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 March 31, 2005
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 May 12, 2005, the registrant had outstanding 6,973,766 shares of its common stock, $.10 par value.
THE SANDS REGENT
FORM 10-Q
| Page No. | ||||
| PART I |
FINANCIAL INFORMATION | |||
| Item 1. |
1-3 | |||
| 1 | ||||
| 2 | ||||
| 3 | ||||
| Notes to Condensed Consolidated Financial Statements (unaudited) |
4-9 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
10-20 | ||
| Item 3. |
21 | |||
| Item 4. |
21 | |||
| PART II |
OTHER INFORMATION | |||
| Item 1. |
22 | |||
| Item 2. |
22 | |||
| Item 3. |
22 | |||
| Item 4. |
22 | |||
| Item 5. |
22 | |||
| Item 6. |
22 | |||
| 23 | ||||
PART I FINANCIAL INFORMATION
| Item 1. | Financial Statements |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)
| THREE MONTHS ENDED MARCH 31, |
NINE MONTHS ENDED MARCH 31, |
|||||||||||||||
| (Dollars in thousands, except per share amounts) |
2004 |
2005 |
2004 |
2005 |
||||||||||||
| Operating revenues |
||||||||||||||||
| Gaming |
$ | 6,762 | $ | 11,786 | $ | 20,210 | $ | 36,117 | ||||||||
| Lodging |
1,893 | 1,692 | 6,802 | 6,555 | ||||||||||||
| Food and beverage |
1,609 | 2,845 | 4,834 | 8,678 | ||||||||||||
| Fuel and convenience store |
3,558 | 3,562 | 11,735 | 12,345 | ||||||||||||
| Other |
358 | 439 | 1,194 | 1,388 | ||||||||||||
| Gross revenues |
14,180 | 20,324 | 44,775 | 65,083 | ||||||||||||
| Promotional allowances |
1,007 | 1,892 | 2,937 | 5,419 | ||||||||||||
| Net revenues |
13,173 | 18,432 | 41,838 | 59,664 | ||||||||||||
| Operating expenses |
||||||||||||||||
| Gaming |
3,193 | 4,990 | 9,110 | 14,791 | ||||||||||||
| Lodging |
931 | 898 | 3,024 | 2,939 | ||||||||||||
| Food and beverage |
1,060 | 1,800 | 3,213 | 5,603 | ||||||||||||
| Fuel and convenience store |
3,362 | 3,324 | 11,074 | 11,712 | ||||||||||||
| Other |
138 | 160 | 428 | 460 | ||||||||||||
| Maintenance and utilities |
1,021 | 1,410 | 3,128 | 4,284 | ||||||||||||
| General and administrative |
2,323 | 3,497 | 6,905 | 9,966 | ||||||||||||
| Depreciation and amortization |
1,000 | 1,551 | 2,901 | 4,612 | ||||||||||||
| 13,028 | 17,630 | 39,783 | 54,367 | |||||||||||||
| Income from operations |
145 | 802 | 2,055 | 5,297 | ||||||||||||
| Other income (expense) |
||||||||||||||||
| Interest expense |
(109 | ) | (438 | ) | (498 | ) | (1,843 | ) | ||||||||
| Collections on previously reserved note receivable |
— | — | 4,393 | — | ||||||||||||
| Insurance settlement |
— | — | — | 200 | ||||||||||||
| Other, net |
4 | — | (83 | ) | (64 | ) | ||||||||||
| (105 | ) | (438 | ) | 3,812 | (1,707 | ) | ||||||||||
| Income before income taxes |
40 | 364 | 5,867 | 3,590 | ||||||||||||
| Income tax provision |
(10 | ) | (105 | ) | (420 | ) | (1,193 | ) | ||||||||
| Net income |
$ | 30 | $ | 259 | $ | 5,447 | $ | 2,397 | ||||||||
| Net income per share |
||||||||||||||||
| Basic |
$ | 0.01 | $ | 0.04 | $ | 1.06 | $ | 0.38 | ||||||||
| Diluted |
$ | 0.01 | $ | 0.03 | $ | 1.01 | $ | 0.35 | ||||||||
| Weighted average of shares outstanding |
||||||||||||||||
| Basic |
5,245,847 | 6,950,255 | 5,124,527 | 6,303,534 | ||||||||||||
| Diluted |
5,579,159 | 7,473,039 | 5,402,102 | 6,793,100 | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
| (Dollars in thousands except share data) |
JUNE 30, 2004 |
MARCH 31, 2005 |
||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 5,443 | $ | 3,722 | ||||
| Accounts receivable, net |
714 | 381 | ||||||
| Inventories |
775 | 736 | ||||||
| Prepaid expenses and other assets |
2,014 | 1,635 | ||||||
| Total current assets |
8,946 | 6,474 | ||||||
| Property and equipment: |
||||||||
| Land |
10,007 | 10,007 | ||||||
| Buildings and improvements |
42,823 | 43,606 | ||||||
| Equipment, furniture and fixtures |
24,634 | 25,871 | ||||||
| Construction in progress |
387 | 1,336 | ||||||
| Total property and equipment |
77,851 | 80,820 | ||||||
| Less accumulated depreciation and amortization |
37,993 | 41,536 | ||||||
| Property and equipment, net |
39,858 | 39,284 | ||||||
| Other assets: |
||||||||
| Goodwill |
28,674 | 28,642 | ||||||
| Other intangibles |
13,011 | 12,580 | ||||||
| Other |
1,104 | 1,023 | ||||||
| Total other assets |
42,789 | 42,245 | ||||||
| Total assets |
$ | 91,593 | $ | 88,003 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 3,380 | $ | 2,883 | ||||
| Accrued salaries, wages and benefits |
2,384 | 2,307 | ||||||
| Other accrued expenses |
465 | 361 | ||||||
| Federal income tax payable |
768 | 437 | ||||||
| Deferred federal income tax liability |
258 | 283 | ||||||
| Current maturities of long-term debt |
3,144 | 3,522 | ||||||
| Total current liabilities |
10,399 | 9,793 | ||||||
| Long-term debt |
33,799 | 17,914 | ||||||
| Deferred federal income tax liability |
1,852 | 2,305 | ||||||
| Total liabilities |
46,050 | 30,012 | ||||||
| Common stock ($.10 par value, 20,000,000 shares authorized; 8,049,555 and 9,376,766 shares issued) |
805 | 938 | ||||||
| Additional paid-in capital |
17,018 | 26,936 | ||||||
| Retained earnings |
50,078 | 52,475 | ||||||
| 67,901 | 80,349 | |||||||
| Treasury stock (at cost; 2,403,000 shares) |
(22,358 | ) | (22,358 | ) | ||||
| Total stockholders’ equity |
45,543 | 57,991 | ||||||
| Total liabilities and stockholders’ equity |
$ | 91,593 | $ | 88,003 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
| NINE MONTHS ENDED MARCH 31, |
||||||||
| (Dollars in thousands) |
2004 |
2005 |
||||||
| Operating Activities |
||||||||
| Net income |
$ | 5,447 | $ | 2,397 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
2,901 | 4,612 | ||||||
| Loss on disposal of property and equipment |
42 | 65 | ||||||
| Tax benefit from stock option exercises |
— | |||||||