The Sands Regent today announced financial results for the second quarter
and first six months of its fiscal year 2004.
For the second quarter ended December 31, 2003, the Company reported net
revenues of $12.7 million, compared to $12.6 million for the second
quarter ended December 31, 2002. Management attributed the small net
revenue growth to: 1) softness in the Reno-area gaming market due in part
to competition from new Native American gaming facilities in Northern
California; 2) severe winter weekend weather that negatively impacted
access to the Reno area for Northern Californians, and 3) the disruptive
effects of the railroad trench project (ReTRAC) adjacent to the Sands
Regency. Net revenues for the six months ended December 31, 2003 rose to
$28.7 million, versus $28.1 million for the corresponding six months of
fiscal 2003, due primarily to the increase in retail gasoline prices at
its Gold Ranch convenience store.
In spite of the challenges described above, the Company’s income from
operations increased to $240,000 for the second quarter of fiscal 2004
from $45,000 for the second quarter of fiscal 2003. Quarterly EBITDAR(2),
which excludes a gain on the settlement in connection with its December
1998 sale(1) of its interest in the Copa Casino in Gulfport, MS, as
described below, increased 28% year-over-year, to $1.4 million from $1.1
million for the prior-year quarter. For the six months ended December 31,
2003, income from operations was $1.9 million, as compared to $2.5 million
for the corresponding period of fiscal 2003. Six-month EBITDAR also
declined year over year, to $4.2 million for the first two quarters of
fiscal 2004 from $4.6 million in the corresponding year-ago period.
For the quarter ended December 31, 2003, the Company reported net income
of $4.3 million, or $0.86 basic, $0.81 diluted, versus a net loss of
$(244,000), or $(0.05) per basic and diluted share in the year-ago
quarter. Quarterly net income without the gain from the Copa Casino sale
and associated favorable tax adjustment would have been $19,000. Six-month
net income was $5.4 million, or $1.08 basic, $1.02 diluted, versus net
income of $1.1 million, or $0.22 per basic share, $0.21 diluted, for the
year-ago six-month period. Without the gain from the Copa and associated
tax benefit, six-month net income would have been $946,000.
During the second quarter of fiscal 2004, as noted in a November 28, 2003
SEC filing, The Sands Regent reached an agreement with the management of
the Copa Casino in Gulfport, MS, regarding a final settlement of amounts
owing to the Company in connection with its December 1998 sale of its
interest in the Copa. The Company received $4.2 million in cash payments
as final settlement during the quarter. As the Company had not previously
recognized a gain on the settlement amount, the Company has recognized a
gain on the full settlement amount plus debt service payments made during
Also during the second quarter, on December 8, 2003, the Company announced
the signing of an agreement to purchase Rail City Casino in Sparks,
Nevada, from Alliance Gaming Corporation. The expected purchase price is
approximately $38 million, consisting of approximately $35 million in cash
and approximately $3 million in subordinated debt carried by the seller.
The final purchase amount will be based on the twelve-month financial
performance of Rail City prior to closing of the sale, which is expected
to take place in the spring of 2004, pending regulatory approval.
Ferenc B. Szony, President and CEO of The Sands Regent, commented, “Given
the impact that new Native American tribal casinos in Northern California
have had throughout the entire Reno market, we are pleased to have held
fairly steady, especially in the second quarter. When structural
improvements to the downtown Reno area are completed, including ReTRAC,
the Downtown Events Center and the unique in-town kayaking park on the
Truckee River, our Sands Regency property will be at the heart of the
expanding mix of gaming, recreational, dining and entertainment options
that Reno offers. Meanwhile, we are increasing our presence among
local-area residents, and realizing a key element of our growth strategy,
through our proposed acquisition of the friendly, casual Rail City Casino
in nearby Sparks. This will give further traction to our property
cross-marketing programs and leverage our in-depth knowledge of the
The Company will hold a conference call today, Friday, February 13, at
10:00 a.m. PST to discuss quarterly results.
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 Friday, February 13 at 12:00 noon PST, through Friday,
February 20 at midnight PST; call (800) 642-1687 and enter the conference
ID number 5478142.