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 March 31, 2000
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 March 31, 2000
$.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/ ALAN J. WOODY
Alan J. Woody, Chief Financial Officer
Las Vegas, Nevada
May 11, 2000
<PAGE>
PART 1. - Financial Information
Item 1. Financial Statements
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
MARCH 31, 2000 AND DECEMBER 31, 1999
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
[CAPTION]
MARCH 31, 2000 AND DECEMBER 31, 1999
ASSETS
MARCH 31, DECEMBER 31,
2000 1999
[S] [C] [C]
Current Assets:
Cash $ 4,757,000 $ 3,250,000
Accounts receivable 425,000 519,000
Inventories of food, beverage
and supplies 411,000 348,000
Prepaid expense 1,008,000 810,000
Total current assets 6,601,000 4,927,000
Property and equipment:
Land 7,012,000 7,012,000
Buildings 56,923,000 56,887,000
Leasehold improvements 3,530,000 3,530,000
Furniture and equipment 39,967,000 39,607,000
107,432,000 107,036,000
Less accumulated depreciation
and amortization 70,523,000 69,526,000
Net property and equipment 36,909,000 37,510,000
Other assets 735,000 841,000
$ 44,245,000 $ 43,278,000
The accompanying notes are an integral
part of these financial statements.
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31, DECEMBER 31,
2000 1999
[S] [C] [C]
Current liabilities:
Accounts payable $ 2,848,000 $ 3,709,000
Accrued liabilities 2,378,000 1,839,000
Current portion of long-term debt 1,076,000 1,368,000
Current portion of obligations under
capital leases 1,338,000 1,338,000
Total current liabilities 7,640,000 8,254,000
Long-term debt, less current portion 29,754,000 28,754,000
Obligations under capital leases, less
current portion 815,000 1,133,000
Deferred income taxes 0 0
38,209,000 38,141,000
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, 1999 and 757,419 shares
at March 31, 2000. 750,000 750,000
Additional paid-in capital 5,462,000 5,462,000
Retained earnings 13,721,000 12,822,000
19,933,000 19,034,000
Less treasury stock, at cost, 742,581
shares at December 31, 1999 and
742,581 shares at March 31, 2000. 13,897,000 13,897,000
Total stockholders' equity 6,036,000 5,137,000
$44,245,000 $43,278,000
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]
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
2000 1999
[S] [C] [C]
Revenues:
Casino $ 10,073,000 $ 8,539,000
Food and Beverage 2,730,000 2,656,000
Rooms 2,869,000 3,033,000
Other 553,000 627,000
Gross revenues 16,225,000 14,855,000
Less promotional complimentaries 1,913,000 2,138,000
Net revenues 14,312,000 12,717,000
Operating expenses:
Casino 3,690,000 3,642,000
Food and Beverage 3,538,000 3,752,000
Rooms 1,477,000 1,421,000
General & Administrative 981,000 1,063,000
Entertainment 116,000 119,000
Advertising & Promotion 141,000 30,000
Utilities & Maintenance 1,404,000 1,344,000
Depreciation & Amortization 997,000 799,000
Provisions for Doubtful Accts. 8,000 14,000
Other Costs and Expenses 356,000 352,000
Total operating expenses 12,708,000 12,536,000
Operating income/(loss) 1,604,000 181,000
Other income (expense):
Interest Income 1,000 1,000
Interest Expense (706,000) (582,000)
Total other income (expense) (705,000) (581,000)
Income before income taxes 899,000 (400,000)
Income taxes 0 0
Net income/(loss) 899,000 (400,000)
Earnings/(loss) per common share $ 1.19 $ (0.53)
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 MARCH 31, 2000 AND 1999
INCREASE IN CASH AND CASH EQUIVALENTS
2000 1999
[S] [C] [C]
Cash flows from operating activities:
Cash received from customers $ 14,934,000 $ 12,969,000
Cash paid to suppliers and employees (12,727,000) (12,680,000)
Interest received 1,000 1,000
Interest paid (706,000) (582,000)
Income taxes paid 0 0
Net cash provided by operating activities 1,502,000 (565,000)
Cash flows from investing activities:
Proceeds from sale of property & equipment 10,000 0
Purchase of property and equipment (395,000) ( 38,000)
Net cash used in investing activities (385,000) ( 38,000)
Cash flows from financing activities:
Proceeds from note payable to Stockholder 1,000,000 425,000
Principal payments on capital lease (318,000) (222,000)
Principal payments on long-term debt (292,000) (25,000)
Net cash provided (used) in financing
activities 390,000 178,000
Net increase (decrease) in cash and
cash equivalents 1,507,000 (425,000)
Cash and cash equivalents
at 12/31/99 & 12/31/98 3,250,000 3,228,000
Cash and cash equivalents,
at 3/31/00 & 3/31/99 4,757,000 2,803,000
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
Net income(loss) for period ended
3/31/00 and 3/31/99 $ 899,000 $ (400,000)
Adjustments to reconcile net income to
Net cash provided by operating activities:
Depreciation and amortization 1,007,000 807,000
Gain on sale of assets (10,000) 10,000
(Increase) decrease in assets:
Accounts receivable (102,000) 50,000
Inventories 63,000 (113,000)
Prepaid expenses 198,000 (65,000)
Other assets (106,000) 159,000
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (447,000) (1,013,000)
Deferred Income Tax 0 0
Total adjustments 603,000 (165,000)
Net cash provided (used) by operating
activities $ 1,502,000 $ (565,000)
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 December 31, 1999 was
zero as the Company withdrew from the Fremont Street Experience
and has been released from all liability. 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. 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:
March 31, December 31,
2000 1999
Casino $ 168,000 $ 384,000
Hotel 109,000 120,000
Other 162,000 99,000
439,000 603,000
Less allowance for
doubtful accounts 14,000 84,000
$ 425,000 $ 519,000
NOTE 3 - OTHER ASSETS
Other assets consist of the following:
March 31, December 31,
2000 1999
Expansion of gaming rights, less
accumulated amortization of
$759,000 and $749,000 $ 51,000 $ 61,000
Net investment in direct financing
lease, net of current portion (Note 7) 31,000 37,000
Leasehold costs, less accumulated
amortization of $423,000 and
$419,000 16,000 20,000
Deposits and other 637,000 723,000
$ 735,000 $ 841,000
<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:
March 31, December 31,
2000 1999
Salaries and Wages $ 857,000 $1,267,000
Union back wages 33,000 40,000
Taxes, other than tax on income 397,000 343,000
Other 1,091,000 512,000
$2,378,000 $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
March 31, 2000.
NOTE 6 - LONG-TERM DEBT
Long-term debt consists of the following:
March 31, December 31,
2000 1999
Related party note, payable in monthly
installments of interest only at prime
rate not to exceed 12%, until January 1,
2005, at which time the entire balance
plus accrued interest is due. The note
is secured by a First Deed of Trust on
land and buildings. The effective rate
of interest at March 31, 2000 is 9.0%. 29,400,000 28,400,000
Contract payable, secured by slot machines
and related equipment, payable in monthly
installments of 25% of net win with no
stated interest for the first twelve months,
after which an interest rate of 3% over
prime applies to the remaining balance. Any
remaining balance plus accrued interest is
due on April 1, 2001. 115,000 146,000
<PAGE>
UNION PLAZA HOTEL AND CASINO INC., AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - LONG TERM DEBT (CONTINUED)
March 31, December 31,
2000 1999
Contract payable, secured by slot machines
and related equipment, payable in monthly
installments of 25% of net win with no
stated interest for the first twelve months,
after which an interest rate of 3% over
prime applies to the remaining balance. Any
remaining balance plus accrued interest is
due on May 1, 2001. 926,000 1,037,000
Contract payable, secured by slot machines
and related equipment, payable in monthly
installments of 25% of net win with no
stated interest for the first twelve months,
after which an interest rate of 3% over
prime applies to the remaining balance. Any
remaining balance plus accrued interest is
due on April 1, 2001. 0 28,000
Contract payable, secured by slot machines
and related equipment, payable in monthly
installments of 25% of net win with no
stated interest for the first twelve months,
after which an interest rate of 3% over
prime applies to the remaining balance. Any
remaining balance plus accrued interest is
due on September 1, 2001. 45,000 72,000
Contract payable, secured by slot machines
and related equipment, payable in monthly
installments of 25% of net win with no
stated interest. Any remaining balance plus
accrued interest is due on July 1, 2001. 153,000 178,000
Contract payable, secured by slot machines
and related equipment, payable in monthly
installments of 25% of net win with no
stated interest for the first twelve months,
after which an interest rate of 3% over
prime applies to the remaining balance. Any
remaining balance plus accrued interest is
due on December 1, 2001. 28,000 0
<PAGE>
UNION PLAZA HOTEL AND CASINO INC., AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - LONG TERM DEBT (CONTINUED)
March 31, December 31,
2000 1999
Contract Payable, secured by slot machines
And related equipment, payable in monthly
Installments of $32,707 until August 31,
2000, with no stated interest. 163,000 261,000
30,830,000 30,122,000
Less current portion 1,076,000 1,368,000
$29,754,000 $28,754,000
On January 21, 2000 the related party note was refinanced under the
terms disclosed above.
Principal payments on long-term debt during the succeeding five years
are as follows:
Remaining nine months $ 1,076,000 $ 1,368,000
2001 354,000 354,000
2002 to 2004 0 0
Thereafter 29,400,000 28,400,000
$30,830,000 $30,122,000
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:
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - LEASES (CONTINUED)
March 31, December 31,
2000 1999
Land and Buildings $ 9,242,000 $9,242,000
Equipment 906,000 906,000
10,148,000 10,148,000
Less accumulated amortization
Land and buildings 8,883,000 8,969,000
Equipment 161,000 116,000
$ 1,104,000 $ 1,063,000
The following is a schedule of future minimum lease payments
as of March 31, 2000.
2000 (Remaining nine months) $ 1,178,000
2001 1,051,000
Thereafter 149,000
Total minimum lease payments 2,378,000
Less amount representing interest 225,000
Present value of net minimum
lease pmts under capital leases 2,153,000
Less current portion 1,338,000
Long-term obligations under
capital leases $ 815,000
SUBLEASES
The bus depot property under a capital lease is sublet as
follows:
March 31, December 31,
2000 1999
Minimum future rents receivable $ 87,000 $ 104,000
Less amount representing interest 8,000 11,000
Minimum future rents receivable 79,000 93,000
Less current portion (included in
accounts receivable) 49,000 56,000
Net investment in direct
financing lease (See Note 3)$ 30,000 $ 37,000
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - EMPLOYEE BENEFIT PLANS
The Company contributes to a discretionary executive bonus
plan. During the first quarter of 2000, the Company contributed
$159,000 to this plan compared to a year ago when $22,000 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. There have been no profit
sharing plan contributions in the past eight quarters and it is
anticipated that there will be none during the remainder of 2000.
NOTE 9 - RELATED PARTIES
On December 18, 1991, Exber, Inc., a 45.21% stockholder as
of September 30, 1997, 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. At varying intervals during
1997, 1998 and 1999 the Company has borrowed additional funds to
supplement cash flows and to meet normal operating requirements.
At the end of 1999, the Company owed Exber, Inc. $28,400,000.
During the first three months of 2000, the Company borrowed
an additional $1,000,000 to provide funds for capital improvements.
The outstanding balance of the note at March 31, 2000 was
$29,400,000.
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 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 cash assets of $4,757,000 (10.8% of total assets) at
March 31, 2000 and $3,250,000 (7.5% of total assets) at December 31, 1999.
The ratio of current assets to current liabilities was .9 to 1 at
March 31, 2000 and .6 to 1 at December 31, 1999.
Long-term debt obligations, including current maturities were $30,830,000
at March 31, 2000 compared to $30,122,000 at December 31, 1999. The
$708,000 increase in long-term debt obligations is due to additional
borrowing of $1,000,000 from the Company's primary shareholder and payments
made on existing slot contracts. The loan from Exber, Inc. occurred early
in the quarter and was needed to fund on-going capital projects at the
Company's hotel and casino.
At March 31, 2000, outstanding receivables were $425,000 compared to
$519,000 at December 31, 1999. The decline in receivables is attributed to
lower casino receivables at the end of the first quarter compared to
traditionally high credit levels associated with the year-end holidays.
Inventories of food, beverage and shop items rose $63,000 from $348,000
to $411,000 which compares to inventories on hand during the same period
a year ago. Accounts payable declined by $986,000 during the quarter
from $3,709,000 to $2,723,000. The decline in payables is due to timing
differences in billing cycles and reporting periods. Payables are
significantly higher this year compared to last year's comparable
period due to the inclusion of a $1,400,000 software purchase that was
transacted at the end of 1999 and remains unpaid. Accrued liabilities
and expenses increased nearly 30% to $2,378,000 primarily the result of
a reclassification of the Company's outstanding gaming chip liability.
RESULTS OF OPERATIONS
The first quarter of the new millennium was very positive for the Company
as net revenue increased $1,595,000 or 12.5% compared to the same period
a year ago. An 18.0% increase in gaming revenues and a 10.5% decline
in promotional complimentaries proved to be the primary factors in the
overall improvement in revenues. Food and beverage revenues also rose
2.7% but those gains were offset by a 5.4% decline in room revenue.
Other income also fell 11.8% or $74,000 due mostly to the recognition
of $50,000 in earnest money in the year ago quarter.
The increase in gaming revenue in the first quarter is encouraging for
the new management team at the Plaza casino. The fact that the Company
reported its first profitable quarter in over three years is testimony
to the benefits of the capital investment in new gaming equipment.
A significant majority of the Company's revenue is attributed to the
slot and video games, therefore, management will continue to focus on
this segment of its operation. The Company expects that its new player
tracking system will be in full operation before the end of the second
quarter. This addition will greatly improve management's ability to
market its services and promotions to all of its customers. While the
process of upgrading the gaming equipment is on-going, the second
and equally important phase of the improvement in the slot area will
focus on customer service. Various programs are currently being
considered to educate employees how to enhance the gaming experience
for its valued customers.
The Company is also focusing on its food and beverage operations.
Recently, two new chefs have been added to the staff to improve the
quality of the food at the Company's restaurants. During the first
quarter, the Backstage restaurant was converted to a Chinese buffet
restaurant and the Company made the decision to remodel its world
famous Center Stage restaurant. Completion of the Center Stage
remodel is expected to be completed in the third quarter of this year.
In conjunction with the improvements identified above, the Company
is also in the process of remodeling each of its hotel guest rooms.
Management understands that maintaining maximum occupancy is critical
to the casino operation and therefore, the rooms must be maintained
at standards equivalent of the larger strip properties. New room
furniture, carpet, bathrooms, air conditioning units and keyless
door locks are just some of the improvements being made in the hotel.
<PAGE>
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
While the Company is committed to increasing revenues, expense control
has not been overlooked. During the first quarter, operating costs
rose $172,000 or 1.3% which is due entirely to higher depreciation
expense. The purchase of gaming devices and property wide upgrades
over the past twelve months has resulted in depreciation costs that
are $198,000 higher than last year. Payroll costs have been reduced
in virtually all segments of the operation while the level of service
has improved or remained the same.
Overall, the Company reported quarterly operating income of $1,604,000
compared to $181,000 a year ago. Interest expense rose $124,000 from
$582,000 to $706,000 reflecting a higher rate of interest and larger
balance on the Company's first mortgage note. Net income was $899,000
for the first quarter of 2000 compared to a loss of $400,000 in 1999.
On a per share basis, the Company reports income of $1.19 in 2000
versus a loss of $0.53 in 1999.
<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: May 11, 2000 /S/ JOHN D. GAUGHAN
JOHN D. GAUGHAN, President
Date: May 11, 2000 /S/ JOHN P. JONES
JOHN P. JONES, Vice President &
Treasurer
Date: May 11, 2000 /S/ ALAN J. WOODY
ALAN J. WOODY, Chief Financial
Officer
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<ARTICLE> 5
<S> <C>
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