UNION PLAZA HOTEL AND CASINO, INC.
1 Main Street
Las Vegas, NV 89101
March 31, 1999
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-K along with
Exhibit 13 (Annual Report) and the 1998 financial data statement.
Sincerely,
UNION PLAZA HOTEL AND CASINO, INC.
Larry Dolesh, Vice President
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
1998
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-6
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . .7
Financial Statements:
Consolidated balance sheets. . . . . . . . . . . . . . . . . . . . . .8-9
Consolidated statements of operations . . . . . . . . . . . . . . . . 10
Consolidated statements of stockholders'
equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Consolidated statements of cash flows. . . . . . . . . . . . . . . .12-13
Notes to consolidated financial
statements. . . . . . . . . . . . . . . . . . . . . . . . . .14-23
Directors and executive officers . . . . . . . . . . . . . . . . . . . . 24
Special information. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
<PAGE>
To Our Shareholders,
The 1998 operating results for the Union Plaza Hotel & Casino proved to be
very disappointing. Saddled in the midst of an extremely competitive market,
the Plaza suffered heavily along with the rest of Downtown Las Vegas. We
had a net loss of $5,002,000 including a $790,000 loss on the Fremont
Street Experience. With these losses in mind and the feeling that the
Fremont Street Experience is detrimental to our business the Plaza has
withdrawn from the Fremont Street Experience.
The openings of the new mega-resorts on the strip and the expanding
neighborhood casinos have made it difficult to keep customers on the
property. They are being drawn out to see the new attractions offered to
them. As in the past, we feel our market niche is the person who visits
Las Vegas two or more times per year. If we want those customers to return to
the Plaza we must make certain the enjoy their stay here. However, the
occupancy rate for 1998 was 89% while for 1997 it was 92%. For this reason,
we feel the need to improve our level of service and friendliness in order
to keep our hotel customers in the casino. If we want the customer to return
to the Plaza, we must make certain that they enjoy their stay here. We want
the customer to feel welcome and comfortable at the Plaza!
Looking ahead to 1999 and beyond, we have asked Director Irving K. Epstein to
take a more active role in the day-to-day operations. Mr. Epstein has already
made several customer-oriented improvements to the hotel and casino and has
everyone motivated to "pitch-in" in order to propel the Plaza back
to profitability.
In short, although the Plaza is currently experiencing difficult times, we
feel confident we can turn it around and have already taken steps in
that direction. To close, I would like to thank all of you for your
continued support as we look forward to the future.
Please make plans to join us on May 21, 1999 at 10:00 A.M. in the Center
Stage Restaurant for the annual meeting of shareholders.
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>
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net revenues $ 45,850 $ 48,015 $ 53,332 $ 51,999 $ 54,689
Casino operating
revenue 30,866 32,135 36,292 36,558 38,864
Net income
(loss) (5,002) (3,644) (736) 104 1,107
Total assets 41,539 45,192 49,317 53,163 54,386
Long-term
obligations 20,558 26,079 26,510 29,845 31,498
Stockholders'
equity 8,304 13,331 16,977 17,794 17,740
Earnings (loss)
per common
share $ (6.60) $ (4.80) $ (.97) $ .14 $ 1.45
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.
1998 COMPARED TO 1997
Gross revenues for 1998 fell to $53.5 million from $55.4 million in 1997, a
decrease of $1.9 million(3.5%). The decrease was largely due to a $1.2 million
decrease in casino win and a decrease of $657,000 in room revenue. An increase
in food and beverage revenue of $172,000(1.8%) was offset by a decrease in
other income of $152,000(6.7%).
The Company's operating loss for 1998 was $4.6 million while the operating
loss for 1997 was $2.2 million, an increase of $2.4 million(100.1%).
The increased loss is due almost entirely to a decline in revenue as
operating expenses increased slightly during 1998. Casino revenue fell
$1.2 million(3.9%) as all departments win percentages fell during 1998.
Room revenue was down $657,000 as 24,000 fewer guests stayed at the
hotel in 1998. And in an effort to get more customers in the casino,
promotional allowances increased $279,000(3.8%)in 1998. Major
cost-cutting may have bottomed out over the last few years as
operating expenses increased by $200,000(.4%).
The entire downtown is facing extreme competition from several new
"mega-resorts" opening on the "strip" and neighborhood "locals" casinos.
To go along with the competitive pressure, management feels that the
Fremont Street Experience(Note 13) is detrimental to it's business as
patrons are drawn out of the casino to view the show that is presented
nightly throughout the evening hours. For this reason, the Company has
withdrawn from the Fremont Street Experience. Management feels this move
may save the Company $400,000 to $600,000 in yearly losses attributed to
the partnership with the Fremont Street Experience.
OPERATING EXPENSES
Operating expenses for 1998 were $50.4 million and for 1997 were
$50.2 million, an increase of $200,000(.4%). Total payroll costs
for table games increased $217,402(4.4%) to go along with an
increased payroll for keno of $92,252(19.7%). Table games added
employees as did keno with the addition of a satellite station.
Utilities and maintenance cost increased $160,000 as power rates
and air conditioning increased during hotter summer months.
Operating expenses for rooms decreased as 24,000 fewer guests
stayed at the hotel during 1998. Entertainment and advertising
expenses declined slightly in 1998 when compared to 1997 as
management kept the same programs in effect.
OTHER EXPENSES
Interest expense increased $82,000(3.8%) during 1998 due to additional
Borrowing major shareholder Exber, Inc. Also, the loss from the Fremont
Street Experience(Note 13) was $790,000 in 1998 and $471,000 in 1997,
a 67.8% increase in costs.
PROVISION (BENEFIT) FOR INCOME TAXES
The Company's effective tax rate was (34.4%) and (24.8%) for the years
1998 and 1997 respectively. The actual tax benefit from net operating
loss carryforwards at December 31, 1998 was $2,619,000 and at December
31, 1997 was $1,198,000.
NET INCOME (LOSS)
As a result of the factors defined above, the Company reported a
net loss of $5,002,000 for the year ended December 31, 1998 compared
to a net loss of $3,644,000 for the year ended December 31, 1997.
1997 COMPARED TO 1996
Gross revenues for the Company were $55.3 million in 1997 compared to $60.7
million in 1996, a decrease of $5.4 million (8.9%). The decrease in revenues
is attributed to a $4.2 million (11.5%) decline in casino win and nearly
$1.0 million decline in hotel revenues during 1997.
The Company's operating loss was $2.2 million in 1997 compared to operating
income of $1.9 million in 1996. The operating loss is attributed to a
nearly 9% loss in revenues while operating expenses declined by only 2.3%.
Virtually all segments of the Company's operation suffered from a decline in
customer traffic during the year. In addition to the increased competition
from the new and larger hotel and casino operations, it appears as if the
Fremont Street Experience is impacting the customer traffic in the casino
greater than previously estimated. During 1997, the hotel occupancy levels
remained above 90%; however, it was apparent that many of those room guests
were not staying in the casino to gamble. Despite occupancy levels slightly
higher than downtown as a whole, hotel guests were drawn from the casino to
look at the Fremont Street Experience (see note 13) and visit other casinos
with "must see" attractions. Despite being a partner in the Fremont Street
Experience, Management is convinced that the attraction is detrimental to
its business.
OPERATING EXPENSES
In connection with the decline in revenues, Management was able to reduce
operating expenses in all areas except the food and beverage and room
sectors which were adversely affected by higher payroll costs associated with
Culinary Union pay raises over the comparable period. Food and beverage
expenses rose $300,000 (2.1%) and room expenses rose by $60,000 (1.1%).
Casino expenses fell from $14.7 million to $14.1 million (4.1%) during the
year due to a reduction in the expenses relating to the decline in business
activity. Promotional, advertising and entertainment costs all fell slightly
compared to the same period in 1996 as management adhered to basically the
same promotional programs and retained the same entertainment schedules in
1997.
OTHER EXPENSES
Utility and maintenance costs declined by $250,000 during the year as
electricity usage fell over $200,000. Amortization and depreciation expenses
declined by $367,000 in 1997 compared to those expenses recorded in the prior
year. Interest expense also declined nearly $100,000 in the period
as the result of an aggressive debt reduction strategy in the first half of
1996.
PROVISION (BENEFIT) FOR INCOME TAXES
The Company's effective tax rate was (24.8%) and (32.3%) for the years 1997
and 1996 respectively. The actual tax benefit due to net operating loss
carryforwards at December 31, 1997 were $1,198,000 and $350,000 at December
31, 1996.
NET INCOME (LOSS)
As a result of the factors defined above, the Company reported a net loss of
$3,644,000 for the year ended December 31, 1997 compared to a net loss of
$736,000 for the year ended December 31, 1996.
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 food, beverage
and hotel 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. Sports 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 $1,186,000 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 to 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.
LIQUIDITY AND CAPITAL RESOURCES
The Company had total cash assets of $3.2 million(7.8% of total assets) at
December 31, 1998 and $3.1 million(6.9%) at December 31, 1997. The ratio of
current assets to current liabilities was .4 to 1 for 1998 and .9 to 1 for
1997 as $7.1 million in principal on notes payable is due in 1999.
Management is confident that terms on a new note will be negotiated with
the Company's majority shareholder, Exber,Inc. Long-term debt, including
current maturities, increased from $20.5 million in 1997 to $25.5 million
in 1998. The ratio of long-term debt to equity was 2.2 to 1 at
December 31, 1998 and 1.5 to 1 at December 31, 1997.
As of December 31, 1998, the Company had outstanding receivables of
$809,000 compared to $821,000 at December 31, 1997. The difference is
mostly due to a $52,000 decline in hotel receivables. Inventories of
food, beverage and supplies showed a slight increase of $16,000. The
Company's "other asset" balance fell $481,000 due to the investment
in the Fremont Street Experience decrease to -0- in 1998 from $386,000
in 1997, and the amortization of gaming rights and direct financing
lease assets.
Current liabilities increased $6,895,000(119.3%) from $5,782,000 in 1997 to
$12,677,000 in 1998 mainly because of $7.1 million in principal on notes
payable becoming due in 1999. Long-term capital lease obligations fell $937,000
as maturity of those obligations approaches in the year 2001(Note 8). Deferred
income taxes declined $2,619,000 as a result of the loss for the year.
Retained earnings also declined due to the loss for 1998.
During the year ended December 31, 1998, net cash used by operating activities
was $2,488,000 as compared to net cash provided by operating activities of
$54,000 in 1997. The major reasons for the negative cash flow were the decline
in the Company's casino revenue and room revenue. These results forced
management to borrow $5,000,000 in order to meet its operating requirements
and lease and debt obligations. The company was able to borrow from its
majority shareholder, Exber,Inc.
Management has implemented several strategies in order to steer the Company
back from hardship. During 1998, the addition of several new participating
slot machine system games proved to be very successful. In response to this,
management has plans to replace approximatley 200 old slot machines with new,
more popular, machines during 1999. These machines will be added without any
capital outlay since the vendor of the machines allows payment from a
percentage of revenue produced by the machines. Also, management is
coordinating a company-wide effort to improve upon its public image.
With these inexpensive yet effective strategies in place, management
feels that the results can improve for 1999 and beyond.
Admittedly, as the Company faces intense competition from the mega-resorts
on the "strip" to the "locals" casinos spread throughout Las Vegas, the climb
back to positive results will be gradual. However, management is of the
opinion that if more funds are needed, the Company's majority shareholder,
Exber, Inc., is open to provide financing to the Company. There has been
no indication that Exber, Inc. would not provide said financing as needed
for the Company to remain a viable entity.
PRIVATE SECURITIES LITIGATION REFORM ACT
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward looking statements. Certain information included in the 10-K and
other materials filed by the Company with the Securities and Exchange
Commission contains statements that are forward-looking, such as statements
relating to plans for capital spending , financing sources and effects of
regulation and competition. Such forward-looking statements involve important
risks and uncertainties that could significantly affect anticipated results in
the future, and accordingly, actual results may differ materially from those
expressed in any forward-looking statements made by or on behalf of the
Company.
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>
UNION PLAZA HOTEL AND CASINO, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
AND
INDEPENDENT AUDITORS' REPORT
<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, 1998, and 1997,
and the related consolidated statements of operations, stockholders' equity
and cash flows for the years ended December 31, 1998, 1997 and 1996. 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, 1998 and 1997, and the
results of their operations and their cash flows for the years ended December
31, 1998, 1997 and 1996 in conformity with generally accepted accounting
principles.
Gary V. Campbell, CPA, Ltd.
Las Vegas, Nevada
February 22, 1999
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
AND
INDEPENDENT AUDITORS' REPORT
<PAGE>
</TABLE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
Amounts in thousands, except per share data
<CAPTION>
ASSETS
1998 1997
<S> <C> <C>
CURRENT ASSETS:
Cash $ 3,228 $ 3,135
Accounts receivable (Note 3) 809 821
Inventories of food, beverage
and supplies 283 267
Prepaid expenses 999 979
TOTAL CURRENT ASSETS 5,319 5,202
PROPERTY AND EQUIPMENT (Note 8):
Land 7,012 7,012
Buildings 56,854 56,794
Leasehold improvements 3,514 3,514
Furniture and equipment 33,950 34,304
101,330 101,624
Less accumulated depreciation
and amortization 66,064 63,069
NET PROPERTY AND EQUIPMENT 35,266 38,555
OTHER ASSETS (Note 4) 954 1,435
$ 41,539 $ 45,192
<FN>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
Amounts in thousands, except per share data
<CAPTION>
1998 1997
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 2,472 $ 2,745
Accrued liabilities (Note 5) 2,162 2,058
Current portion of long-term debt (Note 7) 7,106 161
Current portion of obligations under
capital leases (Note 8) 937 818
TOTAL CURRENT LIABILITIES 12,677 5,782
LONG-TERM DEBT - related party,
less current portion (Note 7) 18,394 20,359
OBLIGATIONS UNDER CAPITAL LEASES - related party,
less current portion (Note 8) 1,770 2,707
DEFERRED INCOME TAXES (Note 6) 394 3,013
33,235 31,861
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 757,419 shares and 758,419
shares at December 31, 1998 and 1997,
respectively. 750 750
Additional paid-in capital 5,462 5,462
Retained earnings 15,989 20,991
22,201 27,203
Less treasury stock, at cost, 742,581 shares
and 741,581 shares at December 31, 1998
and 1997, respectively 13,897 13,872
TOTAL STOCKHOLDERS' EQUITY 8,304 13,331
$ 41,539 $ 45,192
<FN>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Amounts in thousands, except per share data
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
REVENUES:
Casino $ 30,886 $ 32,135 $ 36,292
Food and beverage 9,687 9,515 9,799
Rooms 10,815 11,472 12,293
Other 2,109 2,261 2,344
GROSS REVENUES 53,497 55,383 60,728
Less promotional allowances 7,647 7,368 7,396
NET REVENUES 45,850 48,015 53,332
OPERATING EXPENSES:
Casino 14,469 14,089 14,726
Food and beverage 14,646 14.674 14,369
Rooms 5,685 5,771 5,710
General and administrative 4,072 3,876 4,036
Entertainment 629 619 648
Advertising and promotion 304 385 414
Utilities and maintenance 5,640 5,480 5,735
Depreciation & amortization 3,742 4,094 4,461
Provision for doubtful accounts 37 33 65
Other costs and expenses 1,215 1,218 1,284
TOTAL OPERATING EXPENSES 50,439 50,239 51,448
OPERATING INCOME (LOSS) (4,589) (2,224) 1,884
OTHER INCOME (EXPENSE):
Interest income 28 39 62
Interest expense - related party (2,268) (2,186) (2,279)
Investment in Fremont
Street Experience (Note 13) ( 792) ( 471) ( 753)
TOTAL OTHER INCOME (EXPENSE) (3,032) (2,618) (2,970)
INCOME(LOSS) BEFORE
INCOME TAX EXPENSE (7,621) (4,842) (1,086)
INCOME TAX EXPENSE (BENEFIT)(Note 6):
Current - ( 196) -
Deferred (2,619) (1,002) ( 350)
TOTAL INCOME TAX EXPENSE(BENEFIT) (2,619) (1,198) ( 350)
NET INCOME(LOSS) $(5,002) $(3,644) $ ( 736)
EARNINGS (LOSS) PER COMMON SHARE
(Note 10) $( 6.60) $( 4.80) $ ( .97)
<FN>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
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, 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
Purchase of 50
shares of
treasury stock - - - ( 2) ( 2)
Net loss for 1997 - - (3,644) - (3,644)
BALANCE:
December 31, 1997 $750 $5,462 $20,991 $(13,872) $ 13,331
Purchase of 1000
shares of
Treasury stock - - - ( 25) ( 25)
Net loss for 1998 - - ( 5,002) - ( 5,002)
BALANCE
December 31, 1998 $750 $5,462 $15,989 $(13,897) $ 8,304
<FN>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Amounts in thousands, except per share data
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 45,663 $ 48,062 $ 53,485
Cash paid to suppliers and
employees (47,255) (46,025) (47,064)
Interest received 28 59 68
Interest paid - related party ( 1,121) ( 2,186) ( 2,279)
Income taxes received 197 144 -
NET CASH PROVIDED BY
OPERATING ACTIVITIES ( 2,488) 54 4,210
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property
and equipment 3 21 6
Proceeds from sale of bonds - 25 -
Purchase of property and equipment ( 412) ( 461) ( 1,499)
NET CASH USED IN
INVESTING ACTIVITIES ( 409) ( 415) ( 1,493)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of treasury stock - - 5
Proceeds from long-term debt 3,500 1,483 -
Principal payments on capital leases ( 396) ( 714) ( 623)
Principal payments on long-term debt ( 89) ( 253) ( 1,990)
Purchase of treasury stock ( 25) ( 2) ( 86)
NET CASH USED IN
FINANCING ACTIVITIES 2,990 514 ( 2,694)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 93 153 23
CASH AND CASH EQUIVALENTS, at
beginning of the year 3,135 2,982 2,959
CASH AND CASH EQUIVALENTS, at
end of the year $ 3,228 $ 3,135 $ 2,982
<FN>
The accompanying notes to consolidated financial statements
are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Amounts in thousands, except per share data
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
RECONCILIATION OF NET INCOME (LOSS) TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income (loss) $(5,002) $(3,644) $( 736)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS)
TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 3,742 4,094 4,461
(Gain) loss on sale and abandonment of
property, equipment and improvements ( 3) ( 3) ( 8)
Interest expense 1,147 - -
Equity investment loss 387 471 702
Provision for doubtful accounts ( 13) ( 15) 29
(Increase) decrease in assets:
Accounts receivable 25 67 48
Interest receivable - 20 6
Inventories ( 16) 67 ( 58)
Prepaid expenses ( 20) 18 309
Other assets 53 ( 16) ( 235)
Increase (decrease) in liabilities:
Accounts payable ( 273) 422 ( 364)
Checks issued against future deposits - ( 330) 330
Accrued salaries 43 140 87
Accrued liabilities 61 ( 225) ( 11)
Deferred income tax (2,619) (1,002) ( 350)
TOTAL ADJUSTMENTS 2,514 3,698 4,946
NET CASH PROVIDED BY OPERATING ACTIVITIES $(2,488) $ 54 $ 4,210
<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
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 $-0- at December 31, 1998
and $386,000 at December 31, 1997. 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 1998, 1997 and
1996 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. The Company does
not believe it is subject to any unusual credit risk beyond the normal
risk attendant to operating its business.
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>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
FAIR VALUE OF FINANCIAL INSTRUMENTS
Based on the borrowing rates currently available to the Company, the
carrying value of notes payable and long-term debt, approximates fair
value.
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>
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 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.
COMPREHENSIVE INCOME
Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income, (SFAS 130), required that total
comprehensive income be reported in the financial statements. The
Company does not have any items considered to be other comprehensive
income for the years ended December 31, 1998, 1997 and 1996.
<TABLE>
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 . Uninsured balances at December 31, 1998 and December 31, 1997 are
$223,000 and $185,000 respectively. Also included in cash are uninsured money
market funds amounting to $23,000 and $18,000 at December 31, 1998 and
December 31, 1997, respectively.
NOTE 3 - ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
Amounts in thousands
<CAPTION>
December 31,
1998 1997
<S> <C> <C>
Casino $ 516 $ 512
Hotel 225 277
Other 83 60
824 849
Less allowance for
doubtful accounts 15 28
$ 809 $ 821
</TABLE>
<PAGE>
<TABLE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 - OTHER ASSETS
Other assets consist of the following:
Amounts in thousands
<CAPTION>
December 31,
1998 1997
<S> <C> <C>
Expansion of gaming rights, less
accumulated amortization of
$709,000 and $668,000 $ 101 $ 142
Net investment in direct financing
lease, net of current portion
(Note 8) 94 143
Leasehold costs, less accumulated
amortization of $404,000 and
$389,000 35 50
Investment in Fremont Street Experience
(Note 13) - 386
Deposits and other 724 714
$ 954 $ 1,435
</TABLE>
<TABLE>
NOTE 5 - ACCRUED LIABILITIES
Accrued liabilities consist of the following:
Amounts in thousands
<CAPTION>
December 31,
1998 1997
<S> <C> <C>
Salaries and wages $ 1,267 $ 1,224
Union back wages 40 48
Taxes, other than taxes on income 343 396
Other 512 390
$ 2,162 $ 2,058
</TABLE>
<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.
<TABLE>
The sources of those timing differences and the current tax effect of each
were as follows:
Amounts in thousands
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Depreciation and respective
gains $( 228) $ 59 $ 112
Capitalized leases 203 170 141
Net operating losses (2,510) (1,477) ( 664)
Vacation and backpay 15 ( 9) 28
Tax credits ( 77) ( 249) ( 4)
Valuation Allowance - 513 -
Other ( 22) ( 9) 37
$(2,619) $(1,002) $( 350)
</TABLE>
<TABLE>
The components of the net deferred tax liability at December 31, 1998 and 1997
under SFAS 109 are as follows:
<CAPTION>
1998 1997
<S> <C> <C>
Depreciation and
amortization $ 6,113 $ 6,137
Net operating loss (4,716) (2,206)
Tax and AMT credits, net ( 710) ( 633)
Other ( 293) ( 285)
$ 394 $ 3,013
</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, 1998 of approximately $13,871,000 and $516,000, respectively, with
expiration dates through December 31, 2018. Tax credits were used to reduce
federal income taxes for the year in which they occur.
<TABLE>
Reconciliations between the actual tax expense (benefit) and the amount
computed by applying the U.S. Federal Income Tax rate to income (loss) before
taxes are as follows:
Amounts in thousands
<CAPTION>
1998 1997 1996
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) $(2,588) (34.0%) $(1,646) (34.0%) $( 369) (34.0%)
Increase (reduction)
in tax resulting from:
Tax credits ( 77) ( 1.0%) ( 110) ( 2.3%) - -
Allowance - - 513 10.6% - -
Other - - ( 3) ( 0.1%) - -
Nondeductible
expenses 46 0.6% 48 1.0% 19 1.7%
ACTUAL TAX
EXPENSE (BENEFIT) $(2,619) (34.4%) $(1,198) (24.8%) $( 350) (32.3%)
</TABLE>
<PAGE>
<TABLE>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, 1998 and 1997 is as follows:
Amounts in Thousands
<CAPTION>
December 31,
1998 1997
<C> <C>
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) $ 25,500 $ 20,520
Less current portion 7,106 161
$ 18,394 $ 20,359
</TABLE>
Principal payments on long-term debt during the succeeding five years are
as follows:
1998 $ 7,106
1999 491
2000 530
2001 573
2002 619
2003 16,181
Thereafter $ 25,500
Interest on long-term debt was $1,836,000 in 1998, $1,650,000 in 1997 and
$1,651,000 in 1996.
<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.
<TABLE>
Property and equipment includes the following property under capital
leases by major classes:
Amounts in thousands
<CAPTION>
December 31,
1998 1997
<S> <C> <C>
Building $ 9,242 $ 9,242
Less accumulated amortization 8,793 8,617
$ 449 $ 625
</TABLE>
Depreciation and amortization expense includes amortization of property
under capital leases of $176,000, per year for 1998, 1997, and 1996.
Interest paid on property under capital leases was $432,000 for 1998,
$536,000 for 1997 and $627,000 for 1996.
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, 1998:
CAPITAL
LEASES
(In thousands)
1999 1,250
2000 1,250
2001 729
TOTAL MINIMUM LEASE PAYMENTS 3,229
Less amount representing interest 522
Present value of net minimum lease
payments under capital leases 2,707
Less current portion 937
OBLIGATIONS UNDER CAPITAL LEASES $ 1,770
<PAGE>
<TABLE>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
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Parking lot leases $ 24 $ 24 $ 24
</TABLE>
<TABLE>
SUBLEASES
The bus depot property under a capital lease is sublet as follows:
Amounts in thousands
<CAPTION>
December 31,
1998 1997
<S> <C> <C>
Minimum future rents receivable $170 $236
Less amount representing interest 27 50
Minimum lease payments receivable 143 186
Less current portion (included in
accounts receivable) 49 43
Net investment in direct financing
lease (See Note 4) $ 94 $143
</TABLE>
Other sublet rental property:
The Company rents building space to several retail stores under various
short-term leases. Income from these subleases, included in other income,
for 1998, 1997, and 1996 was $311,000, $313,000 and $298,000,
respectively.
<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 1998, 1997, and 1996 were $32,000, $-0- and $228,000, 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 $-0-,$-0-,$300,000 for 1998, 1997, and
1996, respectively.
The Company provides no post-retirement 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 earnings per common share are 757,419 in 1998, 758,419 in 1997
and 760,623 in 1996.
NOTE 11 - RELATED PARTIES
As of December 31, 1998, the Company holds a note payable to Exber, Inc.,
a 46.08% stockholder, in the amount of $25,500,000, 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 $1,836,000, $1,650,000 and $1,651,000 for 1998,
1997, and 1996, 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
LITIGATI0N
The Company has contingent liabilities with respect to lawsuits and other
matters arising in the ordinary course of business. It is estimated that the
adverse effect of these lawsuits will not exceed $340,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company has had recurring net losses over the past three
years amounting to $4,994,000, $3,644,000 and $736,000 in 1998, 1997
and 1998 respectively. At December 31, 1998 its current liabilities
exceed its assets by approximately $7,350,000. The Company plans to
generate sufficient cash flows to meet operating needs by obtaining
additional debt financing from Exber, Inc., a related party.
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 13 - INVESTMENT IN FREMONT STREET EXPERIENCE
In 1995, 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 5.9% 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 losses of
$792,000, $471,000 and $753,000 for the years 1998, 1997 and 1996
respectively. As of December 31, 1998, the Union Plaza Experience, Inc.
has withdrawn from the Freemont Street Experience and has been released
of all liability. The investment at December 31, 1998 and 1997 was
$-0- and $386,000 respectively.
NOTE 14 - ADVERTISING COSTS
The Company expenses advertising costs as incurred. Advertising expense
was $304,000, $385,000 and $414,000 for the years ended December 31, 1998,
1997 and 1996, 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
Erving K. Epstein 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
Tom Leeder Controller
<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
57% 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, roulette, baccarat and pai gow poker.
The food and beverage facilities account for approximately 18% 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 3%.
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 21, 1999, 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>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 3228000
<SECURITIES> 0
<RECEIVABLES> 809000
<ALLOWANCES> 0
<INVENTORY> 528000
<CURRENT-ASSETS> 5319000
<PP&E> 101330000
<DEPRECIATION> 66064000
<TOTAL-ASSETS> 41539000
<CURRENT-LIABILITIES> 12677000
<BONDS> 18394000
0
0
<COMMON> 750000
<OTHER-SE> 7554000
<TOTAL-LIABILITY-AND-EQUITY> 41539000
<SALES> 9687000
<TOTAL-REVENUES> 53497000
<CGS> 14646000
<TOTAL-COSTS> 28734000
<OTHER-EXPENSES> 10597000
<LOSS-PROVISION> 37000
<INTEREST-EXPENSE> 2268000
<INCOME-PRETAX> (7621000)
<INCOME-TAX> (2619000)
<INCOME-CONTINUING> (5002000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5002000)
<EPS-PRIMARY> ( 6.60 )
<EPS-DILUTED> ( 6.60 )
</TABLE>
