SANDS REGENT - 10-Q Quarterly Report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-Q

x	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2002 or

o	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________ to _________

Commission file number 0-14050

THE SANDS REGENT

(exact name of registrant as specified in charter)

Nevada		88-0201135

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

345 North Arlington Avenue, Reno, Nevada		89501

(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code (775) 348-2200

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 (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

On November 13, 2002, the registrant had outstanding 4,922,805 shares of its common stock, $.10 par value.

THE SANDS REGENT AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS

		Page No.

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements.	1-3

	Consolidated Statements of Operations (unaudited)	1

	Consolidated Balance Sheets (unaudited)	2

	Consolidated Statements of Cash Flows (unaudited)	3

	Notes to Interim Consolidated Financial Statements (unaudited)	4-5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	6-10

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	10

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	11

Item 2.	Changes in Securities	11

Item 3.	Defaults Upon Senior Securities	11

Item 4.	Submission of Matters to a Vote of Security Holders	11

Item 5.	Other Information	11

Item 6.	Exhibits and Reports on Form 8-K	11

SIGNATURES		12

CERTIFICATIONS		13-14

EXHIBITS

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

THE SANDS REGENT AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

		THREE MONTHS ENDED SEPTEMBER 30,

(Dollars in thousands except per share amounts)		2001			2002

Operating revenues
	Gaming	$	5,128		$	7,471
	Lodging		2,790			3,104
	Food and beverage		1,444			2,028
	Fuel and convenience store		—			3,737
	Other		385			438

			9,747			16,778
	Less promotional allowances		765			969

	Net revenues		8,982			15,809

Operating expenses
	Gaming		2,541			3,062
	Lodging		1,058			1,158
	Food and beverage		860			1,238
	Fuel and convenience store		—			3,523
	Other		138			150
	Maintenance and utilities		901			1,159
	General and administrative		1,787			2,204
	Depreciation and amortization		782			882

			8,067			13,376

Income from operations			915			2,433

Other income (expense)
	Interest and other income		71			3
	Interest expense		(297	)		(350	)
	Gain (loss) on disposal of property and equipment, and abandonment of new project		11			(71	)

			(215	)		(418	)

Net income before income taxes			700			2,015
Income tax provision			(232	)		(681	)

Net income		$	468		$	1,334

Net income per share
	Basic		0.10			0.27
	Diluted		0.10			0.26
Weighted average of shares outstanding
	Basic		4,525,722			4,922,805
	Diluted		4,811,017			5,148,355

The accompanying notes are an integral part of these unaudited consolidated financial statements.

THE SANDS REGENT AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(Dollars in thousands)				JUNE 30, 2002			SEPTEMBER 30, 2002

ASSETS
Current assets
	Cash and cash equivalents			$	5,628		$	6,109
	Short-term investments				20			20
	Accounts receivable, net of allowance				517			722
	Note receivable, sale of subsidiaries				180			180
	Inventories				716			721
	Federal income tax refund receivable				369			18
	Prepaid expenses and other assets				1,253			1,246

		Total current assets			8,683			9,016

Property and equipment
	Land				8,506			8,506
	Buildings and improvements				40,148			40,321
	Equipment, furniture and fixtures				20,345			20,524
	Construction in progress				346			345

					69,345			69,696
	Less accumulated depreciation and amortization				31,811			32,681

		Property and equipment, net			37,534			37,015

Other assets
	Note receivable, sale of subsidiaries, net				144			16
	Goodwill				10,950			10,950
	Other intangibles				1,356			1,356
	Other				477			406

		Total other assets			12,927			12,728

			Total assets	$	59,144		$	58,759

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
	Accounts payable			$	3,154		$	1,868
	Accrued salaries, wages and benefits				997			1,360
	Other accrued expenses				241			261
	Deferred federal income tax liability				222			216
	Current maturities of long-term debt				849			739

		Total current liabilities			5,463			4,444
Long-term debt					19,026			17,992
Deferred federal income tax liability					1,047			1,381

			Total liabilities		25,536			23,817

Common stock, $.10 par value, 20,000,000 shares authorized, 7,325,805 shares issued					733			733
	Additional paid-in capital				13,916			13,916
	Retained earnings				41,317			42,651

					55,966			57,300
	Treasury stock, at cost; 2,403,000 shares				(22,358	)		(22,358	)

		Total stockholders’ equity			33,608			34,942

Total liabilities and stockholders’ equity				$	59,144		$	58,759

The accompanying notes are an integral part of these unaudited consolidated financial statements.

THE SANDS REGENT AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

			THREE MONTHS ENDED SEPTEMBER 30,

(Dollars in thousands)			2001			2002

Operating Activities
	Net income		$	468		$	1,334
	Adjustment to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization		782			882
		(Gain) loss on disposal of property and equipment		(11	)		12
		(Increase) decrease in accounts receivable		199			(205	)
		Increase in inventories		(8	)		(5	)
		Decrease in prepaid expenses and other current assets		151			6
		(Increase) decrease in other assets		(92	)		12
		Decrease in accounts payable		(188	)		(188	)
		Increase (decrease) in other accrued expenses

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