UNION PLAZA HOTEL AND CASINO, INC.
1 Main Street
Las Vegas, NV 89101
November 12, 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-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 September 30, 1999
Commission file number 0-8133
UNION PLAZA HOTEL AND CASINO INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0110085
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
No. 1 Main Street 89125
Las Vegas, Nevada (Zip Code)
(Address of principal
executive offices)
(702) 386-2110
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
and (2) has been subject to such filing requirements for the past
90 days.
YES [ X ] NO [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by
this report:
Outstanding at
Class of Common Stock September 30, 1999
$.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
November 12, 1999
<PAGE>
PART 1. - Financial Information
Item 1. Financial Statements
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30, 1999 AND DECEMBER 31, 1998
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
[CAPTION]
September 30, 1999 AND DECEMBER 31, 1998
ASSETS
SEPTEMBER 30, DECEMBER 31,
1999 1998
[S] [C] [C]
Current Assets:
Cash $ 2,740,000 $ 3,228,000
Accounts receivable 862,000 809,000
Inventories of food, beverage
and supplies 364,000 283,000
Prepaid expense 971,000 999,000
Total current assets 4,937,000 5,319,000
Property and equipment:
Land 7,012,000 7,012,000
Buildings 56,880,000 56,854,000
Leasehold improvements 3,530,000 3,514,000
Furniture and equipment 36,614,000 33,950,000
104,036,000 101,330,000
Less accumulated depreciation
and amortization 68,513,000 66,064,000
Net property and equipment 35,523,000 35,266,000
Other assets 734,000 954,000
$ 41,194,000 $ 41,539,000
The accompanying notes are an integral
part of these financial statements.
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
SEPTEMBER 30, DECEMBER 31,
1999 1998
[S] [C] [C]
Current liabilites:
Accounts payable $ 3,841,000 $ 2,472,000
Accrued liabilities 1,859,000 2,162,000
Current portion of long-term debt 7,106,000 7,106,000
Current portion of obligations under
capital leases 937,000 937,000
Total current liabilities 13,743,000 12,677,000
Long-term debt, less current portion 20,794,000 18,394,000
Obligations under capital leases, less
current portion 1,080,000 1,770,000
Deferred income taxes 394,000 394,000
Total Liabilities 36,011,000 33,235,000
Commitments and contingencies
Stockholders' equity:
Common stock, $.50 par value; authorized
20,000,000 shares; issued 1,500,000
shares; Outstanding 757,419 shares at
December 31, 1998 and 757,419 shares
at September 30, 1999. 750,000 750,000
Additional paid-in capital 5,462,000 5,462,000
Retained earnings 12,868,000 15,989,000
19,080,000 22,201,000
Less treasury stock, at cost, 742,581
shares at December 31, 1998 and 742,581
shares at September 30, 1999. 13,897,000 13,897,000
Total stockholders' equity 5,183,000 8,304,000
$41,194,000 $41,539,000
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]
NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Amounts in thousands except per share data
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
[S] [C] [C] [C] [C]
Revenues:
Casino $ 25,597 $24,220 $ 8,239 $ 7,520
Food and Beverage 7,294 7,258 2,179 2,267
Rooms 8,250 8,073 2,566 2,609
Other 1,621 1,555 492 506
Gross revenues 42,762 41,106 13,473 12,902
Less promotional complimentaries 5,737 6,074 1,897 2,209
Net revenues 37,025 35,032 11,576 10,873
Operating expenses:
Casino 11,292 10,996 3,800 3,597
Food and Beverage 11,010 10,928 3,416 3,595
Rooms 4,396 4,299 1,424 1,438
General & Administrative 2,988 2,760 924 833
Entertainment 356 362 124 115
Advertising & Promotion 244 211 148 102
Utilities & Maintenance 4,572 4,333 1,686 1,673
Depreciation & Amortization 2,477 2,851 879 940
Provisions for Doubtful Accts. 28 29 7 8
Other Costs and Expenses 988 980 267 317
Total operating expenses 38,351 37,749 12,675 12,618
Operating income/(loss) (1,326) (2,717) (1,099) (1,745)
Other income (expense):
Interest Income 1 5 0 1
Interest Expense (1,796) (1,668) (631) (576)
Total other income (expense) (1,795) (1,683) (631) (575)
Income before income taxes (3,121) (4,400) (1,730) (2,320)
Income taxes 0 (213) 0 0
Net income/(loss) (3,121) (4,187) (1,730) (2,320)
Earnings/(loss) per common share ($4.12) ($5.52) ($2.28) ($3.06)
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 SEPTEMBER 30, 1999 AND 1998
INCREASE IN CASH AND CASH EQUIVALENTS
1999 1998
[S] [C] [C]
Cash flows from operating activities:
Cash received from customers $ 37,067,000 $ 35,526,000
Cash paid to suppliers and employees (34,741,000) (36,326,000)
Interest received 1,000 5,000
Interest paid (1,796,000) (1,688,000)
Income taxes paid 0 0
Net cash provided by operating activities 531,000 (2,483,000)
Cash flows from investing activities:
Proceeds from sale of property & equipment 15,000 2,000
Purchase of property and equipment (2,744,000) (284,000)
Net cash used in investing activities (2,729,000) (282,000)
Cash flows from financing activities:
Proceeds from note payable to Stockholder 2,400,000 2,274,000
Principal payments on capital lease (690,000) (602,000)
Principal payments on long-term debt 0 (44,000)
Purchase of Treasury Stock 0 (25,000)
Net cash used in financing activities 1,710,000 1,603,000
Net increase (decrease) in cash and
cash equivalents (488,000) (1,162,000)
Cash and cash equivalents
at 12/31/99 & 12/31/98 3,228,000 3,135,000
Cash and cash equivalents,
at 09/30/99 & 09/30/98 2,740,000 1,973,000
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
Net income(loss) for period ended
09/30/99 and 09/30/98 $ (3,121,000) $ (4,187,000)
Adjustments to reconcile net income to
Net cash provided by operating activities:
Depreciation and amortization 2,478,000 2,891,000
Gain on sale of assets 23,000 (4,000)
(Increase) decrease in assets:
Accounts receivable (53,000) 566,000
Inventories (81,000) (135,000)
Prepaid expenses 28,000 (133,000)
Other assets 190,000 (186,000)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 1,067,000 (1,082,000)
Deferred Income Tax 0 (213,000)
Total adjustments 3,652,000 1,704,000
Net cash provided (used) by operating
activities $ 531,000 $ (2,483,000)
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. The Company since withdrew from the
Fremont Street Experience partnership and has written off its
entire investment in the entity. 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 uncollectible
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. Carry-forwards of this credit, as well as the tax
effect of net operating loss carry-forwards, 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:
September 30, December 31,
1999 1998
Casino $ 228,000 $ 516,000
Hotel 126,000 225,000
Other 523,000 83,000
877,000 824,000
Less allowance for
doubtful accounts 15,000 15,000
$ 862,000 $ 809,000
NOTE 3 - OTHER ASSETS
Other assets consist of the following:
September 30, December 31,
1999 1998
Expansion of gaming rights, less
accumulated amortization of
$739,000 and $709,000 $ 71,000 $ 101,000
Net investment in direct financing
lease, net of current portion (Note 7) 57,000 94,000
Leasehold costs, less accumulated
amortization of $415,000 and
$404,000 24,000 35,000
Deposits and other 582,000 724,000
$ 734,000 $ 954,000
<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:
September 30, December 31,
1999 1998
Salaries and Wages $ 788,000 $1,267,000
Union back wages 33,000 40,000
Taxes, other than tax on income 232,000 343,000
Other 806,000 512,000
$1,859,000 $2,162,000
NOTE 5 - INCOME TAXES
The Internal Revenue Service has examined the Company's
Federal income tax returns through 1991. Management is of the
opinion that all taxes have been paid or provided for through
September 30, 1999.
NOTE 6 - LONG-TERM DEBT
Long-term debt consists of the following:
September 30, December 31,
1999 1998
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). 27,900,000 25,500,000
Less current portion 7,106,000 7,106,000
$20,794,000 $18,394,000
Principal payments on long-term debt during the succeeding
five years are as follows:
1999 (Remaining three months) 7,106,000
2000 491,000
2001 530,000
2002 573,000
2003 619,000
Thereafter 18,581,000
$27,900,000
Maturities were calculated based upon interest rates in
effect at September 30, 1999.
<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:
September 30, December 31,
1999 1998
Land and Buildings $ 9,242,000 $9,242,000
Less accumulated amortization 8,925,000 8,793,000
$ 317,000 $ 449,000
The following is a schedule of future minimum lease payments
as of September 30, 1999.
1999 (Remaining three months) $ 313,000
2000 1,250,000
2001 729,000
Total minimum lease payments 2,292,000
Less amount representing interest 275,000
Present value of net minimum
lease pmts under capital leases 2,017,000
Less current portion 937,000
Long-term obligations under
capital leases $ 1,080,000
SUBLEASES
The bus depot property under a capital lease is sublet as
follows:
September 30, December 31,
1999 1998
Minimum future rents receivable $ 121,000 $ 170,000
Less amount representing interest 15,000 27,000
Minimum future rents receivable 106,000 143,000
Less current portion (included in
accounts receivable) 49,000 49,000
Net investment in direct
financing lease (See Note 3)$ 57,000 $ 94,000
<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 nine months of 1999 the Company issued
total bonuses of $22,000 compared to the same period last year when
$32,000 was contributed.
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. During 1999 there have
have been no profit sharing plan contributions and it is
anticipated that there will be none. Last year, there was
$25,000 which was accrued in the first six months but was never
contributed.
NOTE 9 - RELATED PARTIES
On December 18, 1991, Exber, Inc., a 46.08% stockholder as
of September 30, 1999, 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 and during 1998 did the same,
increasing the note to $25,500,000.
During the first nine months of 1999, the Company has borrowed
an additional $2,400,000 from Exber, Inc. to provide for capital
improvements, and slot machine purchases. The outstanding balances
of the note at September 30, 1999 was $27,900,000.
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 $2,740,000(6.7% of total
assets) at September 30, 1999 and $3,228,000 (7.8% of total assets)
at December 31, 1998. The ratio of current assets to current
liabilities was .36 to 1 at September 30, 1999 and .4 to 1 at
December 31, 1998. Cash asset levels are consistent with normal
operating requirements of the casino operation.
Long-term debt obligations, including current maturities
expanded to $27,900,000 compared to $25,500,000 at December 31,
1998, reflecting an increase of $2,400,000 for the first nine
months the year. The proceeds of the additional borrowing was
used to pay for investments in capital equipment including slot
machines, interior signage, gift shop remodeling and slot booth
replacements. These funds were borrowed from Exber, Inc., the
Company's majority shareholder. Exber, Inc. continues to provide
the Company with funding as needed to meet normal operating obligations
and to fund capital improvements.
Due to the additional borrowing over the past several years it
apparent that the Company will not be able to meet its 1999
obligation to Exber, Inc. Therefore, the Company is expected to
renegotiate the terms of the note during the fourth quarter to create
a realistic timetable for repayment of the debt. Due to the relationship
the Company has with Exber, Inc. it does not expect to have any
difficulties in negotiating new terms to the loan agreement with them.
As if September 30, 1999, outstanding receivables were $862,000
compared to $809,000 at December 31, 1998. Inventories of food,
beverage and shop items were $364,000 at the end of the third quarter
compared to $369,000 at the end of the second quarter. Total
accounts payable were $3,841,000 compared to $3,855,000 at the end
of June 1999. Total accrued liabilities rose $82,000 in the period
compared to those reported in the second quarter. The increase in
liabilities is the result of seasonal fluctuations in the book related
to unpaid tickets and future wagers, which rose a combined $101,000.
RESULTS OF OPERATIONS
Third quarter revenues rose $703,000 or 5.4% compared to the
results reported in the same period a year ago. Gaming revenues
rose $716,000 or 9.5%, while room, food, and beverage revenues
fell a combined $131,000 or 2.7%. The decline in room, food
and beverage was directly offset by a $132,000 or 6.5% reduction
in complimentary expenses. Other income, which includes rentals,
commissions, arcade games, and telephone, fell $14,000 or 2.8%.
The increase in gaming revenue during the quarter is encouraging
for the Company because it is the second consecutive quarter of
positive revenue growth, and year-to-date gaming revenues are up
$1,377,000 or 5.7% over last year's result. The improvement in
gaming revenue is largely attributed to an 8.5% increase in slot
profits compared to the year ago period.
<PAGE>
PART 1. - FINANCIAL INFORMATION
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
Food and beverage revenues fell $88,000 (3.9%) during a
period when the Company's restaurants served nearly 33,000
fewer guests. fewer guest complimentaries combined with lower
in-house room guests contributed to the decline. The Company
implemented an overall price increase in both the food and
beverage departments to bring its menu and drink prices in line
with those of the nearby competitors. Despite the significantly
lower restaurant covers, the overall impact of the pricing decision
may not be known for some time. Management will continue to monitor
these key operating statistics and make adjustments where necessary.
As mentioned in the second quarter report, the Company has
recently embarked on a strategy to upgrade its hotel, casino
and restaurants by way of clean-up and capital investment in
new gaming machines. During the past six months, the Company has
replaced a significant percentage of the slot machines that
were on the casino floor at the end of 1998 in an attempt to
revitalize the gaming floor.
While upgrading the casino floor, the Company has purchased
and leased hundreds of new slot machines and other video gaming
machines and has added two change booths to the casino floor.
The Company has also placed a number of "participating" games
on the casino floor during this time. Increasingly, slot machine
manufacturers are making their "theme" machines available to the
casinos by way of participation. These manufacturers share in
the profits of their games by a percentage of handle or by a
percentage of the win. Third quarter participation fees were
$532,000 compared to $253,000 in the third quarter of 1998. The
participation games are typically well designed and are
delivered with impressive signage. The Company does not pay for
purchase of the machines or their signage and can request removal
of these games at any given time.
The Company has also signed an agreement recently to
install a slot player tracking and accounting system at its casino.
This addition will allow the Company to accurately track the play
of its customers more effectively and to market to them accordingly.
This system should be fully implemented in the first quarter of 2000.
The cost of this system is estimated to be nearly $1,600,000 and
will be financed by Exber, Inc., the Company's primary shareholder.
Total operating expenses rose $57,000 or 0.5% during the
third quarter when compared to the same period a year ago.
Expenses were mostly lower for the quarter with the exception of
casino related costs and general and administrative expenses. Casino
costs rose $203,000 (5.6%) due primarily to the higher slot
participation fees while higher group insurance liabilities increased
general and administrative costs significantly compared to last
year.
Overall, the Company reported a net operating loss of $1,099,000
in the quarter versus a loss of $1,745,000 reported in the
third quarter of 1998. Interest expense rose $55,000 to
$631,000 causing the Company's net loss to expand to $1,730,000
compared with a loss of $2,320,000 reported a year ago. On a
per share basis, the loss was $2.28 in 1999 versus a loss of $3.06
in 1998.
<PAGE>
PART 1. - FINANCIAL INFORMATION
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
While the operating loss has been reduced each of the past
two quarters, the Company remains concerned about the prospects
of its gaming business. Competition for customers is at an all
time high as the new resorts that have built in Las Vegas continue
to affect the entire industry. Resort operators on the strip and
in the outlying areas of the City are aggressively marketing their
casinos to our customer(s) with bigger and better offerings.
Management believes that the recent slot purchases and building
improvements are a must to ensure the property remains a viable
entity. Management also understands that prompt and courteous
service is a must in this industry and they are implementing steps
to improve the overall level of service at this property. Management
realizes that a rapid return to profitability will be difficult and
will require significant capital expenditures to become competitive
in this market. The improvements that have been made during the
past two quarters are the first step to remaking the property a
first class operation downtown.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934 the registrant had duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
UNION PLAZA HOTEL AND CASINO, INC.
(REGISTRANT)
Date: November 12, 1999 /SS/ JOHN D. GAUGHAN
JOHN D. GAUGHAN, President
Date: November 12, 1999 /SS/ LARRY DOLESH
LARRY DOLESH, Vice President
of Finance
Date: November 12, 1999 /SS/ JOHN P. JONES
JOHN P. JONES, Vice President &
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 2740000
<SECURITIES> 0
<RECEIVABLES> 862000
<ALLOWANCES> 0
<INVENTORY> 364000
<CURRENT-ASSETS> 4937000
<PP&E> 104036000
<DEPRECIATION> 68513000
<TOTAL-ASSETS> 41194000
<CURRENT-LIABILITIES> 13743000
<BONDS> 20794000
0
0
<COMMON> 750000
<OTHER-SE> 4433000
<TOTAL-LIABILITY-AND-EQUITY> 41194000
<SALES> 7294000
<TOTAL-REVENUES> 42762000
<CGS> 11010000
<TOTAL-COSTS> 22025000
<OTHER-EXPENSES> 8037000
<LOSS-PROVISION> 28000
<INTEREST-EXPENSE> 1796000
<INCOME-PRETAX> (3121000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3121000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3121000)
<EPS-BASIC> (4.12)
<EPS-DILUTED> (4.12)
</TABLE>
