FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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. 1 Main Street 89125
Las Vegas, Nevada (Zip Code)
(Address of principal
executive offices)
(702) 386-2110
(Registrant's telephone number, including area code)
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:
Outstanding at
Class of Common Stock September 30, 1996
$.50 par value 759,419 shares
<PAGE>
The Securities and Exchange Commission
Washington D.C.
The financial information included herein is unaudited. In
addition, the financial information does not include all
disclosures required under generally accepted accounting
principles because certain note information included in the
Company's annual report has been omitted; however, such
information reflects all adjustments (consisting soley of normal
recurring adjustments) which are, in the opinion of Management,
necessary to a fair statement of the results for the interim
period.
/s/ JOHN F. GAUGHAN
John F. Gaughan, President
Las Vegas, Nevada
November 13, 1996
<PAGE>
PART 1. - Financial Information
Item 1. Financial Statements
Exhibit EX-27. Financial Data Statement
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
Amounts in Thousands
[CAPTION]
SEPTEMBER 30, 1996 and DECEMBER 31, 1995
ASSETS
SEPTEMBER 30, DECEMBER 31,
1996 1995
[S] [C] [C]
Current Assets:
Cash $ 2,839 $ 2,959
Accounts receivable 589 966
Inventories of food, beverage
and supplies 452 470
Prepaid expense 1,161 1,306
Total current assets 5,041 5,701
Property and equipment:
Land 6,912 6,912
Buildings 56,749 56,709
Leasehold improvements 3,483 3,456
Furniture and equipment 34,256 33,986
101,400 101,063
Less accumulated depreciation
and amortization 58,199 55,928
Net property and equipment 43,201 45,135
Other assets 2,406 2,327
$ 50,648 $ 53,163
[FN]
The accompanying notes are an integral
part of these financial statements.
4
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LIABILITIES AND STOCKHOLDERS' EQUITY
SEPTEMBER 30, DECEMBER 31,
1996 1995
[S] [C] [C]
Current liabilites:
Accounts payable $ 2,153 $ 2,736
Accrued liabilities 2,071 2,126
Current portion of long-term debt 39 39
Current portion of obligations under
capital leases 623 623
Total current liabilities 4,886 5,524
Long-term debt, less current portion 19,241 21,241
Obligations under capital leases, less
current portion 3,780 4,239
Deferred income taxes 4,366 4,365
32,273 35,369
Commitments and contingencies
Stockholders' equity:
Common stock, $.50 par value; authorized
20,000,000 shares; issued 1,500,000
shares; Outstanding 759,419 shares at
September 30, 1996 and 761,719 shares
at December 31, 1995. 750 750
Additional paid-in capital 5,462 5,462
Retained earnings 26,010 25,371
32,222 31583
Less treasury stock, at cost, 740,581
shares at September 30, 1996 and 738,281 shares
at December 31, 1995, respectively 13,847 13,789
Total stockholders' equity 18,375 17,794
50,648 53,163
[FN]
The accompanying notes are an integral
part of these financial statements.
5
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
[CAPTION]
Amounts in thousands, except per share data
NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
NINE MONTHS THREE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995 1996 1995
[S] [C] [C] [C] [C]
REVENUES:
Casino $ 28,470 $ 27,448 $ 8,824 $ 8,819
Food and Beverage 7,360 6,659 2,371 2,219
Rooms 9,098 8,747 2,981 2,808
Other 1,768 1,659 583 573
GROSS REVENUES 46,696 44,513 14,759 14,419
Less promotional 5,746 5,879 1,946 1,959
NET REVENUES 40,950 38,634 12,813 12,460
OPERATING EXPENSES:
Casino 11,040 10,964 3,503 3,709
Food and Beverage 10,659 9,258 3,716 3,305
Rooms 4,274 3,786 1,486 1,350
General & Administrative 2,953 3,034 832 832
Entertainment 369 345 122 115
Advertising & Promotion 296 245 123 139
Utilities & Maintenance 4,431 4,351 1,642 1,699
Deprec. & Amortization 3,303 3,206 1,109 1,081
Prov. for Doubtful Acct. 48 2 22 14
Other Costs and Expenses 1,058 1,062 335 368
TOTAL OPERATING EXPENSES 38,431 36,253 12,890 12,612
OPERATING INCOME 2,519 2,381 (77) (152)
OTHER INCOME (EXPENSE):
Interest Income 25 27 8 9
Interest Expense (1,729) (2,002) (557) (648)
TOTAL OTHER INC/(EXP) (1,704) (1,975) (549) (639)
INCOME BEFORE INCOME TAXES 815 406 (626) (791)
INCOME TAXES 177 138 (289) (269)
NET INCOME 638 268 (337) (522)
EARNINGS PER COMMON SHARE $0.84 $0.35 ($0.44) ($0.69)
[FN]
The accompanying notes are an integral
part of these financial statements.
6
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UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Amounts in thousands, except per share data
INCREASE IN CASH AND CASH EQUIVALENTS
1996 1995
[S] [C] [C]
Cash flows from operating activities:
Cash received from customers $ 41,431 $ 38,622
Cash paid to suppliers and employees (36,379) (33,653)
Interest received 32 38
Interest paid (1,729) (2,002)
Income taxes paid 0 0
Net cash provided by operating activities 3,355 3,005
Cash flows from investing activities:
Proceeds from sale of property & equipment 0 0
Proceeds from sale of bonds 0 0
Purchase of property and equipment (958) (1,990)
Net cash used in investing activities (958) (1,990)
Cash flows from financing activities:
Proceeds from note payable to Stockholder 0 0
Principal payments on capital lease (459) (400)
Principal payments on long-term debt (2,000) (1,220)
Purchase of Treasury Stock (58) (50)
Net cash used in financing activities (2,517) (1,670)
Net increase (decrease) in cash &
cash equivalents (120) (655)
Cash and cash equivalents
at 12/31/95 and 12/31/94 2,959 2,744
Cash and cash equivalents,
at 09/30/96 and 09/30/95 2,839 2,089
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
Net income for period ended
09/30/96 and 09/30/95 $ 638 $ 268
Adjustments to reconcile net income to
Net cash provided by operating activities:
Depreciation and amortization 2,951 3,206
Gain on sale of assets 0 0
Bad debt expense 0 2
(Increase) decrease in assets:
Accounts receivable 370 47
Interest receivable 7 11
Inventories 18 6
Prepaid expenses 43 (130)
Other assets (137) 23
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (712) (482)
Interest payable 0 0
Income Tax Payable 177 54
Total adjustments 2,717 2,737
Net cash provided by operating activities 3,355 3,005
[FN]
The accompanying notes are an integral
part of these financial statements.
7
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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. The Company does not anticipate any material
changes in which the financial results are reported due to the
adoption of new or proposed accounting pronouncements.
In 1994, the Company organized Union Plaza Experience, Inc. as
a wholly owned subsidiary to participate with other downtown Las
Vegas casino enterprises and the City of Las Vegas Redevelopment
Agency, in a redevelopment project known as the Fremont Street
Experience. Investment at September 30, 1996 was $1,288,000 and
$1,135,000 at December 31, 1995. The Company's investment had
been accounted for by the equity method. The Company has no other
materially important subsidiaries or operations.
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.
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.
8
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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.
9
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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
Accounts receivable consists of the following:
September 30, December 31,
1996 1995
Casino $254,000 $408,000
Hotel 180,000 336,000
Other 189,000 236,000
623,000 980,000
Less allowance for
doubtful accounts 34,000 14,000
$589,000 $966,000
NOTE 3 - OTHER ASSETS
Other assets consist of the following:
September 30, December 31,
1996 1995
Expansion of gaming rights, less
accumulated amortization of $ 192,000 $ 223,000
$618,000 and $587,000
Nevada Pari-Mutuel Association 10,000 0
Subordination of security interest
in lease, less accumulated
amortization of $810,000 and
$783,000 0 27,000
Net investment in direct financing
lease, net of current portion (Note 7) 167,000 224,000
Leasehold costs, less accumulated
amortization of $370,000 and
$359,000 69,000 80,000
Investment in Fremont Street
Experience (Note 11) 1,288,000 1,135,000
Deposits and other 680,000 638,000
2,406,000 2,327,000
10
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UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 4 - ACCRUED LIABILITIES
Accrued liabilities consist of the following:
September 30, December 31,
1996 1995
Salaries and Wages $ 588,000 $ 848,000
Union back wages 82,000 148,000
Taxes, other than tax on income 317,000 425,000
Other 1,084,000 705,000
$2,071,000 $2,126,000
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, 1996.
NOTE 6 - LONG-TERM DEBT
September 30, December 31,
Long-term debt consists of the following: 1996 1995
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). 19,280,000 21,280,000
Less current portion 39,000 39,000
$19,241,000 $21,241,000
Principal payments on long-term debt during the succeeding
five years are as follows:
1996 (Remaining three months) 10,000
1997 42,000
1998 46,000
1999 50,000
2000 55,000
Thereafter 19,077,000
$ 19,280,000
The maturities were calculated based upon interest rates in
effect at September 30, 1996.
11
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UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
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:
September 30, December 31,
1996 1995
Land and Buildings $9,242,000 $9,242,000
Less accumulated amortization 8,369,000 8,265,000
873,000 977,000
The following is a schedule of future minimum lease payments
as of September 30, 1996.
1996 (Remaining three months) $ 313,000
1997 1,250,000
1998 1,250,000
1999 1,250,000
2000 1,250,000
Thereafter 729,000
Total minimum lease payments 6,042,000
Less amount representing interest 1,639,000
Present value of net minimum
lease pmts under capital leases 4,403,000
Less current portion 623,000
Long-term obligations under
capital leases 3,780,000
12
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UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
SUBLEASES
The bus depot property under a capital lease is sublet as
follows:
September 30, December 31,
1996 1995
Minimum future rents receivable $265,000 $369,000
Less amount representing interest 87,000 112,000
Minimum lease payments receivable 178,000 257,000
Less current portion (included in
accounts receivable) 33,000 33,000
Net investment in direct
financing lease (See Note 3) 145,000 224,000
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 $154,000 and
$188,000 at September 30, 1996 and December 31, 1995,
respectively.
NOTE 8 - EMPLOYEE BENEFIT PLANS
The Company contributes to a discretionary executive bonus
plan. Contributions for the first nine months of 1996 and 1995
were $314,000 and $211,000 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 1996 and 1995 were $225,000 for each period.
NOTE 9 - RELATED PARTIES
On December 18, 1991, Exber, Inc., a 45.15% stockholder as
of September 30, 1996, 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 the proceeds
of the note were used to retire the outstanding debt to Bank of
America. The outstanding balance of the note at September 30, was
$19,280,000.
13
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UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 9 - RELATED PARTIES (CONTINUED)
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.
14
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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 $2,839,000
(5.6% of total assets) at September 30, 1996 and $2,959,000
(5.6% of total assets) at December 31, 1995. The ratio of
current assets to current liabilities was 1.0 to 1 at September
30, 1996 and 1.0 to 1 at December 31, 1995. Long-term debt and
obligations under capital leases, including current maturities
was $19,280,000 at September 30, 1996 and $22,750,000 at
December 31, 1995. The ratio of long-term debt to equity was
1.0 to 1 at September 30, 1996 and 1.3 to 1 at December 31, 1995.
Capital expenditures during the first nine months of 1996 were
$958,000, consisting of new room air conditioners and other
general property improvements. The 1996 expenditures represent
a 52% decline in capital spending compared to last year when
the Company expended $1,990,000. The 1995 improvements included
the renovation of the Center Stage Restaurant and various
upgrades to the casino gaming area. Capital expenditures for the
remainder of 1996 and beyond are expected to be in line with
the current trend with no major renovations or outlays of cash
anticipated.
Gaming activities at the Company's casino continue to provide
steady cash flows despite decling earnings over the past several
years. Due to the liquidity provided by by the gaming activities
in the Company's casino, management believes that its working
capital ratio is sufficient to meet normal operating requirements
and to service the existing debt at current levels. The Company
continues to focus on an agressive debt repayment plan which
effectively reduces the interest expense for future periods.
During the first nine months of 1996, the Company has made
principal payments on long-term debt of $2,000,000 compared to
$1,220,000 in the same period last year. With the majority of
planned capital improvements completed, management believes that
future cash flows will provide enough cash to pay off the long
term debt obligations prior to the July 6, 2004, due date.
Investing activities in the past two years have been limited to
share repurchases from existing stockholders and investment in
the Fremont Street Experience through its wholly owned subsidiary,
Union Plaza Experience, Inc. The Company disbursed $565,000 to
purchase 28,262 treasury shares during 1995. During the first
nine months of 1996, the Company disbursed $58,000 to repurchase
2,300 shares. All purchases of treasury stock were funded by
internally generated cash flow. The Company does not anticipate
the purchase of any material number of shares of its stock or
to perform any material investing activities over the next twelve
months. At this time, the Company's stock remains unlisted on any
exchange and there is no active market for the shares, therefore,
the performance graph has been omitted from this filing.
The three year decline in net income for the Company appears to
have stabilized with the completion of the Fremont Street Experience
redevelopment project at the end of 1995. While the Fremont Street
Experience has not impacted earnings to the degree the Company had
anticipated, the improved room occupancy levels and higher gaming
revenues signify a reversal in the downward trend established in
the previous three years. The Company cannot be certain that
earnings will continue to improve, or that the Fremont Street
Experience will continue to bring additional traffic to the downtown
area. The Company is also exposed to other factors that may have
an adverse impact on earnings including increasing competition in
the Las Vegas valley along with the possibility of a nationwide
recession. As a result of these factors, Management is unable to
accurately predict future profitability at the Company's hotel and
casino.
15
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ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES (Cont.)
As of September 30, 1996, the Company had receivables of $589,000
compared to $966,000 at December 31, 1995. The decline in receivables
is due to timing differences in business, mainly as a result of
customer credit outstanding and other hotel related factors. Compared
to the same period in 1995, receivables remain basically unchanged.
Prepaid expenses declined by $145,000 at the end of the third quarter
when compared to December 31, 1995 due to timing differences in prepaid
gaming taxes and licenses. Other Assets increased by $79,000 in the
period reflecting investments in the Union Plaza Experience, Inc.
Accounts Payables and Accrued Liabilities declined significantly when
compared to December 31, 1995. The 1995 figures include certain
payables connected to the renovation of the Center Stage Restaurant
which was completed in December. Compared to the first nine months of
1995, payables have not increased significantly.
RESULTS OF OPERATIONS
The Company's gross revenues increased by $2,183,000 (4.9%) in the
first nine months compared to the same period in 1995. Improved
patron traffic and increased hotel occupancy resulted in higher casino
revenues at the Company's gaming facility. Gross profits were
positively impacted by gaming revenues which showed improvement over
1995. The slot department was the biggest beneficiary of the
increased floor traffic as slot machine revenue climbed by nearly
$1,000,000 in the period, reflecting an increase of 5.4% Poker and
Pan revenue also rose by $150,000 (17%) as the result of more tournaments
and the implementation of self-funded jackpots. Race and sports
operations, as well as keno, showed slight improvement over last year
by rising $46,000. Casino table game revenue was negatively impacted
by a few known gamblers who won significantly in the quarter. Table
game revenue fell by $160,000 (2.5%) when compared to the same period
in 1995.
Gross food and beverage revenues rose $311,000 for the first nine
months of 1996. Revenue gains were the result of increased patron
traffic and higher hotel occupancy rates. For the first nine months
of 1996, the hotel occupancy rate averaged 97.1% versus 91.5% in 1995.
Room revenues rose by $352,000 (4.0%) compared to 1995 when the downtown
area was affected by the city street redevelopment construction.
Occupancy levels were also positively impacted by aggressive pricing
strategies utilized by the Company. In the first nine months of 1996,
the Company's average rate per room has declined to $33 from $35.
For the nine months ended September 30, 1996, total operating expenses
increased by $2.2 million or 6%. Food and beverage operating costs
increased by $1.4 million primarily as the result of higher payroll
costs. 1996 results reflect the reopening of the Center Stage Restaurant
in December 1995 and higher wages levels as outlined by the Company's
labor contract. Additional factors contributing to the increase in
food and beverage costs include glassware, uniforms, menus and cleaning
supplies. Other material cost increases were attributed to the hotel
where payroll costs rose $400,000 and other room related expenses rose
by $90,000. The rise in hotel payroll and expenses were due to
additional personnel and supplies needed to maintain rooms at higher
occupancy levels. Utility and maintenance costs rose slightly due
to higher payroll costs for the casino porters staffed to keep the
premises clean.
16
<PAGE>
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS (Cont.)
Entertainment and advertising costs rose a combined $75,000 due to
higher lounge contract fees and overall higher costs associated with
the normal advertising and promotion campaign. General and
Administrative costs declined by $81,000 due to fewer workers
compensation claims and a decrease of $45,000 in legal fees resulting
from fewer legal issues and the prior settlement of labor contracts.
17
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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.
UNION PLAZA HOTEL AND CASINO, INC.
(REGISTRANT)
Date: November 13, 1996 /SS/ JOHN F. GAUGHAN
JOHN F. GAUGHAN, President &
Chief Operating Officer
Date: November 13, 1996 /SS/ JOHN P. JONES
JOHN P. JONES, Vice President &
Treasurer
Date: November 13, 1996 /SS/ LARRY DOLESH
LARRY DOLESH, Vice President &
Chief Financial Officer
Date: November 13, 1996 /SS/ ALAN J. WOODY
ALAN J. WOODY, Controller
18
<PAGE>
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