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, 2003
or
| ¨ | 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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act. Yes ¨ No x
On February 13, 2004, the registrant had outstanding 5,106,555 shares of its common stock, $.10 par value.
THE SANDS REGENT AND SUBSIDIARIES
FORM 10-Q
| Page No. | ||||
| PART I |
FINANCIAL INFORMATION |
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| Item 1. |
1-3 | |||
| 1 | ||||
| 2 | ||||
| 3 | ||||
| Condensed Notes to Interim Consolidated Financial Statements (unaudited) |
4-8 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
9-16 | ||
| Item 3. |
16 | |||
| Item 4. |
17 | |||
| PART II |
OTHER INFORMATION |
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| Item 1. |
18 | |||
| Item 2. |
18 | |||
| Item 3. |
18 | |||
| Item 4. |
18 | |||
| Item 5. |
18 | |||
| Item 6. |
19 | |||
| 20 | ||||
| CERTIFICATIONS |
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THE SANDS REGENT AND SUBSIDIARIES
PART I FINANCIAL INFORMATION
| Item 1. | Financial Statements |
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
| THREE MONTHS ENDED DECEMBER 31, |
SIX MONTHS ENDED DECEMBER 31, |
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| (Dollars in thousands except per share amounts) |
2002 |
2003 |
2002 |
2003 |
||||||||||||
| Operating revenues |
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| Gaming |
$ | 6,237 | $ | 6,418 | $ | 13,708 | $ | 13,448 | ||||||||
| Lodging |
1,779 | 1,835 | 4,883 | 4,909 | ||||||||||||
| Food and beverage |
1,593 | 1,496 | 3,513 | 3,225 | ||||||||||||
| Fuel and convenience store |
3,319 | 3,580 | 7,056 | 8,177 | ||||||||||||
| Other |
368 | 379 | 806 | 836 | ||||||||||||
| Gross revenues |
13,296 | 13,708 | 29,966 | 30,595 | ||||||||||||
| Promotional allowances |
850 | 963 | 1,819 | 1,930 | ||||||||||||
| Net revenues |
12,446 | 12,745 | 28,147 | 28,665 | ||||||||||||
| Operating expenses |
||||||||||||||||
| Gaming |
2,733 | 2,877 | 5,763 | 5,917 | ||||||||||||
| Lodging |
1,048 | 1,002 | 2,163 | 2,093 | ||||||||||||
| Food and beverage |
1,018 | 1,016 | 2,223 | 2,153 | ||||||||||||
| Fuel and convenience store |
3,163 | 3,408 | 6,686 | 7,712 | ||||||||||||
| Other |
137 | 145 | 287 | 290 | ||||||||||||
| Maintenance and utilities |
1,005 | 986 | 2,157 | 2,107 | ||||||||||||
| General and administrative |
2,419 | 2,085 | 4,623 | 4,582 | ||||||||||||
| Depreciation and amortization |
878 | 986 | 1,760 | 1,901 | ||||||||||||
| 12,401 | 12,505 | 25,662 | 26,755 | |||||||||||||
| Income from operations |
45 | 240 | 2,485 | 1,910 | ||||||||||||
| Other income (expense) |
||||||||||||||||
| Interest expense |
(318 | ) | (171 | ) | (668 | ) | (389 | ) | ||||||||
| Gain on previously reserved note receivable |
— | 4,163 | — | 4,393 | ||||||||||||
| Loss on abandonment of new projects |
— | (46 | ) | (59 | ) | (46 | ) | |||||||||
| Other income (loss) |
(75 | ) | 6 | (83 | ) | (41 | ) | |||||||||
| (393 | ) | 3,952 | (810 | ) | 3,917 | |||||||||||
| Income before income taxes |
(348 | ) | 4,192 | 1,675 | 5,827 | |||||||||||
| Income tax (provision) benefit |
104 | 143 | (575 | ) | (410 | ) | ||||||||||
| Net income (loss) |
$ | (244 | ) | $ | 4,335 | $ | 1,100 | $ | 5,417 | |||||||
| Net income (loss) per share |
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| Basic |
$ | (0.05 | ) | $ | 0.86 | $ | 0.22 | $ | 1.08 | |||||||
| Diluted |
(0.05 | ) | 0.81 | 0.21 | 1.02 | |||||||||||
| Weighted average of shares outstanding |
||||||||||||||||
| Basic |
4,922,805 | 5,052,908 | 4,922,805 | 5,017,938 | ||||||||||||
| Diluted |
4,922,805 | 5,370,167 | 5,176,131 | 5,318,975 | ||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
1
THE SANDS REGENT AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
| (Dollars in thousands) |
JUNE 30, 2003 |
DECEMBER 31, 2003 |
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| ASSETS |
||||||||
| Cash and cash equivalents |
$ | 3,965 | $ | 3,407 | ||||
| Accounts receivable, net of allowance |
675 | 503 | ||||||
| Inventories |
637 | 636 | ||||||
| Federal income tax refund receivable |
611 | 20 | ||||||
| Prepaid expenses and other assets |
1,247 | 1,217 | ||||||
| Total current assets |
7,135 | 5,783 | ||||||
| Land |
8,506 | 8,448 | ||||||
| Buildings and improvements |
40,999 | 41,333 | ||||||
| Equipment, furniture and fixtures |
20,569 | 20,920 | ||||||
| Construction in progress |
157 | 79 | ||||||
| Total property and equipment |
70,231 | 70,780 | ||||||
| Less accumulated depreciation and amortization |
34,700 | 36,005 | ||||||
| Property and equipment, net |
35,531 | 34,775 | ||||||
| Goodwill |
11,018 | 11,018 | ||||||
| Other intangibles |
1,356 | 1,356 | ||||||
| Other |
406 | 1,464 | ||||||
| Total other assets |
12,780 | 13,838 | ||||||
| Total assets |
$ | 55,446 | $ | 54,396 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Accounts payable |
$ | 2,669 | $ | 2,834 | ||||
| Accrued salaries, wages and benefits |
1,612 | 1,102 | ||||||
| Other accrued expenses |
254 | 178 | ||||||
| Deferred federal income tax liability |
206 | 126 | ||||||
| Current maturities of long-term debt |
806 | 828 | ||||||
| Total current liabilities |
5,547 | 5,068 | ||||||
| Long-term debt |
12,620 | 6,060 | ||||||
| Deferred federal income tax liability |
1,747 | 2,052 | ||||||
| Total liabilities |
19,914 | 13,180 | ||||||
| Common stock ($.10 par value, 20,000,000 shares authorized; 7,357,055 issued at June 30, 2003; 7,559,555 issued at December 31, 2003) |
736 | 756 | ||||||
| Additional paid-in capital |
13,967 | 14,215 | ||||||
| Retained earnings |
43,187 | 48,603 | ||||||
| 57,890 | 63,574 | |||||||
| Treasury stock (at cost; 2,403,000 shares) |
(22,358 | ) | (22,358 | ) | ||||
| Total stockholders’ equity |
35,532 | 41,216 | ||||||
| Total liabilities and stockholders’ equity |
$ | 55,446 | $ | 54,396 | ||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
2
THE SANDS REGENT AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
| SIX MONTHS ENDED DECEMBER 31, |
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| (Dollars in thousands) |
2002 |
2003 |
||||||
| Operating Activities |
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| Net income |
$ | 1,100 | $ | 5,417 | ||||
| Adjustment to reconcile net income to net cash provided by operating activities: |
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| Depreciation and amortization |
1,760 | 1,901 | ||||||
| Loss on disposal of property and equipment |
88 | 40 | ||||||
| Gain on previously reserved note receivable |
— | (4,393 | ) | |||||
| (Increase) decrease in accounts receivable |
(18 | |||||||