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 December 31, 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 x

No o

On February 10, 2003, the registrant had outstanding 4,922,805shares 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
	Condensed Consolidated Statements of Operations (unaudited)	1
	Condensed Consolidated Balance Sheet (unaudited)	2
	Condensed Consolidated Statements of Cash Flows (unaudited)	3
	Condensed 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.	10-11

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	11
Item 2.	Changes in Securities	11
Item 3.	Defaults Upon Senior Securities	11
Item 4.	Controls and Procedures	11
Item 5.	Submission of Matters to a Vote of Security Holders	11
Item 6.	Other Information	12
Item 7.	Exhibits and Reports on Form 8-K	12

SIGNATURES		12

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

THE SANDS REGENT AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

		THREE MONTHS ENDED DECEMBER 31,						SIX MONTHS ENDED DECEMBER 31,

(Dollars in thousands except per share amounts)		2001			2002			2001			2002

Operating revenues
	Gaming	$	5,000		$	6,351		$	10,128		$	13,821
	Lodging		1,659			1,779			4,449			4,883
	Food and beverage		1,303			1,693			2,747			3,721
	Fuel and convenience store		—			3,319			—			7,056
	Other		324			368			709			806

			8,286			13,509			18,033			30,287
	Less promotional allowances		751			849			1,516			1,819

	Net revenues		7,535			12,660			16,517			28,468

Operating expenses
	Gaming		2,502			2,861			5,043			5,923
	Lodging		978			1,108			2,036			2,266
	Food and beverage		787			1,033			1,647			2,271
	Fuel and convenience store		—			3,162			—			6,686
	Other		161			137			299			287
	Maintenance and utilities		793			1,003			1,694			2,162
	General and administrative		1,762			2,424			3,549			4,628
	Depreciation and amortization		780			877			1,562			1,760

			7,763			12,605			15,830			25,983

Income (loss) from operations			(228	)		55			687			2,485

Other income (expense)
	Interest and other income		60			1			131			4
	Interest expense		(276	)		(318	)		(573	)		(668	)
	Gain (loss) on disposal of property and equipment, and abandonment of new project		53			(75	)		64			(146	)

			(163	)		(392	)		(378	)		(810	)

Net income (loss) before income taxes			(391	)		(338	)		309			1,675
Income tax (provision) benefit			139			104			(93	)		(575	)

Net income (loss)		$	(252	)	$	(234	)	$	216		$	1,100

Net income (loss) per share
	Basic	$	(0.06	)	$	(0.05	)	$	0.05		$	0.22
	Diluted		(0.06	)		(0.05	)		0.05			0.21
Weighted average of shares outstanding
	Basic		4,525,722			4,922,805			4,525,722			4,922,805
	Diluted		4,525,722			4,922,805			4,770,942			5,177,315

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

THE SANDS REGENT AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET (unaudited)

(Dollars in thousands)				JUNE 30, 2002		DECEMBER 31, 2002

ASSETS
Current assets
	Cash and cash equivalents			$	5,628	$	4,068
	Short-term investments				20		20
	Accounts receivable, net of allowance				517		535
	Note receivable, sale of subsidiaries				180		16
	Inventories				716		719
	Federal income tax refund receivable				369		35
	Prepaid expenses and other assets				1,253		1,433

		Total current assets			8,683		6,826

Property and equipment
	Land				8,506		8,506
	Buildings and improvements				40,148		40,372
	Equipment, furniture and fixtures				20,345		20,057
	Construction in progress				346		556

					69,345		69,491
	Less accumulated depreciation and amortization				31,811		33,055

		Property and equipment, net			37,534		36,436

Other assets
	Note receivable, sale of subsidiaries, net				144		—
	Goodwill				10,950		11,018
	Other intangibles				1,356		1,356
	Other				477		391

		Total other assets			12,927		12,765

			Total assets	$	59,144	$	56,027

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
	Accounts payable			$	3,154	$	1,736
	Accrued salaries, wages and benefits				997		1,197
	Other accrued expenses				241		173

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