SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1996
Commission File No. 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 Identification
incorporation or organization) Number)
No. 1 Main Street, Las Vegas, Nevada 89125
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(702)386-2110
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
None N/A
Securities registered pursuant to Section 12(g) of the Act:
Capital stock par value $.50 per share
(Title or Class)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months,
and (2) has been subject to such filing requirements for the past
90 days.
Yes X No
<PAGE>
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
As of March 1, 1997, 758,419 shares of common stock were
outstanding. The Company's shares are not traded on any market
and although it would be possible, by taking into account
occasional private sales of such shares, to determine an
estimated value of shares held by non-affiliates, it appears
impracticable and could be misleading.
DOCUMENTS INCORPORATED BY REFERENCE
Incorporated Document Location in Form 10-K
Annual Report to Stockholders For Year
Ended December 31, 1996 Part II - Item 6
Annual Report to Stockholders For Year
Ended December 31, 1996 Part II - Item 7
Annual Report to Stockholders for Year
Ended December 31, 1996 Part II - Item 8
Proxy Statement in connection with
Registrant's Annual Meeting to be
held on May 16, 1997 * Part III - Item 10
Proxy Statement in connection with
Registrant's Annual Meeting to be
held on May 16, 1997 * Part III - Item 11
* Proxy statements will be filed within the 120-day period
after the end of the fiscal year.
<PAGE>
<PAGE>
PART I
Item 1. Business.
Union Plaza Hotel and Casino, Inc. (the "Company"), was
organized as a corporation under the laws of the State of Nevada
in 1962. During 1975, the Company transferred all of the
business and properties to its wholly-owned subsidiary, Union
Plaza Operating Company (the "Plaza Subsidiary"), which was
organized as a corporation under the laws of the State of Nevada
in April, 1975. In July, 1981, as a result of consummation of
that certain Agreement Regarding Transfer of Assets between the
Company and subsidiaries of Union Pacific Corporation 1 (the
"Union Pacific Agreement"), all the shares of capital stock of
the Plaza Subsidiary were transferred to Union Plaza Development
Corporation, a corporation organized under the laws of the State
of Nevada in 1979 ("UPDC"), 100% of the presently outstanding
capital stock of which is now owned by the Company as a result of
the issuance of the Company's common shares in exchange for
outstanding UPDC capital stock, pursuant to provisions of the
Union Pacific Agreement on July 31, 1984. All the assets held by
UPDC have now been transferred to the Company and to the Plaza
Subsidiary and UPDC is now dormant.
General.
The Company operates the Plaza Casino located on Main
Street at the head of Fremont Street in downtown Las Vegas,
Nevada. The casino is connected with two multi-story towers
having a total of 1,037 hotel guest rooms. The Union Plaza Hotel
opened for business in July-August, 1971. An expansion program
which included: one of the highrise towers containing 529 guest
rooms; expansion of the casino area to a total of 80,000 square
feet; convention meeting-room and dining facilities totaling
26,800 square feet at the third floor level between the two
hotel-room towers; an outdoor sports deck containing four tennis
courts, a swimming pool, and a quarter-mile running tract, all at
the fifth floor level between the two hotel-room towers; several
new restaurant facilities, including the glass-domed Centerstage
restaurant which overlooks Fremont Street, the center of downtown
Las Vegas Gaming activity, was completed in September, 1983.
In December, 1995, Fremont Street was developed with the
Fremont Street Experience which is comprised of a lighted cover
over the five blocks of Fremont Street beginning at Main Street
and going South five blocks. The cost of this development is some
$70 million and it is comprised of an automated light show that occurs every
hour during the evening. The development is designed to attract many
of the visitors to Las Vegas to the Downtown area and boost the
number of clientele for the Downtown hotels.
[FN]
1 This Agreement was described in "Item 10(c) Submission of
Matters to a Vote of Security Holders" in the Form 10-K Annual
Report for the year ended December 31, 1979.
<PAGE>
The Company's management believes that, in addition to
its casino, there are 21 other downtown Las Vegas casinos 2 (15
of which are also connected with similar hotel facilities) which
currently generate annual gross gaming revenues of at least
$1,000,000 each.
With the exception of the El Cortez casino, which is
located six blocks from the Union Plaza, and the Showboat casino
located at the southeast terminus of the downtown Las Vegas area,
all of the major downtown Las Vegas casinos are clustered within
two or three blocks of the Company's casino at the northwest
terminus of the downtown Las Vegas area.
The nature and size of the operations of the downtown
Las Vegas casinos, as a group, are different from those of the
separate group of an estimated 45 casinos located in the "Las
Vegas Strip" (an area which extends southward from the Las Vegas
city limits as far as McCarran International Airport).
Twenty-five of the Las Vegas Strip casinos are operated
in conjunction with large hotels. The several most grandiose of
the "Strip" hotel/casino complexes offer sumptuous accommodations
and services and cabaret-type entertainment featuring the most
famous entertainers in show business. These luxury complexes
are, as a group, without equal among Nevada casinos in attracting
the patronage and wagering activity of so-called "premium credit"
or "high credit limit" casino players from throughout the world.
As a result, these major hotel/casino complexes generally derive,
over the long run, far greater revenues than do other Nevada
casinos. There are 24 casinos with revenues over $36 million and
19 casinos with revenues over $72 million.
Operations.
The Company's Plaza casino offers a variety of games and
is the largest total floor-area casino in downtown Las Vegas. At
December 31, 1996, the Company's casino contained 19 "21" tables;
5 Craps tables; a 55-seat Keno lounge; a race and sports book; 3
Roulette wheels; 1 "mini-Baccarat" table; 1 "Pai Gow" poker
table; 36 poker and pan tables; and a total of 1,575 slot machines
of varying denominations.
[FN]
2 See also comments under "Item Competition and Business Risks"
first paragraph under "Competitive Conditions."
<PAGE>
The casino also contains a cocktail lounge, 4 bars, a
650-seat showroom, and a "Fifties" style diner, which opened in
December, 1994 as part of the Company's remodeling program,
located off the common area connecting the main casino and the
original hotel tower. Live entertainment is regularly provided
in the casino cocktail lounge.
The Union Plaza Hotel currently has 1,037 guest rooms
and suites, together with meeting and service facilities for
conventions; several offices; a barber shop, a beauty shop, and
several retail stores.
Employees and Labor Relations.
As of December 31, 1996, the Company had approximately
1,288 full-time employees and 67 part-time employees, of whom
approximately 502 were persons directly involved in the casino
activities on a full-time basis and 23 on a part-time basis.
Taking into consideration employees on sick leave or vacation,
the average number of people working on any given day during 1996
was approximately 973 of whom approximately 387 were directly
involved in casino activities.
On June 2, 1995, an agreement was entered into a
collective bargaining agreement with Culinary Workers Union Local
226 and Bartenders Union Local 165. The agreement was applied
retroactively to June 1, 1994, and extends up to and including
May 31, 1997. The agreement sets forth new wage rates for all
covered employees; specifically, hourly rates for employees were
increased $0.25 per year over the 3 year duration of the
contract. The agreement also sets forth new contribution rates
for the health and welfare benefits.
On March 10, 1997, the Company entered into a collective
bargaining agreement with the United Brotherhood of Carpenters and
Joiners of America, Local 1780. The agreement was effective as of
March 1, 1997, and extends up to and including February 28, 2001.
The agreement sets forth new wage rates for all covered employees;
specifically, hourly rates for employees will be increased $0.50
per year over the 4 year duration of the contract. The agreement
also changes the health and welfare coverage for employees from
the Union sponsored program to the Company's health and welfare
program. There are currently 4 employees covered by this agreement.
The Company's collective bargaining agreements with the
Painters Local Union No. 159 and the Teamster Local Union No. 995
are both expired and the Company is currently in negotiations with
both unions. The Company employs 2 painters who would be covered
by any agreement with the Painters Union. An agreement with the
Teamsters Union would cover a total of 53 employees, comprised of
17 Back End employees and 36 Front End employees.
The Plaza and Culinary Union recently participated in an
arbitration hearing concerning the management's decision to remove
certain duties from the purview of change persons. Following the
arbitration, the arbitrator ruled in favor of the Union and
awarded back wages which amounted to approximately $300,000. The
Plaza is currently in the process of appealing said decision.
<PAGE>
Competition and Business Risks.
Competitive Conditions 3
The Company competes with resort hotels in Las Vegas,
some of which provide more elaborate and more lavish hotel,
casino and entertainment facilities than the Company (see
General., above). The primary competition, however, of the
Company is the approximately 21 other casinos located in the
downtown Las Vegas area. Other hotel/casino complexes may be
expanded or constructed in the downtown area in the future. In
addition to the gaming operations of the hotels in the area,
there are large numbers of slot machines located in business
establishments such as bars, grocery stores, drugstores and
restaurants throughout Las Vegas. The Company also competes with
other resort hotels and casino facilities located elsewhere in
Nevada and possibly with other entertainment and resort
facilities in other parts of the world. Recent legalization of
gaming in several states could materially affect the Company's
business. The Company is subject to being affected by adverse
local, regional and national economic trends and conditions.
The Company's management believes that its prices for
room accommodations, food and entertainment are, in general,
considerably less than those charged by the major hotel/casino
complexes located in the Las Vegas Strip area and that its prices
are comparable to those charged by the casino hotels and motels
located in the downtown Las Vegas area.
Revenues.
During the last five fiscal years of the Company, its
casino operating revenues accounted for more than fifteen percent
of its total revenues as shown in the table set forth under
Item 6. Selected Financial Data.
Regulation and Licensing - Nevada.
The sale of alcoholic beverages by the casino is subject
to licensing, control and regulation by the applicable local
authorities. All licenses are revocable and are not
transferable. The agencies involved have full power to limit,
condition, suspend or revoke any such license, and any such
disciplinary action could (and revocation would) have a material
adverse affect upon the operations of the casino.
The ownership and operation of casino gaming facilities
in Nevada are subject to: (i) the Nevada Gaming Control Act and
the regulations promulgated thereunder (collectively, "Nevada
[FN]
3 See also under "Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operation."
<PAGE>
Act"); and (ii) various local regulations. The Company's gaming
operations are subject to the licensing and regulatory control of
the Nevada Gaming Commission ("Nevada Commission"), the Nevada
State Gaming Control Board ("Nevada Board"), the Clark County
Liquor and Gaming Licensing Board and the City of Las Vegas.
The Nevada Commission, the Nevada State Gaming Control Board, the
Clark County Liquor Gaming Licensing Board ("CCLGLB") and the
City of Las Vegas are collectively referred to as the "Nevada
Gaming Authorities".
The laws, regulations and supervisory procedures of the
Nevada Gaming Authorities are based upon declarations of public
policy which are concerned with, among other things: (i) the
prevention of unsavory or unsuitable persons from having a direct
or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible
accounting practices and procedures; (iii) the maintenance of
effective controls over the financial practices of licensees,
including the establishment of minimum procedures for internal
fiscal affairs and the safeguarding of assets and revenues,
providing reliable record keeping and requiring the filing of
periodic reports with the Nevada Gaming Authorities; (iv) the
prevention of cheating and fraudulent practices; and (v)
providing a source of state and local revenues through taxation
and licensing fees. Changes in such laws, regulations and
procedures could have an adverse effect on the Company's gaming
operations.
The Plaza Subsidiary which operates the casino, is
required to be licensed by the Nevada Gaming Authorities. The
gaming license requires the periodic payment of fees and taxes
and is not transferable. The Company is registered by the Nevada
Commission as a publicly traded corporation ("Registered
Corporation") and as such, it is required periodically to submit
detailed financial and operating reports to the Nevada Commission
and furnish any other information which the Nevada Commission may
require. No person may become a stockholder of, or receive any
percentage of profits from the Company, without first obtaining
licenses and approvals from the Nevada Gaming Authorities. The
Company and the Plaza Subsidiary obtained from the Nevada Gaming
Authorities the various registrations, approvals, permits and
licenses required in order to engage in gaming activities in
Nevada.
The Nevada Gaming Authorities may investigate any
individual who has a material relationship to, or material
involvement with, the Company or the Plaza Subsidiary in order to
determine whether such individual is suitable or should be
licensed as a business associate of a gaming licensee. Officers,
directors and certain key employees of the Company must file
applications with the Nevada Gaming Authorities. Officers,
directors and key employees of the Company who are actively and
directly involved in gaming activities of the Plaza Subsidiary
<PAGE>
may be required to be licensed or found suitable by the Nevada
Gaming Authorities. The Nevada Gaming Authorities may deny an
application for licensing for any cause which they deem
reasonable. A finding of suitability is comparable to licensing,
and both require submission of detailed personal and financial
information followed by a thorough investigation. The applicant
for licensing or a finding of suitability must pay all the costs
of the investigation. Changes in licensed positions must be
reported to the Nevada Gaming Authorities and in addition to
their authority to deny an application for a finding of
suitability or licensure, the Nevada Gaming Authorities have
jurisdiction to disapprove a change in a corporate position.
If the Nevada Gaming Authorities were to find an officer,
director or key employee unsuitable for licensing or unsuitable
to continue having a relationship with the Company or the Plaza
Subsidiary, the companies involved would have to sever all
relationships with such person. In addition, the Nevada
Commission may require the Company or the Plaza Subsidiary to
terminate the employment of any person who refuses to file
appropriate applications. Determinations of suitability or of
questions pertaining to licensing are not subject to judicial
review in Nevada.
The Company and the Plaza Subsidiary are required to
submit detailed financial and operating reports to the Nevada
Commission. Substantially all material loans, leases, sales of
securities and similar financing transactions by the Company must
be reported to, or approved by, the Nevada Commission.
If it were determined that the Nevada Act was violated
by the Company, the gaming licenses it holds could be limited,
conditioned, suspended or revoked, subject to compliance with
certain statutory and regulatory procedures. In addition, the
Plaza Subsidiary, the Company, and the persons involved could be
subject to substantial fines for each separate violation of the
Nevada Act at the discretion of the Nevada Commission. Further,
a supervisor could be appointed by the Nevada Commission to
operate the Company's gaming properties and, under certain
circumstances, earnings generated during the supervisor's
appointment (except for the reasonable rental value of the
Company's gaming properties) could be forfeited to the State of
Nevada. Limitation, conditioning or suspension of any gaming
license or the appointment of a supervisor could (and revocation
of any gaming license would) materially adversely affect the
Company's gaming operations.
Any beneficial holder of the Company's voting securities,
regardless of the number of shares owned, may be required to file
an application , be investigated, and have his suitability as a
beneficial holder of the Company's voting securities determined
<PAGE>
if the Nevada Commission has reason to believe that such
ownership would otherwise be inconsistent with the declared
policies of the state of Nevada. The applicant must pay all
costs of investigation incurred by the Nevada Gaming Authorities
in conducting any such investigation.
The Nevada Act requires any person who acquires more than 5%
of the Company's voting securities to report the acquisition to
the Nevada Commission. The Nevada Act requires that beneficial
owners of more than 10% of the Company's voting securities apply
to the Nevada Commission for a funding of suitability within
thirty days after the Chairman of the Nevada Board mails the
written notice requiring such filing. Under certain
circumstances, an "institutional investor," as defined in the
Nevada Act, which acquires more than 10%, but not more than 15%,
of the Company's voting securities may apply to the Nevada
Commission for a waiver of such finding of suitability if such
institutional investor holds the voting securities for investment
purposes only. An institutional investor shall not be deemed to
hold voting securities for investment purposes unless the voting
securities were acquired and are held in the ordinary course of
business as an institutional investor and not for the purpose of
causing, directly or indirectly, the election of a majority of
the members of the board of directors of the Company, any change
in the Company's corporate charter, bylaws, management, policies
or operations of the Company, or any of its gaming affiliates, or
any other action which the Nevada Commission finds to be
inconsistent with holding the Company's voting securities for
investment purposes only. Activities which are not deemed to be
inconsistent with holding voting securities for investment
purposes only include: (I) voting on all matters voted on by
stockholders; (ii) making financial and other inquiries of
management of the type normally made by securities analysts for
informational purposes and not to cause a change in its
management, policies or operations; and (iii) such other
activities as the Nevada Commission may determine to be
consistent with such investment intent. If the beneficial holder
of voting securities who must be found suitable is a corporation,
partnership or trust, it must submit detailed business and
financial information including a list of beneficial owners. The
applicant is required to pay all costs of investigation.
Any person who fails or refuses to apply for a finding
of suitability or a license within thirty days after being
ordered to do so by the Nevada Commission or the Chairman of the
Nevada Board, may be found unsuitable. The same restrictions
apply to a record owner if the record owner, after request, fails
to identify the beneficial owner. Any stockholder found
unsuitable and who holds, directly or indirectly, any beneficial
ownership of the common stock of a Registered Corporation beyond
such period of time as may be prescribed by the Nevada Commission
may be guilty of a criminal offense. The Company is subject to
<PAGE>
disciplinary action if, after it receives notice that a person is
unsuitable to be a stockholder or to have any other relationships
with the Company or the Plaza Subsidiary, the Company (i) pays
that person any dividend or interest upon voting securities of
the Company, (ii) allows that person to exercise, directly or
indirectly, any voting right conferred through securities held by
that person, (iii) pays remuneration in any form to that person
for services rendered or otherwise, or (iv) fails to pursue all
lawful efforts to require such unsuitable person to relinquish
his voting securities for cash at fair market value.
(Additionally, the CCLGLB has taken the position that it has the
authority to approve all persons owning or controlling the stock
of any corporation controlling a gaming license.)
The Nevada Commission may, in its discretion, require
the holder of any debt security of a Registered Corporation to
file applications, be investigated and be found suitable to own
the debt security of a Registered Corporation. If the Nevada
Commission determines that a person is unsuitable to own such
security, then pursuant to the Nevada Act, the Registered
Corporation can be sanctioned, including the loss of its
approvals, if without the prior approval of the Nevada
Commission, it: (i) pays to the unsuitable person any dividend,
interest, or any distribution whatsoever; (ii) recognizes any
voting right by such unsuitable person in connection with such
securities; (iii) pays the unsuitable person remuneration in any
form; or (iv) makes any payment to the unsuitable person by way
of principal, redemption, conversion, exchange, liquidation, or
similar transaction.
The Company is required to maintain a current stock
ledger in Nevada which may be examined by the Nevada Gaming
Authorities at any time. If any securities are held in trust by
an agent or by a nominee, the record holder may be required to
disclose the identity of the beneficial owner to the Nevada
Gaming Authorities. A failure to make such disclosure may be
grounds for finding the record holder unsuitable. The Company is
also required to render maximum assistance in determining the
identity of the beneficial owner. The Nevada Commission has the
power to require the Company's stock certificates to bear a
legend indicating that the securities are subject to the Nevada
Act.
The Company may not make a public offering of its securities
without the prior approval of the Nevada Commission if the
securities or the proceeds therefrom are intended to be used
to construct, acquire or finance gaming facilities in Nevada, or
to retire or extend obligations incurred for such purposes. Such
approval, if given, does not constitute a finding recommendation
or approval by the Nevada Commission or the Nevada Board as to
the accuracy or adequacy of the prospectus or the investment
merits of the securities. Any representation to the contrary is
unlawful.
<PAGE>
License fees and taxes, computed in various ways
depending on the type of gaming or activity involved, are payable
to the State of Nevada and to the counties and cities in which
the Nevada licensee's respective operations are conducted.
Depending upon the particular fee or tax involved, these fees and
taxes are payable either monthly, quarterly or annually and are
based upon either: (i) a percentage of the gross revenues
received; (ii) the number of gaming devices operated; or (iii)
the number of table games operated. A casino entertainment tax
is also paid by casino operations where entertainment is
furnished in connection with the selling of food or refreshments.
Nevada licensees that hold a license as an operator of a slot
route, or a manufacturer's or distributor's license, also pay
certain fees and taxes to the State of Nevada.
Any person who is licensed, required to be licensed,
registered, required to be registered, or is under common control
with such persons (collectively, "Licensees"), and who proposes
to become involved in a gaming venture outside of Nevada is
required to deposit with the Nevada Board, and thereafter
maintain, a revolving fund in the amount of $10,000 to pay the
expenses of investigation of the Nevada Board of their
participation in such foreign gaming. The revolving fund is
subject to increase or decrease in the discretion of the Nevada
Commission. Thereafter, Licensees are required to comply with
certain reporting requirements imposed by the Nevada Act.
Licensees are also subject to disciplinary action by the Nevada
Commission if it knowingly violates any laws of the foreign
jurisdiction pertaining to the foreign gaming operation, fails to
conduct the foreign gaming operation in accordance with the
standards of honesty and integrity required of Nevada gaming
operations, engages in activities that are harmful to the State
of Nevada or its ability to collect gaming taxes and fees, or
employs a person in the foreign operation who has been denied a
license or finding of suitability in Nevada on the ground of
personal unsuitability.
Item 2. Properties.
The Company owns 100% of the Union Plaza Operating Company
and Union Plaza Experience, Inc. The Company has no other
materially important properties.
The Company's Plaza Subsidiary's main casino is on the
ground floor of a three-story building and is comprised of a
total floor area of approximately 80,000 square feet. The
Company's convention facilities are located above the casino
area, and the hotel tower, completed in 1982, is located at the
southern end of the casino.
<PAGE>
The Company leases the original Union Plaza hotel tower
(connected to, and integrated with, the Company's casino building
by a common public area) and a bus depot and a parking facility
adjacent to the south side of the casino from Exber, Inc., a
Nevada corporation, ("Exber"). All furnishings in the hotel were
purchased by the Company. The annual rental is $1,250,000 plus
insurance, taxes and maintenance. The initial term of the lease
extends through the year 2001. The Company has options to renew
the lease for twenty-five years and four additional periods of
ten years each, in each case at a "fair monthly market rental" to
be determined as of the beginning of each renewal by agreement
between the Company and the lessor, or failing such agreement, by
an arbitration procedure provided for in the lease. No
assurances can be given that any such renewal rental rate will
not be less favorable than the present rate. In the event of any
damage or destruction of the hotel building, the bus depot or the
parking facility, the Company is obligated to repair or rebuild
at its own cost. The Company subleases the bus depot to
Greyhound Lines, Inc., under a sublease which extends until
approximately August, 2000, at an annual rental of $66,000,
subject to two renewal options of ten years each at a "fair
monthly market rental" to be agreed upon between the Company and
Greyhound.
Item 3. Legal Proceedings.
The Company and a number of other companies who are
engaged in gaming or the manufacturer of gaming equipment has
been named as Defendants in an action originally filed in the
United States District Court for the Middle District of Florida,
Orlando Division, which alleges irregularities in the manufacture
and operation of video and electronic slot machines. The
litigation in question was recently transferred to the United
States District Court for the District of Nevada.
In the opinion of the company management at this time,
the claims made by the Plaintiffs in this litigation are without
merit and will not have a material adverse effect upon the
financial position or the operation of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
None
PART II
Item 5. Market for the Registrant's Common Stock and Related
Security Holder Matters.
(a) Registrant's common stock is not publicly traded.
<PAGE>
(b) There were 43 holders of Registrant's common stock
on March 1, 1997.
(c) Dividends of $.10 per share were paid
quarter-annually from April, 1978, through December,
1981, but no dividends have been declared since
such date.
Item 6. Selected Financial Data.
The information required by this Item is incorporated by
reference from the Annual Report to Stockholders for Year Ended
December 31, 1996, which is filed herewith as Exhibit 13.01.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information required by this Item is incorporated by
reference from the Annual Report to Stockholders for Year Ended
December 31, 1996, which is filed herewith as Exhibit 13.01.
Item 8. Financial Statements and Supplementary Data.
The following consolidated financial statements of the
Registrant and its subsidiary included in the Registrant's Annual
Report to Stockholders for the Year Ended December 31, 1996, all
of which are filed herewith as Exhibit 13.01, are incorporated
herein by reference:
Report of Independent Certified Public Accountants
Consolidated Balance Sheets - December 31, 1996 and
1995.
Consolidated Statements of Operations - Years ended
December 31, 1996, 1995 and 1994.
Consolidated Statements of Stockholders' Equity - Years
Ended December 31, 1996, 1995 and 1994.
Consolidated Statements of Cash Flows - Years Ended
December 31, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information required by this Item is incorporated by
reference to the Proxy Statement in connection with Registrant's
Annual Meeting to be held on May 16, 1997.
Item 11. Executive Compensation.
The information required by this Item is incorporated by
reference to the Proxy Statement in connection with Registrant's
Annual Meeting to be held on May 16, 1997.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The following table contains information concerning
beneficial ownership, as defined in Footnote (1) to such table,
of the Company's capital stock, as of March 15, 1997, by (a) each
person known to the Company to have such beneficial ownership of
more than five percent (5%) of all such capital stock outstanding
as of March 15, 1997, and (b) all officers and directors as a
group:
Number of Shares and
Names and Address Nature of Beneficial Percent
of Beneficial Owner Ownership (1)
of Class
EXBER, INC. 342,905 (3) 45.213%
600 E. Fremont St.
Las Vegas, NV 89101
J. K. HOUSSELS 90,200 (2) 11.893%
380 Rancho Circle
Las Vegas, NV 89107
JOHN D. GAUGHAN 449,297 (3) 59.250%
P. O. Box 680
Las Vegas, NV 89125
JIMMA LEE BEAM 97,512 12.857%
2409 Windjammer Way
Las Vegas, NV 89107
All officers and directors 193,642 25.554%
as a group
<PAGE>
(1) For the purposes of this table, a person is regarded as
having beneficial ownership of shares in respect of which the
person has or shares the power to vote or to direct voting
("voting power") or the power to dispose or to direct disposition
("investment power"). Unless otherwise indicated by Footnote,
each person named in the table has the sole voting power and the
sole investment power with respect to all the shares set forth
opposite the person's name.
(2) Includes 14,500 shares owned of record by Mr. J.K. Houssels,
as Trustee for Eric Houssels and Kelley Claire Houssels, minor
children of Mr. Houssels, but does not include 4,750 shares owned
by each of Mr. Houssels' adult sons, John Kell Houssels, III and
James O'Shaughnessy Houssels.
(3) The number of shares for John D. Gaughan include the 342,905
shares owned by Exber, Inc.. Mr. Gaughan is the President, and
major shareholder of Exber, Inc. Also included in Mr. Gaughan's
total are 3,650 shares owned of record by Mrs. John D. Gaughan.
Mrs. Gaughan is deceased and her shares will be transferred to a
trust controlled by Mr. Gaughan.
Item 13. Certain Relationships and Related Transactions.
Exber, Inc. leases to the Company land and buildings in
Las Vegas, Nevada. Annual payments by the Company and its
subsidiaries are approximately $1,250,000. The major leases
extend through the year 2001 with renewals. 4
In February, 1993, Exber, Inc. made a loan of Eighteen
Million ($18,000,000.00) Dollars to the Company which was
utilized in partial payment of the outstanding loan, secured by
Deed of Trust, from Valley Bank of Nevada (now Bank of America)
and to satisfy an existing debt to Exber, Inc. of Three Million
($3,000,000.00) Dollars. The loan from Exber, Inc. in the total
amount of $21,000,000, is secured by a First Deed of Trust upon
the company property and bears interest at the prime rate and is
payable at $158,264.90 per month.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) (1) Financial Statements:
The following consolidated financial statements of the
Registrant are included in the Registrant's Annual
Report to Stockholders for the Year Ended December 31,
[FN]
4 See discussion under "Item 2. Properties."
<PAGE>
1996 and the independent auditor's report on such
financial statements are incorporated herein by
reference:
Independent auditor's report
Consolidated Balance Sheets - December 31, 1996 and
1995
Consolidated Statements of Operations - Years Ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Stockholders' Equity -
Years Ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows - Years Ended
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
(2) The following additional information for the years 1996,
1995 and 1994 is submitted herewith:
Independent Auditor's Report and Consent
Schedule V Property and equipment
Schedule VI Accumulated depreciation and
amortization of property and
equipment
Schedule VIII Valuation and qualifying
accounts and reserves
Schedule X Supplementary income statement
information
All other schedules are omitted because they are not
required, inapplicable, or the information is otherwise
shown in the financial statements or notes thereto.
<PAGE>
(3) Exhibits:
Exhibit
Number Description
3.01 Articles of Incorporation of the Registrant and
Amendments thereto dated December 10, 1969,
February 12, 1971, and June 28, 1971, are
incorporated by reference from Form 10 under File
NO. 0-8133, Item 18, Page 45, Exhibits Numbers
1.01, 1.02, 1.03 and 1.04, as filed with
the Securities and Exchange Commission on October
3, 1975.
3.02 Bylaws of Registrant are incorporated herein by
reference from Form 10 under file No. 0-8133,
Exhibit No. 1.05, as filed with the Securities and
Exchange Commission on October 3, 1975.
3.03 Certificate of Amendment to Articles of
Incorporation of Registrant dated May 19, 1987,
filed with the Securities and Exchange Commission
on March 29, 1988.
3.04 Restated and Amended Bylaws of Registrant dated
May 15, 1987, filed with the Securities and
Exchange Commission on March 29, 1988.
4.01 Specimen of Certificate evidencing capital stock of
the Registrant is incorporated by reference Form
10 under File No. 0-8133, Exhibit No. 3.03, as
filed with the Securities and Exchange Commission
on October 3, 1975.
4.02 Specimen of (Amended) Certificate evidencing
capital stock of Registrant, filed with the
Securities and Exchange Commission on March 29,
1988.
10.01 Building Loan and Security Agreement dated March 4,
1982, between Union Plaza Development Corporation
(formerly Scott Development Corporation) and Valley
Bank of Nevada, as filed with the Securities and
Exchange Commission on March 30, 1982.
10.02 Promissory Note, Deed of Trust and Security
Agreement dated March 4, 1982, between Union Plaza
Development Corporation (formerly Scott Development
Corporation) and Valley Bank of Nevada, as filed
with the Securities and Exchange Commission on
March 30, 1982.
<PAGE>
10.03 Note Modification Agreement dated November 4, 1986,
between Valley Bank of Nevada and Scott Plaza, Inc.
successor-in-interest to Union Plaza Development
Corporation (formerly Scott Development
Corporation), filed with the Securities and
Exchange Commission on March 31, 1987.
13.01 Annual Report to Stockholders for the fiscal year
ended December 31, 1996.
22.01 List of Subsidiaries.
<PAGE>
INDEPENDENT AUDITORS' REPORT AND CONSENT
The Stockholders and
Board of Directors
Union Plaza Hotel and Casino, Inc.
We hereby consent to the incorporation by reference in this
annual report on Form 10-K of Union Plaza Hotel and Casino,
Inc. for the year ended December 31, 1996 of our report dated
March 4, 1997 which appears in the annual report to stockholders
for the year ended December 31, 1996.
The audit referred to in the above mentioned report also included
the related financial schedules for the three years ended
December 31, 1996 listed in the accompanying index at Item
14(a)(2). In our opinion, such financial schedules for the years
ended December 31, 1996, 1995 and 1994 present fairly the
information required to be set forth therein.
GARY V. CAMPBELL, CPA, LTD.
Las Vegas, Nevada
March 4, 1997
PAGE
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
SCHEDULE V
PROPERTY AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Balance at
beginning
of year
<S> <C>
Year ended December 31, 1996:
Land $ 6 912 000
Buildings 56 709 000
Leasehold improvements 3 456 000
Furniture and equipment 33 986 000
$101 063 000
Year ended December 31, 1995:
Land $ 6 912 000
Buildings 56 330 000
Construction in progress 1 000
Leasehold improvements 3 453 000
Furniture and equipment 34 048 000
$100 744 000
Year ended December 31, 1994:
Land $ 6 837 000
Buildings 54 419 000
Construction in progress 1 100 000
Leasehold improvements 3 452 000
Furniture and equipment 32 001 000
$ 97 809 000
</TABLE>
Estimated useful lives used in computing depreciation
(straight-line method) are as follows:
Land improvements 3-1/2 - 20 years
Buildings 20 - 40 years
Leasehold improvements 5 - 30 years
Furniture and equipment 3 - 10 years
(a) Represents reclassification from construction in progress.
PAGE
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
SCHEDULE V
PROPERTY AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<C> <C> <C> <C>
Balance
Additions at end
At Cost Retirements Other of year
$ 100 000 $ - $ - $ 7 012 000
37 000 - 56 746 000
28 000 - - 3 484 000
1 334 000 1 144 000 - 34 176 000
$ 1 499 000 $ 1 144 000 $ - $ 101 418 000
$ - $ - $ - $ 6 912 000
378 000 - 1 000 (a) 56 709 000
- - (1 000)(a) -
3 000 - - 3 456 000
2 172 000 2 234 000 - 33 986 000
$ 2 553 000 $ 2 234 000 $ - $ 101 063 000
$ 75 000 $ - $ - $ 6 912 000
1 017 000 205 000 1 099 000 (a) 56 330 000
- - (1 099 000)(a) 1 000
1 000 - - 3 453 000
2 109 000 62 000 - 34 048 000
$ 3 202 000 $ 267 000 $ - $ 101 744 000
</TABLE>
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
SCHEDULE VI
<TABLE>
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Amounts in thousands
Additions
Balance at charged to Balance
beginning cost and Retirements at end
of year expenses and others of year
<S> <C> <C> <C> <C>
Year ended
December 31, 1996:
Buildings $ 28 406 $ 1 733 $ 1 $ 30 138
Leasehold improv. 1 879 143 - 2 022
Furn. & Equip. 25 643 2 487 1 037 27 093
$ 55 928 $ 4 363 $ 1 038 $ 59 253
Year ended
December 31, 1995:
Buildings $ 26 679 $ 1 727 $ - $ 28 406
Leasehold improv. 1 740 139 - 1 879
Furn. & Equip. 25 437 2 427 2 221 25 643
$ 53 856 $ 4 293 $ 2 221 $ 55 928
Year ended
December 31, 1994:
Buildings $ 25 050 $ 1 687 $ 58 $ 26 679
Leasehold improv. 1 600 140 - 1 740
Furn. & Equip. 23 213 2 262 38 25 437
$ 49 863 $ 4 089 $ 96 $ 53 856
</TABLE>
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Amounts in thousands
Additions
Charged
Balance to costs Charged Balance
at begin. and to other Deduc- at end
of year expenses accounts tions(1) of year
<S> <C> <C> <C> <C> <C>
Year ended
December 31, 1996:
Allowance for
doubtful
accounts $ 14 $ 65 $ - $ 36 $ 43
Year ended
December 31, 1995:
Allowance for
doubtful
accounts $ 17 $ 6 $ - $ 9 $ 14
Year ended
December 31, 1994:
Allowance for
doubtful
accounts $ 27 $ 19 $ - $ 29 $ 17
(1) Write-off uncollectible accounts, net of recoveries.
</TABLE>
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
SCHEDULE X
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Amounts in thousands
Charged to costs and expenses
1996 1995 1994
<S> <C> <C> <C>
Maintenance and repairs $ 1 133 $ 1 106 $ 1 102
Taxes, other than payroll
and income taxes:
Gaming tax and
licenses 3 396 3 309 3 442
Propery taxes 904 896 881
Advertising 414 344 453
Amortization of intangible assets is not set forth inasmuch
as it does not exceed one percent of total sales as shown
in the related consolidated statement of income. Royalties
are not set forth inasmuch as it is not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Union Plaza Hotel and Casino,
Inc. has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
UNION PLAZA HOTEL AND CASINO, INC.
/s/JOHN D. GAUGHAN
JOHN D.GAUGHAN, Chairman
of the Board and
Chief Executive Officer
/s/J. K. HOUSSELS
J. K. HOUSSELS, Vice Chairman
of the Board
Date: March 21, 1997.
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the
capacities and on the dates indicated:
Date: March 21, 1997 /s/ JOHN D. GAUGHAN
JOHN D. GAUGHAN, Chairman
of the Board/President
Chief Operating Officer
Date: March 21, 1997 /s/ DON DOBSON
DON DOBSON, Vice President/
Secretary/Director
Date: March 21, 1997 /s/ JOHN P. JONES
JOHN P. JONES, Vice President/
Treasurer/Director
Date: March 21, 1997 /s/ LARRY DOLESH
LARRY DOLESH, Vice President/
Chief Financial Officer/
Director
Date: March 21, 1997 /s/ R. G. TAYLOR
R. G. TAYLOR, Director
Date: March 21, 1997 /s/ MIKE NOLAN
MIKE NOLAN, Vice President/
Director
</TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
1996
ANNUAL REPORT
<PAGE>
TABLE OF CONTENTS
Page
Letter to Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . .1
Selected financial data. . . . . . . . . . . . . . . . . . . . . . . . . .2
Management's discussion and analysis of
financial condition and results of
operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-7
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . .8
Financial Statements:
Consolidated balance sheets. . . . . . . . . . . . . . . . . . . . .9-10
Consolidated statements of operations . . . . . . . . . . . . . . . . 11
Consolidated statements of stockholders'
equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Consolidated statements of cash flows. . . . . . . . . . . . . . . .13-14
Notes to consolidated financial
statements. . . . . . . . . . . . . . . . . . . . . . . . . .15-25
Directors and executive officers . . . . . . . . . . . . . . . . . . . . 26
Special information. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
<PAGE>
Letter to Shareholders:
The year 1996 started out on a positive note for our Company. We had just
completed several major remodeling projects at our hotel and casino, the
Fremont Street Experience opened with much fanfare, and business appeared to
be on the upswing. For the first several months of 1996, Fremont Street was
filled with tourists and locals alike who came to see the various light shows
offered nightly by the Fremont Street Experience. For the first six months of
the year, our Company reported higher revenues in each segment of our
operation, including gaming revenues which were $1,017,000 ahead of last year.
The second half of 1996 proved to be much more challenging for our Company as
the Fremont Street Experience did not appear to have a long lasting impact on
gaming revenues. Gaming revenues declined by $1,283,000 in the last six
months due to significantly less play and a lower average win percentage on
table games. Overall, gross revenues managed to increase by $987,000 to
$60,728,000 due to strong demand for hotel rooms and food revenues. Hotel
occupancy rates averaged 95.3% for the year with an average room rate of
$34.00 compared to 89.9% and $35.00 last year.
Net income before the recognition of our losses in the Fremont Street
Experience was $17,000 for 1996 compared to $150,000 in 1995. With the
inclusion of the Fremont Street Experience pass-through expenses, our Company
reported a net loss of $736,000 for all of 1996 compared to net income of
$104,000 in 1995. The Fremont Street Experience related charges were $753,000
in 1996 and $46,000 in 1995.
As our Company proceeds into 1997 and beyond, we continue to focus on
providing value to our hotel and casino guests. It is our objective to create
a comfortable environment for our customers to gamble while providing quality
entertainment and exceptional food values. Through our "Dinners for Winners"
campaign we continue to expand our customer base by offering dinners, rooms
and shows to known slot players. We are confident that the use of such
promotions will enhance profitability by bringing "qualified" customers to our
casino who are more likely to stay, and play.
Furthermore, our Company continues to generate strong cash flows which allowed
us to reduce long-term debt by $1,990,000 in 1996. Early retirement of the
long-term debt will increase shareholder equity and therefore, enhance the
value of our Company. Management will continue to aggressively reduce debt
where possible as our cash position permits.
I would like to thank you for your continued support and look forward to
seeing each of you at our stockholder's meeting on May 16, 1997 at 10:00 a.m.
in the Center Stage Restaurant.
Sincerely,
/s/ JOHN D. GAUGHAN
John D. Gaughan
Chairman of the Board
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
Amounts in thousands, except per share data
<CAPTION>
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net revenues $ 53,332 $ 51,999 $ 54,689 $ 57,238 $ 60,671
Casino operating
revenue 36,292 36,558 38,864 40,039 43,588
Net income
(loss) (736) 104 1,107 1,784 (479)
Total assets 49,317 53,163 54,386 55,917 55,453
Long-term
obligations 26,510 29,845 31,498 30,888 32,548
Stockholders'
equity 16,977 17,794 17,740 17,198 15,420
Earnings (loss)
per common
share $ (.97) $ .14 $ 1.45 $ 2.25 $ (.60)
Cash dividends
declared
common share $ -0- $ -0- $ -0- $ -0- $ -0-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
This discussion and analysis should be reviewed with the financial
statements, notes and the special information.
1996 COMPARED TO 1995
Gross revenues at the Company's hotel and casino were $60,728,000 in
1996 which reflects an increase of $987,000 or 2% when compared to 1995.
The increase in revenues is credited primarily to the Company's hotel food
and beverage operations. Higher occupancy levels and increased food and
beverage sales are attributed to the completion of the "Fremont Street
Experience" or FSE (See Note 13). It is the Company's opinion that the end
of construction has had a greater impact on the revenues than the benefit of
the Fremont Street Experience project itself. Hotel occupancy rates increased
5.4% to 95.3% compared to 89.9% for all of 1995. The increased occupancy
levels resulted in nearly 50,000 more guests staying in the hotel during 1996
which is only 22,000 more guests than stayed in the Company's hotel in 1994.
These hotel guests have consequently resulted in higher food and beverage
sales at the facility for 1996. The increased customer base also had a
positive impact on "other income" during the year with liquor and gift shops
sales rising $46,000 or 4.3%. Casino revenues fell by 1% or $266,000 during
1996 following two years where casino revenues fell by more than more than two
million dollars annually. Live table games revenue declined by $1.1 million
or 12% during the year with a 16% decline in twenty-one revenue. The Company
adopted a tightened promotional policy during the first half of 1996 in an
effort to reduce complimentary expense. While the tightened policy succeeded
in reducing promotional allowances by $346,000 or 5%, the overall result was a
sharp decline in live table games play. Card room revenues increased by
$151,000 or 12.5% in the period benefiting from an 18% or $163,000 increase in
poker revenue while pan revenues fell by $12,000. The use of progressive
jackpots in the card room appears to be an attractive proposition for new and
existing poker players. The Company recorded a slight decrease overall in the
counter games sector. Sport book revenues increased by a small margin while
race book and keno revenues each declined slightly. Slot operations were the
main beneficiary of increased traffic early in 1996. Revenues from the video
slot machines rose by $611,000 or 2.6%, during the period.
During 1996 the Company recorded significantly higher operational expenses of
$2,425,000 or 5% as the result of higher costs associated with food and
beverage and hotel operations. Food and beverage costs increased by
$1,870,000 or 15% during the period. The rise in food and beverage costs are
the result of two factors including an overall higher cost-of-sales expense as
well as increased payroll costs. Payroll costs soared $1,860,000 or 15% due
to increased business and higher contractual union wages for most all
employees in those areas. Cost-of-sales increased by $659,000 or 17% compared
to last year due to higher volume and general inflation on high volume items
used in the Company's three restuarants. The hotel results also reflected
higher operating costs compared to 1995 due primarily to increased payroll
costs associated with union wage hikes for guest room attendants. Hotel
payroll costs of $488,000 were 10% more than in 1995. Other hotel increases
were the result of a greater level of occupancy in the hotel relating to guest
room supplies and travel agency commissions. General and administrative
expenses fell by $209,000 or 5%. The primary cause for the decline in general
and administrative costs is a significant reduction in workmen's compensation
and group insurance claims during the year. The Company utilizes a light duty
program to get injured workers back to work quickly and has taken measures to
aggressively deter fraudulent claims - this program has resulted in fewer
claims overall at the hotel and casino during the last several years.
Advertising and promotional costs rose by $70,000 due to higher credit card
commissions and souvenir costs. Credit card commissions rose from increased
charge card transactions; while more souvenirs were purchased for giveaways.
Entertainment expenses were also higher due to increased contract fees for
live entertainment. Operating expenses in each of the other departments rose
by less significant amounts due mostly to higher service costs for guest
amenities and maintenance on the facility.
For December of 1996 the Company wrote down a significant portion of its
investment in the Fremont Street Experience due to significant losses in that
entity. The 1996 loss in the Fremont Street Experience amounted to $753,000
or 1% gross revenues. The Company does not anticipate any income from the
Fremont Street Experience due to the nature of the operation and cannot be
reasonably assured that this project will positively impact revenues.
1995 COMPARED TO 1994
Gross revenues of $59,741,000 were down 4% or $2,467,000 from 1994. The
decline in revenues was primarily due to fewer patrons in the casino as a
result of downtown construction relating to the "Fremont Street Experience"
project. Total Gaming revenues were down $2,306,000 (6%) as significantly
all major gaming departments showed a decline in revenue during 1995. Slot
revenue was down $1,670,000 (7%), Table Games revenue was down $164,000
(2%), Card Room revenue decreased by $203,000 (14%), and the Race and Sports
Book revenue also fell by $300,000 (15%). Keno was the only gaming
department to show an increase during the year with a gain of $31,000 (4%).
Food and Beverage revenues were down $373,000 (4%) which is also attributed
to less casino traffic. Occupancy rates in the Hotel averaged 89.9% in 1995
compared to 92.9% in 1994. Despite 11,000 fewer rooms rented in 1995, room
revenues actually rose $14,000 in 1995. Other revenues increased by
$198,000.
Total operating expenses were down $1,360,000. Food and Beverage expenses
were down $994,000 (7%) of which $540,000 is attributable to Cost of Food
Sales and $286,000 is attributable to other costs in the Food Department.
General and Administrative costs declined by $622,000, Advertising and
promotional expenses declined $109,000 and utility and maintenance expenses
were less by $168,000. While there was an overall decline in operating
expenses during the year, casino, entertainment and room expenses increased
in 1995. The $155,000 increase in casino costs were due to higher payroll
costs in the pit and the costs associated with leasing automatic shuffling
machines which amounted to $129,000. Room expenses increased by $56,000 and
entertainment expenses rose by $93,000.
For 1995 the Company recorded net income of $104,000 which was down
$1,003,000 from the net income of $1,107,000 reported in 1994.
During the summer of 1995, the Company negotiated and signed a new contract
with the Culinary and Bartenders Unions. Management believes that the
collective bargaining agreement which was signed in June will not have a
material impact on the profitability of the Company.
The completion of the "Fremont Street Experience" at the beginning of
December resulted in more visitors to the casino in a traditionally slow
month. The Fremont Street Experience is a steel structured canopy over five
blocks of Fremont Street in front of the North Hotel Tower of the Company.
This new structure and nightly show is a must see attraction for visitors in
Las Vegas. Upon reopening the street to foot traffic there was a visible
amount of increased activity in the area and a generally positive response
<PAGE>
generated from the public. While December was encouraging for downtown and
the Company, management remains cautiously optimistic about the future
impact of the Fremont Street Experience project.
1994 COMPARED TO 1993
Gross revenues of $62,208,000 were down $2,695,000 from 1993. Gaming
revenues were down $1,175,000, Slot revenue was down $1,247,000 (5%), Card
Room revenue was down $422,000 (23%) and Keno win was down $104,000 (12%).
Gaming revenues which partially offset these decreases were increases in
Table Games win of $541,000 (6%) and Race and Sports win of $66,000 (4%).
Food and Beverage sales were down $1,151,000 (11%). Room revenues increased
by $22,000 and Other revenues decreased by $391,000.
Total costs and expenses were down $1,872,000. Food and Beverage
expenses were down $1,649,000 (11%) of which $762,000 is attributable to Cost
of Food Sales and $801,000 is attributable to other costs in the Food
Department. Expenses in all other departments did not change substantially
over the prior year.
The Company recorded a net income of $1,107,000 for 1994 which was down
$677,000 from the net income of $1,784,000 reported in 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company had total cash assets of $2,982,000 (6% of total assets) at
December 31, 1996 and $2,959,000 (6% of total assets) at December 31, 1995.
The ratio of current assets to current liabilities was .9 to 1 at December 31,
1996 and 1 to 1 at December 31, 1995. Long-term debt, including current
maturities, was $19,290,000 at December 31,1996 and $21,280,000 at
December 31, 1995. The ratio of long-term debt to equity was 1.1 to 1 at
December 31, 1996 compared to 1.3 to 1 at December 31, 1995.
As of December 31, 1996, outstanding receivables were $883,000 compared to
$966,000 at December 31, 1995. A majority of the difference is attributable
to fewer hotel receivables in the amount of $74,000 at the end of the year.
Prepaid expenses declined by $309,000 or 24% at December 31, 1996 from
$1,306,000 at December 31, 1995. The primary difference year-over-year was
prepaid property taxes in the amount of $248,000 and approximately $80,000
more in prepaid gaming taxes at the end of 1995. Inventories declined by
$53,000 during 1996 the result of fewer beverage items on hand at year end.
Other assets declined by $565,000 as the result of the write down in the
investment in the Fremont Street Experience through the Company's wholly owned
subsidiary, Union Plaza Experience, Inc. The Company does not expect the
Fremont Street Experience to provide any income through its operations but
continues to invest in the project in anticipation of future benefits by
bringing potential patrons to the area. Outstanding payables declined by
$413,000 in 1996 compared to 1995 when there were significant liabilities
connected with the remodeling of the Center Stage Restaurant. Timing
differences on purchases and billing cycles also account for part of the
difference.
Operation at the Company's hotel and casino generated cash of $4,210,000
during 1996. Compared to 1995, cash flows from operating activities declined
$548,000 or 12% from $4,758,000. Despite the reduction in cash from
operations , the Company continued to reduce long-term debt ahead of schedule.
The Company reduced long-term debt by $990,000 in 1996 compared to $1,470,000
in 1995. Additional liquidity was provided by a reduction in capital
expenditures during the year. For all of 1996, capital expenditures were
$1,499,000, which represents a decline of $1,076,000 compared to 1995 as the
Company completed the three year renovation of the hotel and casino facility
in December 1995. Capital expenditures for 1997 are expected to be in line
with 1996 with no major renovations or outlays of cash anticipated. The
Company does not have any existing plans for acquisitions or large property
purchases over the next twelve months. Management believes that future cash
flows will provide enough cash to meet normal operating requirements and pay
off the long-term debt obligations prior to the July 6, 2004 due date.
The Company is exposed to various factors that could have an adverse impact on
earnings and cash flow. The impact of increasing competition in the Las Vegas
Valley, the legalization of gambling in other jurisdictions in the United
States, inflation, changes in the regulatory environment, along with the
possibility of a nationwide recession could each bring financial hardship on
the Company. As a result of these factors, management is unable to accurately
predict future profitability at the Company's hotel and casino. Should a
crisis arise and the Company is unable to service debt on the existing terms,
the Company is confident that it would be able negotiate workable terms or
borrow additional funds from its majority shareholder and debtor, Exber, Inc.
The Company continues to repurchase stock as it becomes available from
shareholders who wish to liquidate their shares. During 1996, $81,000 was
expended to purchase 3,300 shares compared to $50,000 in 1995. These
purchases of treasury stock were funded from internally generated cash flow.
The Company does not imply that it will purchase any or all shares of
potential sellers but it will review each situation independently. At this
time, the Company's stock remains unlisted on any exchange and there is no
active market for the shares. The Company does not anticipate the repurchase
of any material number of shares of its stock or to perform any significant
financing activities over the next twelve months.
Due to the fact that shares in the Company are closely held and there is
virtually no trading in the common shares, the performance graph has been
omitted from this filing.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Stockholders and
Board of Directors
Union Plaza Hotel and Casino, Inc.
We have audited the accompanying consolidated balance sheets of Union Plaza
Hotel and Casino, Inc. and subsidiaries as of December 31, 1996 and 1995,
and the related consolidated statements of operations, stockholders' equity
and cash flows for the years ended December 31, 1996, 1995 and 1994. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 consolidated
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 Union Plaza Hotel and
Casino, Inc. and subsidiaries as of December 31, 1996 and 1995, and the
results of its operations and its cash flows for the years ended December
31, 1996, 1995 and 1994 in conformity with generally accepted accounting
principles.
Gary V. Campbell, CPA, Ltd.
Las Vegas, Nevada
March 4, 1997
<PAGE>
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
AND
INDEPENDENT AUDITORS' REPORT
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
Amounts in thousands, except per share data
ASSETS
</TABLE>
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CURRENT ASSETS:
Cash $ 2,982 $ 2,959
Accounts receivable (Note 3) 883 966
Inventories of food, beverage
and supplies 528 470
Prepaid expenses 997 1,306
TOTAL CURRENT ASSETS 5,390 5,701
PROPERTY AND EQUIPMENT (Note 8):
Land 7,012 6,912
Buildings 56,746 56,709
Leasehold improvements 3,484 3,456
Furniture and equipment 34,176 33,986
101,418 101,063
Less accumulated depreciation
and amortization 59,253 55,928
NET PROPERTY AND EQUIPMENT 42,165 45,135
OTHER ASSETS (Note 4) 1,762 2,327
$ 49,317 $ 53,163
<FN>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
Amounts in thousands, except per share data
<CAPTION>
1996 1995
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 2,323 $ 2,736
Accrued liabilities (Note 5) 2,143 2,126
Checks issued against future deposits 330 -
Current portion of long-term debt (Note 7) 320 39
Current portion of obligations under
capital leases (Note 8) 714 623
TOTAL CURRENT LIABILITIES 5,830 5,524
LONG-TERM DEBT, less current portion (Note 7) 18,970 21,241
OBLIGATIONS UNDER CAPITAL LEASES,
less current portion (Note 8) 3,525 4,239
DEFERRED INCOME TAXES (Note 6) 4,015 4,365
32,340 35,369
COMMITMENTS AND CONTINGENCIES (Notes 8 and 12) - -
STOCKHOLDERS' EQUITY:
Common stock, $.50 par value; authorized
20,000,000 shares; issued 1,500,000 shares;
outstanding 758,469 shares and 761,719
shares at December 31, 1996 and 1995,
respectively 750 750
Additional paid-in capital 5,462 5,462
Retained earnings 24,635 25,371
30,847 31,583
Less treasury stock, at cost, 741,531 shares
and 738,281 shares at December 31, 1996
and 1995, respectively 13,870 13,789
TOTAL STOCKHOLDERS' EQUITY 16,977 17,794
$ 49,317 $ 53,163
<FN>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
<PAGE>
TABLE
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Amounts in thousands, except per share data
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
REVENUES:
Casino $ 36,292 $ 36,558 $ 38,864
Food and beverage 9,799 8,953 9,326
Rooms 12,293 11,971 11,957
Other 2,344 2,259 2,061
GROSS REVENUES 60,728 59,741 62,208
Less promotional allowances 7,396 7,742 7,519
NET REVENUES 53,332 51,999 54,689
OPERATING EXPENSES:
Casino 14,726 14,843 14,688
Food and beverage 14,369 12,499 13,493
Rooms 5,710 5,143 5,087
General and administrative 4,036 4,245 4,867
Entertainment 648 595 502
Advertising and promotion 414 344 453
Utilities and maintenance 5,735 5,637 5,805
Depreciation & amortization 4,461 4,422 4,218
Provision for doubtful accounts 65 6 19
Other costs and expenses 1,284 1,289 1,251
TOTAL OPERATING EXPENSES 51,448 49,023 50,383
OPERATING INCOME 1,884 2,976 4,306
OTHER INCOME (EXPENSE):
Interest income 62 65 61
Interest expense ( 2,279) ( 2,645) ( 2,474)
Investment in Fremont
Street Experience (Note 13) ( 753) ( 46) -
TOTAL OTHER INCOME (EXPENSE) ( 2,970) ( 2,626) ( 2,413)
INCOME(LOSS) BEFORE
INCOME TAX EXPENSE ( 1,086) 350 1,893
INCOME TAX EXPENSE (BENEFIT)(Note 6):
Current - 4 214
Deferred ( 350) 242 572
TOTAL INCOME TAX EXPENSE ( 350) 246 786
NET INCOME(LOSS) $( 736) $ 104 $ 1,107
EARNINGS (LOSS) PER COMMON SHARE
(Note 10) $( .97) $ .14 $ 1.45
<FN>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
<PAGE>
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
Amounts in thousands, except per share data
<CAPTION>
Additional
Common paid-in Retained Treasury
stock capital earnings stock Total
<S> <C> <C> <C> <C> <C>
BALANCE:
December 31, 1993 $750 $ 5,462 $ 24,160 $(13,174) $ 17,198
Purchase of 28,262
shares of
treasury stock - - - ( 565) ( 565)
Net income for 1994 - - 1,107 - 1,107
BALANCE:
December 31, 1994 $750 $ 5,462 $ 25,267 $(13,739) $ 17,740
Purchase of 2,500
shares of
treasury stock - - - ( 50) ( 50)
Net income for 1995 - - 104 - 104
BALANCE:
December 31, 1995 $750 $ 5,462 $ 25,371 $(13,789) $ 17,794
Purchase of 3,450
shares of
treasury stock - - - ( 86) ( 86)
Sale of 200 shares
of treasury stock - - - 5 5
Net loss for 1996 - - (736) - (736)
BALANCE
December 31, 1996 $750 $5,462 $24,635 $(13,870) $ 16,977
<FN>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
Amounts in thousands, except per share data
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 53,485 $ 51,577 $ 54,886
Cash paid to suppliers and
employees (47,064) (44,249) (47,329)
Interest received 68 75 77
Interest paid ( 2,279) ( 2,645) ( 2,474)
Income taxes paid - - ( 172)
NET CASH PROVIDED BY
OPERATING ACTIVITIES 4,210 4,758 4,988
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property
and equipment 6 70 4
Proceeds from sale of bonds - 25
Purchase of property and equipment ( 1,499) ( 2,575) ( 3,202)
NET CASH USED IN
INVESTING ACTIVITIES ( 1,493) ( 2,480) ( 3,198)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of treasury stock 5 - -
Proceeds from long-term debt - - 4,574
Principal payments on capital leases ( 623) ( 543) ( 475)
Principal payments on long-term debt ( 1,990) ( 1,470) ( 5,750)
Purchase of treasury stock ( 86) ( 50) ( 565)
NET CASH USED IN
FINANCING ACTIVITIES ( 2,694) ( 2,063) ( 2,216)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 23 215 ( 426)
CASH AND CASH EQUIVALENTS, at
beginning of the year 2,959 2,744 3,170
CASH AND CASH EQUIVALENTS, at
end of the year $ 2,982 $ 2,959 $ 2,744
<FN>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
<PAGE>
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
Amounts in thousands, except per share data
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
RECONCILIATION OF NET INCOME (LOSS) TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income (loss) $( 736) $ 104 $ 1,107
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 4,461 4,422 4,218
(Gain) loss on sale and abandonment of
property, equipment and improvements ( 8) ( 35) 167
Provision for doubtful accounts 29 6 19
(Increase) decrease in assets:
Accounts receivable 48 ( 375) ( 3)
Interest receivable 6 - -
Inventories ( 58) ( 7) 48
Prepaid expenses 309 ( 14) 132
Other assets 467 ( 79) ( 278)
Increase (decrease) in liabilities:
Accounts payable ( 364) 602 ( 952)
Checks issued against future deposits 330 - -
Accrued salaries 87 ( 208) 26
Accrued liabilities ( 11) 100 ( 68)
Deferred income tax ( 350) 242 572
TOTAL ADJUSTMENTS 4,946 4,654 3,881
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 4,210 $ 4,758 $ 4,988
<FN>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
<PAGE>
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 was $716,000 at December 31,
1996 and $1,135,000 at December 31, 1995. The Company has no other material
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.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements for 1996, 1995 and
1994 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.
CASINO REVENUE AND RECEIVABLES
In accordance with common industry practice, 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. 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 uncollectible casino receivables are provided to reduce these
receivables to amounts anticipated to be collected.
PROMOTIONAL ALLOWANCES
Gross revenues include the retail value of complimentary food, beverage and
hotel services furnished to customers. The retail value of these promotional
allowances is deducted to arrive at net revenues.
PAGE
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures.
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 capitalized leases, is computed using the straight-line
method. Leasehold improvements (distinguished from unamortized leasehold
costs) are amortized over the lives of the leases.
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.
INVENTORIES
Inventories are valued at the lower 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.
STATEMENTS OF CASH FLOWS
The Statements of Cash flows classify changes in cash and cash
equivalents according to operating, investing or financing activities. For
purposes of the statement of cash flows, the Company considers all highly
liquid investments purchased with a maturity of three months or less to be
cash equivalents.
PAGE
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The Company and its subsidiaries file a consolidated federal
income tax breturn. 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.
NOTE 2 - CASH
The Company maintains cash balances in two financial institutions in Las
Vegas, Nevada insured by the Federal Deposit Insurance Corporation up to
$100,000. There are no uninsured balances at December 31, 1996 or
December 31, 1995. Also included in cash are uninsured money market funds
amounting to $230,000 and $16,000 at December 31, 1996 and December 31,
1995, respectively.
NOTE 3 - ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
Amounts in thousands
<TABLE>
<CAPTION>
December 31,
1996 1995
<S> <C> <C>
Casino $ 595 $ 408
Hotel 262 336
Other 69 236
926 980
Less allowance for
doubtful accounts 43 14
$ 883 $ 966
</TABLE>
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 - OTHER ASSETS
<TABLE>
Other assets consist of the following:
Amounts in thousands
<CAPTION>
December 31,
1996 1995
<S> <C> <C>
Expansion of gaming rights, less
accumulated amortization of
$628,000 and $587,000 $ 182 $ 223
Subordination of security interest
in lease, less accumulated
amortization of $810,000 and
$783,000 - 27
Net investment in direct financing
lease, net of current portion
(Note 8) 186 224
Leasehold costs, less accumulated
amortization of $374,000 and
$359,000 65 80
Investment in Fremont Street Experience
(Note 13) 716 1,135
Deposits and other 613 638
$ 1,762 $ 2,327
</TABLE>
NOTE 5 - ACCRUED LIABILITIES
<TABLE>
Accrued liabilities consist of the following:
Amounts in thousands
<CAPTION>
December 31,
1996 1995
<S> <C> <C>
Salaries and wages $ 1,083 $ 848
Union back wages 82 148
Taxes, other than taxes on income 325 425
Other 653 705
$ 2,143 $ 2,126
</TABLE>
<PAGE>
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 - INCOME TAXES
Deferred income tax expense (benefit) results from timing differences in
the recognition of revenue and expense for tax and financial statement
purposes.
Statements of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," (SFAS 109) requires deferred tax liabilities or assets at the end of
each period be determined using the tax rate expected to be in effect when
taxes are actually paid or recovered. Previous rules required providing
deferred taxes using rates in effect when the tax liability or asset was first
recorded, without subsequent adjustment for tax-rate changes. Deferred income
taxes have been calculated based on this new standard, no material adjustment
for prior years was necessary.
The sources of those timing differences and the current tax effect of each
were as follows:
Amounts in thousands
1996 1995 1994
Depreciation and respective
gains $ 112 $ 250 $ 304
Capitalized leases 141 115 93
Net operating losses (664) ( 90) -
Vacation and backpay 28 31 65
Tax credits ( 4) 1 118
Other 37 ( 65) ( 8)
$(350) $ 242 $ 572
The components of the net deferred tax liability at December 31, 1996 and 1995
under SFAS 109 are as follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Depreciation and
amortization $ 5,909 $ 5,656
Net operating loss ( 754) ( 90)
Tax credits ( 872) ( 868)
Other ( 268) ( 333)
$ 4,015 $ 4,365
</TABLE>
<PAGE>UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 - INCOME TAXES (CONTINUED)
The Company has net operating loss and tax credit carryforwards at December
31, 1996 of approximately $2,217,000 and $414,000, respectively, with
expiration dates through December 31, 2003.
Reconciliations between the actual tax expense and the amount computed
by applying the U.S. Federal Income Tax rate to income before taxes are as
follows:
Amounts in thousands
<TABLE>
<CAPTION>
1996 1995 1994
Percent Percent Percent
of of of
pretax pretax pretax
Amount income Amount income Amount income
<S> <C> <C> <C> <C> <C> <C>
Computed "expected"
tax expense (benefit) $(369) (34.0%) $ 119 34.0% $ 644 34.0%
Increase (reduction)
in tax resulting from:
Other - - 4 1.1% - -
Nondeductible
expenses 19 1.7% 123 35.1% 142 7.5%
ACTUAL TAX
EXPENSE (BENEFIT) $(350) (32.3%) $ 246 70.2% $ 786 41.5%
</TABLE>
<PAGE>
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 - LONG-TERM DEBT
Long-term debt at December 31, 1996 and 1995 is as follows:
Amounts in Thousands
December 31,
1996 1995
Bank of America prime rate, payable in
monthly installments of $158,265,
including principal and interest, until
July 6, 2004 at which time the entire
balance plus accrued interest is due.
The note is secured by a First Deed of
Trust on land and building. (See Note 11) $ 19,290 $ 21,280
Less current portion 320 39
$ 18,970 $ 21,241
Principal payments on long-term debt during the succeeding five years are
as follows:
1997 $ 320
1998 347
1999 377
2000 409
2001 444
Thereafter 17,393
$ 19,290
Interest on long-term debt was $1,651,000 in 1996, $1,938,000 in 1995 and
$1,699,000 in 1994.
PAGE
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 - LEASES
The Company leases buildings and equipment under long-term agreements
which are classified as capital leases. The lease with Exber Inc. (Note 11)
covering the hotel and bus depot property expires in 2001. 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.
Property and equipment includes the following property under capital
leases by major classes:
Amounts in thousands
December 31,
1996 1995
Building $ 9,242 $ 9,242
Less accumulated amortization 8,441 8,265
$ 801 $ 977
Depreciation and amortization expense includes amortization of property
under capital leases of $176,000, per year for 1996, 1995, and 1994.
Interest paid on property under capital leases was $627,000 for 1996,
$706,000 for 1995 and $775,000 for 1994.
Future minimum payments, by year and in the aggregate, under capital leases
and non-cancelable operating leases with initial or remaining terms of one
year or more consist of the following at December 31, 1996:
CAPITAL
LEASES
(In thousands)
1997 $ 1,250
1998 1,250
1999 1,250
2000 1,250
2001 729
TOTAL MINIMUM LEASE PAYMENTS 5,729
Less amount representing interest 1,490
Present value of net minimum lease
payments under capital leases 4,239
Less current portion 714
OBLIGATIONS UNDER CAPITAL LEASES $ 3,525
<PAGE>
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 - LEASES (CONTINUED)
Rental expense for all operating leases are as follows:
Amounts in thousands
1996 1995 1994
Parking lot leases $ 24 $ 72 $ 68
SUBLEASES
The bus depot property under a capital lease is sublet as follows:
Amounts in thousands
December 31,
1996 1995
Minimum future rents receivable $303 $369
Less amount representing interest 79 112
Minimum lease payments receivable 224 257
Less current portion (included in
accounts receivable) 38 33
Net investment in direct financing
lease (See Note 4) $186 $224
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, for 1996, 1995, and
1994 was $191,000, $188,000 and $166,000, respectively.
PAGE
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 9 -EMPLOYEE BENEFIT PLANS
The Company contributes to a discretionary executive bonus plan. Contributions
for 1996, 1995, and 1994 were $288,000, $247,000 and $414,000, respectively.
The Company also has a qualified profit sharing plan for eligible non-union
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. Annual Contributions were $300,000 for 1996, 1995, and 1994.
The Company provides no postretirement benefits to employees subject to the
requirements of Statement of Financial Accounting Standards No. 106 (SFAS 106)
which requires accrual of expected cost of providing those benefits to an
employee during the years that the employee renders service.
NOTE 10 - EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) per common share is based on the weighted average number
of shares of common stock outstanding during the years. Shares used for the
computation on earning per common share are 760,623 in 1996, 762,448 in 1995
and 770,464 in 1994.
NOTE 11 - RELATED PARTIES
As of December 31, 1996, the Company holds a note payable to Exber, Inc.,
a 45.2% stockholder, in the amount of $19,290,000, payable in monthly
installments of $158,265 including principal and interest until July 2004
when entire principal and accrued interest is due in full. Interest expense
on loans from Exber, Inc. was $1,651,999, $1,938,177 and $1,568,240 for 1996,
1995, and 1994, respectively.
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.
NOTE 12 - 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.
PAGE
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13 - INVESTMENT IN FREMONT STREET EXPERIENCE
In 1994, the Company's wholly-owned subsidiary, Union Plaza Experience,
Inc., was organized 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. The Union
Plaza Experience, Inc. is entitled to one seat on the board of directors of
the Fremont Street Experience Limited Liability Company at all times. The
Company's 5.6% investment had been accounted for by the equity method whereby
the investment is increased or decreased by their proportionate share of the
investees net earnings or loss, which amounted to $753,000 and $46,000 fro the
years 1996 and 1995 respectively. The investment at December 31, 1996 and
1995 was $716,000 and $1,135,000 respectively.
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
Directors
John D. Gaughan Chairman of the Board
J.K. Houssels Vice Chairman of the Board
Donald L. Dobson Director
Larry Dolesh Director
John P. Jones Director
Michael Nolan Director
R.G. Taylor Director
Executive Officers
John D. Gaughan Chief Executive Officer
President
Donald L. Dobson Vice President/Corporate
Secretary
John P. Jones Vice President/Treasurer
Larry Dolesh Vice President
Michael Nolan Vice President
Alan J. Woody Controller
PAGE
<PAGE>
SPECIAL INFORMATION
SCOPE OF OPERATIONS
The Company operates the Union Plaza Hotel and Casino (Union Plaza) resort
complex in downtown Las Vegas, Nevada.
The casino facilities offer a variety of games which generate approximately
60% of the gross revenue of the Company. The major games of chance featured
by the Company's casino include craps, card room, blackjack ("21"), keno, slot
machines, race and sports book, big six wheels, roulette, mini-baccarat and
pai gow poker.
The food and beverage facilities account for approximately 16% of the
Company's gross revenues. The room operation provides approximately 20% of
gross revenue with retail shops, subleases, vending, interest on
investments, and miscellaneous gains on the sale of assets accounting for
the remaining 4%.
FORM 10-K
A copy of the Company's Annual Report of Form 10-K, as filed with the
Securities and Exchange Commission, will be furnished without charge to any
stockholder upon written request to Mr. John D. Gaughan, President, Union
Plaza Hotel and Casino, Number One Main Street, P.O. Box 760, Las Vegas,
Nevada 89125.
ANNUAL STOCKHOLDERS' MEETING
The annual meeting of Union Plaza Hotel and Casino, Inc. will be held on
May 16, 1997, at the Center Stage Restaurant, Number One Main Street, Las
Vegas, Nevada.
DIVIDENDS AND MARKET PRICE STATISTICS OF COMMON STOCK
The Company's stock is not traded on any securities exchange. A dividend
of $.10 per share was paid to the stockholders of record on the shares of
common stock outstanding on the last day of each quarter during 1981 and
1980. No dividends have been declared or paid since 1981.
AUDITORS
The Company's auditors are Gary V. Campbell, CPA, Ltd., 7440 West Sahara
Avenue, Las Vegas, Nevada 89117.
This report is prepared for the information of stockholders,
employees, and other interested persons. It is not
transmitted in connection with the sale of any security or
offer to sell or offer to buy any security.
<PAGE>
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