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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
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(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED JUNE 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM:
COMMISSION FILE NUMBER: 0-14050
THE SANDS REGENT
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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NEVADA 88-0201135
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
345 NORTH ARLINGTON AVENUE
RENO, NEVADA 89501
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (702) 348-2200
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.05 PAR VALUE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
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The aggregate market value of the Registrant's $.05 par value Common Stock
held by non-affiliates of the Registrant on September 25, 1995 was $
12,160,340. The aggregate market value is computed with reference to the
average price per share on such date.
Registrant's Common Stock outstanding at September 25, 1995 was 4,498,722
shares.
Portions of Registrant's 1995 Annual Report to the Shareholders are
incorporated into Part II as set forth herein. Portions of Registrant's
definitive Proxy Statement for its November 6, 1995 Annual Meeting of
Shareholders are incorporated into Part III as set forth herein.
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PART I
ITEM 1. BUSINESS
GENERAL
THE COMPANY
The Company, through a wholly-owned subsidiary, Zante, Inc. ("Zante"), owns
and operates the Sands Regency hotel/casino in downtown Reno, Nevada. The
Company, through three wholly-owned subsidiaries, Patrician, Inc.
("Patrician"), Gulfside Casino, Inc. ("GCI") and Artemis, Inc., ("Artemis"),
owns Gulfside Casino Partnership (the "Partnership"), which owns the Copa
Casino, a dockside gaming vessel located in Gulfport, Mississippi. GCI,
Patrician and Artemis own 20%, 79% and 1%, respectively, of the Partnership.
Gaming operations for the Copa Casino commenced in September 1993. Patrician
and GCI have equal voting control over all activities and all matters presented
to the Partnership Board are subject to unanimous approval. Patrician is the
day-to-day operations manager for which there is no management fee or other
specific compensation.
Reno, Nevada. The Sands Regency hotel/casino has approximately 27,000
square feet of gaming space and 938 hotel rooms, including 32 suites of various
sizes. The complex also includes three restaurants, a "Winchell's Donut
House", a "Pizza Hut", an "Arby's" restaurant operated by a third party, a
"Baskin-Robbins" and an "Orange Julius" operated by a third party, four
cocktail lounges, a gift shop, a beauty/barber shop and a liquor store, each
operated by third parties, a video arcade, a health club, a swimming pool and
over 10,000 square feet of convention and meeting space which can seat up to
650 people. The Company maintains six parking areas on its main hotel/casino
property and adjacent to it, including two parking garages, with a total
combined capacity for approximately 1,000 vehicles. Although the Company
offers, on a very limited basis, complimentary hotel accommodations to select
customers, no group arrangements known as "junkets" are conducted.
The average room occupancy for fiscal 1995 was 87.1% compared to 89.7%
for 1994. The hotel's average room rate for the current fiscal year was
approximately $33.00 as compared to $32.00 in the prior fiscal year.
As of September 26, 1995, the casino offered 18 table games, including
14 blackjack tables, 1 caribbean stud table, 1 craps table, and 2 roulette
tables, two keno games and approximately 783 slot machines. In connection with
the supervision of its gaming activities, the Company's policies include
stringent controls, cross-checks and recording of all receipts and
disbursements.
The Company's Reno, Nevada operations are conducted 24 hours a day,
every day of the year. The primary source of revenues and income to the
Company is its gaming activities, although the hotel, bars, shops, restaurants
and other services are an important adjunct to the gaming activities. The
Company's operating and marketing philosophy emphasizes high volume business,
offering large, attractive hotel rooms at reasonable prices to travel group
wholesalers, primarily from Western Canada, the Pacific Northwest and Northern
California. Gaming accounted for approximately 56% of the Company's revenues
in fiscal 1995 and approximately 77% of the gaming revenues were generated by
slot machines. The Company generally does not extend credit to its gaming
customers.
The Company has local government approval for a major expansion program
at its Reno facility. As presently approved, the construction is to be
completed in phases through approximately the year 2000. Construction of the
next phase, which must commence by February 1996, would include an expansion of
approximately 5,500 square feet of casino, commercial and restaurant/convention
space. All phases of the expansion program are presently planned to be built
on properties owned by the Company.
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The subsequent phases, as presently approved, would include adding in
excess of 300 additional hotel rooms, approximately 25,000 square feet of
gaming space, 19,000 square feet of convention, meeting and commercial space, a
34-lane bowling alley, restaurants and other public areas. Also included is
the construction of a parking structure sufficient to accommodate approximately
700 vehicles which will meet the hotel/casino's increased capacity.
The total estimated cost of all of the phases of the expansion project,
if completed, is $40 million. Potential sources of financing include bank or
other debt, available cash and funds generated from operations, public equity
securities, or a combination of these sources. The Company does not expect to
begin construction on any phase without arranging all or substantially all of
the financing of such phase. It is anticipated that the first phase, which is
estimated to cost $1.5 million, will be financed by available cash and funds
generated from operations.
Major construction projects, such as the proposed addition to the
hotel/casino, entail significant risks. These include the risk of cost
overruns, insufficient financing, labor disputes, material shortages and other
potential problems. In addition to these risks, completion will be subject to
compliance with local governmental requirements.
Gulfport, Mississippi. In December 1992, the Company, through Patrician,
entered into a partnership agreement with GCI to develop and operate a dockside
gaming facility in Gulfport, Mississippi. Located approximately 75 miles from
New Orleans, Louisiana and 70 miles from Mobile, Alabama, the facility, known
as the "Copa Casino," is a permanently moored 500-foot cruise ship. Gaming
operations commenced in mid- September 1993.
On February 25, 1994, the Company acquired all of the outstanding stock of
GCI as well as certain advances to the Partnership previously due to an
affiliate of GCI. GCI's principal asset is its general partnership interest
in the Partnership. In April 1995, Artemis was formed as a wholly-owned
subsidiary of The Sands Regent and acquired a 1% ownership interest in the
Partnership from Patrician. The Company, through Patrician, GCI and Artemis,
owns 100% of the Partnership.
Mississippi, which legalized casino gaming in September 1991, allows for
24-hour gaming on riverboats or other floating vessels located on or adjacent
to approved navigable waterways. Such floating facilities need not cruise into
the waterways and, as such, become permanently moored as dockside gaming
facilities. Gulfport is a deep-water port located on U.S. Highway 90 on the
Mississippi gulf coast. A population of approximately 2.5 million resides
within a 100-mile radius, including New Orleans and Mobile. Interstate Highway
10, which is the main thoroughfare between Mobile and New Orleans, lies
approximately 10 miles to the north of the port area. The Gulfport-Biloxi
metropolitan area has over 6,000 hotel and motel rooms located in the immediate
Gulfport-Biloxi area.
The Copa Casino consists of approximately 24,000 square feet of casino
space located on two decks. As of September 26, 1995, the Copa offered 679
slot machines and 29 table games, including craps, roulette, blackjack,
caribbean stud, let it ride and poker. In addition, the facility also includes
4 cocktail lounges/bars, a deli-style restaurant, a buffet restaurant operated
by a third party, a gift shop and various ancillary services and facilities.
The deck below the two casino decks contains a surveillance area, a vault,
count rooms and security and various operations and administrative offices. An
additional three decks on the ship are available for future expansion of gaming
and dining facilities.
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The Copa Casino is permanently moored dockside at a location known as the
"Horseshoe Site." Such site, which is leased from the Mississippi Department
of Economic and Community Development and the Mississippi State Port Authority,
is between the East and West Piers of the Mississippi State Port in Gulfport,
Mississippi. This location, which includes 8.3 acres of land based facilities,
will accommodate surface parking for approximately 840 vehicles. The leased
facilities also include a docking structure which accommodates the Copa Casino
ship and will allow for mooring of additional vessels. The docking structure
also includes a roadway and pedestrian walk which provides access to the Copa
Casino entrance.
As in Nevada, the Mississippi operations are conducted 24 hours a day
every day of the year. Present operations provide for the offering of
complimentary food and beverage on a limited basis. Group arrangements, known
as "junkets," are not conducted.
MARKETING
Reno, Nevada. The central component of the Company's marketing
philosophy is to utilize travel wholesalers to attract group and air wholesale
business to the hotel/casino. This philosophy is based on offering attractive,
well-furnished, large hotel accommodations and quality food and beverages at
prices slightly lower than those of most major hotel/casinos in Reno.
Management believes this strategy has enabled the Company to maintain high
levels of hotel occupancy.
Significant group and air wholesale market areas continue to be Western
Canada, the Pacific Northwest and Northern California. The Company continues
to expand its marketing areas by adding additional air wholesalers and has been
successful in obtaining wholesale business in Central and Eastern Canada, the
Midwest, Southwest and Southern California.
In addition to the group and air wholesale business, the Company is
aggressively packaging and marketing convention and military reunion business
which require 300 rooms or less. Other travel package arrangements are also
being promoted which are geared toward individual travelers. The Company
undertakes, from time to time, direct advertising in select Western cities in
order to promote and increase the individual traveler business.
The Company uses a flexible approach to pricing its rooms which is
designed to maintain high occupancy levels. Hotel rooms are offered at
discount prices to travel wholesalers, as much as six months in advance of
arrival, for block sales of rooms used in travel packages. This is
particularly important to the Company because of the impact of hotel occupancy
on the level of gaming activity. The Company is particularly dependent upon
group business from November through February because of the seasonal decline
in other sources of business. During these months, a substantial amount of the
Sands Regency's hotel capacity is normally prebooked 30 to 180 days in advance
on a cancelable basis. During the summer months, the Company relies on direct
advertising of its room rates to attract individual customers.
The Sands Regency is the lead hotel/casino in the Reno area for several
major travel wholesalers who serve major cities in the West, Midwest and
Southwest United States and in Western and Central Canada. Group and air
wholesale business accounted for approximately 61% of the hotel's occupancy in
fiscal 1995 compared to 63% in fiscal 1994.
Most advertising for the Sands Regency is done by travel wholesalers in
their markets. The Company also advertises directly in its major United States
markets through printed publications, especially during periods of the year
when group business operates at reduced levels.
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Gulfport, Mississippi. The Company has positioned the Copa Casino as a
casino for local residents. Emphasis has been placed on providing a casual and
friendly atmosphere. To maintain this marketing position, the Company's goal
is to provide its products and services at values favored by the Company's
guests. The Company also uses numerous, in-house promotional programs to
attract local residents and other customers. These Company-sponsored
promotional and special event programs include gaming, slot and poker
tournaments, football season promotions and give-a-way programs.
The Company has implemented a variety of outside advertising campaigns
in order to attract "drive-up" gaming customers. This includes billboard and
newspaper advertising in numerous cities within a 100-mile radius and local
radio and television advertising. In addition, the Company has implemented
drive-up promotions and programs to generate more frequent customer visits and
to identify valued customers. Direct mail programs have also been recently
undertaken which have resulted in positive customer responses.
The Company has also pursued marketing efforts toward developing group
business, primarily bus charters. Through these efforts, the Company has
attracted bus charters from various areas within a 500-mile radius including
Atlanta, Georgia and Florida.
The Company will continue to utilize various marketing strategies to
increase the frequency of casino visits by its customers which includes
implementing programs to identify and retain selected valued customers and the
establishment of promotional programs which cater to senior citizens. The
Company has employed sales representatives to market to tour operators, travel
agents, social groups, corporations and associations.
COMPETITION
Reno, Nevada. The Company competes in the greater Reno area with
approximately sixteen major casinos and hotel/casinos, some of which are larger
than the Sands Regency. In addition, there are numerous other smaller casinos
in the greater Reno area. The Company competes for its customers based upon
gaming activities, room rates, room size and quality of rooms, food, beverages
and location. Unlike some of its competitors, the Company does not provide
cabaret or showroom entertainment for its customers and hotel guests.
Management believes that the lack of entertainment is not material to the
Company's business. A new hotel/casino was recently built by competitors of
the Company that includes 1,284 hotel rooms with another 436 rooms still under
construction. There are also an additional 1,084 hotel rooms currently under
construction by other competitors of the Company and governmental approval has
been granted to construct an additional 2,469 hotel rooms. Such governmental
approval does not provide assurance that all of these rooms will be built. If
construction is completed on all hotel rooms presently under construction or
approved for construction, the hotel room capacity in the greater Reno area
will increase by approximately 24%. In the event all approved hotel rooms are
built, and depending on the time frames during which they are completed,
management of the Company believes that this added capacity may have an adverse
effect on operations of the Company.
The Company's Reno operations compete, to a lesser extent, with gaming
operations in other parts of the state of Nevada, such as Laughlin, Las Vegas
and Lake Tahoe. California currently sponsors a state lottery and allows other
non-casino style gaming, including parimutuel wagering, card parlors, bingo and
off-track betting. The Company believes that such non-casino style gaming does
not have a significant impact on the Company's operations. The Company
believes, however, that the legalization of casino-style gaming in California
could have a material impact on the Company's operations.
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Gulfport, Mississippi. The Company's operations on the Gulf Coast of
Mississippi are in competition with numerous gaming operations currently
established or to be established on vessels or barges moored on the Gulf Coast
of Mississippi, and on boats or barges cruising or moored on the Mississippi
River. Currently there are eleven dockside gaming facilities, excluding the
Company, operating along the Gulf Coast of Mississippi, including one in Bay
Saint Louis, one in Waveland, one in Gulfport and eight in Biloxi. There are
approximately eight gaming facilities presently planned along the Gulf Coast
of which two are licensed.
Along the Mississippi River, there are presently fifteen Mississippi
dockside casino facilities; one in Natchez, four in Vicksburg, two in
Greenville, one near Lula and seven in Tunica. There are approximately
fourteen additional proposed casino operations, of which four have been
granted gaming licenses, to be located along the Mississippi River, from
Natchez in the South to Tunica in the North. There is also one casino
currently in operation on an Indian reservation near Philadelphia, Mississippi.
In addition to direct competition which the Company faces in the
Mississippi market, the Company faces competition from riverboats and a
land-based casino in the State of Louisiana, which is an important market area
for the Company's Gulfport casino. Current Louisiana legislation permits
unlimited stakes gaming and a total of fourteen riverboat licenses and one
land-based license have been authorized statewide. At present, there are
thirteen riverboats and the land-based casino in operation. Besides these
State of Louisiana gaming operations, it is also anticipated that gaming may be
implemented on Indian reservations near Gulfport and New Orleans.
In the event that all, or a significant number, of these proposed
facilities are licensed, built and operated, management of the Company believes
that this added capacity may have an adverse effect on its Gulfport casino
operation. Management believes that the principal competitive factors will
include ease of access, availability of parking, attractiveness of casino
vessels and surrounding property, proximity to other gaming facilities, and
quality of food and entertainment offered.
General. To a significantly lesser extent, the Company competes with
gaming facilities in New Jersey, Colorado, South Dakota, Illinois, Iowa and
other parts of the world. The Company also competes with various gaming
operations on Indian land, including those located in California, Connecticut,
Michigan, Minnesota and Wisconsin. In addition, Indian casino gaming has
become a rapidly growing sector of the gaming industry as a result of the
Indian Gaming Regulatory Act of 1988, which generally permits unrestricted
gaming on Indian land in any state that allows similar forms of gaming, whether
or not restricted. Other states may legalize various forms of gaming that may
compete with the Company. In any jurisdiction where the Company may commence
operations, it will face competition for desirable sites and qualified
personnel.
EMPLOYEES
At June 30, 1995, the Company employed 987 people at the Sands Regency
in Reno, Nevada, including 87 salaried employees and 900 hourly employees. The
Copa Casino employed approximately 442 people, including 54 salaried employees
and 388 hourly employees. None of the Company's employees is represented by a
union. The Company has not experienced any work stoppages or other significant
labor problems and management considers its labor relations to be good.
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REGULATION AND LICENSING-GAMING
Nevada. The ownership and operation of casino gaming facilities in Nevada
are subject to (i) The Nevada Gaming Control Act and the regulations
promulgated thereunder (collectively, "Nevada Act"); and (ii) various local
regulation. 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") and the City of Reno,
(together, 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) to provide a source of state and
local revenues through taxation and licensing fees. Change in such laws,
regulations and procedures could have an adverse effect on the Company's gaming
operations.
Zante operates the Sands Regency hotel/casino and is required to be
licensed by the Nevada Gaming Authorities. The gaming license requires a
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 Zante
without first obtaining licenses and approvals from the Nevada Gaming
Authorities. The Company and Zante have 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 relationship to, or material involvement with, the Company or Zante 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 Zante must file applications with the Nevada Gaming Authorities
and may be required to be licensed or found suitable by the Nevada Gaming
Authorities. Officers, directors and key employees of the Company who are
actively and directly involved in gaming activities of Zante 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 Zante, the companies involved would have to
sever all relationships with such person. In addition, the Nevada Commission
may require the Company or Zante 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.
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The Company and Zante are required to submit detailed financial and
operating reports to the Nevada Commission. Substantially all material loans,
leases, sales of securities and similar financing transactions by Zante must be
reported to, or approved by, the Nevada Commission.
If it were determined that the Nevada Act was violated by Zante, the gaming
licenses it holds could be limited, conditioned, suspended or revoked, subject
to compliance with certain statutory and regulatory procedures. In addition,
Zante, the Company, and the persons involved could be subject to substantial
fines for each separate violation of the Nevada Act at the direction 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 costs 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 than 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 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 the 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 inquiries 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 relationship with the
Company or Zante, the Company (i) pays that person any dividend or interest
upon voting securities of the Company, (ii)
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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.
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's stock certificates do bear such a legend.
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
therefrom 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.
Changes in control of the Company through merger, consolidation, stock or
asset acquisitions, management or consulting agreements, or any act or conduct
by a person whereby he obtains control, may not occur without the prior
approval of the Nevada Commission. Entities seeking to acquire control of a
Registered Corporation must satisfy the Nevada Board and Nevada Commission in a
variety of stringent standards prior to assuming control of such Registered
Corporation. The Nevada Commission may also require controlling stockholders,
officers, directors and other persons having a material relationship or
involvement with the entity proposing to acquire control, to be investigated
and licensed as part of the approval process relating to the transaction.
The Nevada legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and corporate defense
tactics affecting Nevada gaming licensees, and Registered Corporations that are
affiliated with those operations, may be injurious to stable and productive
corporate gaming. The Nevada Commission has established a regulatory scheme to
ameliorate the potentially adverse effects of these business practices upon
Nevada's gaming industry and to further Nevada's policy to: (i) assure the
financial stability of corporate gaming operators and their affiliates; (ii)
preserve the beneficial aspects of conducting business in the corporate form;
and (iii) promote a neutral environmental for the orderly governance of
corporate affairs. Approvals are, in certain circumstances, required from the
Nevada Commission before the Company can make exceptional repurchases of voting
securities above the current market price thereof and before a corporate
acquisition opposed by management can be consummated. The Nevada Act also
requires prior approval of a plan of recapitalization proposed by the Company's
Board of Directors in response to a tender offer made directly to the
Registered Corporation's stockholders for the purposes of acquiring control of
the Registered Corporation.
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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, required to be
registered, or is under common control with such persons (collectively,
"Licensees"), and who has 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.
Mississippi. The ownership and operation of a gaming business in
Mississippi is subject to extensive laws and regulations, including the
Mississippi Gaming Control Act (the "Mississippi Act") and the regulations (the
"Mississippi Regulations") promulgated thereunder by the Mississippi Gaming
Commission (the "Mississippi Commission") and the Mississippi State Tax
Commission Regulations for Gaming Establishments ("Mississippi Tax
Regulations") promulgated by the Mississippi State Tax Commission ("Mississippi
Tax Commission"). The Mississippi Commission and Mississippi Tax Commission
(together the "Mississippi Gaming Authorities") are empowered to oversee and
enforce the Mississippi Act. Gaming in Mississippi can be legally conducted
only on floating vessels of a certain minimum size in navigable waters of the
Mississippi River or in waters of the State of Mississippi (so called dockside
gambling) which lie adjacent and to the south (principally in the Gulf of
Mexico) of the counties of Hancock, Harrison and Jackson, and only in counties
in Mississippi in which the registered voters have not voted to prohibit such
activities. The voters in Jackson County, the southeastern most county of
Mississippi, have voted to prohibit gaming in that county. However, gaming
could be approved in Jackson County in any subsequently held referendum.
The underlying policy of the Mississippi Act is to ensure that gaming
operations in Mississippi are conducted (i) honestly and competitively, (ii)
free of criminal and corruptive influences, and (iii) in a manner which
protects the rights of the creditors of gaming operations. The laws,
regulations and supervisory procedures of the Mississippi Act seek to (i)
establish and maintain response accounting practices and procedures; (ii)
maintain effective control over the financial practices of licensees, including
establishing minimum procedures for internal fiscal affairs and safeguarding
assets and revenues, providing reliable record keeping, and making periodic
reports to the Mississippi Gaming Authorities; and (iii) provide 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.
The Mississippi Act requires that a person (including any corporation or
other entity) must be licensed to conduct gaming activities in Mississippi. A
license will be issued only for a specified location which has been approved as
a gaming site by the Mississippi Commission prior to issuing such license.
Gaming licenses are issued for an initial two year period and are renewable
every two years thereafter. The Mississippi Act also
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requires that each officer or director of a gaming licensee, or other person
who exercises a material degree of control over the licensee, either directly
or indirectly, must be found suitable by the Mississippi Commission. The
Mississippi Commission will not issue a license or make a finding of
suitability unless it is satisfied, only after an extensive investigation paid
for by the applicant, that the persons associated with the gaming licensee or
applicant for a license are of good character, honesty and integrity, with no
relevant or material criminal record. In addition, the Mississippi Commission
will not issue a license unless it is satisfied that the licensee is adequately
financed or has a reasonable plan to finance its proposed operations from
acceptable sources, and that persons associated with the applicant have
sufficient business probity, competence and experience to engage in the
proposed gaming enterprise. Other parties, including the Partnership's or the
Company's lenders, holders of evidences of indebtedness, underwriters and
employees, may be required to be licensed, and such applications for licensing,
if any, may be denied for any cause deemed reasonable by the Mississippi
Commission. The Mississippi Commission may refuse to issue a work permit to a
gaming employee (i) if the employee has committed larceny, embezzlement or any
crime of moral turpitude, or knowingly violated the Mississippi Act or
Mississippi Regulations, or (ii) for any other reasonable cause.
The Partnership holds the gaming license to the Copa Casino gaming facility
in Gulfport, Mississippi. Patrician, GCI and Artemis, all wholly-owned
subsidiaries of the Company, have been approved as partners of the Partnership.
The license is not transferrable. On August 24, 1995, the Copa Casino's
two-year gaming license came up for renewal and was renewed on a provisional
basis until December 1, 1995. Such provisional renewal occurred so as to allow
the Mississippi Gaming Commission and the Mississippi State Port Authority to
properly evaluate the hurricane evacuation plan recently prepared and submitted
by the Copa Casino. After the evacuation plan has been approved by the
Mississippi State Port Authority and the Gaming Commission, the Gaming
Commission indicated that it will grant a gaming license renewal for the
remaining two years through August 1997.
In October 1994, the Mississippi Gaming Commission adopted a regulation
requiring, as a condition of licensure or license renewal, that a gaming
establishment's site development plan include certain infrastructure facilities
in close proximity to the casino complex which will amount to at least 25% of
the cost of the casino facility. Parking facilities, roads, sewage and water
systems or facilities normally provided by governmental entities do not meet
the infrastructure requirement. The Mississippi Gaming Commission found the
Copa Casino to be in compliance with this regulation as a result of its
construction of a general purpose pier facility and other improvements that
inure to the benefit of the Mississippi State Port Authority.
The Mississippi Commission has the power to deny, limit, condition, revoke
and suspend any license, finding of suitability or registration, or fine any
person, as it deems reasonable and in the public interest, subject to an
opportunity for a hearing. The Mississippi Commission may fine any licensee or
persons who was found suitable up to $100,000 for each violation of the
Mississippi Act or the Mississippi Regulations, which is the subject of an
initial complaint, and up to $250,000 for each such violation which is the
subject of any subsequent complaint. The Mississippi Act provides for judicial
review of any final decision of the Mississippi Commission by petition to a
Mississippi Circuit Court, but the filing of such petition does not necessarily
stay any action taken by the Mississippi Commission pending a decision by the
Circuit Court.
The Partnership must submit detailed financial and operating reports to the
Mississippi Gaming Authorities. Substantially all loans, leases, sales of
securities and other financing transactions entered into by the Partnership
must be reported to, and, in some cases, approved by, the Mississippi Gaming
Authorities.
Under the Mississippi Regulations, a gaming license may not be held by a
publicly traded company, although an affiliate corporation, such as the
Company, may be publicly held so long as the Company receives the approval of
the Mississippi Commission. The Company has received such approval of the
Mississippi Commission. In
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addition, approval of any public offering of the securities of the Company must
be obtained from the Mississippi Commission if any part of the proceeds from
that offering are intended to be used to construct, acquire or finance the
operation of gaming facilities in Mississippi or to retire or extend
obligations incurred for any such purpose.
Under the Mississippi Regulations, a person is prohibited from acquiring
control of the Company without prior approval of the Mississippi Commission.
The Company is also prohibited from consummating a plan of recapitalization
proposed by management in opposition to an attempted acquisition of control of
the Company and which involves the issuance of a significant dividend to Common
Stockholders, where such dividend is financed by borrowing from financial
institutions or the issuance of debt securities. In addition, the Company is
prohibited from repurchasing any of its voting securities under circumstances
(subject to certain exemptions) where the repurchase involves more than one
percent of the Company's outstanding Common Stock at a price in excess of 110%
of the then market value of the Company's Common Stock from a person who owns
and has for less than one year owned more than three percent of the Company's
outstanding Common Stock, unless the repurchase has been approved by a majority
of the Company's shareholders voting on the issue (excluding the person from
whom the repurchase is being made) or the offer is made to all other
shareholders for the Company.
Any person who, directly or indirectly, or in associations with others,
acquires beneficial ownership of more than five percent of the Common Stock of
the Company must notify the Mississippi Commission of this acquisition and may
be required to be found suitable by the Mississippi Commission. Any person who
becomes a beneficial owner of more than 10% of the Company's Common Stock must
apply for a finding of suitability by the Mississippi Commission. Furthermore,
regardless of the amount of securities purchased, any person who acquires any
beneficial ownership in the Common Stock of the Company may be required to be
found suitable if the Mississippi Commission has reason to believe that the
acquisition and ownership would be inconsistent with the declared policy of
Mississippi. Any person who is required to be found suitable must apply for a
finding of suitability from the Mississippi Commission within 30 days after
being requested to do so, and must deposit with the State Tax Commission a sum
of money which is adequate to pay the anticipated investigatory costs
associated with such finding. Any person who is found not to be suitable by
the Mississippi Commission shall not be permitted to have any direct or
indirect ownership in the Company's Common Stock. Any person who is required
to apply for a finding of suitability and fails to do so, or who fails to
dispose of his or her interest in the Company's Common Stock if found
unsuitable, is guilty of a misdemeanor. If a finding of suitability with
respect to any person is not applied for where required, or if it is denied or
revoked by the Mississippi Commission, the Company is not permitted to pay such
person for services rendered, or to employ or enter into any contract with such
person.
The Mississippi legislature has declared that some corporate acquisitions
opposed by management, repurchases of voting securities and other corporate
defense tactics that affect corporate gaming licensees in Mississippi, and
corporations whose stock is publicly traded that are affiliated with those
operations, may be injurious to stable and productive corporate gaming. The
Mississippi Commission has established a regulatory scheme to ameliorate the
potentially adverse effects of these business practices upon Mississippi's
gaming industry and to further Mississippi's policy to (i) assure the financial
stability of corporate gaming operators and their affiliates; (ii) preserve the
beneficial aspects of conducting business in the corporate form; and (iii)
promote a neutral environmental for the orderly governance of corporate
affairs. Approvals are, in certain circumstances, required from the
Mississippi Commission before the Company can make exceptional repurchases of
voting securities above the current market price thereof (commonly referred to
as "greenmail") and before a corporate acquisition opposed by management can be
consummated. Mississippi's gaming regulations also requires prior approval by
the Mississippi Commission if the Company were to adopt a plan of
recapitalization proposed by the Company's Board of Directors in opposition to
a tender offer made directly to its stockholders for the purposes of acquiring
control of the Company.
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Neither the Partnership, the Company nor any controlled affiliate may
engage in gaming activities in Mississippi and outside of Mississippi without
approval of the Mississippi Commission. The Mississippi Commission may
require, among other things, that there be adequate governmental regulation of
gaming in the out-of-state location and that there is a means of the
Mississippi Commission to have access to information concerning the
out-of-state gaming operations and persons associated with them.
REGULATION AND LICENSING - ALCOHOLIC BEVERAGES
Nevada. The sale of alcoholic beverages by the Company is subject to
supervision, control and regulation by the City of Reno, which issues licenses
deemed to be nontransferable, revocable privileges, and which has full power to
limit, condition, suspend or revoke such licenses. The Company is presently
licensed to sell alcoholic beverages. Any adverse regulatory act with respect
to this license could have an adverse effect upon the operations of the
Company.
Mississippi. The sale of alcoholic beverages by the Copa Casino is subject
to regulation by the Mississippi State Tax Commission, which issues licenses
which are both revocable and non-transferable, and which has full power to
limit, condition, suspend or revoke any such license. The Partnership is
currently licensed to sell alcoholic beverages as an "On-Premises Retailer."
Any adverse regulatory act with respect to this license could have an adverse
effect upon the operation of the Partnership. The sale of light wine and beer
by Copa Casino is also subject to regulation by the Mississippi State Tax
Commission, which issues licenses which are both revocable and
non-transferable, and which has the full power to limit, condition, suspend or
revoke any such license. However, the enforcement of laws regulating the
acquisition, use, sale and distribution of light wine and beer is left to local
law enforcement agencies. The Partnership is currently licensed to sell light
wine and beer as a "Retailer" under a beer permit and privilege license. Any
adverse regulatory act with respect to this license could have an adverse
effect upon the operation of the Partnership.
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ITEM 2. PROPERTIES
Reno, Nevada. The Company operates the casino and hotel towers at the
Sands Regency on a Company-owned 6.3 acre site in downtown Reno. The
hotel/casino site also includes the original three-story motor lodge and
four-story hotel tower and other buildings and facilities. Garage and surface
parking is provided at the hotel/casino site and also on a 2.7 acre site
located adjacent to the hotel/casino site. In addition, the Company's
personnel office and certain storage facilities are located one-half block from
the hotel/casino site on a Company- owned .5 acre lot. Management considers
the Company's facility to be in good condition and well-maintained.
In addition to the main hotel/casino facility, the Company owns several
smaller properties in Reno including El Rancho South, a 24-room motel located
on a 1.6 acre parcel and other properties consisting of an aggregate area of
approximately .6 acres.
The Company's Reno hotel/casino property is subject to aggregate
encumbrances of approximately $18.6 million as of June 30, 1995.
Gulfport, Mississippi. The Copa Casino gaming facilities are located on
two decks of a 500 foot cruise ship owned by Gulfside Casino Partnership.
These two decks also include four cocktail lounges/bars, a deli-style
restaurant, a buffet restaurant operated by a third party and a gift shop. The
deck below the two casino decks contains a surveillance area, a vault, count
rooms, security and various operations and administrative offices. An
additional three decks on the ship are available for future expansion of gaming
and dining facilities. The engines for such cruise ship are disabled. All
gaming activities are conducted while moored dockside.
The Copa Casino is permanently moored dockside at a location known as
the "Horseshoe Site." Such site, which is leased from the Mississippi
Department of Economic and Community Development and the Mississippi State Port
Authority, is between the East and West Piers of the Mississippi State Port in
Gulfport, Mississippi. This location, which includes 8.3 acres of land-based
facilities, will accommodate surface parking for approximately 840 vehicles.
The leased facilities also include a docking structure which accommodates the
Copa Casino ship and will allow for mooring of additional vessels. The
docking structure also includes a four-lane roadway and a pedestrian walk which
provides access to the Copa Casino entrance.
The initial term of the lease, as amended, is seven years. The lease
provides for three renewal periods of five years each under the same terms and
conditions except that the rental charges shall be adjusted annually, in years
six through twenty-two, in accordance with changes in the Consumer Price Index.
In addition to the three renewal periods of five years each, the
Partnership has the option to further extend the lease for an additional period
of ten years if the Partnership, within the first ten years of the lease
agreement, constructs, on the leased premises or within the city limits of
Gulfport, a hotel with a minimum of 350 units. If such ten year renewal option
is exercised, the lease term will be extended under the same terms and
provisions of the lease agreement except that the rental amounts will be
adjusted and revised annually in accordance with changes in the Consumer Price
Index.
The lease provides for an annual rental of $500,000 (the "Minimum
Rental") plus five percent (5%) of the gross annual gaming revenues over
$25,000,000 (the "Percentage Rental"). In addition to the Minimum Rental and
Percentage Rental set forth above, the Partnership will also pay, monthly, 3%
of the gross monthly revenues on all activities other than gaming (the
"Additional Percentage Rent"). The Minimum Rental is to be paid in advance, in
equal monthly installments of $41,667 on the first day of every month during
the lease year. For each month, the Percentage Rental and the Additional
Percentage Rental must be calculated and the amounts due, if any, are to be
paid on or before the 10th day of the following month.
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ITEM 3. LEGAL PROCEEDINGS
In December 1994, a lawsuit was filed by Terry W. Green and Joel R.
Carter, Sr. ("Green and Carter") in the Chancery Court of Harrison County,
Mississippi, First Judicial District against GCI because of GCI's failure to
make payments on promissory note obligations to these two former shareholders
of GCI. These note obligations, in the aggregate amount of $6 million, are
included in the current maturities of long-term debt on the Company's
consolidated balance sheet at June 30, 1995 and are secured by a pledge of
GCI's partnership interest in GCP. All accrued interest expense is also
included as a current liability on the Company's consolidated balance sheet.
In addition to demanding payment of the $6 million plus interest, for
which a partial summary judgment has been granted, the lawsuit by Green and
Carter is demanding the appointment of a receiver for GCI to take possession of
and sell GCI's ownership interest in GCP. The lawsuit also seeks attorneys
fees in an amount not less than $900,000 which management of the Company
believes would not be deemed a reasonable amount in the event of an unfavorable
judgment against GCI. In May 1995, GCP and Patrician were joined as necessary
parties to the lawsuit.
At present, a Charging Order is in place which requires GCP to respond
to inquiries by Green and Carter for the purpose, among other things, of
determining what distributions, if any, have been paid by the partnership to
either of its partners. Moreover, a court order has been granted whereby any
amounts due or to become due GCI by GCP are to be paid to Green and Carter
until the summary judgment against GCI is satisfied. GCP has not generated
adequate operating results to allow for any partner distributions and
distributions are not expected in the near future.
These underlying promissory notes were owed by GCI when The Sands Regent
purchased GCI in February 1994 and have not been assumed or guaranteed by The
Sands Regent. GCI's only tangible asset, and its source of funds for repayment
of the promissory notes, is its partnership interest in GCP. GCI is neither
presently in the financial position to make any payments with respect to these
note obligations nor is it expected to be in such a position in the near
future.
As part of the dispute with Green and Carter, issues will have to be
resolved concerning an amendment to the GCP partnership agreement, effective
January 1, 1993, whereby the profit and loss allocation percentages were
amended from 40% to 80% for Patrician and from 60% to 20% for GCI. Such
amendment was entered into so as to properly reflect the relative financial
risks of Patrician and GCI. Green and Carter claim that GCI's ownership
interest in GCP should be the pre-amendment 60% interest. GCI and Patrician
contend that the amended ownership interests are valid because the underlying
agreement that pledged GCI's interest in GCP to Green and Carter permitted
transfers so long as there were no defaults at the time of transfer.
The Company will continue to monitor the progress of the lawsuit, the
ultimate outcome of which could include the sale of GCI's ownership interest in
GCP.
The Company is also a party to various other legal actions, proceedings
and pending claims arising in the normal course of its business. Management
does not expect the outcome of these claims or suits to have a material adverse
effect on the Company's financial position or results of future operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of security holders in
the fourth quarter of fiscal 1995.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SHAREHOLDER MATTERS
The Common Stock of the Company is traded in the NASDAQ National Market
System under the symbol "SNDS" and the following table sets forth the range of
high and low closing sales prices as reported by NASDAQ.
CASH
FOR THE YEARS ENDED JUNE 30, HIGH LOW DIVIDEND
- ---------------------------- ------ ------ --------
1994
First Quarter . . . . . . . . . . . . . . . . . . . $20.25 $12.75 $ .05
Second Quarter. . . . . . . . . . . . . . . . . . . 17.25 11.75 $ .05
Third Quarter . . . . . . . . . . . . . . . . . . . 14.00 10.75 $ .05
Fourth Quarter. . . . . . . . . . . . . . . . . . . 14.50 9.75 $ .05
1995
First Quarter . . . . . . . . . . . . . . . . . . . $12.25 $ 8.75 $ .05
Second Quarter. . . . . . . . . . . . . . . . . . . 10.00 6.25 $ .05
Third Quarter . . . . . . . . . . . . . . . . . . . 8.00 4.50 $ .05
Fourth Quarter. . . . . . . . . . . . . . . . . . . 6.00 5.06 $ .05
- ----------------
The declaration and payment of dividends in the future will be
determined by the Board of Directors in light of the conditions then existing,
including the Company's earnings, financial condition, capital requirements and
other factors.
As of September 25, 1995, the Company had 178 shareholders of record
and in excess of 400 beneficial shareholders.
ITEM 6. SELECTED FINANCIAL DATA
There is hereby incorporated by reference the information appearing
under the caption "The Sands Regent - Selected Financial Data" in the Company's
1995 Annual Report, filed as Exhibit 13 to this Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
There is hereby incorporated by reference the information appearing
under the caption "The Sands Regent - Management's Discussion and Analysis of
Financial Condition and Results of Operations" in the Company's 1995 Annual
Report, filed as Exhibit 13 to this Form 10-K.
15
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
There is hereby incorporated by reference the Consolidated Financial
Statements and the Notes to the Consolidated Financial Statements in the
Company's 1995 Annual Report, filed as Exhibit 13 to this Form 10-K. Reference
is made to the Consolidated Financial Statements and the Notes to the
Consolidated Financial Statements in Item 14(a)(1) hereof.
With the exception of the aforementioned information and the
information in Items 6 and 7, the Company's 1995 Annual Report is not deemed
filed as part of this Form 10-K.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
16
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is hereby incorporated by reference the information appearing
under the caption "Directors and Executive Officers" in the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held on
November 6, 1995, filed or to be filed with the Securities and Exchange
Commission.
ITEM 11. EXECUTIVE COMPENSATION
There is hereby incorporated by reference the information appearing
under the caption "Compensation of Executive Officers" in the Company's
definitive Proxy Statement for the Annual Meeting of Shareholders to be held on
November 6, 1995, filed or to be filed with the Securities and Exchange
Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is hereby incorporated by reference the information appearing
under the captions "Principal Shareholders" and "Directors and Executive
Officers" in the Company's definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on November 6, 1995, filed or to be filed with the
Securities and Exchange Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is hereby incorporated by reference the information appearing
under the caption "Certain Relationships and Related Transactions" in the
Company's definitive Proxy Statement for the Annual Meeting of Shareholders to
be held on November 6, 1995, filed or to be filed with the Securities and
Exchange Commission.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A)(1) FINANCIAL STATEMENTS.
Included in Part II of this Report:
Independent Auditors' Report
Consolidated Balance Sheets -- June 30, 1995 and 1994
Consolidated Statements of Operations -- Years Ended
June 30, 1995, 1994 and 1993
Consolidated Statements of Stockholders' Equity -- Years
Ended June 30, 1995, 1994 and 1993
Consolidated Statements of Cash Flows -- Years Ended
June 30, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
(A)(2) FINANCIAL STATEMENT SCHEDULES.
Included in Part IV of this Report:
As of and for the Years Ended June 30, 1995, 1994 and 1993:
Independent Auditors' Report on Schedules
Schedule II -- Valuation and Qualifying Accounts
All other schedules have been omitted because they are not applicable
or the required information is shown in the financial statements or notes
thereto.
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(A)(3) EXHIBITS
3(a)(i) Restated Articles of Incorporation of the Company
(Exhibit 3(a) to the Company's Registration Statement
(Registration No. 2-93453) on Form S-1).*
3(a)(ii) Certificate of Amendment to the Restated Articles of
Incorporation of the Company, dated November 2, 1987
(Exhibit 4(a) to the Company's Form 10-Q for the
quarter ended December 31, 1987).*
3(b)(i) Amended and Restated Bylaws of the Company, as amended
April 29, 1985, and currently in effect (Exhibit 3(b)
to the Company's Form 10-K for the fiscal year ended
June 30, 1985).*
3(b)(ii) Resolution of Amendment to the Bylaws of the Company,
dated November 2, 1987 (Exhibit 4(b) to the Company's
Form 10-Q for the quarter ended December 31, 1987).*
4(a) Amended Trust Agreement, dated February 22, 1987, among
Antonia Cladianos II as trustor and beneficiary and
Pete Cladianos, Jr. as trustee (Exhibit 4(a) to the
Company's Form 10-K for the fiscal year ended June 30,
1987).*
4(b) Amended Trust Agreement, dated February 19, 1987, among
Pete Cladianos III as trustor and beneficiary and Pete
Cladianos, Jr. as trustee (Exhibit 4(b) to the
Company's Form 10-K for the fiscal year ended June 30,
1987).*
10(a) Amended and Restated Stock Option Plan for Executive
and Key Employees of the Sands Regent and Forms of
Stock Option Agreements (Exhibit 4(a) to the Company's
Registration Statement (Registration No. 33-59574) on
Form S-8).*
10(b) Deferred Compensation Plan for Directors of the
Company (Exhibit 10(e) to the Company's Registration
Statement (Registration No. 2-93453) on Form S-1).*
10(c) Form of Indemnity Agreement for Directors and Officers
of the Company (Exhibit 10(f) to the Company's Form
10-K for the fiscal year ended June 30, 1988).*
10(d) Loan Agreement, dated March 31, 1993, by and between
First Interstate Bank of Nevada, National Association,
First Interstate Bank of California, The Daiwa Bank,
Limited and Zante, Inc. and the related Term and
Revolving Credit Promissory Note; Guarantee of Loan by
the Sands Regent; Deed of Trust, Fixture Filing and
Security Agreement with Assignment of Rents (Exhibit
10(b) to the Company's Form 10-Q for the Quarter ended
March 31, 1993).*
10(e) First Amendment to Loan Agreement, dated June 27, 1994,
by and between First Interstate Bank of Nevada,
National Association, The Daiwa Bank Limited and Zante,
Inc., Borrower, and The Sands Regent, Guarantor
(Exhibit 10(e) to the Company's Form 10-K for the
fiscal year ended June 30, 1994).*
10(f) International Swap Dealers Association, Inc. Master
Agreement for interest rate swap, dated March 23,1994,
by and between First Interstate Bank of Nevada N.A. and
Zante, Inc., and the related Guarantee by The Sands
Regent and Letter Agreement of Confirmation (Exhibit
10(f) to the Company's Form 10-K for the fiscal year
ended June 30, 1994).*
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21
10(g) General Partnership Agreement, effective as of December
31, 1992, between Gulfside Casino, Inc. and Patrician,
Inc. (a wholly-owned subsidiary of the Sands Regent)
(Exhibit 10(a) to the Company's Form 10-Q for the
Quarter ended March 31, 1993).*
10(h) First Amendment to Gulfside Casino, a Mississippi
General Partnership, General Partnership Agreement,
dated April 15, 1994, between Gulfside Casino, Inc. and
Patrician, Inc. (both wholly owned subsidiaries of The
Sands Regent) (Exhibit 10(a) to the Company's Form 10-Q
for the Quarter ended March 31, 1994).*
10(i) Second Amendment to Gulfside Casino, a Mississippi
General Partnership, General Partnership Agreement,
dated December 9, 1994, between Gulfside Casino, Inc.
and Patrician, Inc., (both wholly-owned subsidiaries of
The Sands Regent)(Exhibit 10(a) to the Company's Form
10-Q for the Quarter ended December 31, 1994).*
10(j) Agreement for the Purchase of Stock of the Gulfside
Casino, Inc. and certain Assets of McDonald Limited,
dated February 25,1994 (Exhibit 2(a) to the Company's
Form 8-K/A for event reporting date of February 14,
1994).*
10(k) Gulfside Casino, Inc. Settlement Agreement, dated
August 20, 1993, by and between Gulfside Casino, Inc.,
a Mississippi Corporation, and Joel R. Carter, Sr. and
Terry Green (Exhibit 10(j) to the Company's Form 10-K
for the year ended June 30,1994).*
10(l) Settlement Agreement dated November 2, 1984, by and
between Hughes Properties, Inc., and Zante, Inc.
(Exhibit 10(u) to the Company's Registration Statement
(Registration No. 2-93453) on Form S-1).*
10(m) Franchise Agreement dated October 9, 1986 and as
amended on October 9, 1986, by and between Roma
Corporation and Zante, Inc. (Exhibit 10(r) to the
Company's Form 10-K for the fiscal year ended June 30,
1987).*
10(n) Agreement, dated as of January 2, 1995, between David
R. Wood and The Sands Regent.**
13 1995 Annual Report to Shareholders.**
21 Subsidiaries: Zante, Inc., Patrician, Inc., and
Artemis, Inc., Nevada Corporations, and Gulfside
Casino, Inc., a Mississippi corporation, are wholly
owned by the Company. Patrician, Inc., Gulfside Casino,
Inc.,and Artemis, Inc., are the sole partners in
Gulfside Casino Partnership, a Mississippi general
partnership.
23 Independent Auditors' Consent to the incorporation by
reference into specified registration statement on Form
S-8 of their reports contained in or incorporated by
reference into this report.**
27 Financial Data Schedule.**
-----------------
* Incorporated by reference
** Filed herewith
20
22
(B) REPORTS ON FORM 8-K.
The Company did not file any reports on Form 8-K during the last quarter of
fiscal 1995.
(C) INDEX TO EXHIBITS.
(D) FINANCIAL STATEMENT SCHEDULES.
Financial statement schedules required by Regulation S-X are excluded from
the 1995 Annual Report to the Shareholders by Rule 14a-3(b)(1). See
Schedule II to the Financial Statements appearing under Item 14(a)(2)
hereof.
21
23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
THE SANDS REGENT
Date: September 27, 1995 By: PETE CLADIANOS, JR.
------------------------------
Pete Cladianos, Jr., President
and Chief Executive Officer
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.
SIGNATURE CAPACITY DATE
- --------- -------- ----
PETE CLADIANOS, JR. President (Chief September 27, 1995
- ---------------------------- Executive Officer)
Pete Cladianos, Jr. and Director
KATHERENE LATHAM Chairman of the September 27, 1995
- --------------------------- Board of Directors
Katherene Latham
DAVID R. WOOD Vice President of September 27, 1995
- --------------------------- Finance and Administration,
David R. Wood Treasurer (Chief
Financial and Accounting
Officer) and Director
PETE CLADIANOS III Vice President, September 27, 1995
- --------------------------- Secretary and Director
Pete Cladianos III
JON N. BENGTSON Director September 27, 1995
- ---------------------------
Jon N. Bengtson
JOSEPH G. FANELLI Director September 27, 1995
- ---------------------------
Joseph G. Fanelli
WELDON C. UPTON Director September 27, 1995
- ---------------------------
Weldon C. Upton
22
24
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of The Sands Regent:
We have audited the consolidated financial statements of The Sands Regent and
subsidiaries as of June 30, 1995 and 1994, and for each of the three years in
the period ended June 30, 1995, and have issued our report thereon dated August
11, 1995. Such consolidated financial statements and report are included in
your 1995 Annual Report to Shareholders and are incorporated herein by
reference. Our audits also included the consolidated financial statement
schedule of The Sands Regent and subsidiaries, listed in Item 14. This
financial statement schedule is the responsibility of the Company's management.
Our responsibility is to express an opinion based on our audits. In our
opinion, such consolidated financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
[SIG]
Deloitte & Touche LLP
Reno, Nevada
August 11, 1995
23
25
The Sands Regent
Schedule II
Valuation and Qualifying Accounts
(in thousands)
Additions
Balance at Charged to
Beginning Costs and Balance at
Description of Year Expenses Deductions(1) End of Year
----------- ---------- ---------- ------------- -----------
Allowance for Doubtful Accounts Receivable:
Year ended June 30, 1995 . . . . . . . . $111 $92 $(56) $147
Year ended June 30, 1994 . . . . . . . . 72 88 (49) 111
Year ended June 30, 1993 . . . . . . . . 94 28 (50) 72
- ----------------
(1) Write-offs of uncollectible accounts receivable, net of recoveries
24
26
INDEX TO EXHIBITS
EXHIBIT SEQUENTIALLY
NUMBER NUMBERED
- ------- PAGE
------------
10(n) Agreement dated as of January 2, 1995, between David R. Wood and
The Sands Regent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13 1995 Annual Report to Shareholders . . . . . . . . . . . . . . . . . . . . .
23 Independent Auditors' Consent to the incorporation by reference into
specified registration statement on Form S-8 of their reports contained
in or incorporated by reference into this report . . . . . . . . . . . . . .
27 Financial Data Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . .