<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31,1998 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 0-14050
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THE SANDS REGENT
- --------------------------------------------------------------------------------
(exact name of registrant as specified in charter)
Nevada 88-0201135
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
345 North Arlington Avenue, Reno, Nevada 89501
- --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (702) 348-2200
--------------
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
On May 12, 1998, the registrant had outstanding 4,498,722 shares of its
common stock, $.05 par value.
<PAGE> 2
THE SANDS REGENT AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements. 1 - 6
Consolidated Statements of Operations 1
Consolidated Balance Sheets 2 - 3
Consolidated Statements of Cash Flows 4 - 5
Notes to Interim Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations. 7 - 12
PART II OTHER INFORMATION
Item 1. Legal Proceedings. 13
Item 2. Changes in Securities. 13
Item 3. Defaults Upon Senior Securities. 13
Item 4. Submission of Matters to a Vote of
Security Holders. 13
Item 5. Other Information. 13
Item 6. Exhibits and Reports on Form 8-K. 13
SIGNATURES 14
</TABLE>
<PAGE> 3
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
THE SANDS REGENT AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Dollars in thousands, THREE MONTHS NINE MONTHS
except per share amounts) ENDED MARCH 31, ENDED MARCH 31,
------------------------------- -------------------------------
1997 1998 1997 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Operating revenues:
Gaming $ 10,330 $ 10,963 $ 31,491 $ 31,421
Lodging 1,631 1,665 5,797 6,409
Food and beverage 1,885 2,047 5,853 6,211
Other 362 405 1,117 1,237
----------- ----------- ----------- -----------
14,208 15,080 44,258 45,278
Less complimentary lodging, food
and beverage included above 732 765 2,173 2,111
----------- ----------- ----------- -----------
13,476 14,315 42,085 43,167
----------- ----------- ----------- -----------
Operating costs and expenses:
Gaming 5,367 5,581 16,261 16,451
Lodging 1,123 1,112 3,701 3,631
Food and beverage 1,411 1,749 4,753 5,596
Other 149 168 481 490
Maintenance and utilities 1,155 1,278 4,036 4,515
General and administrative 3,527 3,468 10,714 10,455
Depreciation and amortization 940 1,009 2,820 3,036
----------- ----------- ----------- -----------
13,672 14,365 42,766 44,174
----------- ----------- ----------- -----------
Loss from operations (196) (50) (681) (1,007)
----------- ----------- ----------- -----------
Other income (deductions):
Interest and other income 53 44 691 271
Interest and other expense (438) (555) (1,429) (1,680)
----------- ----------- ----------- -----------
(385) (511) (738) (1,409)
----------- ----------- ----------- -----------
Loss before income taxes (581) (561) (1,419) (2,416)
Income tax benefit (210) (182) (543) (811)
----------- ----------- ----------- -----------
Net loss $( 371) $( 379) $( 876) $( 1,605)
=========== =========== =========== ===========
Net loss per share $( .08) $( .08) $( .19) $( .36)
=========== =========== =========== ===========
Weighted average shares
outstanding 4,498,722 4,498,722 4,498,722 4,498,722
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE> 4
THE SANDS REGENT AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Dollars in thousands) JUNE 30, MARCH 31,
1997 1998
------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 7,644 $ 9,405
Short-term investments 250 250
Accounts and notes receivable less allow-
ance for possible losses of $119 and $126 418 530
Inventories 640 557
Prepaid federal income taxes 1,063 538
Prepaid expenses and other assets 1,297 1,339
------- -------
Total current assets 11,312 12,619
PROPERTY AND EQUIPMENT:
Land 8,093 8,093
Buildings, ship and improvements 45,753 45,693
Equipment, furniture and fixtures 24,776 25,403
Construction in progress 172 474
------- -------
78,794 79,663
Less accumulated depreciation
and amortization 31,060 33,742
------- -------
47,734 45,921
OTHER ASSETS:
Deferred federal income tax asset 422 574
Note receivable 1,237 --
Other 347 282
------- -------
2,006 856
------- -------
Total assets $61,052 $59,396
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-2-
<PAGE> 5
THE SANDS REGENT AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Dollars in thousands) JUNE 30, MARCH 31,
1997 1998
-------- --------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,712 $ 2,829
Accrued salaries, wages and benefits 1,816 1,916
Other accrued expenses 1,692 1,924
Deferred federal income tax liability 240 266
Current maturities of long-term debt 17,480 17,442
-------- --------
Total current liabilities 23,940 24,377
LONG-TERM DEBT 4,658 4,170
STOCKHOLDERS' EQUITY:
Preferred stock, $.10 par value, 5,000,000
shares authorized, none issued -- --
Common stock, $.05 par value, 20,000,000
shares authorized, 6,898,722 shares
issued 345 345
Additional paid-in capital 13,074 13,074
Retained earnings 41,390 39,785
-------- --------
54,809 53,204
Treasury stock, at cost, 2,400,000 shares (22,355) (22,355)
-------- --------
Total stockholders' equity 32,454 30,849
-------- --------
Total liabilities and stockholders'
equity $ 61,052 $ 59,396
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-3-
<PAGE> 6
THE SANDS REGENT AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Dollars in thousands) NINE MONTHS ENDED
MARCH 31,
------------------------
1997 1998
------- -------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $( 876) $(1,605)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization 2,820 3,036
(Gain) loss on sale of property
and equipment (314) 57
(Increase) in accounts and notes
receivable (30) (112)
Decrease in inventories 135 83
(Increase) in prepaid expenses
and other current assets (497) (42)
Decrease in other assets 116 57
Increase (decrease) in accounts
payable (194) 77
Increase in accrued expenses 125 332
Change in federal income taxes
payable/receivable (937) 525
Changes in deferred federal
income taxes 562 (126)
(Decrease) in other liabilities (19) --
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 891 2,282
------- -------
INVESTING ACTIVITIES:
Purchase of short-term investments (50) --
Payments received on note receivable 5 1,237
Additions to property and equipment (2,566) (1,268)
Proceeds from sale of property and
equipment 476 36
------- -------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (2,135) 5
------- -------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-4-
<PAGE> 7
THE SANDS REGENT AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
<TABLE>
<CAPTION>
(Dollars in thousands) NINE MONTHS ENDED
MARCH 31,
-------------------------
1997 1998
-------- --------
<S> <C> <C>
FINANCING ACTIVITIES:
Issuance of long-term debt 728 256
Payments on long-term debt (4,979) (782)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES (4,251) (526)
-------- --------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (5,495) 1,761
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 11,357 7,644
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,862 $ 9,405
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Property and equipment acquired by
term-debt debt $ 825 --
======== ========
Property and equipment acquired by
accounts payable $ 49 $ 40
======== ========
Property and equipment acquired by
conversion of other assets $ 400 --
======== ========
Interest paid, net of amount capitalized $ 1,195 $ 1,360
======== ========
Federal income taxes paid -- --
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
-5-
<PAGE> 8
THE SANDS REGENT AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED MARCH 31, 1998 AND 1997
NOTE 1 - BASIS OF PREPARATION
These statements should be read in connection with the 1997 Annual Report
heretofore filed with the Securities and Exchange Commission as Exhibit 13 to
the Registrant's Form 10-K for the year ended June 30, 1997. The accounting
policies utilized in the preparation of the financial information herein are
the same as set forth in such annual report except as modified for interim
accounting policies which are within the guidelines set forth in Accounting
Principles Board Opinion No. 28.
The Consolidated Balance Sheet at June 30, 1997 has been taken from the
audited financial statements at that date. The interim consolidated financial
information is unaudited. In the opinion of management, all adjustments,
consisting only of normal recurring accruals, necessary to present fairly the
financial condition as of March 31, 1998 and the results of operations and cash
flows for the three and nine months ended March 31, 1997 and 1998 have been
included. Interim results of operations are not necessarily indicative of the
results of operations for the full year.
The accompanying Consolidated Financial Statements include the accounts
of the Company and its wholly owned subsidiaries Zante, Inc. ("Zante"),
Patrician, Inc. ("Patrician"), Gulfside Casino, Inc. ("GCI"), Artemis,
Inc. ("Artemis") and Gulfside Casino Partnership ("GCP") (together the
"Company"). Patrician, GCI and Artemis are the sole partners in GCP.
Zante, Inc. owns and operates the Sands Regency hotel/casino in Reno, Nevada
and GCP owns and operates the Copa Casino in Gulfport, Mississippi.
NOTE 2 - EARNINGS PER SHARE
The Company adopted Statement of Financial Accounting Standards No. 128-
"Earnings Per Share" in fiscal 1998. This statement establishes standards for
computing and presenting earnings per share and requires restatement of all
prior-period earnings per share data presented.
During the three and nine month periods ended March 31, 1998 and 1997,
there were no outstanding convertible securities that would result in dilutive
potential common shares and, as such, dilutive earnings per share are not
applicable. At March 31, 1998 and 1997, respectively, there were options to
purchase 410,000 and 334,000 shares of common stock at prices ranging from
$1.81 to $3.50 and $3.50 to $12.63, respectively. Such options are not included
in the computation of diluted Earnings Per Share because to do so would have
been antidilutive.
NOTE 3 - RECLASSIFICATIONS
Certain reclassifications have been made to the results of operations for
the three and nine months ended March 31, 1997 to conform to the presentation
for the three and nine months ended March 31, 1998.
-6-
<PAGE> 9
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Results of operations - Three months ended March 31, 1998 compared to
three months ended March 31, 1997
In the three month period ended March 31, 1998, compared to the same three
month period in fiscal 1997, revenues increased to $14.3 million from $13.5
million. This is a result of an increase in revenues at the Sands Regency of
$750,000, to $7.7 million, and an increase at the Copa Casino of approximately
$100,000 to $6.6 million. For the same comparable periods, the loss from
operations improved from a loss of $196,000 in the three months ended March 31,
1997 to a $50,000 loss in the three months ended March 31, 1998. Such increase
consists of an improvement in the loss from operations at the Sands Regency of
$361,000 to a loss from operations of $561,000 in the March 1998 quarter. This
increase was offset by a decrease in income from operations at the Copa Casino
of approximately $214,000 to income from operations of approximately $511,000.
The Company had a net loss of $379,000, or loss per share of $.08, in the
quarter ended March 31, 1998 which was the same as in the comparable March 1997
quarter. For the current year third quarter, The Sands Regency incurred a net
loss of $605,000 which compared favorably with the fiscal 1997 third quarter
net loss of $735,000. Such improvement from the Sands Regency was offset by a
decline at the Copa Casino. For the quarter ended March 31, 1998, the Copa
Casino realized net income of approximately $226,000 as compared to net income
in the prior year third quarter of $364,000. The increases at the Sands Regency
are due to an increase in revenue per occupied room. The slight increase in
revenue at the Copa Casino is due to an increase in customers and the addition
of the buffet restaurant in May 1997. The declines in income from operations
and net income at the Copa Casino are due to increased costs including
promotional and other costs incurred in order to attract guests as mitigation
for the impaired access to the Copa Casino resulting from the ongoing
construction on Highway 90.
The slight increase in lodging revenue of $34,000, in the third quarter of
fiscal 1998 compared to the same quarter in the prior year, is due to an
increase in the Sands Regency's average daily room rate from approximately $24
to $26, an increase of over 8%. For the same comparable periods, hotel
occupancy decreased from approximately 82.2% to 77.4%. Such decrease is
partially due to unusually poor weather conditions which adversly affected
drive-up business.
The increase in gaming revenue of $633,000, in the March 1998 quarter
versus the March 1997 quarter, is a result of an increase in gaming revenue
from the Sands Regency to approximately $4.8 million. Gaming revenue at the
Copa Casino remained constant at approximately $6.1 million in both the current
and prior year third quarters. The increase in gaming revenue in Reno is
primarily due to an increase in gaming revenue from hotel guests. Gaming
revenue per occupied room increased by almost 23% from approximately $59 in the
three months ended March 31, 1997 to $72 in the three months ended March 31,
1998. At the Copa Casino, gaming revenue per guest declined slightly from
approximately $21 in the March 1997 quarter to $20 in the March 1998 quarter.
-7-
<PAGE> 10
Results of operations - Three months ended March 31, 1998 compared to
three months ended March 31, 1997 (continued)
The increase in food and beverage revenue of $162,000, in the quarter
ended March 31, 1998, compared to the March 1997 quarter, includes an increase
in restaurant revenue at the Sands Regency of approximately $99,000 and an
increase at the Copa Casino of $82,000. At the Sands Regency, food revenue per
occupied room increased from approximately $16 in the March 1997 quarter to $18
in the March 1998 quarter. The increase in restaurant revenue at the Copa
Casino is due to the Copa's operation of a buffet restaurant which was
previously operated by a third party through May 1997.
The increase in gaming costs and expense of $214,000, in the quarter ended
March 31, 1998 compared to the quarter ended March 31, 1997, is primarily
attributable to the Copa Casino. It is principally composed of added costs and
expenses associated with the Copa Casino slot player's club which was commenced
in April 1997.
The increase in food and beverage costs and expense of $338,000, in the
third quarter of fiscal 1998 compared to the third quarter of fiscal 1997,
includes an increase from the Copa Casino of $246,000 and an increase at the
Sands Regency of approximately $92,000. The increase at the Copa Casino
consists of approximately $112,000 in added food costs associated with the
buffet restaurant, which has been operated by the Copa Casino since May 1997,
and increased other food operating costs and expenses due to changes in
products being offered and sold to the public. The increase at the Sands
Regency principally consists of promotional discounts offered on certain
restaurant food products.
The increase in maintenance and utilities costs and expenses of $123,000 is
approximately evenly attributable to the Copa Casino and the Sands Regency and
is composed of an increase in general maintenance and repair costs.
The decrease in general and administrative costs and expenses of $59,000
consists principally of a decrease from the Copa Casino of approximately
$201,000 and an increase from the Sands Regency of approximately $175,000. The
decrease from the Copa Casino consists of a decrease in legal and professional
costs of $271,000 which was partially offset by an increase in advertising and
promotional costs. This decrease in legal and professional costs is related to
the legal actions with the State Port of Mississippi at Gulfport which
culminated in a trial in October 1997. The increase at the Sands Regency
consists of an increase in various general and administrative costs and expense
items.
The increase in interest and other expense of $117,000 is due to an
increase in the interest rate, to prime plus three percent, on the Sands
Regency's long-term debt obligation due its banks. Such represents a default
rate in accordance with the Company's loan agreement.
-8-
<PAGE> 11
Results of operations - First nine months of fiscal 1998 compared to 1997
In the nine months ended March 31, 1998, compared to the same nine months
in fiscal 1997, revenues increased from $42.1 million to $43.2 million as a
result of an increase at the Sands Regency of $2.1 million to $25 million. Such
increase was partially offset by a decrease in revenue at the Copa Casino of
$1.0 million to $18.2 million. For the same comparable periods, the loss from
operations increased from $681,000 to $1.0 million. Such increase in loss from
operations consists of an increase at the Copa Casino of $2.3 million, to a
loss from operations of $388,000, which was partially offset by an improvement
at the Sands Regency of approximately $2.0 million to a loss from operations of
$619,000.
For the same comparable nine month periods, the Company had a net loss of
$1.6 million, or loss per share of $.36, compared to a net loss of $876,000, or
loss per share of $.19, in the first nine months of fiscal 1997. The Sands
Regency's portion of the net loss was $1.0 million which compared favorably to
a net loss of $1.8 million in the March 1997 nine months. Such improvement from
the Sands Regency was offset by a decline at the Copa Casino. For the first
nine months of the current year, the Copa Casino incurred a net loss of
approximately $590,000 as compared to net income in the prior year comparable
nine months of $1.0 million. The declines in revenues, income (loss) from
operations and net income (loss) at the Copa Casino are due to a decline in
customer counts and an increase in costs and expenses. The decline in customers
is due, in part, to the construction on Highway 90 which has significantly
impaired access to the Copa Casino. The increases at the Sands Regency are due
to an increase in revenue per occupied room.
The increase in lodging revenue of $612,000 in the nine months ended March
31, 1998, compared to the same period in the prior year, is primarily due to an
increase in the average daily rate from approximately $27 in the first nine
months of fiscal 1997 to $31 in the first nine months of fiscal 1998, an
increase of almost 15%. For the same comparable periods, hotel occupancy
decline slightly from 82.8% to 81.1%.
The slight decrease in gaming revenue of $70,000 is a result of a decrease
in gaming revenue from the Copa Casino of $1.1 million which was partially
offset by an increase in gaming revenue from the Sands Regency of approximately
$1.0 million. The decrease at the Copa Casino is due to a reduction in the
number of customers which the Company attributes, in part, to the curtailment
of access to the Copa because of construction on Highway 90. This construction
is scheduled for completion in the spring/summer of 1998. The increase in
gaming revenue in Reno is primarily due to an increase in gaming revenue from
hotel guests. Gaming revenue per occupied room increased by over 11% from
approximately $61 in the nine months ended March 31, 1997 to $68 in the nine
months ended March 31, 1998.
The increase in food and beverage revenue of $358,000, in the nine months
ended March 31, 1998, compared to the same period in fiscal 1997, includes an
increase in restaurant revenue at the Sands Regency of approximately $325,000
and an increase at the Copa Casino of $191,000. At the Sands Regency, food
revenue per occupied room increased from approximately $17 in the first nine
months of fiscal 1997 to $19 in the first nine months of fiscal 1998. The
increase in restaurant revenue at
-9-
<PAGE> 12
Results of operations - First nine months of fiscal 1998 compared to 1997
(continued)
the Copa Casino, which was partially offset by a decrease in Copa Casino
beverage revenue, is due to the Copa's operation of a buffet restaurant which
was previously operated by a third party through May 1997.
The increase in other revenue of $120,000 is in ancillary revenue from the
Sands Regency.
The increase in gaming costs and expense of $190,000 in the nine months
ended March 31, 1998, compared to the nine months ended March 31, 1997, is
comprised of an increase from the Copa Casino of approximately $340,000 and a
decrease from the Sands Regency of $150,000. The increase in Copa Casino costs
and expenses is primarily attributable to added costs and expenses associated
with the slot player's club, which was commenced in April 1997, of $532,000.
This increase was partially offset by a reduction in gaming taxes due to
reduced gaming revenue. The decrease at the Sands Regency is generally due to
an overall decrease in various cost and expense items.
The increase in food and beverage costs and expense of $843,000 in the
first nine months of fiscal 1998, compared to the first nine months of fiscal
1997, consists of increases at the Copa Casino and Sands Regency, respectively,
of $651,000 and $192,000. The increase at the Copa Casino includes $361,000 in
added food costs associated with the buffet restaurant, which has been operated
by the Copa Casino since May 1997, and increased other food operating costs and
expenses due to changes in products being offered and sold to the public. The
increase at the Sands Regency consists of promotional discounts offered on
certain restaurant food products of approximately $210,000 and a decrease in
the allocation of complimentary food and beverage costs as gaming costs and
expenses.
The increase in maintenance and utilities costs and expenses of $479,000 is
primarily attributable to the Copa Casino. It includes an increase in hurricane
evacuation expenses of $199,000 as a result of preparedness actions necessary
during Hurricane Danny in July 1997, the cost of removing dredging spoils of
$110,000 as a result of maintenance dredging performed under and around the
ship and an increase in other maintenance and repair costs.
The decrease in general and administrative costs and expenses of $259,000
in the nine months ended March 1998, compared to the nine months ended March
1997, consists principally of decreases from the Sands Regency and the Copa
Casino of approximately $107,000 and $115,000, respectively. The decrease at
the Sands Regency is primarily due to a decrease in advertising and promotional
costs and expenses. The decrease from the Copa Casino is attributable to a
decrease in advertising and promotional costs of approximately $506,000 which
was partially offset by an increase in legal and professional costs of
$445,000. The decrease in advertising and promotional costs is due, in part, to
the implementation of the slot player's club which includes various promotional
costs that supercede some prior promotional programs. The increase in legal and
professional costs is related to the legal actions with the State Port of
Mississippi at Gulfport which culminated in a trial in October 1997.
-10-
<PAGE> 13
Results of operations - First nine months of fiscal 1998 compared to 1997
(continued)
The decrease in interest and other income of approximately $420,000 is
primarily due to the non-recurrence of a gain on the sale of a non-casino
property in Reno in the nine months ended March 31, 1997. The increase in
interest and other expense of $251,000 is due to an increase in the interest
rate, to prime plus three percent, on the Sands Regency's long-term debt
obligation due its banks. Such represents a default rate in accordance with the
Company's loan agreement.
The effective income tax rate differs from the statutory rate, in the
prior year nine month period, as a result of one-time differences including
tax-free interest income and deductable tax credits.
Capital resources and liquidity
In January 1998, the Company entered into a nonbinding Letter Agreement
with the Company's banks regarding the Company's noncompliance with certain
financial convenants and restructuring the bank debt relative to the Reno
operating facilities. Such Letter Agreement is subject to a definitive
agreement, which is presently being negotiated, and is revocable until a
definitive agreement is executed. In the event that a definitive agreement is
not entered into and the banks accelerate the principal balance, aggregating
$11 million, the Company would not be in the financial position to repay the
debt in full or on an accelerated basis.
In Mississippi, various legal proceedings are pending, related to legal
actions undertaken by the two former GCI shareholders, including the Patrician,
Inc. and GCI bankruptcy matters, the appeal to the Mississippi Supreme Court of
previous rulings by the Chancery Court and the Federal lawsuit against The
Sands Regent and certain Officers and Directors of The Sands Regent, Patrician
and GCI. Also pending is the appeal of the judgement issued by the Chancery
Court in Harrison County, Mississippi in the lawsuit between Gulfside Casino
Partnership and the Mississippi State Port Authority at Gulfport and
Mississippi Department of Economic and Community Development.
The outcome of these actions continue to not be subject to reasonable
estimation. At March 31, 1998, the book value of the Company's net investment
in and advances to (including accrued interest) the Mississippi gaming
operation was approximately $1.7 million.
Cautionary statement for purposes of the "Safe Harbor" provisions of the
Private Securities Litigation Reform Act of 1995
The foregoing Management's Discussion and Analysis of Financial Condition
and Results of Operations contains various "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which represent
the Company's expectations or beliefs concerning future events. Such statements
are identified by the words "anticipates", "believes", "expects", "intends",
"future", or words of similar import. Various important factors that could
cause actual results to differ materially from those in the forward-looking
statements include, without limitation, the following: increased competition in
existing markets or the
-11-
<PAGE> 14
Cautionary statement for purposes of the "Safe Harbor" provisions of the
Private Securities Litigation Reform Act of 1995 (continued)
opening of new gaming jurisdictions; a decline in the public acceptance of
gaming; the limitation, conditioning or suspension of any of the Company's
gaming licenses; adverse outcomes in any of the Company's various material
legal proceedings in Mississippi; increases in or new taxes imposed on gaming
revenues or gaming devices; a finding of unsuitability by regulatory
authorities with respect to the Company's officers, directors or key employees;
loss or retirement of key executives; significant increases in fuel or
transportation prices; adverse economic conditions in the Company's key
markets; severe and unusual weather in the Company's key markets and adverse
results of significant litigation matters.
-12-
<PAGE> 15
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
NONE
(b) Reports on Form 8-K:
NONE
-13-
<PAGE> 16
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.
THE SANDS REGENT
(Registrant)
Date: May 12, 1998 By /s/ David R. Wood
-------------------------------------------
David R. Wood, Executive Vice President and
Principal Accounting and Financial Officer
-14-
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Page
------- ------------
<S> <C>
27 Financial Data Schedule....................
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
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