UNION PLAZA HOTEL AND CASINO, INC.
1 Main Street
Las Vegas, NV 89101
August 14, 2000
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.
Joe Woody, Controller
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 June 30, 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/ JOE WOODY
Joe Woody, Controller
Las Vegas, Nevada
August 14, 2000
<PAGE>
PART 1. - Financial Information
Item 1. Financial Statements
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
JUNE 30, 2000 AND DECEMBER 31, 1999
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
[CAPTION]
JUNE 30, 2000 AND DECEMBER 31, 1999
ASSETS
JUNE 30, DECEMBER 31,
2000 1999
(Unaudited)
[S] [C] [C]
Current Assets:
Cash $ 3,553,000 $ 3,250,000
Accounts receivable 581,000 519,000
Inventories of food, beverage
and supplies 433,000 348,000
Prepaid expense 844,000 810,000
Total current assets 5,411,000 4,927,000
Property and equipment:
Land 7,012,000 7,012,000
Buildings 56,938,000 56,887,000
Leasehold improvements 3,530,000 3,530,000
Furniture and equipment 40,643,000 39,607,000
108,123,000 107,036,000
Less accumulated depreciation
and amortization 71,527,000 69,526,000
Net property and equipment 36,596,000 37,510,000
Other assets 723,000 841,000
$ 42,730,000 $ 43,278,000
The accompanying notes are an integral
part of these financial statements.
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
JUNE 30, DECEMBER 31,
2000 1999
(Unaudited)
[S] [C] [C]
Current liabilites:
Accounts payable $ 3,076,000 $ 3,709,000
Accrued liabilities 2,163,000 1,839,000
Current portion of long-term debt 883,000 1,368,000
Current portion of obligations under
capital leases 1,338,000 1,338,000
Total current liabilities 7,460,000 8,254,000
Long-term debt, less current portion 29,419,000 28,754,000
Obligations under capital leases, less
current portion 486,000 1,133,000
37,365,000 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 June 30, 2000.
750,000 750,000
Additional paid-in capital 5,462,000 5,462,000
Retained earnings 13,050,000 12,822,000
19,262,000 19,034,000
Less treasury stock, at cost, 742,581
shares at December 31, 1999 and June
30, 2000. 13,897,000 13,897,000
Total stockholders' equity 5,365,000 5,137,000
$42,730,000 $43,278,000
The accompanying notes are an integral
part of these financial statements.
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
[CAPTION]
SIX AND THREE MONTHS ENDED JUNE 30, 2000 AND 1999
Amounts in thousands except per share data
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999 2000 1999
[S] [C] [C] [C] [C]
Revenues:
Casino $ 18,751 $17,361 $ 8,678 $ 8,822
Food and Beverage 5,107 5,115 2,377 2,459
Rooms 5,635 5,684 2,766 2,651
Other 1,153 1,129 610 502
Gross revenues 30,646 29,289 14,431 14,434
Less promotional complimentaries 3,399 3,840 1,486 1,702
Net revenues 27,247 25,449 12,945 12,732
Operating expenses:
Casino 7,498 7,492 3,808 3,850
Food and Beverage 7,032 7,594 3,494 3,842
Rooms 2,940 2,972 1,463 1,551
General & Administrative 1,848 2,064 867 1,001
Entertainment 229 232 112 113
Advertising & Promotion 413 96 273 66
Utilities & Maintenance 2,931 2,886 1,527 1,542
Depreciation & Amortization 2,001 1,598 1,004 799
Provisions for Doubtful Accts. 18 21 10 7
Other Costs and Expenses 688 721 332 369
Total operating expenses 25,598 25,676 12,890 13,140
Operating income/(loss) 1,649 (227) 55 (408)
Other income (expense):
Gain on sale of assets 24 0 14 0
Interest Income 9 1 8 0
Interest Expense (1,454) (1,165) (748) (583)
Total other income (expense) (1,421) (1,164) (726) (583)
Income before income taxes 228 (1,391) (671) (991)
Income taxes 0 0 0 0
Net income/(loss) 228 (1,391) (671) (991)
Earnings/(loss) per common share $0.30 ($1.84) ($0.89) ($1.31)
The accompanying notes are an integral
part of these financial statements.
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THREE MONTHS ENDED JUNE 30, 2000 AND 1999
INCREASE IN CASH AND CASH EQUIVALENTS
2000 1999
[S] [C] [C]
Cash flows from operating activities:
Cash received from customers $ 27,340,000 $ 25,409,000
Cash paid to suppliers and employees (23,857,000) (22,952,000)
Interest received 9,000 1,000
Interest paid (1,659,000) (1,165,000)
Income taxes paid 0 0
Net cash provided by operating activities 1,833,000 (1,278,000)
Cash flows from investing activities:
Proceeds from sale of property & equipment 24,000 15,000
Purchase of property and equipment (1,087,000) (2,442,000)
Net cash used in investing activities (1,063,000) (2,427,000)
Cash flows from financing activities:
Proceeds from borrowing 1,034,000 900,000
Principal payments on capital lease (647,000) (452,000)
Principal payments on long-term debt (854,000) 0
Net cash provided (used) in financing
activities 467,000 448,000
Net increase (decrease) in cash and
cash equivalents (303,000) (686,000)
Cash and cash equivalents
at 12/31/99 & 12/31/98 3,250,000 3,228,000
Cash and cash equivalents,
at 06/30/00 & 06/30/99 3,553,000 2,542,000
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING
ACTIVITIES
Net income(loss) for period ended
06/30/00 and 06/30/99 $ 228,000 $ (1,391,000)
Adjustments to reconcile net income to
Net cash provided by operating activities:
Depreciation and amortization 2,000,000 1,616,000
Gain on sale of assets (24,000) (15,000)
(Increase) decrease in assets:
Accounts receivable (62,000) (8,000)
Inventories (85,000) (86,000)
Prepaid expenses (34,000) (11,000)
Other assets 117,000 160,000
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (307,000) (998,000)
Total adjustments 1,605,000 2,654,000
Net cash provided (used) by operating
activities $ 1,833,000 $ 1,293,000
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
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.
NOTE 2 - EMPLOYEE BENEFIT PLANS
The Company contributes to a discretionary executive bonus
plan. During the first six months 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 nine quarters and it is
anticipated that there will be none during the remainder of 2000.
NOTE 3 - RELATED PARTIES
On December 18, 1991, Exber, Inc., a 48.9% stockholder as
of June 30, 2000, 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. At varying intervals during
1997, 1998 and 1999 the Company has borrowed additional funds to
supplement its cash flows and to meet normal operating requirements.
At the end of 1999, the Company owed Exber, Inc. $28,400,000.
During the first six months of 2000, the Company borrowed an
additional $1,000,000 to provide for capital improvements. The
outstanding balance of the note at June 30, 2000 was $29,400,000.
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 4 - 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>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - LONG TERM DEBT
Long-term debt consists of the following:
June 30, December 31,
2000 1999
[C] [C]
Related party note, payable in monthly
Installments of interest only at the 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 June 30, 2000 is 9.5%. $ 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. 90,000 146,000
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 May 1, 2001. 569,000 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
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - LONG TERM DEBT (CONTINUED)
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. 23,000 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 in due on July 1, 2001. 128,000 178,000
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. 26,000 0
Contract payable, secured by slot machines
and related equipment, payable in monthly
installments of $32,707 until August 31,
2000, with no stated interest. 66,000 261,000
30,302,000 30,122,000
Less current portion 883,000 1,368,000
$ 29,419,000 $ 28,754,000
<PAGE>
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7 - LEASES
The Company leases slot machine and hotel property under long-
term lease agreements which are classified as capital leases. The
lease with Exber, Inc. (See Note 3) covering the hotel and bus
depot property expires in 2001 with renewals. The value of existing
leases are as follows:
June 30, December 31,
2000 1999
[C] [C]
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 9,057,000 8,969,000
Equipment 263,000 116,000
$ 828,000 $ 1,063,000
The following is a schedule of future minimum lease payments as
of June 30, 2000:
2000(Remaining six months) $ 790,000
2001 1,059,000
Thereafter 139,000
Total minimum lease payments $ 1,988,000
Less amount representing interest 164,000
Present value of net minimum lease
payments under capital leases 1,824,000
Less current portion 1,338,000
Long-term obligations under
capital leases $ 486,000
<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 $3,553,000 (8.3% of total assets)
at June 30, 2000 and $3,250,000 (7.5% of total assets) at December
31, 1999. The ratio of current assets to current liabilities was
.7 to 1 at June 30, 2000 and .6 to 1 at December 31, 1999.
Long-term debt obligations, including current maturities were
$30,302,000 at June 30, 2000 compared to $30,122,000 at December 31,
1999. Accounts payable declined by $633,000 during the first six
months from $3,709,000 to $3,076,000 due mostly to timing differences
in billing cycles and reporting periods. Accrued liabilities and
expenses increased $324,000 reflecting higher gaming related liabilities
at the end of the period.
The Company relies on Exber, Inc., its majority shareholder, for
financing for capital improvements and for operating cash when needed.
Should Exber, Inc. discontinue this financial relationship for any
reason, there would be a material impact on the financial condition of
the Company.
RESULTS OF OPERATIONS
Net revenue at the Company's hotel and casino rose $213,000 during
the second quarter compared to the same period in 1999. The increase
in net revenues is attributed to higher average room rates, increased
room occupancy levels and lower promotional complimentaries.
For the first six months of 2000, revenues increased by $1,798,000
over the comparable period in 1999. Higer gaming revenues along
with lower promotional complimentaries were the primary factors in the
improvement over last year's results. Operating income was
$1,649,000 for the first half of 2000 compared to an operating loss
of $227,000 in the year ago period.
Despite the fact that Management continued the operating strategy
that was successful in the first quarter, the second quarter proved to
be a greater challenge for the Company. Revenue growth in the second
quarter of this year slowed to 1.2% from the 12.5% growth experienced
during the first three months of the year. Competition from other
downtown casinos, local taverns and mega-resorts remains a major issue
for the Company. Gaming venues outside Nevada are also becoming a
greater source of concern as legalized Native American Gaming expands
in California. Management believes that extraordinary customer service
along with a clean gaming environment will be the key to surviving in
the downtown market.
Going forward, there are several projects planned for the Company's
hotel and casino that should enhance the operation and help it to become
more competitive. On June 27th, the #1 Main Club finally became a reality.
The newly implemented slot tracking system has been well received by
the casino guests and is expected to provide crucial data for marketing
to key customers. In addition, the Company recently completed the
installation of the key card system on all of its hotel rooms to
modernize the security of the property. During the third quarter, the
Company will complete a major renovation of its famous "Center Stage"
Restaurant aimed to upgrade the property's feature attraction. Pending
approval from the Nevada Gaming Commission, the Company will begin a
revenue sharing arrangement with the Coast Resorts casinos in Las Vegas.
<PAGE>
PART 1. - FINANCIAL INFORMATION
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS(CONTINUED)
ANALYSIS OF OPERATINS (CONTINUED)
This arrangement will allow Coast Resorts to operate the sports
book within the Plaza Hotel and Casino. The sports book will accept
larger wagers, participate in their widely recognized "Pick the Pros"
football contest, and will include a complete renovation of the wagering
area. Meanwhile, the renovation of the hotel guest rooms continues.
Management understands that maintaining maximum occupancy is critical
to the casino operation and therefore, the rooms must be maintained at
standards equivalent to that of the competition.
Overall, the Company reported a quarterly loss of $671,000 or
$0.89 a share versus a loss of $991,000 or $1.31 a share one year ago.
Interest expense rose $165,000 reflecting a higher rate of interest
and larger balance on the Company's first mortgage note. For the first
six months of the year, the Company earned $228,000 or $.30 per share
compared to a loss of $1,391,000 or $1.84 per share in the year ago
period.
<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: August 14, 2000 /SS/ JOHN D. GAUGHAN
JOHN D. GAUGHAN, President
Date: August 14, 2000 /SS/ JOE WOODY
JOE WOODY, Controller
Date: August 14, 2000 /SS/ JOHN P. JONES
JOHN P. JONES, Vice President &
Treasurer
