* Second-quarter net income increased 21.1% from $498,000 to
$603,000 RENO, Nev., March 23 /PRNewswire-FirstCall/ -- The Sands
Regent (NASDAQ:SNDS) today announced financial results for its
second quarter and first six months of fiscal 2006, ended December
31, 2005 and the results of its independent investigation of
certain accounting matters. For the second quarter ended December
31, 2005, revenues rose 15.0% year over year, to $22.3 million,
versus $19.4 million for the second quarter ended December 31,
2004. Dayton Depot, acquired on September 1, 2005, contributed $1.5
million of the increase in net revenue, and the balance of the
increase was attributable to same-store net revenue growth of 7.3%.
The Company's income from operations, after adding back the
one-time, non-cash charge of $419,000 relating to the loss on early
termination of its Rail City land lease, improved 31.4% year over
year, from $1.4 million in the fiscal 2005 second quarter to $1.8
million in the fiscal 2006 quarter. Net income for the fiscal 2006
second quarter was $603,000, or $0.09 per basic share, $0.08
diluted, a 21.1% increase as compared to net income of $498,000, or
$0.08 per share basic, $0.07 diluted for the prior-year period.
Quarterly EBITDAR increased 15.7% year over year, from $3.3 million
in the second quarter of fiscal 2005 to $3.8 million in the second
quarter of fiscal 2006. For the six months ended December 31, 2005,
revenues rose 12.5%, to $46.4 million, from $41.2 million for the
corresponding prior-year period. The Company's income from
operations, after adding back the one-time, non-cash charge of
$419,000 relating to the loss on early termination of its Rail City
land lease, improved 12.6%, to $5.1 million in the six months ended
December 31, 2005, compared to $4.5 million in the corresponding
prior-year period. Net income for the six months ended December 31,
2005 was $2.5 million, or $0.35 per basic share, $0.33 diluted, as
compared to net income of $2.1 million, or $0.36 per share basic,
$0.33 diluted for the corresponding prior-year period. Net income
for the quarter and six months ended December 31, 2005 was
adversely impacted by a one-time, non-cash charge of $419,000
pre-tax, $277,000 after-tax, or ($0.04) per basic and diluted
share, relating to the early termination of the Rail City
under-market land lease resulting from the Company's purchase of
the property in December 2005. Net income for the quarter and the
six months ended December 31, 2005 were favorably impacted by the
results of operations of Dayton Depot, acquired on September 1,
2005. Dayton's contribution to net income for the quarter was
$166,000, or $0.02 per basic and diluted share. For the six months
ended December 31, 2005, Dayton contributed $188,000, or $0.03
basic and $0.02 diluted, to net income. EBITDAR for the six months
ended December 31, 2005 increased 9.4% year over year, from $8.1
million in the six months ended December 31, 2004 to $8.9 million
in the six months ended December 31, 2005. Ferenc B. Szony,
President and CEO of The Sands Regent, commented, "Aided by a
strong Northern Nevada economy, Rail City and the Sands Regency
achieved increases in revenue of 6.2% and 4.8% respectively.
Operating income margins, after adding back the loss on early
termination of land lease, improved at Rail City to 28.4% from
25.7%. Sands Regency experienced a slight decline it its operating
income margin. At Gold Ranch, continued weakness in weekend traffic
counts on Interstate 80 combined with high gasoline prices resulted
in a decrease in gallons pumped. Gold Ranch reported an increase in
revenue while operating income decreased $51,000 from the second
quarter of fiscal 2005." Mr. Szony concluded, "Early results from
our most recent acquisition, Dayton Depot, have exceeded
expectations. Customers are responding to the upgraded slot
product. On January 16, 2006 we installed a slot player tracking
system that will facilitate marketing opportunities. We expect to
begin remodeling of the restaurant in the spring. On December 20,
2005 we completed the acquisition of the land required for the
expansion of Rail City. Groundbreaking on the Rail City expansion
is expected within the next few months. Completion of the expanded
casino space and additional brew pub restaurant and bar are
expected in late 2006." The Company's Audit Committee has completed
its independent investigation it announced it would undertake in
its press release of February 14, 2006. The Audit Committee was
aided in its review by outside counsel and a forensic accountant.
During its investigation the Audit Committee did not become aware
of any facts that caused it to believe that there was any material
misstatement or omission in the Company's previously issued
financial statements or that otherwise would necessitate a
restatement of any of the Company's previously issued financial
statements. Consequently, no restatement of any previously issued
financial statements will be made. The Company filed its Quarterly
Report on Form 10-Q for the quarter ended December 31, 2005 on
March 22, 2006. With the filing of the Form 10-Q, the Company
expects to regain compliance with Marketplace Rule 4310(c)(14), and
will notify the Nasdaq Listing Qualifications Panel of this
development. Management of The Sands Regent will host a conference
call to discuss its second-quarter and six-month financial results
today, March 23, 2006 at 1:30 p.m. Pacific Time. To participate in
the conference call, please dial the following number five to ten
minutes prior to the scheduled conference call time: (800)
399-7496. International callers should dial (706) 634-6508. There
is no pass code required for this call. If you are unable to
participate in the call at this time, a replay will be available on
March 23 at approximately 2:30 p.m. PT through March 30 at 9:00
p.m. PT; call (800) 642-1687 and enter the conference ID number
7025734. International callers should call (706) 645-9291. About
The Sands Regent The Sands Regent owns and operates Rail City
Casino in Sparks, Nevada, Sands Regency Casino and Hotel in
downtown Reno, Nevada, Gold Ranch Casino and RV Resort in Verdi,
Nevada, and the Depot Casino and Red Hawk Sports Bar in Dayton,
Nevada. Rail City Casino, located in Sparks, Nevada, has
approximately 16,600 square feet of gaming space housing slot
machines, table games, keno, a sports book, and the City Cafe
family-style restaurant. Located near Victorian Square at 2121
Victorian Avenue in Sparks, it is the first casino a motorist
encounters when exiting Interstate 80 at the Rock Boulevard exit
(Exit 16). The Sands Regency is an 833-room hotel and casino with
29,000 square feet of gaming space offering table games, a sports
book, poker room, keno, bingo and slot machines. In addition to the
amenities and on-site brand name restaurants, the Company's
property also includes a 12,000 square foot convention and meeting
center which seats close to 1,000 people. The Gold Ranch Casino and
RV Resort is located in Verdi, Nevada, twelve miles west of Reno.
Gold Ranch offers slot machines in an 8,000 square foot casino, a
sports book, two restaurants, a 105-space RV park, a California
lottery station, an ARCO gas station and a convenience store. The
Depot Casino and the Red Hawk Sports Bar, acquired on September 1,
2005, are located in Dayton, Nevada. The Depot Casino has
approximately 16,000 square feet of restaurant and casino space
with 250 slots, a restaurant and two bars. The Red Hawk Sports Bar,
across the street from Depot Casino, has 33 slots, a convenience
store and a bar. This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. You can identify these statements by the fact
that they do not relate strictly to historical or current facts.
These statements contain words such as "may", "will", "project",
"might", "expect", "believe", "anticipate", "intend", "could",
"would", "estimate", "continue", or "pursue", or the negative or
other variations thereof or comparable terminology. In particular,
they include statements relating to, among other things, future
actions, strategies, future performance and future financial
results of the Company. The forward-looking statements contained in
this release are based on current expectations and entail various
risks and uncertainties that could cause actual results to differ
materially from those suggested in the forward-looking statements.
Such risks and uncertainties include, among others, the future
performance of the Company's management team, general economic
financial and business conditions, overall conditions in the gaming
and entertainment industries, our ability to successfully integrate
the operations of casinos that we acquire and realize the expected
benefits of these acquisitions, and other factors discussed in our
Annual Report on Form 10-K for the year ended June 30, 2005,
subsequent Forms 10-Q and other filings with the Securities and
Exchange Commission. The Sands is providing this information as of
the date of this release and does not undertake any obligation to
update any forward-looking statements contained in this document as
a result of new information, future events or other wise. ISIN:
US8000911003 Contact: Ferenc B. Szony, President and Chief
Executive Officer The Sands Regent (775) 348-2210 or Sean Collins,
Partner CCG Investor Relations (310) 477-9800 THE SANDS REGENT
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited) THREE
MONTHS SIX MONTHS ENDED DECEMBER 31, ENDED DECEMBER 31, (Dollars in
thousands, 2005 2004 2005 2004 except per share amounts) Operating
revenues Gaming $14,170 $ 11,907 $27,589 $24,331 Lodging 1,864
1,809 5,050 4,863 Food and beverage 2,912 2,786 5,958 5,833 Fuel
and convenience store 4,693 4,080 10,658 8,783 Other 483 470 985
949 Gross revenues 24,122 21,052 50,240 44,759 Promotional
allowances 1,858 1,695 3,846 3,527 Net revenues 22,264 19,357
46,394 41,232 Operating expenses Gaming 5,574 4,806 10,869 9,801
Lodging 952 936 2,026 2,041 Food and beverage 2,075 1,865 4,154
3,803 Fuel and convenience store 4,528 3,915 10,266 8,388 Other 196
143 357 300 Maintenance and utilities 1,511 1,382 3,084 2,874
General and administrative 3,837 3,424 7,137 6,469 Depreciation and
amortization 1,791 1,516 3,440 3,061 Loss on early termination of
land lease 419 -- 419 -- 20,883 17,987 41,752 36,737 Income from
operations 1,381 1,370 4,642 4,495 Other income (expense) Interest
expense (434) (799) (862) (1,405) Insurance settlement -- 200 --
200 Other, net (43) (18) (34) (64) (477) (617) (896) (1,269) Income
before income taxes 904 753 3,746 3,226 Income tax provision (301)
(255) (1,262) (1,088) Net income $603 $498 $2,484 $2,138 Net income
per share Basic $0.09 $0.08 $0.35 $0.36 Diluted $0.08 $0.07 $0.33
$0.33 Weighted average of shares outstanding Basic 7,095,103
6,327,852 7,087,453 5,987,204 Diluted 7,539,993 6,921,535 7,533,118
6,529,771 THE SANDS REGENT FINANCIAL HIGHLIGHTS (Unaudited)
(Dollars in thousands except per share amounts) Three months ended
Year to date December 31, December 31, 2005 2004 2005 2004 Net
revenues $22,264 $19,357 $46,394 $41,232 Income from operations
$1,381 $1,370 $4,642 $4,495 Net income $603 $498 $2,484 $2,138
Reconciliation of Income from operations to Adjusted income from
operations Income from operations $1,381 $1,370 $4,642 $4,495 Loss
on early termination of below-market land lease $419 $-- $419 $--
Adjusted income from operations (1) $1,800 $1,370 $5,061 $4,495
Reconciliation of net income to EBITDAR Net income $603 $498 $2,484
$2,138 Interest expense $434 $799 $862 $1,405 Income tax provision
$301 $255 $1,262 $1,088 Loss on disposal of property and equipment
$43 $18 $34 $64 Loss on early termination of below market land
lease $419 $-- $419 $-- Rent and management fees $200 $191 $399
$382 Depreciation and amortization $1,791 $1,516 $3,440 $3,061
EBITDAR (2) $3,791 $3,277 $8,900 $8,138 Earnings per share Basic
$0.09 $0.08 $0.35 $0.36 Diluted $0.08 $0.07 $0.33 $0.33 (1)
Adjusted income from operations includes an add-back for the loss
on early termination of the below market land lease at Rail City
Casino. Adjusted income from operations is not a calculation
determined pursuant to generally accepted accounting principles and
is not an alternative to operating income or net income, and is not
a measure of liquidity. Since not all companies calculate this
measure in the same manner, the Company's adjusted income from
operations measure may not be comparable to similarly titled
measures reported by other companies. The Company believes that
this disclosure enhances the understanding of the day-to-day
operating performance. (2) EBITDAR includes earnings before
depreciation and amortization, interest expense, income taxes,
rent, gain or (loss) on the sale or disposal of property of
subsidiaries and loss on early termination of below market land
lease. EBITDAR is not a calculation determined pursuant to
generally accepted accounting principles and is not an alternative
to operating income or net income, and is not a measure of
liquidity. Since not all companies calculate this measure in the
same manner, the Company's EBITDAR measure may not be comparable to
similarly titled measures reported by other companies. The Company
believes that this disclosure enhances the understanding of the
financial performance of a company with substantial interest
expense, depreciation and amortization. Prior to the Gold Ranch
acquisition, the Company reported "EBITDA" data. Gold Ranch has a
substantial real property rent component and the Company believes
EBITDAR provides a more complete depiction of the Company's
financial position and performance. Moreover, if the option of the
Company to purchase the Gold Ranch real property is exercised,
which can happen at the Company's sole discretion, the rental
expense would be available for other uses by the Company. THE SANDS
REGENT CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) DECEMBER
31, JUNE 30, (Dollars in thousands except share data) 2005 2005
ASSETS Cash and cash equivalents $6,285 $3,272 Accounts receivable,
net 876 580 Inventories 685 692 Prepaid expenses and other assets
2,240 1,805 Total current assets 10,086 6,349 Property and
equipment: Land 13,208 10,007 Buildings and improvements 47,323
43,597 Equipment, furniture and fixtures 29,222 27,264 Leasehold
improvements 178 178 Construction in progress 1,848 854 Total
property and equipment 91,779 81,900 Less accumulated depreciation
and amortization 45,933 42,992 Property and equipment, net 45,846
38,908 Other assets: Goodwill 33,388 28,642 Other intangibles
12,168 12,426 Other 979 1,202 Total other assets 46,535 42,270
Total assets $102,467 $87,527 LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $2,509 $2,578 Accrued salaries, wages and benefits
2,198 1,884 Other accrued expenses 1,431 398 Federal income tax
payable 1,092 774 Deferred federal income tax liability 388 338
Current maturities of long-term debt 3,992 2,198 Total current
liabilities 11,610 8,170 Long-term debt 25,953 17,744 Deferred
federal income tax liability 2,330 2,209 Total liabilities 39,893
28,123 Common stock ($.10 par value, 20,000,000 shares authorized;
9,518,204 and 9,376,766 shares issued) 952 938 Additional paid-in
capital 28,034 26,938 Unearned compensation (424) -- Retained
earnings 56,370 53,886 84,932 81,762 Treasury stock (at cost;
2,403,000 shares) (22,358) (22,358) Total stockholders' equity
62,574 59,404 Total liabilities and stockholders' equity $102,467
$87,527 DATASOURCE: The Sands Regent CONTACT: Ferenc B. Szony,
President and Chief Executive Officer of The Sands Regent,
+1-775-348-2210, or fax, +1-775-348-6241; or Sean Collins, Partner
of CCG Investor Relations, +1-310-477-9800, or fax,
+1-310-231-8663, for The Sands Regent Web site:
http://www.sandsregency.com/
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