UNION PLAZA HOTEL AND CASINO, INC.
1 Main Street
Las Vegas, NV 89101
July 31, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
Pursuant to the requirements of the Securities Exchange Act of 1934, we are
transmitting herewith the attached
Form 10-Q.
Sincerely,
UNION PLAZA HOTEL AND CASINO, INC.
Larry Dolesh, Vice President
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 June 30, 1998
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 June 30, 1998
$.50 par value 757,419 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 entirely of normal
recurring adjustments) which are, in the opinion of Management,
necessary to a fair statement of the results for the interim
period.
/s/ LARRY DOLESH
Larry Dolesh, Vice President of Finance
Las Vegas, Nevada
July 31, 1998
<PAGE>
PART 1. - Financial Information
Item 1. Financial Statements
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
JUNE 30, 1998 AND DECEMBER 31, 1997
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
[CAPTION]
JUNE 30, 1998 AND DECEMBER 31, 1997
ASSETS
JUNE 30, DECEMBER 31,
1998 1997
[S] [C] [C]
Current Assets:
Cash $ 1,887,000 $ 3,135,000
Accounts receivable 377,000 821,000
Inventories of food, beverage
and supplies 413,000 267,000
Prepaid expense 908,000 979,000
Total current assets 3,585,000 5,202,000
Property and equipment:
Land 7,012,000 7,012,000
Buildings 56,825,000 56,794,000
Leasehold improvements 3,514,000 3,514,000
Furniture and equipment 34,476,000 34,304,000
101,827,000 101,624,000
Less accumulated depreciation
and amortization 64,979,000 63,069,000
Net property and equipment 36,848,000 38,555,000
Other assets 1,523,000 1,435,000
$ 41,956,000 $ 45,192,000
The accompanying notes are an integral
part of these financial statements.
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
JUNE 30, DECEMBER 31,
1998 1997
[S] [C] [C]
Current liabilites:
Accounts payable $ 1,970,000 $ 2,745,000
Accrued liabilities 1,636,000 2,058,000
Current portion of long-term debt 161,000 161,000
Current portion of obligations under
capital leases 818,000 818,000
Total current liabilities 4,585,000 5,782,000
Long-term debt, less current portion 20,819,000 20,359,000
Obligations under capital leases, less
current portion 2,312,000 2,707,000
Deferred income taxes 2,801,000 3,013,000
30,517,000 31,861,000
Commitments and contingencies
Stockholders' equity:
Common stock, $.50 par value; authorized
20,000,000 shares; issued 1,500,000
shares; Outstanding 758,419 shares at
December 31, 1997 and 757,419 shares
at June 30, 1998. 750,000 750,000
Additional paid-in capital 5,462,000 5,462,000
Retained earnings 19,124,000 20,991,000
25,336,000 27,203,000
Less treasury stock, at cost, 741,581
shares at December 31, 1997 and 742,581
shares at June 30, 1998. 13,897,000 13,872,000
Total stockholders' equity 11,439,000 13,331,000
$41,956,000 $45,192,000
The accompanying notes are an integral
part of these financial statements.
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
[CAPTION]
SIX AND THREE MONTHS ENDED JUNE 30, 1998 AND 1997
Amounts in thousands except per share data
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
1998 1997 1998 1997
[S] [C] [C] [C] [C]
Revenues:
Casino $ 16,700 $17,021 $ 7,719 $ 8,147
Food and Beverage 4,991 4,890 2,394 2,316
Rooms 5,464 5,864 2,612 2,854
Other 1,049 1,221 509 634
Gross revenues 28,204 28,996 13,234 13,951
Less promotional complimentaries 4,045 3,668 1,900 1,693
Net revenues 24,159 25,328 11,334 12,258
Operating expenses:
Casino 7,399 7,012 3,738 3,631
Food and Beverage 7,333 7,527 3,640 3,658
Rooms 2,861 2,841 1,425 1,420
General & Administrative 1,927 1,959 869 795
Entertainment 247 243 126 122
Advertising & Promotion 109 122 104 104
Utilities & Maintenance 2,660 2,658 1,406 1,366
Depreciation & Amortization 1,911 2,110 951 1,043
Provisions for Doubtful Accts. 21 20 11 1
Other Costs and Expenses 663 615 326 295
Total operating expenses 25,131 25,107 12,596 12,435
Operating income/(loss) (972) 221 (1,262) (177)
Other income (expense):
Interest Income 4 5 3 4
Interest Expense (1,112) (1,084) (556) (549)
Total other income (expense) (1,108) (1,079) (553) (545)
Income before income taxes (2,080) (858) (1,815) (722)
Income taxes (213) (405) (123) (332)
Net income/(loss) (1,867) (453) (1,692) (390)
Earnings/(loss) per common share ($2.46) ($0.60) ($2.23) ($0.52)
The accompanying notes are an integral
part of these financial statements.
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THREE MONTHS ENDED JUNE 30, 1998 AND 1997
INCREASE IN CASH AND CASH EQUIVALENTS
1998 1997
[S] [C] [C]
Cash flows from operating activities:
Cash received from customers $ 24,609,000 $ 25,507,000
Cash paid to suppliers and employees (24,589,000) (24,327,000)
Interest received 4,000 5,000
Interest paid (1,112,000) (1,084,000)
Net cash provided by operating activities (1,088,000) 101,000
Cash flows from investing activities:
Proceeds from sale of property & equipment 2,000 0
Purchase of property and equipment (203,000) (290,000)
Net cash used in investing activities (201,000) (290,000)
Cash flows from financing activities:
Proceeds from note payable to Stockholder 500,000 500,000
Principal payments on capital lease (394,000) (345,000)
Principal payments on long-term debt (40,000) (190,000)
Purchase of Treasury Stock (25,000) (1,000)
Net cash used in financing activities 41,000 (36,000)
Net increase (decrease) in cash and
cash equivalents (1,248,000) (225,000)
Cash and cash equivalents
at 12/31/97 & 12/31/96 3,135,000 2,982,000
Cash and cash equivalents,
at 06/30/98 & 06/30/97 1,887,000 2,757,000
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
Net income(loss) for period ended
06/30/98 and 06/30/97 $ (1,867,000) $ (453,000)
Adjustments to reconcile net income to
Net cash provided by operating activities:
Depreciation and amortization 1,929,000 2,090,000
Bad debt expense (7,000) (15,000)
(Increase) decrease in assets:
Accounts receivable 648,000 342,000
Inventories (146,000) 92,000
Prepaid expenses (126,000) (112,000)
Other assets (109,000) (103,000)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (1,197,000) (1,335,000)
Deferred Income Tax (213,000) (405,000)
Total adjustments 779,000 554,000
Net cash provided (used) by operating
activities $ (1,088,000) $ 101,000
The accompanying notes are an integral
part of these financial statements.
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include
the accounts of Union Plaza Hotel and Casino, Inc. (the Company)
and its wholly-owned subsidiaries. All material inter-company
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 June 30, 1998 was
$655,000 and $386,000 at December 31. 1997. 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.
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.
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Property and Equipment
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.
Property and equipment, including capitalized leases, are
depreciated over their estimated useful lives of 3 to 20 years
for land improvements, 20 to 40 years for buildings, 5 to 30
years for leasehold improvements and 3 to 10 years for furniture
and equipment.
Other Assets
Leasehold costs are being amortized on a straight-line basis
over the initial 30-year term of the lease. Expansion of gaming
rights is being amortized on a straight line basis over 20 years.
Subordination of security interest in lease is being amortized on
a straight-line basis over 15 years.
Progressive Slot Liability
The Company has installed a number of progressive slot
machines. As coins are played the amount available to win
increases and will be paid out when the appropriate jackpot is
hit. In accordance with common industry practice, the Company
has recorded the liability and has charged this amount against
casino revenue.
Earnings Per Common Share
Earnings per common share was computed by dividing net
income by the weighted average number of shares of common stock
outstanding during each period.
Inventories
Inventories are valued at the lower of cost, (first-in,
first-out) or market. Maintenance and other operating supplies
are stated at estimated amounts considered by management to be
necessary to conduct full operations. Subsequent replacements
are charged to expense.
Income Taxes
The Company and its subsidiaries file a consolidated Federal
Income Tax return. Deferred income taxes are provided to reflect
the tax effect of timing differences between financial and tax
reporting, principally related to depreciation, slot machine
revenue, interest costs, accrued expenses, capitalization of
leases, capitalization of property costs and write-down of
facilities and other investments to estimated recoverable value.
The Company accounts for the investment tax credit as a
reduction of income tax expense in the year in which such credits
are utilized. Carryforwards of this credit, as well as the tax
effect of net operating loss carryforwards, are shown as a
reduction to deferred income taxes.
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Statement of Cash Flows
The Statements of Cash Flows classify 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:
June 30, December 31,
1998 1997
Casino $ 204,000 $ 512,000
Hotel 13,000 277,000
Other 181,000 60,000
398,000 849,000
Less allowance for
doubtful accounts 21,000 28,000
$ 377,000 $ 821,000
NOTE 3 - OTHER ASSETS
Other assets consist of the following:
June 30, December 31,
1998 1997
Expansion of gaming rights, less
accumulated amortization of
$689,000 and $668,000 $ 121,000 $ 142,000
Net investment in direct financing
lease, net of current portion (Note 7) 122,000 143,000
Leasehold costs, less accumulated
amortization of $397,000 and
$389,000 42,000 50,000
Investment in Fremont Street
Experience 655,000 386,000
Deposits and other 583,000 714,000
$1,523,000 $1,435,000
<PAGE>
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:
June 30, December 31,
1998 1997
Salaries and Wages $ 691,000 $1,224,000
Union back wages 40,000 48,000
Taxes, other than tax on income 321,000 396,000
Other 584,000 390,000
$1,636,000 $2,058,000
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
June 30, 1998.
NOTE 6 - LONG-TERM DEBT
Long-term debt consists of the following:
June 30, December 31,
1998 1997
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). 20,980,000 20,520,000
Less current portion 161,000 161,000
$20,819,000 $20,359,000
Principal payments on long-term debt during the succeeding
five years are as follows:
1998 (Remaining six months) 29,000
1999 129,000
2000 140,000
2001 152,000
2002 166,000
2003 180,000
Thereafter 20,184,000
$20,980,000
Maturities were calculated based upon interest rates in
effect at June 30, 1998.
<PAGE>
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:
June 30, December 31,
1998 1997
Land and Buildings $ 9,242,000 $9,242,000
Less accumulated amortization 8,705,000 8,617,000
$ 537,000 $ 625,000
The following is a schedule of future minimum lease payments
as of June 30, 1998.
1998 (Remaining six months) $ 625,000
1999 1,250,000
2000 1,250,000
2001 729,000
Total minimum lease payments 3,854,000
Less amount representing interest 724,000
Present value of net minimum
lease pmts under capital leases 3,130,000
Less current portion 818,000
Long-term obligations under
capital leases $ 2,312,000
SUBLEASES
The bus depot property under a capital lease is sublet as
follows:
June 30, December 31,
1998 1997
Minimum future rents receivable $ 203,000 $ 236,000
Less amount representing interest 38,000 50,000
Minimum future rents receivable 165,000 186,000
Less current portion (included in
accounts receivable) 43,000 43,000
Net investment in direct
financing lease (See Note 3)$ 122,000 $ 143,000
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 8 - EMPLOYEE BENEFIT PLANS
The Company contributes to a discretionary executive bonus
plan. During the first six months of 1998, the Company contibuted
$32,000 to this plan compared to a year ago when there were no
bonus contibutions.
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. In the first six months of
1998, $25,000 was accrued for the profit sharing plan compared to
$150,000 accrued in the year ago period. While these accruals are
based upon the the history of past contributions, the Board of
Directors may or may not authorize such contributions based on
the Company's financial results.
NOTE 9 - RELATED PARTIES
On December 18, 1991, Exber, Inc., a 45.27% stockholder as
of June 30, 1998, 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. At varying intervals during 1997, the Company borrowed
an additional $1,483,000 from Exber, Inc. to supplement cash flows
to meet normal operating requirements. During the first quarter
of 1998, the Company borrowed an additional $500,000 from Exber,
Inc. following the typically weak month of December. The outstanding
balance of the note at June 30, 1998 was $20,980,000.
Exber, Inc. also 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 leases extend
through 2001 with renewal options.
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.
<PAGE>
PART 1. - FINANCIAL INFORMATION
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
ANALYSIS OF FINANCIAL CONDITION
The Company had total cash assets of $1,887,000(4.5% of total
assets) at June 30, 1998 and $3,135,000 (6.9% of total assets)
at December 31, 1997. The ratio of current assets to current
liabilities was .8 to 1 at June 30, 1998 and .9 to 1 at
December 31, 1997.
Long-term debt obligations, including current maturities were
$20,980,000 at June 30, 1998 and $20,520,000 at December 31, 1997.
Long-term debt obligations increased by $460,000 during the
six months as the Company borrowed an additional $500,000
during the first quarter. The proceeds of the additional borrowing
were used to meet normal operating requirements and was provided by
Exber, Inc., the Company's majority shareholder. Exber, Inc. continues
to provide the financial stability for the Company by supplying capital
for operations and needed improvements during slow operational
periods. Management is confident that as long as Exber, Inc.
maintains its majority position in the Company, financing options
will remain available as needed. Based on this relationship with
Exber, Inc., Management has not, and does not deem necessary at this
time, the need to seek alternative forms of financing. Due to the
structure of the Exber, Inc. note and the existing principal balance,
it is probable that the Company will be required to re-negotiate
the terms of the agreement and extend the maturity date beyond the
year 2006.
As if June 30, 1998, outstanding receivables were $377,000
compared to $821,000 at December 31, 1997. The decline in
receivables is attributed to sharply lower hotel receivables at the
end of the period along with other recurring receivable fluctuations
caused by timing differences. Inventories of food, beverage and shop
items rose $146,000 from $267,000 to $413,000 during the past six
months due to seasonal demands of the operation. Compared to the
same period last year, inventories remained basically unchanged.
Accounts payable declined during the first half of the year from
$2,745,000 to $1,970,000 which is reflective of the timing differences
in billing cycles and reporting periods. Compared to the second
quarter of 1997, accounts payable liabilities are up $240,000 or 14%.
Accrued liabilities and expenses are also lower compared to those
reported at year end but are higher than those reported in the second
quarter of 1997. The increase over the year ago period is due to higher
payroll obligations in the current period compared to last year because
of payroll period differences. Financing activities were limited to the
repurchase of 1,000 common shares from one stockholder during the
period.
RESULTS OF OPERATIONS
The second quarter has been another difficult period for the
casino as revenues declined $717,000 or 5.1% compared to the same
period in 1997. Revenues continue to be negatively impacted by the
intense competition in the Las Vegas market for both room and casino
guests. Downtown casinos have been particularly vulnerable to the
recent slowdown in Las Vegas visitors.
<PAGE>
PART 1. - FINANCIAL INFORMATION
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Unfortunately, downtown redevelopment efforts by the City of
Las Vegas have been unsuccessful so far in reviving the area. It is
managements opinion that the future of the Company's business and
that of downtown is dependent upon the development of the area west
of downtown on Grand Central Parkway. Should the development of that
area occur and be successful, the Company's hotel and casino is the
best location downtown to be the gateway to Fremont Street.
For the quarter ended June 30, 1998 room revenues declined
$242,000 or 8.5% and casino revenues declined $428,000 or 5.3%. The
decline in room and casino revenues was partially offset by an
increase of $78,000, or 3.4% in food and beverage sales.
Food and beverage sales improved slightly thoughout the first
half of the year although cash sales actually declined in the second
quarter and also for the first six months. The casino's promotional
complimentary expense increased during the second quarter and the
first half of the year by 12.2% or $207,000 and 10.3% or $377,000,
respectively. In connection with a menu pricing increase during
the 1997 period, the Company's restaurants served 58,000 fewer
patrons during the first six months of 1998. Management made the
decision to raise food prices following the second quarter of 1997
following several years of no changes and also closed its midscale
Backstage restaurant at the end of the 1997 second quarter. Both
factors have affected overall restaurant traffic while revenues
increased due to the pricing increase. Beverage prices still remain
among the lowest in the city which appeals to the Company's value
oriented customer. Management continues to believe that offering the
customer good service along with reasonable prices is a necessity in
improving customer traffic and gaming revenues.
The Company's total operating expense rose $164,000 or 1.3%
during the second quarter and rose a modest $24,000 for the first six
months of the year. Higher payroll and departmental expenses in the
live gaming and keno departments, along with higher jackpot
contribution rates in the slot department are primarily the cause
for the increase in costs. Increases in each of these segments is
due to attempts by Management to improve service in these departments
and provide additional gaming options for our customer. Essentially
all other segments of our operation held costs in line with inflation
or made improvements where possible.
The rise in costs, compounded with the decline in revenue
expanded the Company's net operating loss in the quarter from
$177,000 to $1,262,000 compared to the year ago quarter. For the
first half of 1998, the Company had a net operating loss of $972,000
compared to a net operating gain of $221,000 last year.
Overall, the Company reported a net loss for the second quarter
of $1,692,000 or $2.23 a share versus a net loss of $390,000 or
$.52 a share in the year ago period. For the first six months of
1998, the Company had a net loss of $1,867,000 or $2.46 a share
compared to a net loss of $453,000 or $.60 a share a year ago.
<PAGE>
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934 the registrant had duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
UNION PLAZA HOTEL AND CASINO, INC.
(REGISTRANT)
Date: July 31, 1998 /SS/ JOHN D. GAUGHAN
JOHN D. GAUGHAN, President
Date: July 31, 1998 /SS/ LARRY DOLESH
LARRY DOLESH, Vice President
of Finance
Date: July 31, 1998 /SS/ JOHN P. JONES
JOHN P. JONES, Vice President &
Treasurer
Date: July 31, 1998 /SS/ ALAN J. WOODY
ALAN J. WOODY, Controller
16
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-END] JUN-30-1998
[CASH] 1887000
[SECURITIES] 0
[RECEIVABLES] 377000
[ALLOWANCES] 0
[INVENTORY] 413000
[CURRENT-ASSETS] 3585000
[PP&E] 101827000
[DEPRECIATION] 64979000
[TOTAL-ASSETS] 41956000
[CURRENT-LIABILITIES] 4585000
[BONDS] 20819000
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 750000
[OTHER-SE] 11439000
[TOTAL-LIABILITY-AND-EQUITY] 41956000
[SALES] 4991000
[TOTAL-REVENUES] 28204000
[CGS] 7333000
[TOTAL-COSTS] 14661000
[OTHER-EXPENSES] 5234000
[LOSS-PROVISION] 21000
[INTEREST-EXPENSE] 1112000
[INCOME-PRETAX] (2080000)
[INCOME-TAX] ( 213000)
[INCOME-CONTINUING] (1867000)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (1867000)
[EPS-PRIMARY] ( 2.46)
[EPS-DILUTED] ( 2.46)
</TABLE>
