-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AsLx/mefVPSpX6Zuzs4p5b3/VrX0rGcsinKmLjR56NwwpL7QsGlu96Szt9ueL7qF T+VGO1+COyGwEImJ52sWGg== 0000087918-01-000001.txt : 20010402 0000087918-01-000001.hdr.sgml : 20010402 ACCESSION NUMBER: 0000087918-01-000001 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNION PLAZA HOTEL & CASINO INC CENTRAL INDEX KEY: 0000087918 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 880126106 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-08133 FILM NUMBER: 1587996 BUSINESS ADDRESS: STREET 1: NUMBER ONE MAIN ST CITY: LAS VEGAS STATE: NV ZIP: 89101 BUSINESS PHONE: 7023862110 MAIL ADDRESS: STREET 1: 1 MAIN STREET CITY: LAS VEGAS STATE: NV ZIP: 89101 FORMER COMPANY: FORMER CONFORMED NAME: SCOTT CORP DATE OF NAME CHANGE: 19870831 10-K 1 0001.txt COVER UNION PLAZA HOTEL AND CASINO, INC. 1 Main Street Las Vegas, NV 89101 March 30, 2001 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 2000 financial data statement. Sincerely, UNION PLAZA HOTEL AND CASINO, INC. Joe Woody Chief Financial Officer EX-13 2 0002.txt UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES 2000 ANNUAL REPORT TABLE OF CONTENTS Page Letter to Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . .1 Selected financial data. . . . . . . . . . . . . . . . . . . . . . . . . .2 Management's discussion and analysis of financial condition and results of operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-5 Independent Auditors' Reports . . . . . . . . . . . . . . . . . . . . .6-7 Financial Statements: Consolidated balance sheets. . . . . . . . . . . . . . . . . . . . . .8-9 Consolidated statements of loss . . . . . . . . . . . . . . . . . . . 10 Consolidated statements of stockholders' equity. . . . . . . . . . . . 11 Consolidated statements of cash flows. . . . . . . . . . . . . . . .12-13 Notes to consolidated financial statements. . . . . .. . . . . . . .14-26 Directors and executive officers . . . . . . . . . . . . . . . . . . . . 27 Special information. . . . . . . . . . . . . . . . . . . . . . . . . . . 28 To Our Shareholders, The year 2000 was another positive year in terms of progress at the Plaza. Gaming revenues at our property increased by 6.2% and total revenues increased by 5.6% and we were able to keep our operating expenses stable with an increase of less than a half of a percent compared to the prior year. As a result of these improvements our combined operating cash flow was $2,693,000 in 2000 compared to negative cash flow of $22,000 a year ago and negative cash flow of $2,415,000 in 1998. Progress at the Plaza has not been without substantial investment. During the past year, nearly $3,000,000 was expended for capital improvements at the Plaza on top of nearly $6,000,000 expended in 1999. Projects completed in 2000 included a complete renovation of the Center Stage Restaurant, the sports book, numerous room remodels, as well as additional purchases of slot gaming equipment. Each of these improvements have made a significant difference in our property and have been well received by our guests. To make these changes possible, it was necessary to borrow additional funds during the course of the year. Factoring the increased debt levels and fluctuating interest rate, our cost of borrowing increased by $551,000 in 2000. We look forward to 2001 despite uncertainties in both our local and national economies. Increasing competition outside the state of Nevada may also have an impact on our future business. While we are unable to control many of these factors we believe that we must continue to upgrade our property and continue our focus on customer service in order to remain competitive. These efforts will be expensive and will require us to use our existing cash, future cash flows and possibly additional debt financing to meet those needs. In addition to the capital investments, we have increased our sales and marketing efforts over the past twelve months. Becoming more aggressive in seeking out new business will be another key factor in our success. Attending travel shows, using direct mail marketing, offering frequent slot promotions and utilizing our pit and slot player tracking systems are all a part of our efforts to expand our customer base. In closing, I would like to thank each of you for your continued support as we close out another year and look forward to the future. Please make plans to join us on May 18, 2001 at 10:00am in the Center Stage Restaurant for the annual meeting of shareholders. Sincerely, /s/ John D. Gaughan John D. Gaughan Chairman of the Board SELECTED FINANCIAL DATA Amounts in thousands, except per share data
2000 1999 1998 1997 1996 Net revenues $ 50,745 $ 48,052 $ 45,847 $ 48,015 $ 53,332 Casino operating revenue 34,092 32,091 30,886 32,135 36,292 Net income (loss) (1,595) (3,167) (5,002) (3,644) (736) Total assets 41,969 43,278 41,539 45,192 49,317 Long-term obligations 31,749 29,887 20,558 26,079 26,510 Stockholders' equity 3,542 5,137 8,304 13,331 16,977 Earnings (loss) per common share $ (2.11) $ (4.18) $ (6.60) $ (4.80) $ (.97) Cash dividends declared common share $ -0- $ -0- $ -0- $ -0- $ -0- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with the Company's Consolidated Financial Statements and accompanying notes. Certain statements in this report are forward-looking statements that involve risks and uncertainties, which could cause the Company's future results to differ from the expectations described herein. Forward-looking statements should be evaluated in the context of risk factors and uncertainties. RESULTS OF OPERATIONS 2000 COMPARED TO 1999 Net revenues increased 5.6% to $50,745,000 in 2000 compared to $48,052,000 one year ago. The primary contributor to the overall improvement in revenues was strong growth in gaming win at the Company's casino. Room sales were also higher as were food and beverage sales. Promotional allowances, which include complimentary room, food and beverages, which are generally provided to gaming customers, were down during the year. Gaming revenue continued to improve as net casino win rose 6.2% or $2,001,000. Win from slot machines increased by 13.8% or $3,338,000 as a result of the continued slot floor update that began in March of 1999. As part of the slot floor upgrade, the Company has purchased or leased a significant number of new and exciting slot machines to provide many more options for the casino guest. Hotel revenues improved by 1.7% or $190,000 as occupancy levels rose to 88.6% from 87.1% a year ago. Combined food and beverage revenue rose .6% or $58,000 despite the fact that beverage sales declined 9.9% or $344,000. Food revenue increased by 6.5% or $402,000 reflecting a higher sales per guest average. Despite the improved gaming and lodging revenues, the Company was effective in reducing the complimentary allowance during 2000. Management believes that the criteria used to evaluate casino players, for the purpose of room, food and beverage comps, remains liberal although controlled. In spite of the 5.6% growth in revenues, total operating expenses rose just .3% or $157,000 in 2000. As a result of management's efforts to control costs, expenses connected with revenue producing departments were actually lower in 2000 compared to 1999. General and administrative, advertising, utilities, and depreciation expenses were all higher when compared to last year. The decline in costs for the revenue producing segments was due to lower total payroll costs in each of those areas. Casino expenses declined 4.0% or $527,000, food and beverage expenses declined 2.6% or $377,000, and room related expenses fell 6.5% or $368,000 in 2000. The reduction in personnel costs has been a concerted effort by management to eliminate excess staff in significantly all areas of the Company's operation. Management continues to seek and implement methods of operation that improve the he property. At the same time, management continues to focus on reducing the overall number of employees. Increasing costs in the non-revenue producing areas more than offset the decline in costs in the revenue sectors. General and administrative costs rose 8.7% or $345,000 due primarily to rising group insurance costs for employees and their dependents during the past year. Advertising and promotional costs were 52.9% or $317,000 higher for 2000 reflecting management's increased focus on marketing. Utility and maintenance expenses increased by 3.1% or $184,000 during the year, reflecting higher energy and w's property. Depreciation expense rose 15.3% or $544,000 during the year due reflective of the capital improvements made to the property during the past 18 months. Overall, the Company had a net operating profit of $1,377,000 for 2000 compared to a net operating loss of $1,159,000 one year ago. Interest expense rose 22.1% or $551,000 due to a higher level of debt compounded by higher interest rates during the year. The net loss for 2000 was $1,595,000 compared to a loss of $3,167,000 in 1999. On a per share basis, the net loss was $2.11 compared to a net loss of $4.18 a year ago. 1999 COMPARED TO 1998 For 1999, the Company's net revenues increased 4.8% over 1998 to $48,052,000. Revenue growth was led by higher slot gaming win and lower promotional allowances. During the year, the Company has invested substantial resources to improve the appearance of the property and to improve the level of customer service throughout the property. While this process is far from complete, the results of these changes have reversed the negative trend in revenue growth and reduced the Company's operating losses by 74.8% compared to 1998. The Company's operating loss was $1,159,000 in 1999 compared to $4,592,000 in 1998. Net losses were $3,167,000 and $5,002,000 in 1999 and 1998 respectively. Revenue from the Company's casino operations rose 3.9% in 1999 after declining 3.9% in 1998. During the year, the Company purchased and leased a significant number of new electronic gaming machines to offer its customers a wider selection of gaming options during their stay. The Company has also increased its mix of participating games, where revenue is shared with the slot machine manufacturers who provide the games. These new games and the signage on the floor have improved the look of the casino floor and have helped drive slot revenues. The Company has also redefined its promotional policy during the year to ensure that qualified players are rewarded adequately for their play while excessive and unqualified complimentaries have been largely eliminated. This change in policy resulted in over $550,000 in savings during the year. As explained above, the Company's revenue increase in 1999 was primarily attributable to increased slot revenue, that represented 40.0% of gross revenue. The modernization and ever changing layout of the slot floor have dramatically increased the revenue despite an average of 190 fewer games on the casino floor. Revenue for the remainder of the casino declined by approximately $520,000 as table game revenue fell $527,000. The table games win percentage fell one full percent during the year and overall handle was down $480,000. The decline in handle is mostly attributed to a decision to close certain areas of the casino pit during slow periods. The overall impact of this decision helped to significantly reduce casino payroll expenses. Revenues from the card room and from counter games were basically unchanged from a year ago. Operating expenses for 1999 were $49,211,000 compared to $50,439,000 in 1998. The reduction of payroll expense in virtually all departments had the largest single impact on departmental costs. Casino payroll fell $684,000 despite $327,000 paid on behalf of the slot department for the settlement of a Culinary Union Arbitration and Culinary back-pay related to a new Culinary contract signed in 1999. Food and beverage cost of sales declined more than $280,000 during 1999 as the Company increased prices to levels comparable to the competition. While food revenue increased $233,000, covers declined by 73,000. Beverage sales fell $190,000 although cash sales rose 7.6% or $70,000. Complimentary beverage sales fell nearly 10.0% or $260,000. Advertising and promotion expense increased nearly 100% or $295,000 for the year which is reflective of the increase in promotional efforts at the Company's casino. During the year, newspaper advertising was up $122,000 while radio/television advertising and related artwork was up $60,000. Holiday giveaways and a recently started paycheck promotion accounted for $61,000 in additional expense. Unredeemed group package items declined by $48,000 due to fewer group bookings and postage and general supply costs increased $4,000. Utility and maintenance expenses were up more than $300,000 during the year. Electricity costs were 11.6% or $170,000 higher than the previous year which the Company attributes to more exterior lighting on the property. Water, sewer and rubbish removal and other related costs were also higher during the year by a combined total of $49,000. Maintenance expenses related to upgrading floor coverings, furnishings, and the building itself, were up over 22% compared to last year. Depreciation and amortization expenses were lower by $176,000 during 1999 which is attributed to the first half of the year. Capital investments in slot machines, remodeling, and other improvements, in the middle and latter stages of the year, have increased the depreciation expenses in the last quarter. Interest expense increased $225,000 over last year as a result of the additional debt incurred by the Company during the year compounded by rising interest rates. The Company's loss before the benefit of deferred income taxes declined to $3,561,000 in 1999 from $7,621,000 in 1998. The net loss declined to $3,167,000 in 1999 from $5,002,000 in 1998. The Company's effective tax rate was (12.4%) and (34.4%) for the years 1999 and 1998 respectively. The actual tax benefit from net operating loss carry-forwards at December 31, 1999 was $394,000 and $2,619,000 at December 31, 1998. The loss per common share decreased to $4.18 in 1999 from $6.60 in 1998. LIQUIDITY AND CAPITAL RESOURCES At December 31, 2000, the Company's primary source of liquidity was 3,335,000 in cash and cash equivalents and a $1,000,000 letter of credit secured by the Company's majority shareholder. Cash assets accounted for 7.9% of total assets at December 31, 2000 and 7.5% or $3,250,000 of the total assets at December 31, 1999. The ratio of current assets to current liabilities was .8 to 1 for 2000 and .6 to 1 for 1999. The improvement in the current ratio is attributed to an improved cash position at year-end supplemented by additional debt financing in the fourth quarter. Accounts receivable rose 38.9% or $202,000 during the year compared to last year, the Company affiliated itself with several travel service providers, including some internet venues, to market its rooms to the public. As a result, there are a larger number of agencies and travel service providers with outstanding balances due to the hotel. Management believes that the strategy to expand its source of room guests is vital in the competitive hotel market. Long-term debt and obligations under capital leases (including current term portions) was $33,321,000 at December 31, 2000 compared to $32,593,000 at December 31, 1999. The increase in obligations is attributable to additional debt financing of $3,654,000 less repayments of $2,926,000 for slot machines and the slot marketing system. Operating cash flow improved to $2,693,000 in 2000 compared to a negative $22,000 in 1999. Management expects the cash generated by operations to continue to improve based on recent trends in its business. However, the uncertainty in the overall economy and its impact cannot be accurately evaluated. Furthermore, it will be difficult for the Company to continue its growth at the pace of the past two years without growth in the entire downtown gaming sector. The Company considers the financial stability of its majority shareholder to be a source of capital for future investment in equipment and funding for operations when needed. These factors considered, management believes that its capital resources and those available to it should be adequate to meet its anticipated requirements. 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 an , 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. INDEPENDENT AUDITOR'S 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 (a Nevada Corporation) as of December 31, 2000 and 1999, and the related consolidated statements of loss, stockholders equity and cash flows for the years then ended. 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 audit. 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 the Union Plaza Hotel and Casino, Inc. and subsidiaries as of December 31, 2000 and 1999, and results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles. Conway, Stuart & Woodbury CPA's Las Vegas, Nevada March 6, 2001 INDEPENDENT AUDITOR'S REPORT The Stockholders and Board of Directors Union Plaza Hotel and Casino, Inc. We have audited the accompanying consolidated statements of loss, stockholders' equity and cash flows of Union Plaza Hotel and Casino, Inc. and subsidiaries (a Nevada Corporation) for the year ended December 31, 1998. 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 audit. We conducted our audit 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 audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the results of Union Plaza Hotel and Casino, Inc. and subsidiaries operations and their cash flows for the year ended December 31, 1998, in conformity with generally accepted accounting principles. GARY V. CAMPBELL, CPA LTD Las Vegas, Nevada February 22, 1999
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2000 AND 1999 Amounts in thousands, except per share data
ASSETS 2000 1999 CURRENT ASSETS: Cash and cash equivalents $ 3,335 $ 3,250 Accounts receivable, net 721 519 Inventories of food, beverage and supplies 310 348 Prepaid expenses 717 810 TOTAL CURRENT ASSETS 5,083 4,927 PROPERTY AND EQUIPMENT: Land 7,012 7,012 Buildings 57,242 56,887 Leasehold improvements 3,534 3,530 Furniture and equipment 38,712 39,607 106,500 107,036 Less accumulated depreciation and amortization 70,381 69,526 NET PROPERTY AND EQUIPMENT 36,119 37,510 OTHER ASSETS 767 841 $ 41,969 $ 43,278 The accompanying notes to consolidated financial statements are an integral part of these financial statements.
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (CONTINUED) DECEMBER 31, 2000 AND 1999 LIABILITIES AND STOCKHOLDERS' EQUITY Amounts in thousands, except per share data
2000 1999 CURRENT LIABILITIES: Accounts payable $ 2,942 $ 3,709 Accrued liabilities 2,164 1,839 Current portion of long-term debt 680 1,368 Current portion of obligations under capital leases 892 1,338 TOTAL CURRENT LIABILITIES 6,678 8,254 LONG-TERM DEBT, less current portion 31,604 28,754 OBLIGATIONS UNDER CAPITAL LEASES, less current portion 145 1,133 TOTAL LIABILITIES 38,427 38,141 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, 2000 and 1999 750 750 Additional paid-in capital 5,462 5,462 Retained earnings 11,227 12,822 17,439 19,034 Less: treasury stock at cost, 742,581 shares at December 31, 2000 and 1999 13,897 13,897 TOTAL STOCKHOLDERS' EQUITY 3,542 5,137 $ 41,969 $ 43,278 The accompanying notes to consolidated financial statements are an integral part of these financial statements.
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF LOSS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 Amounts in thousands, except per share data
2000 1999 1998 REVENUES: Casino $ 34,092 $ 32,091 $ 30,886 Food and beverage 9,767 9,709 9,687 Rooms 11,267 11,077 10,815 Other 2,173 2,268 2,106 GROSS REVENUES 57,299 55,145 53,494 Less promotional allowances 6,554 7,093 7,647 NET REVENUES 50,745 48,052 45,847 OPERATING EXPENSES: Casino 12,749 13,276 14,469 Food and beverage 14,010 14,387 14,646 Rooms 5,256 5,624 5,685 General and administrative 4,328 3,983 4,072 Entertainment 579 597 629 Advertising and promotion 916 599 304 Utilities and maintenance 6,128 5,944 5,640 Depreciation and amortization 4,110 3,566 3,742 Provision for doubtful accounts 39 24 37 Other costs and expenses 1,253 1,211 1,215 TOTAL OPERATING EXPENSES 49,368 49,211 50,439 OPERATING INCOME/LOSS 1,377 (1,159) (4,592) OTHER INCOME (EXPENSE): Interest income 27 19 28 Gain on sale of assets 45 72 3 Interest expense (3,044) (2,493) (2,268) Investment in Fremont Street Experience - - (792) TOTAL OTHER INCOME (EXPENSE) (2,972) (2,402) (3,029) LOSS BEFORE INCOME TAX (1,595) (3,561) (7,621) INCOME TAX BENEFIT: Current - - - Deferred - 394 2,619 TOTAL INCOME TAX BENEFIT - 394 2,619 NET LOSS $(1,595) $(3,167) $ (5,002) LOSS PER COMMON SHARE $( 2.11) $( 4.18) $ ( 6.60) The accompanying notes to consolidated financial statements are an integral part of these financial statements.
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 Amounts in thousands, except per share data
Additional Common paid-in Retained Treasury stock capital earnings stock Total BALANCE: December 31, 1997 $750 $ 5,462 $ 20,991 $(13,872) $ 13,331 Purchase of 1,000 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 Net loss for 1999 - - (3,167) - (3,167) BALANCE: December 31, 1999 $750 $5,462 $12,822 $(13,897) $ 5,137 Net loss for 2000 - - (1,595) - (1,595) BALANCE: December 31, 2000 $750 $5,462 $11,227 $(13,897) $ 3,542 The accompanying notes to consolidated financial statements are an integral part of these financial statements.
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 Amounts in thousands, except per share data
2000 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 50,504 $ 47,853 $ 45,736 Cash paid to suppliers and employees (44,840) (45,958) (47,255) Interest received 27 19 28 Interest paid ( 2,998) ( 1,936) ( 1,121) Income taxes received - - 197 NET CASH PROVIDED BY (USED IN)OPERATING ACTIVITIES 2,693 ( 22) (2,415) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of property and equipment 45 72 3 Purchase of property and equipment ( 2,932) ( 1,006) ( 412) NET CASH USED IN INVESTING ACTIVITIES ( 2,887) ( 934) ( 409) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt 3,205 2,500 3,500 Principal payments on long-term debt ( 1,492) ( 822) ( 89) Principal payments on capital leases ( 1,434) ( 999) ( 396) Purchase of treasury stock - - ( 25) NET CASH PROVIDED BY FINANCING ACTIVITIES 279 679 2,990 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 85 ( 277) 166 CASH AND CASH EQUIVALENTS, at beginning of the year 3,250 3,527 3,361 CASH AND CASH EQUIVALENTS, At end of the year $ 3,335 $ 3,250 $ 3,527 The accompanying notes to consolidated financial statements are an integral part of these financial statements.
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 Amounts in thousands, except per share data
2000 1999 1998 RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: Net loss $(1,595) $(3,167) $(5,002) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: Depreciation and amortization 4,110 3,566 3,742 Gain on sale of property equipment and improvements ( 45) ( 72) ( 3) Interest expense - 352 1,147 Equity investment loss - - 387 Provision for doubtful accounts 39 24 ( 13) (Increase) decrease in assets: Accounts receivable ( 241) ( 33) 98 Inventories 38 ( 65) ( 16) Prepaid expenses 93 182 ( 20) Other assets 32 72 53 Increase (decrease) in liabilities: Accounts payable 142 ( 164) ( 273) Accrued salaries 165 ( 469) 43 Other accrued liabilities ( 45) 146 61 Deferred income tax - ( 394) (2,619) TOTAL ADJUSTMENTS 4,288 3,145 2,587 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 2,693 $( 22) $(2,415) The accompanying notes to consolidated financial statements are an integral part of these financial statements.
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. 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 2000, 1999 and 1998 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. 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. UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 approximate fair value. 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. PROGRESSIVE JACKPOT LIABILITY The Company has a number of progressive jackpot slot machines and progressive poker games. As coins are played on the progressive jackpot slot machines, the amount available to win increases and will be paid out when the appropriate jackpot is hit. The jackpots for the poker games also increase with amount of play, to be paid out when hit. In accordance with common industry practice, the Company has recorded the progressive jackpots as a liability with a corresponding charge 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. UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES 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 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. 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 general business 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. 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, 2000 and December 31, 1999 are $687,000 and $524,000 respectively. Also included in cash are uninsured money market funds amounting to $9,000 and $24,000 at December 31, 2000 and December 31, 1999, respectively. NOTE 3 - ACCOUNTS RECEIVABLE Accounts receivable consist of the following: Amounts in thousands
December 31, 2000 1999 Casino $ 275 $ 384 Hotel 355 120 Other 136 99 766 603 Less allowance for doubtful accounts 45 84 $ 721 $ 519
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
December 31, 2000 1999 Expansion of gaming rights, less accumulated amortization of $790,000 and $749,000 $ 20 $ 61 Net investment in direct financing lease, net of current portion - 37 Leasehold costs, less accumulated amortization of $434,000 and $419,000 5 20 Deposits and other 742 723 $ 767 $ 841
NOTE 5 - ACCRUED LIABILITIES Accrued liabilities consist of the following: Amounts in thousands
December 31, 2000 1999 Salaries and wages $ 963 $ 798 Union back wages 28 33 Taxes, other than taxes on income 272 301 Accrued Interest 251 205 Other 650 502 $ 2,164 $ 1,839
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. UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 6 - INCOME TAXES (CONTINUED) The sources of those timing differences and the current tax effect were as follows: Amounts in thousands
2000 1999 1998 Depreciation and amortization $( 310) $( 422) $( 228) Capitalized leases 319 242 203 Net operating losses ( 560) (1,027) (2,510) Vacation and backpay ( 12) ( 13) 15 Tax credits 127 11 436 Tax credit valuation allowance ( 200) ( 78) ( 513) Other 69 48 ( 22) $( 567) $(1,239) $(2,619) Less valuation allowance 567 845 - $ - $( 394) $(2,619)
The components of the net deferred tax liability at December 31, 2000 and 1999 under SFAS 109 are as follows:
December 31, TAX 2000 1999 EXPENSE Deferred tax asset $ 1,412 $ 845 $ 567 Valuation allowance (1,412) ( 845) ( 567) $ - $ - $ -
The Company has net operating loss carryforward of approximately $18,535,000 and tax credit carryforwards of approximately $851,000 with expiration dates through December 31, 2020. Tax credits are used to reduce federal income taxes in the year in which benefit is available. 20 UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 6 - INCOME TAXES (CONTINUED) 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
2000 1999 1998 Percent Percent Percent of of of Pretax Pretax Pretax Amount Income Amount Income Amount Income Computed "expected" tax expense(benefit) $( 542) (34.0%) $(1,077) (34.0%) $(2,588) (34.0%) Increase (reduction) in tax resulting from: Tax credits 127 7.9% 11 ( 0.4%) 436 ( 1.0%) Tax credit valuation allowance (200) (12.5%) (78) ( 2.5%) (513) Nondeductible expenses 48 3.0% (95) (2.9%) 46 0.6% Actual tax Benefit $( 567) (35.6%) $(1,239) (39.0%) $(2,619) (34.4%) Less valuation allowance 567 35.6% 845 26.6% - - $ - - $( 394) (12.4%) $(2,619) (34.4%)
NOTE 7 - LONG-TERM DEBT Long-term debt at December 31, 2000 and 1999 is as follows: Amounts in Thousands
December 31, 2000 1999 Related party note, as amended, payable in monthly payments of interest only at prime 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 December 31, 2000 is 9.5%. $ 31,604 $ 28,400 UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7 - LONG-TERM DEBT (CONTINUED) December 31, 2000 1999 Contracts 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 as follows: April 1, 2001 49 146 April 1, 2001 - 28 May 1, 2001 179 1,037 September 1, 2001 - 72 December 30, 2001 11 - September 8, 2002 82 - July 1, 2002 53 - December 30, 2002 229 - 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. 77 178 UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 7 - LONG-TERM DEBT (CONTINUED) December 31, 2000 1999 Contract payable, secured by slot machines and related equipment, payable in monthly installments of $32,707 through August 31, 2000, with no stated interest. - 261 32,284 30,122 Less current portion 680 1,368 $ 31,604 $ 28,754
On January 21, 2000 the related party note payable was refinanced under the terms disclosed above. Principal payments on long-term debt during the succeeding five years are as follows: 2001 $ 680 2002 to 2005 - Thereafter 31,604 $ 32,284 Interest on long-term debt was $2,802,000 in 2000, $2,143,000 in 1999 and $1,836,000 in 1998. 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., a 48.91% stockholder of the Company, covering the hotel and bus depot property expires in 2001 and contains one renewal option of twenty-five years and four renewal options of ten years each. The bus depot property is sublet to Greyhound Lines, Inc. under a lease expiring in 2001, with two ten-year renewal options available. Property and equipment includes the following property under capital leases by major classes: Amounts in thousands
December 31, 2000 1999 Buildings $ 9,242 $ 9,242 Equipment 906 906 10,148 10,148 Less accumulated amortization: Buildings 9,145 8,969 Equipment 297 116 $ 706 $ 1,063
Depreciation and amortization expense includes amortization of property under capital leases of $176,000 per year for 2000, 1999, and 1998 and amortization of equipment of $181,000 and $116,000 for 2000 and 1999, respectively. Interest paid on property under capital leases was $242,000 for 2000, $350,000 for 1999 and $432,000 for 1998. 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, 2000: CAPITAL LEASES (In thousands) 2001 $ 946 2002 149 Total Minimum Lease Payments 1,095 Less amount representing interest 58 Present value of net minimum lease payments under capital leases 1,037 Less current portion 892 Obligations Under Capital Leases $ 145 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
2000 1999 1998 Parking lot leases $ 24 $ 24 $ 24
SUBLEASES The bus depot property under a capital lease is sublet as follows: Amounts in thousands
December 31, 2000 1999 Minimum future rents receivable $ 39 $104 Less amount representing interest 2 11 Minimum lease payments receivable 37 93 Less current portion (included in accounts receivable) 37 56 Net investment in direct financing lease (included in other assets) $ - $ 37
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 2000, 1999, and 1998 was $307,000, $293,000 and $311,000. NOTE 9 -EMPLOYEE BENEFIT PLANS The Company contributes to a discretionary executive bonus plan. Contributions for 2000, 1999, and 1998 were $228,000, $31,000 and $32,000, 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. No contributions were made to the plan for 2000, 1999, and 1998. 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. UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) 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 2000, 757,419 in 1999 and 757,819 in 1998. NOTE 11 - RELATED PARTIES The related party note payable of $31,604,000, as more fully described in Note 7, is payable to Exber, Inc., a 48.91% stockholder of the Company. Included in accrued liabilities is $251,000 and $205,000 of accrued interest relating to this note at December 31, 2000 and 1999 respectively. Interest expense on this note was $2,758,000, $2,143,000 and $1,836,000 for 2000, 1999, and 1998, respectively. In addition, the Company has a line of credit for $1,000,000 with Exber, Inc. to be used for normal operating requirements as needed. As of December 31, 2000 and 1999 the outstanding balance was $0. The Company also pays $104,000 in monthly capital lease payments to Exber, Inc. for the hotel and bus depot property, as more fully described in Note 8. The Company paid $1,354,000 during 2000 and $1,250,000 during each of the years 1999, 1998 in connection with this lease. Interest expense on this capital lease was $185,000, $313,000, and $432,000 for 2000, 1999, and 1998, respectively. In September of 2000, the Company entered into an agreement with Coast Hotels and Casinos, Inc. to operate the sports book facilities located in the Union Plaza Hotel and Casino. In connection with this agreement, the Company receives a prorated share of the net income or loss from total sports book operations for the Coast Hotels and Casinos, Inc. For the year ended December 31, 2000, the Company had net income of $296,000 in relation to this agreement. In addition, $97,000 was payable to Coast Hotels and Casinos, Inc. as of December 31, 2000. Coast Hotels and Casinos, Inc. is a wholly-owned subsidiary of Coast Resorts, Inc. A major stockholder and chairman of the board of Coast Resorts, Inc. is the son of the President of the Company. The Company paid $26,000 and $53,000 to Coast Hotels and Casinos, Inc. d/b/a Gold Coast Hotel and Casino during 2000 and 1999, respectively, in connection with various services provided to the Company. The Company paid $27,000, $29,000 and $31,000 to Las Vegas Dissemination, Inc. during 2000, 1999 and 1998, respectively, in connection with race book pari-mutuel system operator fees. The sole stockholder of Las Vegas Dissemination, Inc. is the grandson of the President of the Company. 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 $60,000. LIQUIDITY AND CAPITAL RESOURCES The Company has had recurring net losses over the past three years amounting to $1,595,000, $3,167,000 and $5,002,000 in 2000, 1999 and 1998 respectively. At December 31, 2000 its current liabilities exceed its assets by approximately $1,595,000. UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) NOTE 13 - INVESTMENT IN FREMONT STREET EXPERIENCE In 1994, 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 Company's 5.9% investment was accounted for by the equity method whereby the investment was increased or decreased by their proportionate share of the investors net earnings or loss, which amounted to losses of $792,000 for the year 1998. During 1998, the Union Plaza Experience, Inc. withdrew from the Fremont Street Experience and has been released of all liability. NOTE 14 - ADVERTISING COSTS The Company expenses advertising costs as incurred. Advertising expense was $916,000, $599,000 and $304,000 for the years ended December 31, 2000, 1999 and 1998 respectively. NOTE 15 - SUPPLEMENTAL CASH FLOWS INFORMATION Supplemental schedule of noncash Investing and financing activities: Amounts in thousands:
December 31, 2000 1999 Equipment acquired by direct financing $ 449 $ 4,763 Long-term debt payments directly financed $ - $ 321 Lease payments directly financed $ - $ 104
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) DIRECTORS AND EXECUTIVE OFFICERS Directors John D. Gaughan Chairman of the Board J.K. Houssels Vice Chairman of the Board Donald L. Dobson Director John P. Jones Director Michael Gaughan Director Michael Nolan Director Irving 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 Joe Woody Chief Financial Officer 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 59% 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 17% of the Company's gross revenues. The room operation provides approximately 20% of gross revenue with retail shops, subleases, vending, and interest on investments accounting for the remaining 4%. 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 18, 2001, 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 Conway, Stuart & Woodbury, CPA's, 4021 Meadows Lane, Las Vegas, Nevada 89107. 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. EX-27 3 0003.txt
5 YEAR DEC-31-2000 DEC-31-2000 3335000 0 721000 0 310000 5083000 106500000 70381000 41969000 6678000 31604000 0 0 750000 2792000 41969000 9767000 57299000 14010000 26054000 11491000 39000 3044000 (1595000) 0 (1595000) 0 0 0 (1595000) ( 2.11 ) ( 2.11 )
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