle improved from $186 million in
2001 to $205 million in 2002, marking the second highest handle
year since we began operation twenty-eight years ago. More
importantly, we increased our contribution to Suffolk County by
$300,000. While these numbers are an important place to start, they
are only part of the story of our success in 2002.
For the second year in a row, the New York State Racing and Wagering Board has singled out Suffolk OTB as the “cleanest, most customer friendly OTB” in the state. Our cashiers
and managers were challenged to provide our customers with the kind of service they would
want to receive themselves, and they met those expectations. The Buildings and Grounds staff
and attendant custodians are staying ahead of problems, allowing Suffolk OTB to present a
community-friendly face. The new Route 110 Branch is a shining example of this philosophy.
Opened in January, it replaced a dark, unappealing location with one that is brightly lit, has
comfortable cushioned seating, a video wall and individual carrels with their own personal
monitors. All of our branches are neat, bright and comfortable places to be. Our company
owned branches go the “extra mile” with attractive facades and nicely landscaped exterior
areas.
As a public benefit corporation, Suffolk OTB remains very aware of our responsibilities under New York State law. Unlike any private entity, we are directly answerable to elected
officials. Our goals remain as they were envisioned when off-track betting was first legalized
in New York State. While we have largely succeeded in eliminating illegal betting on horse
racing, we remain vigilant in ensuring public confidence in the integrity of our operation. The
goal of providing revenues to continue the success of the racing industry in New York State is
also well served. In 2002, Suffolk OTB delivered $2.5 million to the racing industry in New
York State alone. Lastly, we continue to work hard to fund our local government. Since Suffolk
OTB was created, Suffolk County has received a total of $177 million from OTB revenues.
We conclude the year 2002 as we started it, in a better place than we were before, but
with many challenges to face. Like other government entities, costs are rising. We need new
sources of revenue to continue to improve. Our efforts alone will not be enough. We need
changes in state legislation to allow OTB to compete in a changing environment. Given the
right tools, Suffolk OTB will remain a corporation that Suffolk residents will be proud to call
their own.
SUFFOLK REGIONAL OFF-TRACK BETTING CORPORATION
(A Public Benefit Corporation)
5 YEAR HANDLE COMPARISON
$205,247,268
$205,247,268
$186,820,326
$186,820,326
20
02
20
01
20
00
19
99
19
98
19
97
$159,290,621
$159,290,621
$167,081,320
$167,081,320
$176,267,394
$176,267,394 $174,302,864
$174,302,864
2
2002 REVENUE ALLOCATION
Total Distribution: $27,379,807
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A L B R E C H T, V I G G I A N O , Z U R E C K
& C O M P A N Y, P. C .
CERTIFIED PUBLIC ACCOUNTANTS
25 SUFFOLK COURT
HAUPPAUGE, NY 11788
(631) 434-9500
INDEPENDENT AUDITORS’ REPORT
Board of Directors
Suffolk Regional Off-Track Betting Corporation
Hauppauge, New York
We have audited the accompanying balance sheets of Suffolk Regional Off-Track Betting Corporation (A Public Benefit Corporation), a component unit of the County of Suffolk, New York, as of December 31, 2002 and 2001, and the related statements
of revenue, expenses and revenue allocation, undistributed net revenue payable to Suffolk County, and cash flows for the years
then ended. These financial statements are the responsibility of the Corporation’s management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Suffolk
Regional Off-Track Betting Corporation as of December 31, 2002 and 2001, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally accepted in the United States of America.
As described in note 1, the Corporation has implemented a new financial reporting model, as required by the provisions of
GASB Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments, as of December 31, 2002.
The management’s discussion and analysis on pages 2 through 4 are not a required part of the basic financial statements but
are supplementary information required by accounting principles generally accepted in the United States of America. We have
applied certain limited procedures, which consisted principally of inquiry of management regarding the methods of measurement
and presentation of the supplementary information. However, we did not audit the information and express no opinion on it.
Hauppauge, New York
March 12, 2003
4
MANAGEMENT’S DISCUSSION AND ANALYSIS
Our discussion and analysis of Suffolk Regional Off-Track Betting Corporation’s (hereinafter
referred to as “the Corporation”) financial performance provides an overview of the Corporation’s financial activities for the year ended December 31, 2002. Please read it in conjunction
with the independent auditors’ report and the Corporation’s financial statements.
Financial Highlights
The Corporation generated handle of $205.2 million, the second highest handle in the Corporation’s 28-year history and an increase of $18.3 million over the prior year.
The Corporation produced revenues of $6,983,130 for the County of Suffolk, $2,524,203 for the
State of New York, $17,424,268 for the racing industry and $1,234,582 for other local governments. In total, these revenues were $1,803,168 or 7% greater than the prior year.
Of the $6,983,130 net revenue allocated to Suffolk County, $6,221,551 represented operating
revenue which is paid to the County monthly, and $761,579 represented the net income of the
Capital Asset Reserve Trust (CART), which is retained by the Corporation to be used for capital
investments.
Operating expenses, of which a significant portion are a function of handle, increased approximately $1,000,000, a 7.2% increase.
General and administrative expenses increased approximately $520,000, a 7.6% increase.
Basic Financial Statements
This annual report consists of a series of financial statements that have been audited by independent auditors. They have been prepared in compliance with generally accepted accounting
principles for proprietary funds. A proprietary fund is used by governments to account for
business-type activities engaged in for profit. Proprietary funds are required to use the full
accrual method of accounting, which means that all revenues are recorded when earned and all
expenses are recorded when they are incurred regardless of when they will be paid.
The balance sheets are as of December 31, 2002 and 2001 and show the Corporation’s assets,
liabilities and undistributed revenue. They show the resources available and the related obligations the Corporation must meet. Suffolk Regional Off-Track Betting Corporation is a public
benefit corporation and as such, all income derived from operations is distributed to state and
local governments. Therefore, the “equity” section consists of undistributed revenues payable
to Suffolk County, the State of New York and other local governments.
The statements of revenue, expenses and revenue allocation, otherwise known as the operating
statements, show activity for the years ended December 31, 2002 and 2001. Revenues are
classified by source. Expenses are classified into two categories: operating and administrative.
The difference between revenues and expenses is the income before the revenue allocation.
The statements of undistributed net revenue payable to Suffolk County are reconciliations of the
beginning and ending revenue payable to the County.
5
Basic Financial Statements (continued)
The statements of cash flows for the years ending December 31, 2002 and 2001 detail the receipt
and disbursement of cash. They segregate cash received and disbursed into three groups; operating,
investing and financing activities. The cash flow statements separately report cash received from and
paid to bettors, cash received from other sources, cash paid out to suppliers and employees (salaries),
and statutory payments. They also show cash paid for the purchase of fixed assets and payments
made on mortgages. The end result is a reconciliation of beginning to ending cash.
The notes to the financial statements disclose the Corporation’s significant accounting policies and
provide detail of the major assets and liabilities such as cash and investments, fixed assets, accounts
payable and accrued expenses, and debt. The NYS Retirement System is described, as well as its
funding policy and total cost. Also disclosed are future commitments of the Corporation, such as leases
and major contracts. The notes include a definition of gross revenue and detail the allocation of such
revenues to the racing industry, Suffolk County, New York State and other local governments.
Condensed Financial Information
(In 000’s):
2002
$ 5,690
13,955
8
$ 19,653
2001
$ 4,627
14,178
8
$ 18,813
2000
$ 4,819
11,895
8
$ 16,722
$ 4,872
6,423
11,295
8,358
$ 4,152
6,653
10,805
8,008
$ 4,854
4,878
9,732
6,990
Total Liabilities and Undistributed Revenue
$ 19,653
$ 18,813
$ 16,722
Total Revenue and Other Income
Total Expenses
Income before Revenue Allocation
Revenue Allocation:
Racing Industry
New York State
Other Local Governments
Net Revenue Allocated to Suffolk County
$ 50,369
22,203
28,166
$ 47,045
20,682
26,363
$ 44,646
21,056
23,590
17,424
2,524
1,235
$ 6,983
15,950
2,287
1,241
$ 6,885
14,682
2,149
1,298
$ 5,461
Current Assets
Fixed Assets, net
Other Assets
Total Assets
Current Liabilities
Long-Term Liabilities
Total Liabilities
Undistributed Revenue
6
Overall Financial Position and Results of Operations
The Corporation’s handle reached $205,247,686, an increase of $18,346,086 or 10% over the prior
year. Since the Corporation’s revenue primarily consists of commissions on bets and surcharges on
winnings, there is a direct correlation between increased handle and increased revenue to the Corporation.
This significant increase in handle was primarily due to the success of the Corporation’s flagship facility,
The Suffolk Racing Forum, which opened in May, 2001. The Forum generated better than anticipated
handle through an accomplished effort to attract big bettors to this beautifully appointed, customerfriendly branch, which provides bar and restaurant facilities, as well as track prices on all winning
bets.
The combination of the Forum’s success, increased customer usage of the Corporation’s convenient
Tel-a-Bet (telephone account) betting system, and the relocation of a declining branch in Amityville to a
new location in Farmingdale, where it has prospered, led to the significant increase in the Corporation’s
handle.
These key factors as well as increased branch cleanliness, technological updates and a program to
increase customer satisfaction, all contributed to the Corporation’s improved financial performance.
Capital Asset Activity
During 2002, the Corporation expended $455,856 on capital assets. Significant additions included
$130,908 paid for the renovation of a newly leased facility in Farmingdale, known as the Route 110
branch; final construction costs totaling $121,544 for the Racing Forum; machinery and equipment purchases of $110,494; and furniture and fixture costs of $12,079.
Current Economic Factors, Decisions and Conditions
The Corporation converted its last non-simulcast branch, located in Southampton, to a simulcast branch
in mid-February. The ability to simulcast live racing, provide a greater number of tracks to bettors and
increase the hours of operation will generate more handle for the Corporation.
On March 6, 2003, the Corporation sold its unused facility at 160 South Ocean Avenue, Patchogue
for $1,370,000, thereby eliminating the security, insurance and financing costs associated with the
building.
The New York State Comptroller, in a letter dated March 21, 2003, announced a new funding plan for
the New York State Employees Retirement System. The plan, which will take effect immediately upon
enactment, will require employers to make a minimum contribution of 4.5% of payroll every year. The
rate the Corporation paid for 2002 was 1.2%. This will mean an increase in the annual required pension
contribution of approximately $400,000.
7
DECEMBER 31, 2002 & 2001 BALANCE SHEETS
2002
ASSETS
Current Assets
Cash and cash equivalents
Due from other governments
Prepaid expenses and other current assets
Total Current Assets
$
Fixed Assets, (at cost)
Property, plant, equipment, and leasehold improvements
Less: Accumulated depreciation and amortization
$
$
Long Term Liabilities
Due to New York State Retirement System
Compensated absences
Mortgages payable - net of current portion
Commitments
Undistributed Net Revenue Payable to
Suffolk County
Current (net of payments of:
2002 - $6,655,577; 2001 - $5,939,321)
Noncurrent - Capital Acquisition Reserve Trust
New York State (net of payments of:
2002 - $2,476,613; 2001 - $2,219,492)
Other local governments (net of payments of:
2002 - $1,257,860; 2001 - $1,228,717)
8
$
21,247,783
(7,292,800)
13,954,983
Other Assets
Security Deposits
LIABILITIES
Current Liabilities
Accounts payable and accrued expenses
Notes payable
Mortgages payable
Due to New York State Retirement System
Outstanding tickets payable
Telephone betting customer accounts
Total Current Liabilities
4,388,983
833,314
467,806
5,690,103
2001
$
See notes to financial statements.
8,114
19,653,200
2,734,615
1,400,000
230,455
159,241
66,610
281,073
4,871,994
3,749,208
424,283
453,370
4,626,861
22,557,617
(8,379,343)
14,178,274
$
$
8,114
18,813,249
2,029,717
1,400,000
210,189
155,808
75,713
280,655
4,152,082
376,692
1,335,312
4,711,258
6,423,262
11,295,256
541,192
1,170,349
4,941,706
6,653,247
10,805,329
577,726
7,032,217
1,011,752
6,270,638
644,132
598,383
103,869
8,357,944
19,653,200
127,147
8,007,920
18,813,249
$
STATEMENT OF REVENUE, EXPENSES AND REVENUE ALLOCATION
Years ended December 31, 2002 and 2001
2002
REVENUE
Commissions - Pari-Mutuel Betting
Retained Surcharge
Surcharge and surcharge breakage
Surcharge - Capital Acquisition Reserve Trust
Breakage
Estimated unclaimed winnings and refunds allocable
to New York State
2001
$ 41,045,375
1,259,202
3,853,278
692,364
842,441
$ 37,960,103
1,317,066
3,824,097
697,122
774,752
574,438
48,267,098
523,147
45,096,287
14,869,421
7,333,830
22,203,251
13,869,128
6,813,315
20,682,443
Income From Operations
26,063,847
24,413,844
Income Before Revenue Allocation
2,102,337
28,166,184
1,949,171
26,363,015
17,424,268
15,949,707
1,949,765
574,438
1,234,582
21,183,053
1,763,722
523,147
1,241,574
19,478,150
EXPENSES
Operating
General and Administrative
Other Income
Revenue Allocation
Racing Industry
New York State
-Pari-Mutuel tax and breakage
-Estimated unclaimed winnings and refunds
Other local governments
Net Revenue Allocated to Suffolk County
$
6,983,131
$
6,884,865
9
STATEMENTS OF UNDISTRIBUTED NET REVENUE
PAYABLE TO SUFFOLK COUNTY
2002
Undistributed net revenue payable to
Suffolk County - January 1
2001
$ 7,282,390
$ 6,336,846
2,618,695
4,364,436
2,582,523
4,302,342
14,265,521
13,221,711
Less payments made during the year
6,655,577
5,939,321
Undistributed net revenue payable to
Suffolk County - December 31
$ 7,609,944
$ 7,282,390
Net revenue for year allocable to Suffolk County:
Surcharge and surcharge breakage
Operations
Net revenue available for distribution to Suffolk County
10
STATEMENTS OF CASH FLOW
2002
205,293,049
2001
$ 186,936,949
(156,991,114)
(141,756,439)
48,301,935
45,180,510
164,974
128,289
64,240
61,869
24,974
1,371,107
55,679
62,667
59,129
1,822,519
(21,585,523)
(20,823,077)
Racing Industry
New York State
Other Local Governments
Suffolk County
Net Cash Provided by Operating Activities
(16,726,103)
(2,476,613)
(1,257,860)
(6,655,578)
1,287,422
(16,161,967)
(2,219,492)
(1,228,717)
(5,939,321)
936,219
Cash Flows From Investing Activities
Purchase of fixed assets
Proceeds from the sale of fixed assets
Net Cash Used by Investing Activities
(455,856)
18,391
(437,465)
(2,854,280)
5,400
(2,848,880)
Cash Flows From Financing Activities
Proceeds of loans
Payments on mortgages payable
Payments on capital lease
Net Cash Provided (Used) by Financing Activities
-0(210,182)
-0(210,182)
2,022,320
(154,010)
(11,007)
1,857,303
639,775
(55,358)
3,749,208
3,804,566
Cash received from bettors
$
Cash returned to bettors
Other Income Received:
Admission income
Lottery income
Concession income
Interest income
Miscellaneous income
Cash paid to suppliers and employees
Statutory Payments to:
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents - Beginning
Cash and Cash Equivalents - Ending
$
4,388,983
$
3,749,208
11
STATEMENTS OF CASH FLOW
2002
2001
Reconciliation of net income to net cash provided
by operating activities:
Income before revenue allocation
Non-cash items included in income before revenue
allocation:
Depreciation and amortization
(Gain) loss on disposition of fixed assets
Estimated unclaimed tickets
(Increase) decrease in:
Due from other governments
Prepaid expenses
Other current assets
Increase (decrease) in:
Accounts payable and accrued expenses
Script payable
Outstanding tickets payable
Telephone betting customer accounts
Amount due to NYSERS
Compensated absences
before Revenue Distribution
Revenue Distributed to:
New York State
Racing Industry
Suffolk County
Other local governments
$
28,166,184
26,363,015
665,847
(5,091)
(1,841)
560,916
5,101
(7,518)
(409,031)
(12,769)
(1,667)
251,026
(110,055)
(4,705)
(38,630)
45,363
(9,103)
418
(161,067)
164,963
(627,549)
35,349
(24,882)
81,274
(163,835)
127,579
28,403,576
26,485,716
(2,476,613)
(16,726,103)
(6,655,578)
(1,257,860)
$
1,287,422
(2,219,492)
(16,161,967)
(5,939,321)
(1,228,717)
$
936,219
12
$
NOTES TO FINANCIAL STATEMENTS
December 31, 2002 and 2001
Note 1 - Summary of Significant Accounting Policies
Suffolk Regional Off-Track Betting Corporation was formed on October 7, 1974 pursuant to Section 172 of
Article VIIA, of Chapter 346 of the Laws of 1973 and as amended by Chapter 573 of the Laws of the State
of New York. Enabling legislation by the Suffolk County Legislature electing to participate in Off-Track
Betting was enacted on July 23, 1974 by Local Law 22 of 1974. The governing body of the entity is the
Board of Directors, which consists of three members who are appointed by the Suffolk County Legislature.
The financial reporting entity consists of all activities and functions over which the Board of Directors exercises responsibility. Actual Off-Track Betting operations commenced on April 25, 1975. At the close of
2002 there were fifteen operational locations consisting of the Racing Forum and Tel-A-Bet at Hauppauge
and thirteen other branch offices.
The Corporation provides off-track betting services for thoroughbred and harness racing. The geographic
area covered by the Corporation’s locations is Suffolk County, New York.
The financial statements of Suffolk Regional Off-Track Betting Corporation have been prepared in conformity with generally accepted accounting principles as applied to governmental units. The Government
Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental
accounting and financial reporting principles. The Corporation did not elect to adopt Paragraph 7 of GASB
Statement No. 20 and 29 which allows governmental proprietary funds to follow all FASB statements
issued after November 30, 1989, that do not conflict with or contradict GASB pronouncements and that
are developed for business enterprises.
In 1999, The Governmental Accounting Standards Board (GASB) issued Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments. Certain of the significant changes in the Statement include the following:
For the first time the financial statements include:
•
A Management Discussion and Analysis section providing an analysis of the Corporation’s
overall financial position and results of operations.
•
Cash Flow statements prepared using the direct method.
These and other changes are reflected in the accompanying financial statements. The Corporation was
required to implement the general provisions of the Statement in the current year. The Corporation’s more
significant accounting policies are described below.
Reporting Entity
The County of Suffolk is the 100% shareholder of Suffolk Regional Off-Track Betting Corporation. The
County of Suffolk appoints the Corporation’s board, has the ability to impose its will, and is entitled to the
Corporation’s resources. Accordingly, the Corporation has been determined to be a component unit of
the County of Suffolk, New York.
13
Note 1 - Summary of Significant Accounting Policies (continued)
Basis of Presentation
The accounts of the Corporation are organized as a proprietary fund. Proprietary funds are used to
account for operations that are financed and operated in a manner similar to private business enterprises.
The measurement focus is upon determination of net income, financial position, and changes in financial
position.
Basis of Accounting/Measurement Focus
Basis of accounting refers to when revenues and expenses and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing
of the measurements made, regardless of the measurement focus. Measurement focus is the determination of what is measured, i.e. expenses.
Proprietary funds are accounted for on the accrual basis of accounting, whereby revenues are recognized
when earned and expenses are recorded when incurred. Fixed assets and long-term liabilities related to
these activities are recorded within the fund.
Cash and Cash Equivalents
For purposes of reporting cash flow, cash equivalents are defined as short-term, highly liquid investments
that are both readily convertible to known amounts of cash. At December 31, 2002, the Corporation’s
investments consisted of short-term highly liquid certificates of deposit with original maturities of three
months or less. The Statement of Cash Flows presented uses the direct method of reporting cash
flows.
Fixed Assets
Fixed assets are recorded at cost. All depreciation and amortization is computed on the straight-line
method and charged to operations over the assets’ estimated useful lives which range from two and onehalf years for certain vehicles to forty years for buildings. Leasehold improvements are amortized over
their estimated useful lives, or the remaining term of the leases exclusive of renewal options. No interest
expense has been capitalized. The Corporation does not own any infrastructure-type assets.
Reclassification
Certain prior year amounts have been reclassified to conform with current year presentation.
14
Note 1 - Summary of Significant Accounting Policies (continued)
Risk Management
The Corporation has adopted Governmental Accounting Standards Board Statement No. 10, Accounting
and Reporting for Risk Financing and Related Insurance Issues. The Statement establishes standards for
risk financing and insurance-related activities. It is the policy of the Corporation to purchase commercial
insurance for risks of losses to which it is exposed except for unemployment insurance. The unemployment expense for the years ended December 31, 2002 and 2001 was approximately $100 and $17,069,
respectively.
Post Employment Benefits
In addition to providing pension benefits, the Corporation provides health insurance coverage and survivor
benefits, in accordance with union contracts, to its retired employees and their survivors. The Corporation
bears principally all costs associated with these benefits based upon the coverage selected. Substantially
all of the Corporation’s full time employees may become eligible for these benefits if they reach normal
retirement age while working for the Corporation and have been employed by the Corporation for ten consecutive years. Health care benefits and survivors benefits are provided through an insurance company
whose premiums are based on the benefits paid during the year. The Corporation recognizes the cost of
providing benefits by recording its share of insurance premiums as an expense in the year paid.
During 2002 and 2001, the Corporation paid approximately $657,000 on behalf of 115 retirees and
$610,000 on behalf of 106 retirees, respectively.
Note 2 - Cash and Investments
The Corporation’s investment policies are governed by state statutes. In addition, the Corporation has
its own written investment policy. The Corporation’s monies must be deposited in insured commercial or
savings banks or trust companies located within New York State. The Comptroller is authorized to use
demand accounts, money market accounts and certificates of deposit. Permissible investments include
obligations of the U.S. Treasury and U.S. Agencies, repurchase agreements, and obligations of New York
State or its localities.
Collateral is required for deposits not covered by federal deposit insurance. This collateral is required to
be delivered to the Corporation or a custodial bank. Obligations that may be pledged as collateral are
obligations of the United States and its agencies and obligations of the state and its municipalities and
school districts.
Deposits, including time deposits and money market accounts, at December 31, 2002 were entirely covered by Federal depository insurance or by collateral held by the bank or a custodial bank.
15
Note 2 - Cash and Investments (continued)
Deposits consisted of the following:
Bank
Balance
$ 2,803,092
391,297
1,025,068
Bank
Long Island Commercial Bank
North Fork Bank
Bank of New York
FDIC
Insured
$ 200,000
100,000
100,000
Collateral Held
by Third Party
Custodial Bank
$ 4,666,569
305,504
962,864
Note 3 - Changes in Fixed Assets
A summary of changes in Property, Plant, Equipment, and Leasehold Improvements for the year ended
December 31, 2002 is as follows:
Land, Buildings, and
Building Improvements
Machinery and Equipment
Furniture and Fixtures
Leasehold Improvements
CART Assets
Balance
1/1/02
$ 8,221,595
4,126,954
413,510
1,805,612
7,989,946
$ 22,557,617
Additions
$
$
2,725
110,494
12,079
12,520
318,038
455,856
Disposals
and other
Transactions
$
895
(991,682)
(760,992)
(13,911)
($ 1,765,690)
Balance
12/31/02
$ 8,225,215
3,245,766
425,589
1,057,140
8,294,073
$ 21,247,783
Depreciation and amortization expense for the years ended December 31, 2002 and 2001 totaled
$665,847 and $560,916, respectively.
Note 4 - Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses are comprised of the following:
Supplies, Services, Rents, etc.
Wagering Services
Payroll and Payroll Taxes
Withheld Tax on Winning Tickets
Script Payable
Track Settlement
Additional Track Commissions
Thoroughbred Associations
Harness Associations
2002
283,317
185,308
332,193
-0224,635
175,461
1,078,210
379,470
76,021
$ 2,734,615
$
2001
317,945
172,954
335,908
12,641
179,272
73,920
628,985
230,581
77,511
$ 2,029,717
$
Additional track commissions consist of commissions on out-of-state races to be distributed to in-state
tracks.
16
Note 5 - Outstanding Tickets Payable
In 2002, the Corporation remitted $521,306 to New York State for 2001 winning and refundable uncashed
tickets. As of February 28, 2003, the outstanding winning and refundable unclaimed tickets for 2002
amount to $574,438. It is anticipated that this amount will not be claimed and will, therefore, escheat to
New York State. Ninety-five percent of this amount was paid by March 15, 2003, with the remaining balance payable by April 10, 2003.
Outstanding tickets are presented as follows:
2002
Total outstanding tickets payable at December 31
Less: Amounts classified as estimated unclaimed
winnings and refunds allocable to New York State
$
641,048
Net outstanding tickets payable at December 31
$
574,438
66,610
2001
$
598,860
$
523,147
75,713
Note 6 - Debt
Short Term Debt
2002
Unsecured loan; due in full March 23, 2003; bears interest at
prime rate as published in Wall Street Journal. Proceeds were
used to purchase a building.
2001
$1,400,000
$1,400,000
Long Term Debt
Mortgages payable as of December 31, 2002 and 2001 consist of the following:
Purchase money mortgage; payable in 180 monthly installments. The interest rate and monthly payment will adjust
every five years to the current weekly average five year
Treasury constant rate in effect 30 days prior to the adjustment date plus 2.75%. Currently the monthly installment is
$8,278 including interest at 7.23%; final payment due August
2012; secured by real property.
2002
$
686,999
2001
$
730,918
Purchase money mortgage; payable in 240 monthly installments of $11,166 including interest at 6.48%; final payment
due October 2018; secured by real property.
1,324,595
1,371,110
Construction loan; converted to a 15-year mortgage on May
15, 2001; interest only at prime until conversion; interest rate
based on U.S. Treasury rates thereafter with a minimum rate
of 7.75%; secured by real property.
2,930,119
3,049,867
$ 4,941,713
$ 5,151,895
17
Note 6 – Debt (continued)
Other Long-Term Debt
Due to NYSERS (New York State Employees’ Retirement System) – Represents the liability to the state
retirement system for retirement incentive programs.
Compensated Absences - Represents the value of the earned and unused portion of the liability for
compensated absences.
The following is a summary of changes in debt and other long term liabilities for the year ended
December 31, 2002:
Notes Payable
Mortgages Payable
Due to NYSERS
Compensated Absences
Balance
January 1,
2002
$ 1,400,000
5,151,895
697,000
1,170,349
New debt
issued
Repayments
$
Other
Increases
(Decreases)
210,182
161,067
$
164,963
Balance
December
31, 2002
$ 1,400,000
4,941,713
535,933
1,335,312
Changes to Compensated Absences are shown net since it is impractical to determine the amounts
separately.
Future minimum payments on mortgages payable are as follows:
2003
2004
2005
2006
2007
Thereafter
Principal
230,455
247,951
266,920
287,232
309,128
3,600,027
$ 4,941,713
$
Interest
354,780
337,283
318,314
298,002
276,106
1,270,343
$ 2,854,828
$
Total amount charged to interest expense for the years ending December 31, 2002 and 2001 was
$435,975 and $393,346, respectively.
Note 7 - Commitments
Rental expense for real property under lease agreements was $999,681 and $1,432,926 for 2002 and
2001, respectively. Approximate minimum rentals under the terms of leases in effect at December 31,
2002 exclusive of renewal options and escalation clauses for real estate taxes and other costs are summarized as follows:
Year ending December 31, 2003
2004
2005
2006
2007
18
$ 714,275
548,973
284,661
226,163
165,134
$ 1,939,206
Note 7 – Commitments (continued)
In addition to rental payments, certain leases provide for payments of real estate taxes and other costs.
Lease terms on the above minimum rental commitments range from a period of one to five years. Certain
leases contain provisions for renewal options. The terms of the renewal options are based on the average
fixed minimum rent escalated by an increase in the consumer price index.
On August 29, 2002 the Corporation entered into an amended agreement for the leasing of an automated
wagering system and various interface services. In accordance with the terms of the agreement, the
Corporation exercised its option to renew the contract and lease until May 6, 2009. The Corporation also
has an agreement for simulcasting services through December 31, 2003.
Based on a $205 million handle for the Corporation, the minimum lease commitments would be as follows:
2003
2004
2005
2006
$
$
1,178,000
1,025,000
1,025,000
341,667
3,569,667
Note 8 - Retirement System
Plan Description
The Corporation participates in the New York State and Local Employees’ Retirement System (ERS),
which is a cost-sharing multiple-employer retirement system. The System provides a wide range of
plans and benefits that are related to years of service and final average salary, vesting of retirement
benefits, death and disability benefits. Obligation of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL).
As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole
trustee and administrative head of the System. The Comptroller shall adopt and may amend rules and
regulations for the administration and transaction of the business of the System and for the custody
and control of their funds. The System issues a publicly available financial report that includes financial
statements and required supplementary information. That report may be obtained by writing to the
New York State and Local Retirement Systems, Gov. Alfred E. Smith State Office Building, Albany, NY
12244.
19
Note 8 - Retirement System (continued)
Funding Policy
The System is non-contributory except for employees who joined the New York State and Local
Employees’ Retirement System after July 27, 1976, and who have less than ten years of membership
and less than ten years of credited service with a retirement system under the provisions of article
fourteen or fifteen of the NYSRSSL, who contribute 3% of their salary. Prior to October 1, 2000, all
employees who joined the System after July 27, 1976 were required to contribute 3% of their salary.
Under the authority of the NYSRSSL, the Comptroller shall certify annually the rates expressed as proportions of payroll of members, which shall be used in computing the contributions required to be made
by employers to the pension accumulation fund.
The Corporation is required to contribute at an actuarially determined rate. The required contributions
for the current year and two preceding years were:
Early Retirement
Incentives, §803
Costs, & Other
Annual Required Contribution
% of Covered
Amount
Payroll
110,474
1.2%
2001
57,740
0.6%
564,716
622,456
2000
18,615
0.2%
494,728
513,343
2002
$
$
540,323
Total
Payment
$
650,797
The Corporation’s contribution to the System was equal to 100 percent of the contributions required for
each year.
Since 1989, the System’s billings have been based on Chapter 62 of the Laws of 1989 of the State
of New York. This legislation requires participating employers to make payments on a current basis,
while amortizing existing unpaid amounts relating to the System’s fiscal years ending March 31, 1988
and 1989 (which otherwise were to have been paid on June 30, 1989 and 1990, respectively) over a
17-year period, with an 8.75% interest factor added. Participants were given the option to prepay this
liability. The total unpaid liability at the end of the year was $249,848.
Pursuant to Chapter 41 of the Laws of 1997, Chapter 47 of the Laws of 1998, Chapter 70 of the Laws
of 1999, and Chapter 86 of the Laws of 2000, the State Legislature authorized participating employers
to make available retirement incentive programs with estimated costs (excluding interest) of $258,002,
$178,186, $200,634, and $315,358 respectively. The cost of each of the programs are being billed and
paid over five years beginning December 15, 1998, 1999, 2000, and 2001 respectively, and payments
include interest ranging from 8 to 8.5%. A total of $221,679 including interest was paid and charged to
expense in 2002. The Corporation also paid $122,876 including interest related to costs of retroactive
membership in the retirement system as required by Section 803 of the Retirement and Social Security
Law. The total unpaid liability related to Section 803 costs at December 31, 2002 was $286,085.
20
Note 9 - Net Handle
Net handle for years ended December 31, 2002 and 2001 were $205,247,268 and $186,820,326,
respectively.
Note 10 - Gross Revenues
Gross revenues earned on handle range from 14% to 20% of the total amount of applicable regular
wagers handled, 16% to 26% of the total amount of applicable multiple wagers handled, and 20% to
30% of applicable exotic wagers handled. A multiple wager is defined as a “single bet or wager on two
horses, evidenced by a single ticket and representing an interest in a single betting pool.” An exotic
wager is defined as a “single bet or wager on three or more horses, evidenced by a single ticket and
representing an interest in a single betting pool.”
Breakage
Revenue from breakage was shared as follows:
New York State
Suffolk County
Totals
2002 Breakage from
Harness
Thoroughbred
Racing
Racing
$
2,593 $
14,822
129,652
712,789
$ 132,245 $
727,611
$
$
2002
Total
17,415
842,441
859,856
$
$
2001
Total
13,149
774,752
787,901
Surcharge and Surcharge Breakage
Section 532 of the Racing, Pari-Mutuel Wagering and Breeding Law of the State of New York (“Section
532”) imposes a surcharge of 5% on pari-mutuel winnings distributable to persons having placed bets
at off-track betting facilities, with the exception of The Racing Forum.
Surcharge and Surcharge Breakage Revenues were shared as follows:
Community
Suffolk County
Nassau OTB for Nassau County
Sullivan County
New York City OTB for City of New York
City of Yonkers
Saratoga County
Ontario County
Oneida County
Onandaga County
Western OTB for Buffalo
Totals
2002
$ 2,618,695
288,218
54,993
597,266
90,817
180,294
7,557
8,201
668
6,569
$ 3,853,278
2001
$ 2,582,523
277,457
52,273
611,799
90,203
184,212
8,991
9,443
-07,196
$ 3,824,097
Revenue is payable to participating tracks at rates ranging from 1.5% to 5.75% on the total amount of
the applicable regular and multiple wagers handled, and 2% and 8.85% of the applicable exotic wagers
handled.
21
Note 11 - Revenue Allocated to the Racing Industry
Revenue Allocated to the Racing Industry was shared as follows:
Track Commissions
Simulcast Fees
Breeding and Development
Fund Commissions
Breeding and Development
Fund Breakage
2002 Allocation to
Harness
Thoroughbred
2002
Racing
Racing
Total
$ 2,879,615
$ 11,668,218
$14,547,833
124,500
1,189,103
1,313,603
819,495
368,395
187,471
$ 4,011,081
187,471
$ 13,413,187
2001
Total
$13,528,859
1,014,456
1,187,890
1,061,446
374,942
$17,424,268
344,946
$15,949,707
Note 12 - Capital Acquisition Reserve Trust
Section 532 of the Racing, Pari-Mutuel Wagering and Breeding Law of New York State, created a 1% supplemental surcharge on winning multiple, exotic and super exotic wagers for the purpose of financing the
acquisition, construction or equipping of offices, facilities or premises of the Corporation. The proceeds of
this additional surcharge are recognized in the year earned. This revenue is distributed to Suffolk County
in accordance with a schedule of depreciation deductions that would be allowed for Federal and New York
State income tax purposes. All purchases are subject to the approval of a “trustee” approved by the New
York State Racing and Wagering Board. The New York State Racing and Wagering Board is currently in
the process of establishing rules and regulations for the administration of this law.
In July 1989, Section 509-a of the Racing, Pari-Mutuel Wagering and Breeding Law of New York State was
enacted which allows the Corporation to contribute additional net revenues to the Fund. The revenues
contributed are subject to the following limitations:
a) Amounts may not exceed 1% of the total pari-mutuel wagering pools for the quarter in which the
contribution is made, and
b) Amounts may not exceed 50% of quarterly net revenues, exclusive of surcharge revenue, and
c) The unexpended balance of the fund resulting from the contributions of net wagering pools shall
not exceed the lesser of 1% of total pari-mutuel wagering pools for the previous year or the undepreciated value of the Corporation offices, facilities and premises.
22
Note 12 - Capital Acquisition Reserve Trust (continued)
As of December 31, 2002 and 2001, the Corporation retained $400,000 and $400,000, respectively, of
regular benefits as allowed under Section 509-a of the Racing, Pari-Mutuel Wagering and Breeding Law
of New York State to meet the capital needs of the Corporation. The Corporation was in compliance with
the limitations set forth in Section 509-a of the Racing, Pari-Mutuel Wagering and Breeding Law of New
York State as of December 31, 2002 and 2001.
The amount payable to Suffolk County for the Capital Acquisition Reserve Trust (CART) at December 31,
2002 is as follows:
Amount payable - January 1, 2002
Revenues from CART Surcharge
Less: CART depreciation remitted
Add: Section 509-a contribution
$ 6,270,638
692,364
(
330,785)
400,000
Amount payable - December 31, 2002
$ 7,032,217
The assets in the Capital Acquisition Reserve Trust (CART) at December 31, 2002 are as follows:
Cash
$
817,035
Fixed Assets
Accumulated Depreciation
8,294,073
2,078,891
Net Fixed Assets
6,215,182
Total Assets
$ 7,032,217
Note 13 – Subsequent Event
The sale of the Patchogue building took place March 6, 2003. The unsecured loan for $1,400,000 was
paid off March 11, 2003 with proceeds from the sale.
23
SROTB PRESENTS A CHECK FOR OVER
SIX MILLION DOLLARS TO SUFFOLK COUNTY
FOR YEAR ENDING DECEMBER 2002
Suffolk Regional Off-Track Betting Officials present
a check for $6,221,551.00 to Suffolk County Executive Robert Gaffney.
24
SROTB HONORS SUFFOLK COUNTY
VOLUNTEER FIRE DEPARTMENTS
25
26
In the Region/Long Island
OTB and Storage Operators Bet on Classier Looks
New betting facility
evokes the atmosphere
of Saratoga Springs.
By CAROLE PAQUETTE
T
WO industries -- off-track betting
and self-storage -- known for their
purely functional and nondescript
buildings are seeking to improve their
images by upscaling the décor of their
facilities and adding amenities.
The new looks have brought in more
customers, especially women who appreciate not only the less industrial-strength
design but also the upgraded comforts,
according to those in the industries.
“I can’t overstate the importance of an
upscale architectural image; it meets the
existing needs of customers and brings
in more,’’ said Mea Knapp, president
of Suffolk Regional Off-Track Betting,
which has opened a new $3.8 million
betting facility in Hauppauge designed
in the style of the venerable Saratoga
Race Course in Saratoga Springs, north
of Albany.
“The new building, because of the way
it looks, has brought in more customers
and has nearly doubled business,’’ she
said. “It’s lovely and is attracting more
women.’’
In a similar way, owners of selfstorage facilities say their industry has
had a growth spurt after they designed
their properties in a way that would make
them appear safer and more appealing to
women.
Suffolk OTB’s new 14,468-squarefoot facility, called the Suffolk Racing
Forum, is one of seven such “teletheaters’’
permitted in the state and is the only one
on Long Island. Teletheater customers pay
a $2 fee to enter, but their winnings are not
subject to a surcharge. This attracts large
bettors, according to William A. Majuk,
director of facilities development.
By comparison, at the small traditional
one-room betting offices, often located in
neighborhood shopping centers, there is
27
no entry fee but a 6 percent surcharge is
imposed on winnings.
The surcharge and a percentage of the
money bet are used for OTB’s operating
expenses and for payments to numerous
agencies, including the counties, the state
and the New York Racing Association.
Unlike Suffolk’s 15 betting offices, the
teletheater offers amenities that include
a full-service bar, a 2,300-square-foot
restaurant, and a 1,300-square-foot private room for high-stakes bettors, which
accommodates 15 people at a time. To
gain access to the high bettors’ room, a
patron must maintain an average daily
wager of $1,000.
Since the facility opened on May 31,
2001, business has increased 40 percent,
Ms. Knapp said, compared with the
facility it replaced, Tel-A-Race, which
was in a nondescript 13,000-square-foot
building a mile and a half away in the
Hauppauge Industrial Park, where it paid
rent of $40,000 a month, Mr. Majuk said.
The more visible Forum is on 2.7 acres
on Vanderbilt Motor Parkway. Its handle
was $45,104,904 in the year that ended
on May 31, compared with Tel-A-Race’s
total of $32,177,780 the previous year,
according to Ms. Knapp.
The new building was constructed “to
attract new customers,’’ Mr. Majuk said.
“We needed to change our face, bring in a
comfortable interior and beautiful exterior,
make the environment more like a living
room.’’
The Forum is a complete turnaround
from the “functional OTB office with tile
floors and fluorescent lights,’’ he said.
The new building features a graygreen shingled roof with copper finials and
cupolas that evoke the Victorian designs of
the Saratoga area, said Philip Monastero,
a principal in the Ronkonkoma-based
Baldassano Architectural Group, which
designed the building. A combination of
stones were used on the exterior for the
Adirondack look.
“The building is a modern expression
of the Victorian Age,’’ he said. “It was a
challenge, because we wanted to design
something that didn’t look Disney-ish.
We didn’t want to duplicate Saratoga and
make it like a theme park. We needed a
subtle design because Motor Parkway is
in an industrial area. We had to make it
fit in.’’
The interior is “more upscale and
elegant,’’ said Susan Hanley, the interior
designer. The colors are hunter green and
burgundy with copper touches, “reminiscent of that era, and low-level lighting to
create a casino feel.’’
INCE the Forum opened, OTB
has “lost some patronage from its
nearby betting offices,’’ but the
increase at the Forum has more than offset
declines elsewhere, Mr. Majuk said.
As part of a five-year capital program,
the Suffolk corporation will be examining
some new locations. “We are much into
the new OTB image,’’ he said. “We are
now trying to relocate some branches and
enhance them.’’
OTB officials throughout the state
have visited the Hauppauge teletheater,
which is inspiring similar refurbishing
elsewhere, Ms. Knapp said.
In Nassau County, the 14 betting
offices are being updated, and the betting
corporation is looking to add a new facility
similar to Suffolk’s Forum, according
to Larry Aaronson, president of Nassau
Regional Off-Track Betting.
Because it is the home of Belmont
Park in Elmont, Nassau is not permitted to
have a surcharge-free teletheater, but it can
expand a betting office to include a restaurant and bar, Mr. Aaronson said.
Currently, Nassau is planning two projects: an approximately 10,000-square-foot
“state-of-the-art Forum-type facility’’ and
a betting office in Carle Place with a theme
based on Roosevelt Raceway, which operated in nearby Westbury until 1988.
S
2002 SUFFOLK REGIONAL
OFF-TRACK BETTING CORPORATION’S
BOARD OF DIRECTORS
Richard J. Krumholz
Chairman
Herbert G. Hemendinger
Board Member
Dominick P. Feeney
Vice Chairman
John J. Toomey Jr.
Board Member
28
PERSONNEL
Mea Knapp
President/CEO
Dominic Baranello
Vice President
Steve Feig
Executive Director
Jeanne O’Rourke
Associate Counsel
Jack Luquer
Director-Buildings
& Grounds
29
Toni Rettaliata-Tepe
Executive Director
Christina Capobianco
Comptroller
William Majuk
Director-Facilities
Development
Paul Edelstein
Director-Customer Service
Arlene Samos
Director-Corporate Marketing
& Public Relations
SUFFOLK OTB RACING FORUM
30
SUFFOLK REGIONAL OFF-TRACK BETTING
BRANCH LOCATIONS
Branch # Name of Branch
31
Branch #
Name of Branch
253
Huntington Branch
321 W. Jericho Turnpike
Huntington, NY 11743
2 lights west of Rte. 110
255
Ronkonkoma Branch
136 Portion Road
Ronkonkoma, NY 11779
Next to Bank of New York
256
Centereach Branch
1937 Middle Country Rd.
Centereach, NY 11720
1⁄2 mile west of Nichols Rd.
257
Riverhead Branch
1071 Old Country Road
Riverhead, NY 11901
Aid Auto Shopping Center
259
Commack Branch
6230F Jericho Turnpike
Commack, NY 11725
1⁄2 mile west of Commack Rd.
260
Shirley Branch
6 Northern Boulevard
Shirley, NY 11967
Nthn Bl & Wm Floyd Pkwy
261
Deer Park Branch
532-34 Commack Road
Deer Park, NY 11729
1 block north of R/R tracks
262
Route 110 Branch
1741A Broadhollow Road
E. Farmingdale, NY 11735
North of R/R trestle, east side
264
Hauppauge Branch
536 Route 347
Hauppauge, NY 11787
NE corner of Rte 111 & Rte 347
265
Southampton Branch
829-31 N. Highway (Rte 27)
Southampton, NY 11960
Across from Hess Station
273
Patchogue Branch
350 E. Main Street
Patchogue, NY 11772
Just east of Rte. 112
280
The Racing Forum
690 Motor Parkway
Hauppauge, NY 11788
Just west of Exit 55 of LIE
281
Airport Branch
300 Knickerbocker Ave.
Bohemia, NY 11716
2 blocks south of MacArthur
282
Sunrise Branch
1375 Sunrise Highway
Bay Shore, NY 11706
On North Service Road
FACILITIES
Ronkonkoma Branch
Shirley Branch
Southampton Branch
Riverhead Branch
Hauppauge Branch
32
FACILITIES
Centereach Branch
Patchogue Branch
Deer Park Branch
Huntington Branch
Commack Branch
Suffolk Off-Track Betting Corporation
5 Davids Drive
Hauppauge, NY 11788

President`s Message

Transcription

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