UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995
Commission file Number 0-8133
Union Plaza Hotel and Casino Inc.
(Exact name of registrant as specified in its charter)
Nevada 88-0110085
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
No. One Main Street, 89125
Las Vegas, Nevada (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
(702) 386-2110
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
and (2) has been subject to such filing requirements for the
past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered
by this report:
Common Stock, $.50 Par Value - 761,719 shares as of September 30,
1995
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1995 and DECEMBER 31, 1994
<CAPTION>
ASSETS
SEPTEMBER 30, DECEMBER 31,
1995 1994
<S> <C> <C>
Current Assets:
Cash $ 2,089,000 $ 2,744,000
Accounts receivable 537,000 597,000
Inventories of food, beverage
and supplies 457,000 463,000
Prepaid expense 1,422,000 1,292,000
Total current assets 4,505,000 5,096,000
Property and equipment:
Land 6,912,000 6,912,000
Buildings 56,643,000 56,331,000
Leasehold improvements 3,456,000 3,453,000
Furniture and equipment 33,572,000 34,048,000
100,583,000 100,744,000
Less accumulated depreciation
and amortization 54,840,000 53,856,000
Net property and equipment 45,743,000 46,888,000
Other assets 2,308,000 2,402,000
52,556,000 54,386,000
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
<S> <C> <C>
Current liabilites:
Accounts payable 1,985,000 $ 2,141,000
Accrued liabilities 1,956,000 2,227,000
Current portion of long-term debt 236,000 236,000
Current portion of obligations under
capital leases 544,000 544,000
Total current liablilities 4,721,000 5,148,000
Long-term debt, less current portion 21,294,000 22,514,000
Obligations under capital leases, less
current portion 4,461,000 4,861,000
Deferred income taxes 4,123,000 4,123,000
34,599,000 36,646,000
Commitments and contingencies
Stockholders' equity:
Common stock, $.50 par value; authorized
20,000,000 shares; issued 1,500,000
shares; Outstanding 761,719 shares at
September 30, 1995 and 764,219 shares
at December 31, 1994. 750,000 750,000
Additional paid-in capital 5,462,000 5,462,000
Retained earnings 25,534,000 25,267,000
31,746,000 31,479,000
Less treasury stock, at cost, 738,281 shares
at September 30, 1995 and 735,781 shares
at December 31, 1994 13,789,000 13,739,000
Total stockholders' equity 17,957,000 17,740,000
52,556,000 54,386,000
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Amounts in thousands, except per share data
<CAPTION>
NINE MONTHS THREE MONTHS
ENDED SEPT 30, ENDED SEPT 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Casino $ 27,448 $ 29,890 $ 8,819 $ 9,403
Food and Beverage 6,659 7,324 2,219 2,009
Rooms 8,747 8,839 2,808 2,844
Other 1,659 1,699 573 585
Gross revenues 44,513 47,752 14,419 14,841
Less promotional complimentaries 5,879 5,830 1,959 1,861
Net revenues 38,634 41,922 12,460 12,980
Operating expenses:
Casino 10,964 11,003 3,709 3,665
Food and Beverage 9,258 10,652 3,305 3,013
Rooms 3,786 3,785 1,350 1,267
General and administrative 3,034 3,669 832 1,202
Entertainment 345 266 115 118
Advertising and promotion 245 352 139 192
Utilities and maintenance 4,351 4,507 1,699 1,689
Depreciation and amortization 3,206 3,056 1,081 1,022
Provisions for doubtful account 2 15 14 (11)
Other costs and expenses 1,062 1,034 368 344
Total operating expenses 36,253 38,339 12,612 12,501
Operating income 2,381 3,583 (152) 479
Other income (expense):
Interest income 27 13 9 8
Interest expense (2,002) (1,800) (648) (619)
Total other income (expense) (1,975) (1,787) (639) (611)
Income before income taxes 406 1,796 (791) (132)
Income taxes 138 606 (269) (49)
Net Income 268 1,190 (522) (83)
Earnings per common share $0.35 $1.53 ($0.69) ($0.11)
<FN>
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Amounts in thousands, except per share data
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 38,622 $ 42,018
Cash paid to suppliers and employees (33,653) (37,178)
Interest received 38 30
Interest paid (2,002) (1,800)
Income taxes paid 0 0
Net cash provided by operating activities 3,005 3,070
Cash flows from investing activities:
Proceeds from sale of property and equipment 0 0
Proceeds from sale of bonds 0 0
Purchase of property and equipment (1,990) (1,825)
Net cash used in investing activities (1,990) (1,825)
Cash flows from financing activities:
Proceeds from note payable to Stockholder 0 5,200
Principal payments on capital lease (400) (349)
Principal payments on long-term debt (1,220) (6,026)
Purchase of Treasury Stock (50) (515)
Net cash used in financing activities (1,670) (1,690)
Net increase/(decrease) in cash and cash equivalents (655) (445)
Cash and cash equivalents, at 12/31/94 & 12/31/93 2,744 3,170
Cash and cash equivalents, at 9/30/95 & 9/30/94 2,089 2,725
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Net income for period ended 9/30/95 and 9/30/94 268 1,190
Adjustments to reconcile net income to
Net cash provided by operating activities:
Depreciation and amortization 3,206 3,166
Gain on sale of assets 0 0
Bad debt expense 2 15
(Increase) decrease in assets:
Accounts receivable 47 100
Interest receivable 11 17
Inventories 6 67
Prepaid expenses (130) 50
Other assets 23 (565)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (482) (970)
Interest payable 0 0
Deferred income tax 54 0
Total adjustments 2,737 1,880
Net cash provided by operating activites 3,005 3,070
<FN>
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the
accounts of Union Plaza Hotel and Casino, Inc. (the Company) and its
wholly-owned subsidiaries. All material intercompany balances and
transactions have been eliminated in consolidation.
NATURE OF THE OPERATIONS AND BASIS OF ACCOUNTING
The Company's wholly-owned subsidiary, Union Plaza Operating
Company, operates hotel and gaming operations in downtown Las Vegas,
Nevada. A substantial portion of the operating revenues of the Company's
subsidiary is derived from gaming operations which are subject to extensive
regulations in the State of Nevada by the Gaming Commission, the Gaming
Control Board and local regulatory agencies.
Management believes that the Company's procedures for supervising
casino operations, recording casino and other revenues and for granting
credit comply in all material respects with applicable regulations.
The Company has no other materially important subsidiaries or
operations.
CASINO RECEIVABLES AND REVENUE
Credit is extended to certain casino customers and the Company records
all unpaid advances as casino receivables on the date credit was granted.
Allowances for estimated uncollectable casino receivables are provided to
reduce the receivables to amounts anticipated to be collected. The Company
recognizes as casino revenue the net win (which is the difference between
amounts wagered and amounts paid to winning patrons) from gaming
activities.
PROMOTIONAL ALLOWANCES
Gross revenues include the retail value of complimentary food and
beverage and hotel services furnished to customers. The retail value of
these promotional allowances is deducted to arrive at net revenues.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Expenditures for
additions, renewals and betterments are capitalized; expenditures for
maintenance and repairs are charged to expenses as incurred. Upon
retirement or disposal of assets, the cost and accumulated depreciation are
eliminated from the accounts and the resulting gain or loss is included in
income. Depreciation, including amortization of a capitalized lease, is
computed using the straight-line method. Leasehold improvements
(distinguished from unamortized leasehold costs) are amortized over the
lives of the leases.
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT (CONTINUED)
Property and equipment, including capitalized leases, are
depreciated over their estimated useful lives of 3 to 20 years for land
improvements, 20 to 40 years for buildings, 5 to 30 years for leasehold
improvements and 3 to 10 years for furniture and equipment.
OTHER ASSETS
Leasehold costs are being amortized on a straight-line basis over
the initial 30-year term of the lease. Expansion of gaming rights is being
amortized on a straight-line basis over 20 years. Subordination of
security interest in lease is being amortized on a straight-line basis over
15 years.
PROGRESSIVE SLOT LIABILITY
The Company has installed a number of progressive slot machines. As
coins are played the amount available to win increases and will be paid out
when the appropriate jackpot is hit. In accordance with common industry
practice, the Company has recorded the liability and has charged this
amount against casino revenue.
EARNINGS PER COMMON SHARE
Earnings per common share was computed by dividing net income by the
weighted average number of shares of common stock outstanding during each
period.
INVENTORIES
Inventories are valued at the lower of cost, (first-in, first-out)
or market. Maintenance and other operating supplies are stated at
estimated amounts considered by management to be necessary to conduct full
operations. Subsequent replacements are charged to expense.
INCOME TAXES
The Company and its subsidiaries file a consolidated Federal Income
Tax return. Deferred income taxes are provided to reflect the tax effect
of timing differences between financial and tax reporting, principally
related to depreciation, slot machine revenue, interest costs, accrued
expenses, capitalization of leases, capitalization of property costs and
write-down of facilities and other investments to estimated recoverable
value. The Company accounts for the investment tax credit as a reduction
of income tax expense in the year in which such credits are utilized.
Carryforwards of this credit, as well as the tax effect of net operating
loss carryforwards, are shown as a reduction to deferred income taxes.
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
STATEMENT OF CASH FLOWS
The Statement of Cash Flows classifies changes in cash and cash
equivalents according to operating, investing and financing activities.
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
NOTE 2 - ACCOUNTS RECEIVABLE
<TABLE>
Accounts receivable consists of the following:
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Casino $236,000 $353,000
Hotel 178,000 186,000
Other 140,000 75,000
554,000 614,000
Less allowance for
doubtful accounts 17,000 17,000
$537,000 $597,000
</TABLE>
<TABLE>
NOTE 3 - OTHER ASSETS
Other assets consist of the following:
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Expansion of gaming rights, less accumulated
amortization of $577,000 and $547,000 $233,000 $263,000
Subordination of security interest in lease,
less accumulated amortization of
$770,000 and $729,000 40,000 81,000
Net investment in financing lease (Note 7) 236,000 257,000
Leasehold costs, less accumulated amortization
of $344,000 and $333,000 84,000 95,000
Deposits and other 1,717,000 1,706,000
$2,310,000 $2,402,000
</TABLE>
<TABLE>
NOTE 4 - ACCRUED LIABILITIES
<CAPTION>
Accrued liabilities consist of the following:
September 30, December 31,
1995 1994
<S> <C> <C>
Salaries and Wages $803,000 $967,000
Union back wages 148,000 238,000
Taxes, other than taxes on income 406,000 352,000
Other 599,000 670,000
$1,956,000 $2,227,000
</TABLE>
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 5 - INCOME TAXES
The Internal Revenue Service has examined the Company's Federal
income tax returns through 1991. Management is of the opinion that all
taxes have been paid or provided for through September 30, 1995.
NOTE 6 - LONG-TERM DEBT
<CAPTION>
September 30, December 31,
Long-term debt consists of the following: 1995 1994
<S> <C> <C>
Note Payable to Exber, Inc. at the Prime
Interest Rate payable in monthly
installments of $158,265 including
principal and interest, until July 6,
2004 at which time the balance is due.
The note is secured by a first deed of
trust in land and building (See Note 9). 21,530,000 22,750,000
Less current portion 236,000 236,000
$21,294,000 $22,514,000
Principal payments on long-term debt during the succeeding five
years are as follows:
1995 (Remaining three months) $60,000
1996 276,000
1997 297,000
1998 319,000
1999 343,000
Thereafter 20,235,000
$21,530,000
The maturities were calculated based upon interest rates in effect at
September 30, 1995.
</TABLE>
<TABLE>
NOTE 7 - LEASES
The Company leases equipment and hotel and bus depot property under
long-term lease agreements which are classified as capital leases. The
lease with Exber, Inc. (See Note 9) covering the hotel and bus depot
property expires in 2001 with renewals. The hotel and bus depot property
lease contains one renewal option of twenty-five years and four renewal
options of ten years. The bus depot property is sublet to Greyhound Lines,
Inc. under a lease expiring in 2001, with two ten-year renewal options
available. The value of the lease with Exber, Inc. is as follows:
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Land and Buildings $9,242,000 $9,242,000
Less accumulated amortization 8,221,000 8,089,000
$1,021,000 $1,153,000
</TABLE>
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 - LEASES (CONTINUED)
<CAPTION>
The following is a schedule of future minimum lease payments as of
September 30, 1995.
<S> <C>
1995 (Remaining three months) $313,000
1996 1,250,000
1997 1,250,000
1998 1,250,000
1999 1,250,000
Thereafter 1,979,000
Total minimum lease payments 7,292,000
Less amount representing interest 2,255,000
Present value of net minimum
lease pmts under capital leases 5,037,000
Less current portion 544,000
Long-term obligations under capital leases $4,493,000
SUBLEASES
<CAPTION>
The bus depot property under a capital lease is sublet as follows:
September 30, December 31,
1995 1994
<S> <C> <C>
Minimum future rents receivable $314,000 $363,000
Less amount representing interest 49,000 78,000
Minimum lease payments receivable 265,000 285,000
Less current portion (included in
accounts receivable) 29,000 28,000
Net investment in direct
financing lease (See Note 3) $236,000 $257,000
</TABLE>
Other sublet rental property:
The Company rents building space to several retail stores under
various short-term leases. Income from these subleases, included in other
income, was $217,000 and $166,000 at September 30, 1995 and December
31,1994, respectively.
NOTE 8 - EMPLOYEE BENEFIT PLANS
The Company contributes to a discretionary executive bonus plan.
Contributions at the end of the nine months of 1995 and 1994 were $71,000
and $314,000 respectively.
The Company also has a qualified profit sharing plan for eligible
employees. Contributions to this plan are made at the discretion of the
Board of Directors and benefits are limited to the allocated interests in
fund assets. Contributions for the first nine months of 1995 and 1994 were
$225,000.
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 - RELATED PARTIES
On December 18, 1991, Exber, Inc., a 45.02% stockholder as of
September 30, 1995 loaned the Company $1,800,000, payable interest only in
monthly installments at 10% per annum, with principal due in full December
19, 1996. During February 1992 this loan was increased to $3,000,000
subject to the same terms and maturity date of the original borrowing.
During February 1993 this loan was refinanced to $18,000,000, interest
only at the prime rate published in the Wall Street Journal until February
14, 1999. On February 14, 1994 an additional $1,500,000 was added to this
loan bringing the loan balance to $19,500,000 with the same terms and
maturity date. On June 3, 1994 an additional $3,700,000 was borrowed and
the balance refinanced payable in monthly installments of $158,265
including principal and interest, until July 6, 2004. The majority of
proceeds of the note were used to retire the outstanding debt to Bank of
America. The outstanding balance of the note at September 30, 1995 was
$21,530,000.
Exber, Inc. also leased to the Company land and buildings in Las
Vegas, Nevada. Annual payments by the Company and its subsidiaries are
approximately $1,250,000. The leases extend through 2001 with renewal
options. The property under lease was purchased by Exber, Inc. in June of
1991 from Upland Industries. The lease terms were renegotiated effective
July 1, 1991 resulting in a reduction of monthly payments of $32,000. The
resulting reduction in the present value of future minimum lease payments
amounting to $2,100,000 reduced the carrying value of the asset and the
obligation under capital lease.
NOTE 10 - CONTINGENCIES
The Company has contingent liabilities with respect to lawsuits and
other matters arising in the ordinary course of business. In the opinion
of management, no material liability exists with respect to these
contingencies.
PART 1. - FINANCIAL INFORMATION
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company had total cash assets amounting to $2,089,000 (4.0% of
total assets) at September 30, 1995 and $2,744,000 (5.0% of total assets)
at December 31, 1994. The ratio of current assets to current liabilities
was .9 to 1 at September 30, 1995 and 1.0 to 1 at December 31, 1994. Due
to the liquidity provided by the gaming activities in the Company's casino,
management believes that its working capital ratio is sufficient to meet
normal operating requirements.
<PAGE>
PART 1. - FINANCIAL INFORMATION
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The Company divested itself of all cash-consuming, nonessential
operations, sold its nonessential assets and eliminated executive,
supervisors and support personnel not needed to operate the Plaza Hotel and
Casino. These steps were taken to improve cash flow which is being
utilized in part to retire outstanding debt and to make future capital
improvements at the Plaza complex.
In February 1993, the Company increased it's loan from Exber, Inc.
from $3,000,000 to $18,000,000. The additional proceeds plus $2,500,000
borrowed from Exber, Inc. on June 3, 1994 were used to reduce the
outstanding loan from Bank of America. The loan from Exber, Inc. bears
interest at 1% less than the Bank of America loan, resulting in an average
annual saving of approximately $175,000.
The Company's long-term debt and obligations under capital leases,
including current maturities, was $26,535,000 at September 30, 1995 and
$28,155,000 at December 31, 1994. The ratio of long-term debt to equity
was 1.2 to 1 at September 30, 1995 and 1.3 to 1 at December 31, 1994.
The Company disbursed $565,000 to purchase 28,262 treasury shares
during 1994 and $50,000 to purchase 2,500 treasury shares during the first
nine months of 1995. The acquistions were funded from internally generated
cash flow.
RESULTS OF OPERATIONS
The Company's gross revenues for the first nine months of 1995 of
$44,512,000 were down $3,240,000 (6.8%) from the $47,752,000 reported for
this period last year. Total Casino win was down $2,442,000 (8%) over
1994. The Slot Department showed the biggest decrease and was down
$1,744,000 (9%). Card Room revenue was down $224,000 (20%). Table games
results declined by $200,000, a decrease of 3%. Race and Sports also
showed a decline of $295,000 (19%) over the prior year. Food revenues for
the period were down $615,000 (14%) from the comparable period last year.
Beverage revenues also declined $106,000 while all other revenue areas
remained unchanged from 1994.
Operating expenses decreased by $2,086,000 due primarily in the reduction
in food and beverage costs which declined by $1,394,000. General and
Administrative costs declined by $635,000 in the same period. Interest
expenses increased by $201,000 due to higher interest rates. Overall, the
company reported a net income of $268,000, down $910,000 from the
$1,178,000 reported for the same period last year.
For the third quarter, gross revenues declined $422,000 from the same
period last of 1994. Casino revenues were down $584,000 while food and
beverage revenues increased by $210,000. Operating expenses increased by
$111,000 during the third quarter along with an increase of $29,000 in
interest expense. The net loss for the period was $522,000 compared to a
loss of $83,000 in the third quarter of 1994.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
the registrant had duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
UNION PLAZA HOTEL AND CASINO, INC.
(REGISTRANT)
Date: October 31, 1995 /SS/ JOHN F. GAUGHAN
JOHN F. GAUGHAN, President & Chief
Operating Officer
Date: October 31, 1995 /SS/ JOHN P. JONES
JOHN P. JONES, Vice President &
Treasurer
