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UNION PLAZA HOTEL AND CASINO, INC.
1 Main Street
Las Vegas, NV 89101
March 22, 2002
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.
Sincerely,
UNION PLAZA HOTEL AND CASINO, INC.
/s/ ALAN J. WOODY
Alan J. Woody, Chief Financial Officer
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 2001
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 89101
Las Vegas, Nevada (Zip Code)
(Address of principal
executive offices)
(Registrant's telephone number, including area code)
(702)- 386-2110
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
Registered
None N/A
Securities registered pursuant to Section 12 (g) of the Act:
Capital stock par value $.50 per share
(Title or Class)
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 latest practicable date:
As of March 22, 2002, 757,419 shares of common stock were
outstanding. The Company's shares are not traded on any market and
although it would be possible, by taking into account occasional
private sales of such shares, to determine an estimated value of
shares held by non-affiliates, it appears impracticable and
could be misleading.
DOCUMENTS INCORPORATED BY REFERENCE
Incorporated Document Location in Form 10-K
Annual Report to Stockholders For Year
Ended December 31, 2001 Part II - Item 6
Annual Report to Stockholders For Year
Ended December 31, 2001 Part II - Item 7
Annual Report to Stockholders for Year
Ended December 31, 2001 Part II - Item 8
Proxy Statement in connection with
Registrant's Annual Meeting to be
held on May 17, 2002 * Part III - Item 10
Proxy Statement in connection with
Registrant's Annual Meting to be
held on May 17, 2002 * Part III - Item 11
* Proxy statements will be filed within the 120-day period after the
end of the fiscal year.
PART 1.
Item 1. Business
Union Plaza Hotel and Casino, Inc. (the "Company"), was organized as a
corporation under the laws of the State of Nevada in 1962. During 1975, the
Company transferred all of the business and properties to its wholly-owned
subsidiary, Union Plaza Operating Company (the "Plaza Subsidiary"), which was
organized as a corporation under the laws of the State of Nevada in April, 1975.
In July, 1981, as a result of consummation of that certain Agreement Regarding
Transfer of Assets between the Company and subsidiaries of Union Pacific
Corporation (the "Union Pacific Agreement"), all the shares of capital
stock of the Plaza Subsidiary were transferred to Union Plaza Development
Corporation, a corporation organized under the laws of the State of Nevada
in 1979 ("UPDC"), 100% of the presently outstanding capital stock of which
is now owned by the Company as a result of the issuance of the Company's
common shares in exchange for outstanding, UPDC capital stock, pursuant
to provisions of the Union Pacific Agreement on July 31, 1984. All the
assets held by UPDC have now been transferred to the Company and to the
Plaza Subsidiary and UPDC is now dormant.
General
The Company operates the Plaza Casino located on Main Street at the head of
Fremont street in downtown Las Vegas, Nevada. The casino is connected with two
multi-story towers having a total of 1,037 hotel guest rooms. The Union Plaza
Hotel opened for business in July-August, 1971. An expansion program which
included: one of the high rise towers containing 529 guest rooms; expansion
of the casino area to a total of 80,000 square feet; convention meeting-room
and dining facilities totaling 26,800 square feet at the third floor level
between the two hotels-room towers; an outdoor sports deck containing four
tennis courts, a swimming pool, and a quarter mile running tract, all at the
fifth floor level between the two hotel room towers; several new restaurant
facilities, including the glass-domed Center stage restaurant which overlooks
Fremont Street, the center of downtown Las Vegas Gaming activity, was completed
in September, 1983.
In December, 1995, Fremont Street was developed with the Fremont Street
Experience which is comprised of a lighted cover over the five blocks of Fremont
Street beginning at Main Street and going South five blocks. The cost of this
development was some $70 million and it is comprised of an automated light show
that occurs every hour during the evening. The development was designed to
attract many of the visitors to Las Vegas, to the Downtown area and boost the
number of clientele for the Downtown hotels.
This Agreement was described in "Item 10 (c) Submission of Matters to
a Vote of Security Holders" in the Form 10-K Annual Report for the year
ended December 31, 1979.
The Company's management believes that, in addition to its casino,
there are 18 other downtown Las Vegas casinos (15 of which are
also connected with similar hotel facilities) which currently generate
annual gross gaming revenues of at least $1,000,000 each.
The nature and size of the operations of the downtown Las Vegas casinos, as
a group, are different from those of the separate group of the estimated 39
casinos located in the "Las Vegas Strip" (an area which extends southward
from the Las Vegas city limits as far as McCarran International Airport).
Twenty-two of the Las Vegas Strip casinos are operated in conjunction with
large hotels. The several most grandiose of the "Strip" hotel/casino complexes
offer sumptuous accommodations and service and cabaret-type entertainment
featuring the most famous entertainers in show business. These luxury complexes
are, as a group, without equal among Nevada casinos in attracting the patronage
and wagering activity of so-called "premium credit" or "high credit limit"
casino players from throughout the world. As a result, these major hotel/casino
complexes generally derive, over the long run, far greater revenues than do
other Nevada casino. There are 22 casinos with revenues over $72,000,000.
Operations.
The Company's Plaza casino offers a variety of games and is the largest
total floor-area casino in downtown Las Vegas. At December 31, 2001, the
Company's casino contained 16 "21" tables; 4 crap tables; a 18-seat Keno
lounge; a race and sports book; 3 Roulette wheels; 1 "mini-Baccarat" table;
2 "Pai Gow' poker tables; 1 Let-it-Ride Bonus table; 16 poker and pan tables;
and a total of 1,218 slot machines of varying denominations.
The casino also contains a cocktail lounge, 4 bars, a 600-seat showroom
and a "Fifties" style diner located off the common area connecting the main
casino and the original hotel tower. Live entertainment is regularly provided
in the casino cocktail lounge.
The Union Plaza Hotel currently has 1,037 guest rooms and suites, together
with meeting and service facilities for conventions; several offices; a barber
shop, a beauty shop, and a small selection of retail stores. The Company also
leases space within its hotel and casino for food and beverage operations to
McDonalds Corporation, Subway Sandwiches, and Seattle's Best Coffees.
Employees and Labor Relations
As of December 31, 2001, the Company had approximately 962 full-time
employees and 53 part-time employees, of whom approximately 339 were persons
directly involved in the casino activities on a full-time basis and 31 on a
part-time basis. Taking into consideration employees on sick leave or vacation,
the average number of people working on any given day during 2001 was
approximately 713 of whom approximately 373 were directly involved in casino
activities.
See also comments under "Item Competition and Business Risks" first
paragraph "Competition Conditions".
On April 19, 1999, the Company entered into a collective bargaining
Agreement with Culinary Workers Union Local 226 and Bartenders Local 165. The
Agreement was retroactive to June 1, 1997 and extends through May 31, 2002.
The Culinary and Bartenders contract covers a total of 506 employees.
On March 10, 1997, the Company entered into a collective bargaining
Agreement with the United Brotherhood of Carpenters and Joiners of America,
Local 1780. This agreement expired on February 28, 2001. The Company has
been engaged in discussions with the Local 1780 regarding a new contract
but have not agreed upon the terms of a new agreement. There are currently
3 employees covered by this agreement.
On August 29, 2000, the Company entered into a collective bargaining
agreement with Teamsters Local 995. The agreement was retroactive to
August 27, 2000 and extends through August 26, 2003. The Teamsters contract
covers a total of 49 employees, which is comprised of 16 backend employees
and 33 frontend employees. Wages based on hours worked and paid will increase
by 7.5% in each classification over the duration of the contract.
The Company's collective bargaining agreements with the Painters Local
Union 159, which is comprised of 2 painters and Operating Engineers Local 501,
which covers 20 employees have expired. At this time, the Company is not
engaged in negotiations with either union.
Competition and Business Risks
Competitive Conditions
The Company competes with resort hotels in Las Vegas, some of which
provide more elaborate and more lavish hotel, casino and entertainment
facilities than the Company (see General, above). The primary competition,
however, of the company is the approximately 18 other casino located in the
downtown Las Vegas area. In addition to the gaming operations of the hotels
in the area, there are large numbers of slot machines located in business
establishments such as bars, grocery stores, drugstores and restaurants
throughout Las Vegas. The Company also competes with other resort hotels and
casino facilities in other parts of the world. Legalization of gaming in
other states also affects the Company's business. The Company is also
subject to adverse local, regional and national economic trends and
conditions, including, terrorist threats and the fears of future attacks
involving commercial airlines and commercial buildings.
See also under "Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operation".
The Company's management believes that its prices for room accommodations,
food and entertainment are, in general, considerably less that those charged by
the major hotel/casino complexes located in the Las Vegas Strip area and that
its prices are comparable to those charged by the casino hotels and motels
located in the downtown Las Vegas area.
Revenues
During the last five fiscal years of the Company, its casino operating
revenues accounted for more that fifty percent of its total revenues as shown
in the table set forth under Item 6. Selected Financial Data.
Regulation and Licensing - Nevada.
The sale of alcoholic beverages by the casino is subject to licensing,
control and regulation by the applicable local authorities. All licenses
are revocable and are not transferable. The agencies involved have full power
to limit, condition, suspend or revoke any such license, and any such
disciplinary action could (and revocation would) have a material adverse
affect upon the operations of the casino.
The ownership and operation of casino gaming facilities in Nevada are
subject to: (i) the Nevada Gaming Control Act and the regulations promulgated
there under (collectively, "Nevada Act"); and (ii) various local regulations.
The Company's gaming operations are subject to the licensing and regulatory
control of the Nevada Gaming Commission ("Nevada Commission"), the Nevada
State Gaming Control Board ("Nevada Board"), the Clark County Liquor and
Gaming Licensing Board and the City of Las Vegas. The Nevada Commission,
the Nevada State Gaming Control Board, the Clark County Liquor Gaming Licensing
Board ("CCLGLB") and the city of Las Vegas are collectively referred to as the
"Nevada Gaming Authorities".
The laws, regulations and supervisory procedures of the Nevada Gaming
Authorities are based upon declarations of public policy which are concerned
with, among other things: (i) the prevention of unsavory or unsuitable persons
from having a direct or indirect involvement with gaming at any time or in any
capacity; (ii) the establishment and maintenance of responsible accounting
practices and procedures; (iii) the maintenance of effective controls over
the financial practices of licensees, including the establishment of minimum
procedures for internal fiscal affairs and the safeguarding of assets and
revenues, providing reliable record keeping and requiring the filing of
periodic reports with the Nevada Gaming Authorities; (iv) the prevention of
cheating and fraudulent practices; and (v) providing a source of state and
local revenues through taxation and licensing fees. Changes in such laws,
regulations and procedures could have an adverse effect on the Company's
gaming operations.
The Plaza Subsidiary which operates the casino, is required to be
licensed by the Nevada Gaming Authorities. The gaming license requires
the periodic payment of fees and taxes and is not transferable. The
Company is registered by the Nevada Commission as a publicly traded
corporation ("Registered Corporation") and as such, it is required
periodically to submit detailed financial and operating reports to
the Nevada Commission and furnish any other information
which the Nevada Commission may require. No person may become a stockholder of,
or receive any percentage of profits from the Company, without first obtaining
licenses and approvals from the Nevada Gaming Authorities. The Company and
the Plaza Subsidiary obtained from the Nevada Gaming Authorities the various
registrations, approvals, permits and licenses required in order to engage in
gaming activities in Nevada.
The Nevada Gaming Authorities may investigate any individual who has a
material relation ship to, or material involvement with, the Company, or the
Plaza Subsidiary in order to determine whether such individual is suitable
or should be licensed as a business associate of a gaming licensee. Officers,
directors and certain key employees of the Company must file applications with
the Nevada Gaming Authorities. Officers, directors and key employees of the
Company who are actively and directly involved in gaming activities of the
Plaza Subsidiary may be required to be licensed or found suitable by the
Nevada Gaming Authorities. The Nevada Gaming Authorities may deny an
application for licensing for any cause which they deem reasonable. A finding
of suitability is comparable to licensing, and both require submission of
detailed personal and financial information followed by a thorough
investigation. The applicant for licensing or a finding of suitability must
pay all the costs of the investigation. Changes in licensed positions must be
reported to the Nevada Gaming Authorities and in addition to their authority
to deny an application for a finding of suitability or licensure, the
Nevada Gaming Authorities have jurisdiction to disapprove a change in a
corporate position.
If the Nevada Gaming Authorities were to find an officer, director or key
employee unsuitable for licensing or unsuitable to continue having a
relationship with the Company or the Plaza Subsidiary, the companies involved
would have to sever all relationships with such person. In addition, the
Nevada Commission may require the Company or the Plaza Subsidiary to terminate
the employment of any person who refuses to file appropriate applications.
Determinations of suitability or of questions pertaining to licensing are not
Subject to judicial review in Nevada.
The Company and the Plaza Subsidiary are required to submit detail
financial and operating reports to the Nevada Commission. Substantially all
material loans, leases, sales of securities and similar financing transactions
by the Company must be reported to, or approved by, the Nevada Commission.
If it were determined that the Nevada Act was violated by the Company, the
gaming licenses it holds could be limited, conditioned, suspended or revoked,
subject to compliance with certain statutory and regulatory procedures. In
addition, the Plaza Subsidiary, the Company, and the persons involved could be
subject to substantial fines for each separate violation of the Nevada Act at
at the discretion of the Nevada Commission. Further, a supervisor could be
appointed by the Nevada Commission to operate the Company's gaming properties
and, under certain circumstances, earnings generated during the supervisor's
appointment (except for the reasonable rental value of the Company's gaming
properties) could be forfeited to the State of Nevada. Limitation,
conditioning or suspension of any gaming license or the appointment of a
supervisor could (and revocation of any gaming license would) materially
adversely affect the Company's gaming operations.
Any beneficial holder of the Company's voting securities, regardless of
the number of shares owned, may be required to file an application, be
investigated, and have his suitability as a beneficial holder of the Company's
voting securities determined if the Nevada Commission has reason to believe that
such ownership would otherwise be inconsistent with the declared policies of the
State of Nevada. The applicant must pay all cost of investigation incurred by
the Nevada Gaming Authorities in conducting any such investigation.
The Nevada Act requires any person who acquires more than 5% of the
Company's voting securities to report the acquisition to the Nevada Commission.
The Nevada Act requires that beneficial owners of more that 10% of the
Company's voting securities apply to the Nevada Commission for a finding of
suitability within thirty days after the Chairman of the Nevada Board mails
the written notice requiring such filing. Under certain circumstances, an
"institutional investor," as defined in the Nevada Act, which acquires more
than 10%, but not more than 15%, of the Company's voting securities may
apply to the Nevada commission for a waiver of such finding of suitability
if such institutional investor holds the voting securities for investment
purposes only. An institutional investor shall not be deemed to hold
voting securities for investment purposes unless the voting securities
were acquired and are held in in the ordinary course of business as an
institutional investor and not for the purpose of causing, directly or
indirectly, the election of a majority of the members of the board of
directors of the Company, any change in the Company's corporate charter,
bylaws, management, policies or operations of the Company, or any of its
gaming affiliates, or any other action which the Nevada Commission
finds to be inconsistent with holding the Company's voting securities for
investment purposes only. Activities which are not deemed to be inconsistent
with holding voting securities for investment purposes only include:
(i) voting on all matters voted on by stockholders; (ii) making financial
and other inquires of management of the type normally made by securities
analysts for informational purposes and not to cause a change in its
management, policies or operations; and (iii) such other activities as the
Nevada Commission may determine to be consistent with such investment
intent. If the beneficial holder of voting securities who must be found
suitable is a corporation, partnership or trust, it must submit detailed
business and financial information including a list of beneficial owners.
The applicant is required to pay all costs of investigation.
Any person who fails or refuses to apply for a finding of suitability or
a license within thirty days after being ordered to do so by the Nevada
Commission or the Chairman of the Nevada Board, may be found unsuitable. The
same restrictions apply to a record owner if the record owner, after request,
fails to identify the beneficial owner. Any stockholder found unsuitable and
who holds, directly or indirectly, any beneficial ownership of the common stock
of a Registered Corporation beyond such period of time as may be prescribed by
the Nevada Commission may be guilty of a criminal offense. The Company is
subject to disciplinary action if, after it receives notice that a person is
unsuitable to be a stockholder or to have any other relationships with the
Company or the Plaza Subsidiary, the Company (i) pays that person any dividend
or interest upon voting securities of the Company, (ii) allows that person to
exercise, directly or indirectly, any voting right conferred through securities
held by that person, (iii) pays remuneration in any form to that person for
services rendered or otherwise, or (iv) fails to pursue all lawful efforts to
require such unsuitable person to relinquish his voting securities for cash at
fair market value. (Additionally, the CCLGLB has taken the position that it
has the authority to approve all persons owning or owning or controlling the
stock of any corporation controlling a gaming license.)
The Nevada Commission may, in its discretion, require the holder of any
debt security of a Registered Corporation to file applications, be investigated
and be found suitable to own the debt security of a Registered Corporation. If
the Nevada Commission determines that a person is unsuitable to own such
security, then pursuant to the Nevada Act, the Registered Corporation can be
sanctioned, including the loss of its approvals, if without the prior approval
of the Nevada Commission, it: (i) pays to the unsuitable person any dividend,
interest, or any distribution whatsoever; (ii) recognizes any voting right by
such unsuitable person in connection with such securities; (iii) pays the
unsuitable person remuneration in any form; or (iv) makes any payment to the
unsuitable person by way of principal, redemption, conversion, exchange,
liquidation, or similar transaction.
The Company is required to maintain a current stock ledger in Nevada
which may be examined by the Nevada Gaming Authorities at any time. If any
securities are held in trust by an agent or by a nominee, the record holder
may be required to disclose the identity of the beneficial owner to the
Nevada Gaming Authorities. A failure to make such disclosure may be grounds
for finding the record holder unsuitable. The Company is also required to
render maximum assistance in determining the identity of the beneficial owner.
The Nevada Commission has the power to require the Company's stock certificates
to bear a legend indicating that the securities are subject to the Nevada Act.
The Company may not make a public offering of its securities without the
prior approval of the Nevada Commission if the securities or the proceeds
there from are intended to be used to construct, acquire or finance gaming
facilities in Nevada, or to retire or extend obligations incurred for such
purposes. Such approval, if given, does not constitute a finding
recommendation or approval by the Nevada Commission or the Nevada Board as to
the accuracy or adequacy of the prospectus or the investment merits of the
securities. Any representation to the contrary is unlawful.
License fees and taxes, computed in various ways depending on the type
of gaming or activity involved, are payable to the State of Nevada and to the
counties and cities in which the Nevada licensee's respective operations are
conducted. Depending upon the particular fee or tax involved, these fees and
taxes are payable either monthly, quarterly or annually and are based upon
either: (i) a percentage of the gross revenues received; (ii) the number of
gaming devices operated; or (iii) the number of table games operated. A
casino entertainment tax is also paid by casino operations where entertainment
is furnished in connection with the selling of food or refreshments. Nevada
licensees that hold a license as an operator of a slot route, or a
manufacturer's or distributor's license, also pay certain fees and taxes to
the State of Nevada.
Any person who is licensed, required to be licensed, registered, required
to be registered, or is under common control with such persons (collectively,
"Licensees"), and who proposes to become involved in a gaming venture outside
of Nevada is required to deposit with the Nevada Board, and thereafter maintain,
a revolving fund in the amount of $10,000 to pay the expenses of investigation
of the Nevada Board of their participation in such foreign gaming. The
revolving fund is subject to increase or decrease in the discretion of the
Nevada Commission. Thereafter, Licensees are required to comply with certain
reporting requirements imposed by the Nevada Act. Licensees are also subject
to disciplinary action by the Nevada Commission if it knowingly violates any
laws of the foreign jurisdiction pertaining to the foreign gaming operation,
fails to conduct the foreign gaming operation in accordance with the standards
of honesty and integrity required of Nevada gaming operations, engages in
activities that are harmful to the State of Nevada or its ability to collect
gaming taxes and fees, or employs a person in the foreign operation who has been
denied a license or finding of suitability in Nevada on the ground of personal
unsuitability.
Item 2. Properties.
The Company owns 100% of the Union Plaza Operating Company. The Company
has no other materially important properties.
The Company's Plaza subsidiary's main casino is on the ground floor of a
three-story building and is comprised of a total floor area of approximately
80,000 square feet. The Company's convention facilities are located above the
casino area, and the hotel tower, completed in 1982, is located at the southern
end of the casino.
The Company leases the original Union Plaza hotel tower (connected to,
and integrated with, the Company's casino building by a common public area) and
a bus depot and a parking facility adjacent to the south side of the casino
from Exber, Inc., a Nevada corporation, ("Exber"). All furnishings in the
hotel were purchased by the Company. The annual rental is $1,250,000 plus
insurance, taxes and maintenance. The initial term of the lease expired in
2001. The Company continues to rent the property from Exber, Inc. on a
month-to-month basis for $104,000. In the event of any damage or destruction
of the hotel building, the bus depot or the parking facility, the Company
is obligated to repair or rebuild at its own cost. The Company subleases
the bus depot to Greyhound lines, Inc., under an agreement entered into on
August 3, 1970 withan initial term of thirty years subject to two renewal
options of ten years each at a "fair monthly market rental" to be agreed
upon between the Company and Greyhound. In August, 2001, the initial term
of the sublease agreement expired and Greyhound Lines, Inc. exercised
the first ten year option. Under terms of the amendment agreement,
Greyhound lines, Inc. pays the Company a monthly rental of $24,500 subject
to an annual adjustment upward of three percent over the previous year's rent.
Item 3. Legal Proceedings.
The Company and a number of other companies who are engaged in gaming or
the manufacturer of gaming equipment has been named as Defendants in an action
originally filed in the United States District Court for the Middle District
of Florida, Orlando Division, which alleges irregularities in the manufacture
and operation of video and electronic slot machines. The litigation in
question was transferred to the United States District Court for the District
of Nevada.
In the opinion of the Company's management at this time, the claims made
by the Plaintiffs in this litigation are without merit and will not have a
material adverse effect upon the financial position or the operation of the
Company.
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 $100,000.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for the Registrant's Common Stock and Related Security
Holder matters.
Registrant's common stock is not publicly traded. There were 33 holders
of Registrant's common stock on March 22, 2002.
Dividends of $.10 per share were paid quarter annually from April,
1979, through December, 1981, but no dividends have been declared since
such date.
Item 6. Selected Financial Data.
The information required by this Item is incorporated by reference from
the Annual Report to Stockholders for Year Ended December 31, 2001, which
is filed herewith as Exhibit 13.01.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The information required by this Item is incorporated by reference from
the Annual Report to Stockholders for Year Ended December 31, 2001, which is
filed herewith as Exhibit 13.01.
Item 8. Financial Statements and Supplementary Data
The following consolidated financial statements of the Registrant and its
subsidiary included in the Registrant's Annual Report to Stockholders for the
year Ended December 31, 2001, all of which are filed herewith as Exhibit
13.01, are incorporated herein by reference:
Report of Independent Certified Public Accountants
Consolidated Balance Sheets - December 31, 2001 and 2000.
Consolidated Statements of Loss - Years ended December 31, 2001,
2000 and 1999.
Consolidated Statements of Stockholders' Equity - Years Ended December 31,
2001, 2000 and 1999.
Consolidated Statements of Cash Flows - Years Ended December 31, 2001,
2000 and 1999.
Notes to Consolidated Financial Statements.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information required by this Item is incorporated by reference to
the Proxy statement in connection with Registrant's Annual Meeting to be
held on May 17, 2002.
Item 11. Executive Compensation.
The information required by this Item is incorporated by reference to
the Proxy Statement in connection with Registrant's Annual Meeting to be
held on May 17, 2002.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table contains information concerning beneficial
ownership, as defined in Footnote (1) to such table, of the Company's capital
stock, as of March 22, 2002, by (a) each person known to the Company to have
such beneficial ownership of more that five percent (5%) of all such capital
stock outstanding as of March 22, 2002, and (b) all officers and directors
as a group:
Number of Shares and
Names and Address Nature of Beneficial
Of Beneficial Owner Ownership (1) Percent of Class
Exber, Inc. 386,475 (3) 51.025%
600 E. Fremont St.
Las Vegas, NV 89101
J. K. Houssels 88,600 (2) 11.698%
380 Rancho Circle
Las Vegas, NV 89107
John D. Gaughan 492,867 (3) 65.072%
P.O. Box 680
Las Vegas, NV 89125
Jimma Lee Beam 97,512 12.874%
2409 Windjammer Way
Las Vegas, NV 89107
All officers and 192,292 25.388%
Directors as a group
(1) For the purposes of this table, a person is regarded as having
beneficial ownership of shares in respect of which the person has or
shares the power to vote or to direct voting ("voting power") or the
power to dispose or to direct disposition ("investment power").
Unless otherwise indicated by Footnote, each person named in the table
has the sole voting power and the sole investment power with respect
to all the shares set forth opposite the person's name.
(2) Includes 72,500 shares owned of record by J.K. Houssels, as trustee of
Houssels 1998 Charitable Trust. Also includes 16,100 shares owned of record by
Mr. J.K. Houssels, as Trustee for Eric Houssels and Kelley Claire Houssels,
children of Mr. Houssels, but does not include 5,550 shares owned by
each of Mr. Houssels' adult sons, John Kell Houssels, III and James
O'Shaughnessy Houssels.
(3) Includes 106,392 shares owned of record by John D. Gaughan, as trustee
of the Gaughan 1993 Marital Trust. Also includes 386,475 shares owned by
Exber, Inc. Mr. Gaughan is the President, and major shareholder of Exber, Inc.
Item 13. Certain Relationships and Related Transactions.
The information required by this Item is incorporated by reference from
the Annual Report to Stockholders for Year Ended December 31, 2001, which is
filed herewith as Exhibit 13.01.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) (1) Financial Statements:
The following consolidated financial statements of the Registrant
are included in the Registrant's Annual Report to Stockholders for the
year Ended December 31, 2001 and the independent auditor's report on
such financial statements are incorporated herein by reference:
Independent auditor's report
Consolidated Balance Sheets - December 31, 2001 and 2000
Consolidated Statements of Loss - Years Ended December 31,
2001, 2000 and 1999
Consolidated Statements of Stockholders' Equity - Years Ended
December 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows - Years Ended December 31,
2001, 2000 and 1999
Notes to Consolidated Financial Statements
(2) The following additional information for the years 2001, 2000 and 1999
Is submitted herewith:
Independent Auditor's Report
Schedule II Valuation and qualifying accounts and reserves
All other schedules are omitted because they are not required, inapplicable,
or the information is otherwise shown in the financial statements or notes
thereto.
(3) Exhibits:
Exhibit
Number Description
3.01 Articles of Incorporation of the Registrant and Amendments thereto
dated December 10, 1969, February 12, 1971, and June 28, 1971, are
incorporated by reference from Form 10 under File No. O-8133, Item
18, Page 45, Exhibits Numbers 1.01, 1.02, 1.03 and 1.04, as filed
with the Securities and Exchanges Commission on October 3, 1975.
3.02 Bylaws of Registrant are incorporated herein by reference from
Form 10 under file No. 0-8133, Exhibit No. 1.05, as filed with the
Securities and Exchange Commission on October 3, 1975.
3.03 Certificate of Amendment to Articles of Incorporation of Registrant
dated May 19, 1987, filed with the Securities and Exchange
Commission on March 29, 1988.
3.04 Restated and Amended Bylaws of Registrant dated May 15, 1987,
filed with the Securities and Exchange Commission on March 29,
1988.
4.01 Specimen of Certificate evidencing capital stock of the Registrant
is incorporated by reference to Form 10 under File No. 0-8133,
Exhibit No. 3.03, as filed with the Securities and Exchange
Commission on October 3, 1975.
4.02 Specimen of (Amended) Certificate evidencing capital stock of
Registrant, filed with the Securities and Exchange Commission on
March 29, 1988.
10.01 Building Loan and Security Agreement dated March 4, 1982, between
Union Plaza Development Corporation (formerly Scott Development
Corporation) and Valley Bank of Nevada, as filed with the Securities
And Exchange Commission on March 30, 1982.
10.02 Promissory Note, Deed of Trust and Security Agreement dated March
4, 1982, between Union Plaza Development Corporation (formerly
Scott Development Corporation) and Valley Bank of Nevada, as filed
with the Securities and Exchange Commission on March 30, 1982.
10.03 Note Modification Agreement dated November 4, 1986, between
Valley Bank of Nevada and Scott Plaza, Inc. successor-in-interest
to Union Plaza Development Corporation (formerly Scott Development
Corporation), filed with the Securities and Exchange Commission
on March 31, 1987.
13.01 Annual Report to Stockholders for the fiscal year ended December 31,
2001.
22.01 List of Subsidiaries.
INDEPENDENT AUDITOR'S REPORT
The Stockholders and
Board of Directors
Union Plaza Hotel and Casino, Inc.
Our report on the consolidated financial statements of Union Plaza Hotel
and Casino, Inc. and subsidiaries for the years ended December 31, 2001
2000 and 1999 is included in this report on Form 10-K. In connection with our
audit of such consolidated financial statements, we have also audited the
Schedule on Valuation and Qualifying Accounts and Reserves for the years
ended December 31, 2001, 2000 and 1999.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken
as a whole, presents fairly, in all material respects, the information
required to be included therein.
Conway, Stuart & Woodbury CPA's
Las Vegas, Nevada
March 1, 2002
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
ADDITIONS
BALANCE
AT CHARGED TO CHARGED BALANCE
BEGINNING COSTS AND TO OTHER AT END
OF YEAR EXPENSES ACCOUNTS DEDUCTIONS (1) OF YEAR
Year ended
December 31,
2001:
Allowance for
Doubtful
Accounts $ 45,000 $44,000 $ - $43,000 $46,000
Year ended
December 31,
2000:
Allowance for
Doubtful
Accounts $ 84,000 $39,000 $ - $78,000 $45,000
Year ended
December 31,
1999:
Allowance for
Doubtful
Accounts $ 15,000 $24,000 $ - $(45,000) $84,000
(1) Write-off of uncollectible accounts, net of recoveries.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Security
Exchange Act of 1934, Union Plaza Hotel and Casino, Inc, has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
UNION PLAZA HOTEL AND CASINO, INC.
/S/JOHN D. GAUGHAN
JOHN D. GAUGHAN, Chairman of the board
And Chief Executive Officer
/s/J.K. HOUSSELS
J.K. HOUSSELS, Vice Chairman of the
Board
Date: March 22, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
Date: March 22, 2002 /s/JOHN D. GAUGHAN
JOHN D. GAUGHAN, Chairman of the
Board/President/Chief Operating
Officer
Date: March 22, 2002 /s/ DON DOBSON
DON DOBSON, Vice President/Secretary/
Director
Date: March 22, 2002 /s/ JOHN P. JONES
JOHN P. JONES Vice President/Treasure/
Director
Date: March 22, 2002 /s/ IRVING K. EPSTEIN
IRVING K. EPSTEIN, Director
Date: March 22, 2002 /s/ MIKE NOLAN
MIKE NOLAN, Vice President/Director
Date: March 22, 2002 /s/ ALAN J. WOODY
ALAN J. WOODY, Vice President/Chief
Financial Officer/Director
UNION PLAZA HOTEL AND CASINO, INC.
AND SUBSIDIARIES
2001
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3-6
Independent Auditors' Reports . . . . . . . . . . . . . . . . . . . . . .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. . . . . .. . . . . . . .14-27
Directors and executive officers . . . . . . . . . . . . . . . . . . . . 28
Special information. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
To Our Shareholders,
The year 2001 was an extremely difficult period for our Company. During
the first eight months of the year, we witnessed an overall slowdown in
business growth, compounded by increasing costs company-wide. Competition
for our middle class customer intensified and prices for goods and services,
utilities, and employee health care were all higher. After nine months,
our operating income was down nearly eighty percent. Near the end of that
period was September 11th.
As expected, the events of September 11, 2001 had a significant impact on our
business and our 2001 results. During the fourth quarter, we lost nearly
half of our wholesale room bookings causing us to lower prices and
to increase advertising to sell rooms. Payroll expenses, as well as other
costs, became significantly higher as a percentage of revenue. It was
apparent that we were over-staffed in most segments of our operation and
certain changes would be required. Between September 11th and December 31st
we were able to reduce payroll across the board by over 10% without affecting
service.
Despite our quick response to the decline in tourism, the cost reduction
efforts put in place could not fully be realized in the fourth quarter.
Our expenses increased 11% for the year and our net loss expanded to $3.85
a share.
Although the overall results were very disappointing, 2001 represented the
fourth year of positive revenue growth at our Company. Casino revenues at
the Plaza were up 9.1% compared to an increase of only 1.7% for all of
Downtown Las Vegas. We believe that our on-going efforts to revitalize the
hotel and casino, and to market the property aggressively is the key to
this growth. Looking forward to 2002 and beyond, our philosophy is to continue
to offer our guests an enjoyable gaming and entertainment experience at a
reasonable price. We will strive to improve our operating margins in all
segments of our operation while improving the property through capital
improvements.
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 17, 2002 at 10:00am in the Center Stage Restaurant for the
annual meeting of shareholders.
Sincerely,
John D. Gaughan
Chairman of the Board
SELECTED FINANCIAL DATA
Amounts in thousands, except per share data
2001 2000 1999 1998 1997
Net revenues $ 54,870 $ 51,271 $ 48,560 $ 45,847 $ 48,015
Casino operating
revenue 35,683 33,830 32,074 30,886 32,135
Net loss (2,914) (1,595) (3,167) (5,002) (3,644)
Total assets 40,513 41,969 43,278 41,539 45,192
Long-term
Obligations 34,482 31,749 29,887 20,558 26,079
Stockholders'
Equity 628 3,542 5,137 8,304 13,331
Loss
per common
share $ (3.85) $ (2.11) $ (4.18) $ (6.60) $ (4.80)
Cash dividends
declared
common share $ - $ - $ - $ - $ -
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
2001 COMPARED TO 2000
REVENUES
Net revenues increased 7.0% to $54,870,000 in 2001 compared to
$51,271,000 in 2000. Casino revenues increased 9.2% or $3,192,000, food
and beverage sales improved 6.0% or $584,000 and revenue from other
sources rose 16.2% or $351,000. Despite revenue gains in all other
major segments, room revenues declined 1.4% or $157,000 for the year.
Casino revenues improved for the third consecutive year due to the
Company's continued focus on upgrading the slot floor and aggressive
slot marketing. More than 550 new slot machines have been purchased
and a wide selection of participation games have been placed on the
floor since March of 1999. The #1 Main Club, slot players' reward
program, has also been an effective marketing tool to develop both
existing and new players. Food and beverage sales were higher despite
35,000 fewer restaurant covers in the year. Food covers declined due
to the additional dining options provided by McDonalds, Subway, and
Seattle's Best, while food sales benefited from a change in pricing.
Combined revenue from other sources increased due to two primary
factors including forfeited escrow funds of $200,000 and increased
rental income of $180,000. On the downside, room occupancy levels
declined 4.1% to an average of 84.5% primarily the result of the
public's reluctance to travel in the fourth quarter following September
11, 2001.
OPERATING EXPENSES
Operating expenses increased 10.9% or $5,469,000 for the year ended
December 31, 2001. Costs associated with revenue generation, including
casino expenses and advertising and promotion, increased a combined
$3,673,000. Utilities and maintenance expense rose 10.4% or $634,000
due primarily to increases in electricity and gas costs. General and
administrative costs were up 18.7% or $813,000 mostly the result of
rental expense on property previously classified as a capital lease.
Total rent payments made on the property from July 2001 to December
2001 was $625,000.
OTHER INCOME (EXPENSE)
For the year ended December 31, 2001, the Company recorded a loss of
$159,000 on disposition of assets in relation to a slot machine
purchase/trade-in transaction at year-end. This compared to a gain
of $45,000 for the year ended December 31, 2000. Interest expense
declined $779,000 to $2,265,000 reflecting the decreases in the
prime rate of interest throughout the year.
NET LOSS
As a result of these factors, the Company reported net losses of
$2,914,000 and $1,595,000, respectively, during the years ended
December 31, 2001 and 2000.
2000 COMPARED TO 1999
REVENUES
Net revenues increased 5.6% to $51,271,000 in 2000 compared to
$48,560,000 in 1999. 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
$2,033,000. Win from slot machines increased by 13.8% 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 9.7% or $335,000. Food revenue
increased by 4.1% or $393,000 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.
OPERATING EXPENSES
In spite of the 5.6% growth in revenues, total operating expenses rose
just .4% or $175,000 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. Advertising, utilities,
and depreciation expenses were all higher when compared to 1999.
Casino expenses declined 7.1% or $1,494,000 due to a reduction in
payroll expense compared to the year ago period. Reductions in
casino expense were partially offset by an increase in food and
beverage costs and overall higher room related expenses. Increased
costs in the non-revenue producing segments further offset the
improvements reported from the casino. Advertising and promotional
costs were up more than 50% to $913,000 as the Company increased
its marketing efforts amidst rising competition. Utility and
maintenance expenses increased by 3.3% or $195,000 during the year,
reflecting higher energy and water costs at the Company's property.
Depreciation expense rose 15.3% or $544,000 during the year reflective
of recent 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 in 1999.
OTHER EXPENSE
Interest expense rose 22.1% or $551,000 during 2000 due to a higher
level of debt compounded by higher interest rates during the year.
NET LOSS
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 in 1999.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2001, the Company's primary source of liquidity was
3,552,000 in cash and cash equivalents and a $1,000,000 letter of
credit secured by the Company's majority shareholder. Cash assets
accounted for 8.8% of total assets at December 31, 2001 and 7.9% or
$3,335,000 of the total assets at December 31, 2000. The ratio of
current assets to current liabilities was 1 to 1 for 2001 and .8
to 1 for 2000. Prepaid expenses increased 10.6% or $76,000 during
2001 reflecting higher gaming taxes at year-end. Accounts receivable
increased 9.0% or $65,000 including outstanding balances due to the
hotel from travel agencies and internet booking agencies.
Long-term debt and obligations under capital leases (including
current term portions) was $34,964,000 at December 31, 2001
compared to $33,321,000 at December 31, 2000. The increase in
obligations is attributable to additional debt financing from the
Company's majority shareholder and equipment lease obligations
relating to the slot accounting and telephone systems.
During the year ended December 31, 2001, the Company generated
operating cash flow of $1,066,000 compared to $2,693,000 during
2000. The decline in cash flow is attributable to the increase
in cash paid to suppliers and employees. Management feels that
positive operating cash flows generated by the Company combined
with the financial stability of its majority shareholder 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 anticipated
results in the future, and accordingly, actual results may differ
materially from those expressed in any forward-looking statements
made by or on behalf of the Company.
Due to the fact that shares in the Company are closely held and
there is virtually no trading in the common shares, the performance
graph has been omitted from this filing.
INDEPENDENT AUDITOR'S REPORT
The Stockholders and
Board of Directors
Union Plaza Hotel and Casino, Inc.
We have audited the accompanying consolidated balance sheet of Union Plaza
Hotel and Casino, Inc. and subsidiaries (a Nevada Corporation) as of
December 31, 2001, and 2000 the related consolidated statements of
loss, stockholders' equity and cash flows for the year then ended December 31,
2001, 2000 and 1999. 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 financial position of Union Plaza Hotel and
Casino, Inc. and subsidiaries as of December 31, 2001 and 2000, and the
results of their operations and their cash flows for the year then ended
December 31, 2001, 2000 and 1999 in conformity with accounting principles
generally accepted in the United States of America.
Conway, Stuart & Woodbury CPA's
Las Vegas, Nevada
March 1, 2000
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2001 AND 2000
Amounts in thousands, except per share data
ASSETS
2001 2000
CURRENT ASSETS:
Cash and cash equivalents $ 3,552 $ 3,335
Accounts receivable, net 786 721
Inventories of food, beverage
and supplies 423 452
Prepaid expenses 793 717
TOTAL CURRENT ASSETS 5,554 5,225
PROPERTY AND EQUIPMENT:
Land 7,012 7,012
Buildings 48,040 57,242
Leasehold improvements 3,564 3,534
Furniture and equipment 31,659 38,712
90,275 106,500
Less accumulated depreciation
and amortization 55,903 70,381
NET PROPERTY AND EQUIPMENT 34,372 36,119
OTHER ASSETS 587 625
$ 40,513 $ 41,969
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, 2001 AND 2000
LIABILITIES AND STOCKHOLDERS' EQUITY
Amounts in thousands, except per share data
2001 2000
CURRENT LIABILITIES:
Accounts payable $ 2,441 $ 2,590
Accrued liabilities 2,353 2,516
Short-term contracts payable 127 -
Current portion of long-term debt 38 680
Current portion of obligations under
capital leases 444 892
TOTAL CURRENT LIABILITIES 5,403 6,678
LONG-TERM DEBT,
less current portion 32,900 31,604
OBLIGATIONS UNDER CAPITAL LEASES,
less current portion 1,582 145
TOTAL LIABILITIES 39,885 38,427
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, 2001 and 2000 750 750
Additional paid-in capital 5,462 5,462
Retained earnings 8,313 11,227
14,525 17,439
Less: treasury stock at cost, 742,581 shares
at December 31, 2001 and 2000 13,897 13,897
TOTAL STOCKHOLDERS' EQUITY 628 3,542
$ 40,513 $ 41,969
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, 2001, 2000 AND 1999
Amounts in thousands, except per share data
2001 2000 1999
REVENUES:
Casino $ 37,807 $ 34,615 $ 32,582
Food and beverage 10,351 9,767 9,709
Rooms 11,110 11,267 11,077
Other 2,524 2,173 2,268
GROSS REVENUES 61,791 57,822 55,636
Less promotional allowances 6,922 6,551 7,076
NET REVENUES 54,870 51,271 48,560
OPERATING EXPENSES:
Casino 22,865 19,608 21,102
Food and beverage 8,997 8,779 8,322
Rooms 4,294 4,216 4,088
General and administrative 5,155 4,342 4,334
Entertainment 591 579 597
Advertising and promotion 1,329 913 599
Utilities and maintenance 6,712 6,078 5,883
Depreciation and amortization 4,130 4,110 3,566
Provision for doubtful accounts 44 39 24
Other costs and expenses 1,246 1,230 1,204
TOTAL OPERATING EXPENSES 55,363 49,894 49,719
OPERATING INCOME (LOSS) (493) 1,377 (1,159)
OTHER INCOME (EXPENSE):
Interest income 3 27 19
Gain (loss) on sale of assets (159) 45 72
Interest expense (2,265) (3,044) (2,493)
TOTAL OTHER INCOME (EXPENSE) (2,421) (2,972) (2,402)
LOSS BEFORE INCOME TAX (2,914) (1,595) (3,561)
INCOME TAX BENEFIT:
Deferred - - 394
NET LOSS $(2,914) $(1,595) $ (3,167)
LOSS PER COMMON SHARE $( 3.85) $( 2.11) $ ( 4.18)
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, 2001, 2000 AND 1999
Amounts in thousands, except per share data
Additional
Common paid-in Retained Treasury
stock capital earnings stock Total
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
Net loss for 2001 - - (2,914) - (2,914)
BALANCE:
December 31, 2001 $750 $5,462 $ 8,313 $(13,897) $ 628
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, 2001, 2000 AND 1999
Amounts in thousands, except per share data
2001 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 54,761 $ 51,289 $ 48,361
Cash paid to suppliers and
employees (51,314) (45,625) (46,466)
Interest received 3 27 19
Interest paid ( 2,384) ( 2,998) ( 1,936)
NET CASH PROVIDED BY
(USED IN)OPERATING
ACTIVITIES 1,066 2,693 ( 22)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property
and equipment 42 45 72
Purchase of property and equipment ( 1,173) ( 2,932) ( 1,006)
NET CASH USED IN
INVESTING ACTIVITIES ( 1,131) ( 2,887) ( 934)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on
short-term contracts ( 158) - -
Proceeds from long-term debt 2,000 3,205 2,500
Principal payments on long-term debt ( 641) ( 1,492) ( 822)
Principal payments on capital leases ( 919) ( 1,434) ( 999)
NET CASH PROVIDED BY
FINANCING ACTIVITIES 282 279 679
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 217 85 ( 277)
CASH AND CASH EQUIVALENTS,
at beginning of the year 3,335 3,250 3,527
CASH AND CASH EQUIVALENTS,
At end of the year $ 3,552 $ 3,335 $ 3,250
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, 2001, 2000 AND 1999
Amounts in thousands, except per share data
2001 2000 1999
RECONCILIATION OF NET LOSS TO NET
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Net loss $(2,914) $(1,595) $(3,167)
ADJUSTMENTS TO RECONCILE NET LOSS
TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Depreciation and amortization 4,130 4,110 3,566
(Gain)loss on sale of property
and equipment 159 ( 45) ( 72)
Interest expense - - 352
Provision for doubtful accounts 44 39 24
(Increase) decrease in assets:
Accounts receivable ( 109) ( 241) ( 33)
Inventories 29 38 ( 65)
Prepaid expenses ( 76) 93 182
Other assets 17 32 72
Increase (decrease) in liabilities:
Accounts payable ( 51) 142 ( 164)
Accrued liabilities ( 163) 120 ( 323)
Deferred income tax - - ( 394)
TOTAL ADJUSTMENTS 3,980 4,288 3,145
NET CASH PROVIDED BY
(USED IN) OPERATING
ACTIVITIES $ 1,066 $ 2,693 $( 22)
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.
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 2001, 2000 and
1999 include the accounts of Union Plaza Hotel and Casino, Inc. (the
Company) and its wholly-owned subsidiaries. All material intercompany
balances and transactions have been eliminated in consolidation.
CASINO REVENUE AND RECEIVABLES
In accordance with common industry practice, the Company recognizes as
casino revenue the net win (which is the difference between amounts wagered
and amounts paid to winning patrons) from gaming activities. Credit is
extended to certain casino customers and the Company records all unpaid
advances as casino receivables on the date credit was granted. Allowances
for estimated uncollectible casino receivables are provided to reduce these
receivables to amounts anticipated to be collected. The Company does
not believe it is subject to any unusual credit risk beyond the normal
risk attendant to operating its business.
INVENTORIES
Inventories are valued at the lower of cost (first-in, first out or
weighted average) 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)
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. Other assets also includes operating stock
for the company's hotel and food and beverage operations
PROGRESSIVE JACKPOT LIABILITY
The Company has a number of progressive jackpot slot machines, progressive
poker games and progressive bingo jackpots. 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 and bingo 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.
OUTSTANDING CHIP AND TOKEN LIABILITY
In accordance with common industry practice, the Company records the
difference between the chips and tokens on hand and the chips and
tokens placed in service as a liability. The Company has an obligation
to redeem these chips ad tokens for cash in the future.
PLAYERS' CLUB LIABILITY
The Company has recorded a liability or points issued to patrons in
conjunction with its players' club program. Points are redeemable for cash
or merchandise. As more fully described in note 15, the Company records the
value of points issued to patrons as a reduction in casino revenue.
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROMOTIONAL ALLOWANCES
The retail value of admissions, food and beverage and other complimentary
items furnished to customers without charge is included in gross revenue and
then deducted as promotional allowances. The retail value of such promotional
allowances have been included in gross revenue as follows:
Amounts in thousands
2001 2000 1999
Food and beverage $ 3,798 3,562 3,993
Rooms 3,124 2,989 3,083
$ 6,922 6,551 7,076
Additionally, the estimated cost of providing such promotional allowances
have been included in casino expenses on the statements of loss as follows:
Amounts in thousands
2001 2000 1999
Food and beverage $ 5,214 5,038 5,812
Rooms 1,678 1,523 1,577
$ 6,892 6,561 7,389
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, casino 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.
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.
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.
VALUATION OF LONG-LIVED ASSETS
Long-lived assets and certain identifiable intangibles held and
used by the Company are reviewed for impairment whenever events or
changes in circumstances warrant such a review. The carrying value of
a long-lived or intangible asset is considered impaired when the
anticipated undiscounted cash flow from such asset is separately
identifiable and is less than its carrying value. In that event, a
loss is recognized based on the amount by which the carrying value
exceeds the fair value of the asset. Fair value is determined primarily
using the anticipated cash flows discounted at a rate commensurate with
the risk involved. Losses on long-lived assets to be disposed of are
determined in a similar manner, except that fair values are reduced for
the cost of disposal.
ESTIMATES
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect
certain reported amounts and disclosures.
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, 2001 and 2000 are
$891,000 and $687,000 respectively. Also included in cash are uninsured
money market funds amounting to $9,000 at December 31, 2001 and 2000.
NOTE 3 - ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
Amounts in thousands
December 31,
2001 2000
Casino $ 263 $ 275
Hotel 430 355
Other 139 136
832 766
Less allowance for
doubtful accounts 46 45
$ 786 $ 721
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,
2001 2000
Expansion of gaming rights, less
accumulated amortization of
$810,000 and $790,000 $ - $ 20
Leasehold costs, less accumulated
amortization of $439,000 and
$434,000 - 5
Deposits and other 587 600
$ 587 $ 625
NOTE 5 - ACCRUED LIABILITIES
Accrued liabilities consist of the following:
Amounts in thousands
December 31,
2001 2000
Salaries and wages $ 1,028 $ 965
Taxes, other than taxes on income 219 272
Accrued interest 132 251
Progressive jackpot liabilities 208 335
Outstanding chip and token liability 172 256
Players' club liability 332 194
Other 262 243
$ 2,353 $ 2,516
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 of each
were as follows:
Amounts in thousands
2001 2000 1999
Depreciation and amortization $( 365) $( 310) $( 422)
Capitalized leases 27 319 242
Net operating losses ( 539) ( 560) (1,027)
Vacation and backpay 17 ( 12) ( 13)
Other ( 28) 69 48
Tax credits ( 62) 127 11
Tax credit valuation allowance - ( 200) ( 78)
$( 950) $( 567) $(1,239)
Less valuation allowance 950 567 845
$ - $ - $( 394)
The components of the net deferred tax liability at December 31, 2001
and 2000 under SFAS 109 are as follows:
Amounts in thousands
December 31,
2001 2000 Tax Expense
Deferred tax asset $ 2,362 $ 1,412 $ 950
Valuation allowance (2,362) (1,412) ( 950)
$ - $ - $ -
The Company has net operating loss carryforwards of approximately
20,120,000 and tax credit carryforwards of approximately $913,000 at
December 31, 2001 with expiration dates through December 31, 2021.
Tax credits are used to reduce federal income taxes in the year which
benefit is available.
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
2001 2000 1999
Percent Percent Percent
of of of
Pretax Pretax Pretax
Amount Income Amount Income Amount Income
Computed "expected"
tax expense(benefit) $( 990) (34.0%) $( 542) (34.0%) $(1,077) (34.0%)
Increase (reduction)
in tax resulting from:
Tax credits ( 62) ( 2.1%) 127 7.9% 11 0.4%
Tax credit valuation
allowance - - ( 200) (12.5%) ( 78) ( 2.5%)
Nondeductible
expenses 102 3.5% 48 3.0% ( 95) ( 2.9%)
Actual tax Benefit $( 950) (32.6%) $( 567) (35.6%) $(1,239) (39.0%)
Less valuation allowance 950 32.6% 567 35.6% 845 26.6%
$ - - $ - - $( 394) (12.4%)
NOTE 7 - LONG-TERM DEBT
Long-term debt at December 31, 2001 and 2000 is as follows:
Amounts in Thousands
December 31,
2001 2000
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, 2001 is 4.75%. $ 32,900 $ 31,604
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 - LONG-TERM DEBT (CONTINUED)
Amounts in Thousands
December 31,
1999 1998
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
May 1, 2001 - 179
December 30, 2001 - 11
July 1, 2002 - 53
September 8, 2002 - 82
December 30, 2002 38 229
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 was due on
July 1, 2001. $ - 77
Total long-term debt 32,938 32,284
Less current portion 38 680
Total long-term debt, net 32,900 31,604
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 7 - LONG-TERM DEBT (CONTINUED)
Principal payments on long-term debt during the succeeding five years
are as follows:
Amounts in Thousands
2002 $ 38
2003 -
2004 -
2005 32,900
$ 32,938
Interest on long-term debt was $2,198,000 in 2001, $2,802,000 in 2000 and
$2,143,000 in 1999.
NOTE 8 - LEASES
The Company leases equipment under long-term agreements, which are
classified as capital leases. The capital lease with Exber, Inc.,
a 51.03% stockholder of the Company, covering the hotel and bus depot
property expired during 2001. The hotel and bus depot property are now
leased from Exber, Inc. on a month-to-month basis under an operating lease
commencing on July 1, 2001. The bus depot property is sublet to Greyhound
Lines, Inc. under a lease, the original term of which expired during 2001. On
August 1, 2001 the Company and Greyhound Lines, Inc. exercised the first of
two availabe ten year options.
Property and equipment includes the following property under capital
leases by major classes:
Amounts in thousands
December 31,
2001 2000
Buildings $ - $ 9,242
Equipment 2,814 906
2,814 10,148
Less accumulated amortization:
Buildings - 9,145
Equipment 790 297
$ 2,024 $ 706
Depreciation and amortization expense includes amortization of
buildings under capital leases of $97,000 for 2001, and $176,000 per
year for 2000 and 1999, and amortization of equipment of $348,000,
$181,000 and $116,000 for 2001, 2000 and 1999, respectively.
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 - LEASES (CONTINUED)
Interest paid on property under capital leases was $67,000 for
2001, $242,000 for 2000 and $350,000 for 1999.
Future minimum payments, by year and in the aggregate, under
capital leases with initial or remaining terms of one year or more
consist of the following at December 31, 2001:
Amounts in thousands
CAPITAL
Year LEASES
2002 $ 551
2003 463
2004 463
2005 463
2006 463
Thereafter 61
Total Minimum Lease Payments 2,424
Less amount representing interest 398
Present value of net minimum lease
payments under capital leases 2,026
Less current portion 444
Obligations Under Capital Leases $ 1,582
OPERATING LEASES
Rental expense for all operating leases are as follows:
Amounts in thousands
2001 2000 1999
Buildings $ 625 $ - $ -
Parking lot leases 24 24 24
$ 649 $ 24 $ 24
OPERATING SUBLEASES
The Company rents the bus depot property and other building spaces
to several retail stores under various operating subleases. Income
from these subleases, included in other income, for 2001, 2000 and
1999 was $487,000, $307,000 and $293,000, respectively.
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 8 - LEASES (CONTINUED)
Future minimum rents receivable, by year, under operating subleases
with initial or remaining terms of one year or more consist of the
following at December 31, 2001:
Amounts in Thousands
Year Operating Subleases
2002 $ 499
2003 495
2004 437
2005 404
2006 409
Thereafter 1,939
$4,183
NOTE 9 -EMPLOYEE BENEFIT PLANS
The Company contributes to a discretionary executive bonus plan.
Contributions for 2001, 2000, and 1999 were $193,000, $228,000 and
$31,000, 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 2001, 2000, and 1999.
The Company provides no post-retirement benefits to employees
subject to the requirements of Statement of Financial Accounting
Standards No. 106 (SFAS 106) which requires accrual of expected
cost of providing those benefits to an employee during the
years that the employee renders service.
NOTE 10 - LOSS PER COMMON SHARE
Loss per common share is based on the weighted average number
of shares of common stock outstanding during each year. Shares
used for the computation of earnings per common share are 757,419
for each of the years 2001, 2000 and 1999.
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 11 - RELATED PARTIES
The related party note payable of $32,900,000, as more fully
described in Note 7, is payable to Exber, Inc., a 51.03% stockholder
of the Company. Included in accrued liabilities is $132,000 and
$251,000 of accrued interest relating to this note at December 31, 2001
and 2000, respectively. Interest expense on this note was $2,189,000,
$2,758,000 and $2,143,000 for 2001, 2000, and 1999, 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, 2001 and 2000 the outstanding balance was $0.
The Company also pays $104,000 in monthly lease payments to Exber,
Inc. for the hotel and bus depot property, as more fully described
in Note 8. The Company paid $1,250,000 during 2001, $1,354,000 during
2000 and $1,250,000 during 1999 in connection with the lease. Interest
expense on the capital lease was $24,000, $185,000 and $313,000 for
2001, 2000 and 1999, respectively.
During 2001, the Company also financed various equipment purchases through
Exber, Inc., which have been classified as capital leases. As of December
31, 2001, capital leases include $1,881,000 payable to Exber, Inc.
Interest expense on these capital leases was $13,000 for 2001.
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
net loss from total sports book operations for Coast Hotels and Casinos, Inc.
For the years ended December 31, 2001 and 2000, the Company had a net
income of $742,000 and $296,000, respectively, in relation to this
agreement. In addition, $26,000 and $97,000 was payable to Coast Hotels
and Casinos, Inc. as of December 31, 2001 and 2000, respectively.
Coast Hotels and Casinos, Inc. is a wholly-owned subsidiary of Coast
Resorts, Inc. A major stockholder and chairman of the board of Coats
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 conection with various services provided to the Company.
The Company paid $25,000, $27,000 and $29,000 to Las Vegas
Dissemination, Inc. during 2001, 2000 and 1999, respectively, in
connection wioth race book pari-mutuel system operator fees.
The sole stockholder of Las Vegas Dissemination, Inc. is the grandson of
the President of the Company.
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 $100,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company has had recurring net losses over the past three
years amounting to $2,914,000, $1,595,000 and $3,167,000 in 2001, 2000
and 1999 respectively. At December 31, 2001 its current assets exceed its
current liabilities by approximately $151,000.
NOTE 13 - ADVERTISING COSTS
The Company expenses advertising costs as incurred. Advertising expense
was $1,329,000, $913,000 and $559,000 for the years ended December 31, 2001,
2000 and 1999 respectively.
NOTE 14 - SUPPLEMENTAL CASH FLOWS INFORMATION
Supplemental schedule of non-cash
Investing and financing activities:
Amounts in thousands:
December 31,
2001 2000 1999
Equipment acquired by direct
financing $ 883 $ 449 $4,763
Long-term debt payments directly
financed $ - $ - $ 321
Lease payments directly financed $ - $ - $ 104
Equipment acquired through $ 507 $ - $ -
capital leases
UNION PLAZA HOTEL AND CASINO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 15 - RECLASSIFICATION OF ITEMS
As of January 1, 2001, the Company adopted Emerging Issues Task
Force Issue 00-22, "Accounting for Points and Certain Other Time-Based
or Volume-based Sales Incentive Offers, and Offers for Free Products
or Services to be Delivered in the Future", which requires that certain
incentives related to gaming play be recorded as a reduction to gross
casino revenue. The Company previously recorded such incentives as an
operating expense.
In accordance with common industry practice, the estimated costs
of providing promotional allowances have been included in casino expenses
on the statements of loss as more fully described in note 1. The Company
previously recorded these amounts in food and beverage expense and rooms
expense.
In addition to the above changes, other items in the 2000 and 1999
financial statements have been reclassified to be consistent with the 2001
financial statement presentation.
The net impact of these reclassifications is to reduce net revenues
and casino expenses by $526,000 and $508,000 for the year ended December
31, 2000 and 1999, respectively. The reclassifications have no impact
on net income for the years ended December 31, 2000 and 1999.
NOTE 16 - SUBSEQUENT EVENTS
Effective March 15, 2002, the Company refinanced $704,000 of the long
term debt payable to Exber, Inc. and $812,000 of accounts payable as long
term capital leases payable to Exber, Inc. In accordance with FAS 6,
"Classification of Short-Term Obligations Expected to Be Refinanced", the
financial statements, as of December 31, 2001, present these amounts as if
the transaction had occurred as of December 31, 2001. The new lease
agreement requires monthly payments of $30,650 principal and interest
commencing March 15, 2002 for a period of 60 months. Interest will be
harged at a rate of 8% per year.
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 Nolan Director
Irving K. Epstein Director
Alan J. Woody Director
Executive Officers
John D. Gaughan Chief Executive Officer/
President
Donald L. Dobson Vice President/Corporate
Secretary
John P. Jones Vice President/Treasurer
Michael Nolan Vice President/General
Manager
Alan J. Woody Chief Financial Officer/
Controller
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
61% 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, bingo and pai-gow poker.
The food and beverage facilities account for approximately 17% of the
Company's gross revenues. The room operation provides approximately 18% of
gross revenue with retail shops, subleases, vending, interest on
investments, and miscellaneous gains on the sale of assets 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 17, 2002, 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.