UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 25, 2004
MONARCH CASINO & RESORT, INC.
(Exact name of registrant as specified in its charter)
NEVADA 0-22088 88-0300760
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1175 W. Moana Lane, Suite 200
Reno, NEVADA 89509
(Address of Principal Executive Offices) (Zip Code)
(775)825-3355
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
----------------------------------------------------
(Former name or former address, if changed since last report)
ITEM 2.02 Results of Operations and Financial Condition
On October 25, 2004, Monarch Casino & Resort, Inc. (the "Company") issued
a press release reporting the Company's financial results for the third
quarter ended September 30, 2004. A copy of the press release is attached
hereto as Exhibit 99.1 and incorporated herein by reference.
ITEM 8.01 Other Informaiton
Additional disclosures regarding the Company?s third quarter ended
September 30, 2004:
-Hotel occupancy at the Company?s Atlantis Casino Resort for the three
months ended September 30, 2004 was 98.2%, unchanged when compared to the
three months ended September 30, 2003. For the nine-month period ended
September 30, 2004, the hotel occupancy was 95.9%, an improvement over the
94.3% during the same period of 2003.
-The average daily room rate (?ADR?) at the Atlantis was $71.22 for the
three months ended September 30, 2004, versus $64.48 for the three months
ended September 30, 2003. For the nine months ended September 30, 2004, the
ADR was $65.53, an improvement over the $58.93 ADR during the nine months
ended September 30, 2003.
-The decrease in depreciation expense during the third quarter of 2004 as
compared to the third quarter of 2003 was mainly due to the fact that some of
the assets from the Company?s previous major expansion had fully depreciated.
-The increase in selling, general and administrative expenses during the
third quarter ended September 30, 2004, was mainly attributable to increases
in bonuses, insurance costs and other general operating expenses.
ITEM 9.01 Financial Statements and Exhibits
(c) EXHIBITS
99.1 Text of press release dated October 25, 2004.
-2-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
MONARCH CASINO & RESORT, INC.
Date: October 26, 2004 By: /s/ Ben Farahi
-------------------------
Name: Ben Farahi
Title: Chief Financial Officer,
Treasurer and Secretary
-3-
Exhibit 99.1
PRESS RELEASE
MONARCH CASINO & RESORT, INC. ANNOUNCES ALL-TIME RECORDS
FOR THIRD QUARTER ENDED SEPTEMBER 30, 2004
- 9-MONTH EPS BEATS RECORD YEAR 2003 TOTAL -
RENO, NV?October 25, 2004? Monarch Casino & Resort, Inc. (Nasdaq: MCRI) (the
"Company") announced its second successive all-time Company record for the
quarter ended September 30, 2004. The Company?s net income, earnings per
share, EBITDA (1), casino revenue, hotel revenue, and net revenue during the
2004 third quarter eclipsed all such previous quarterly results, including its
previous record-setting second quarter ended June 30, 2004.
Net income for the Company during the third quarter ended September 30,
2004, was $5,552,438, or $0.59 per diluted share. This marks a 51.5%
improvement over net income of $3,665,814, and $0.39 per diluted share, in the
third quarter ended September 30, 2003, and a 27.6% improvement over its
previous record quarterly net income set in the second quarter of 2004. The
Company?s nine-month earnings per share of $1.35 is a 32% improvement over the
full year 2003 per share earnings of $1.02. EBITDA (1) for the third quarter
was $10,858,147, or 23.4% better than the $8,797,634 EBITDA (1) from the third
quarter last year.
Revenues in all major categories increased significantly in the third
quarter of 2004 year over year. Casino revenues were $22,642,767 compared to
$19,893,383, an increase of 13.8%. Food and beverage revenues increased 5.9%,
from $9,146,124 to $9,689,843. Hotel revenues also jumped significantly, from
$6,259,807 to $7,021,432, a 12.2% increase. Other revenues decreased
approximately $103,000, or 8.8%. The strong increases in casino, food and
beverage and hotel revenues combined to increase the Company?s gross revenues
by 10.8%. Promotional allowances increased only 6.7%, leading to an 11.5%
improvement in net revenue during the 2004 third quarter over the 2003 third
quarter. Operating expenses in the quarter ended September 30, 2004,
increased only 3.9% as compared to the quarter ended September 30, 2003,
resulting in a 42.4% increase in income from operations. The increase in
revenues and smaller increase in operating expenses, combined with a 46.4%
decrease in interest expense and stockholder guarantee fee expense, led to an
impressive 51.5% increase in net income during the 2004 third quarter over the
2003 third quarter.
Commenting on the Company?s all-time record quarter, John Farahi, its
Chief Executive Officer and Co-Chairman, said: ?Obviously, we are very
pleased about the record results once again. The increase in our revenues and
operating margins are attributable to our superior product and service. All
in all, about 52% of the additional revenue flowed through to the bottom line,
resulting in a 5.4 percentage point increase in operating margin year over
year to 25.1%, our best ever. I am extremely proud of all our team members?
continuing efforts and valuable contributions. We continue to benefit from
local population growth, constant physical improvement to the property,
increases in convention bookings at the Reno-Sparks Convention Center and
management?s continuous attention to detail.? Mr. Farahi later added: ?We
are also very excited about our latest physical enhancement to the Atlantis, a
new expansive paver driveway and entrance to the Atlantis that are accentuated
with three colossal, show-controlled water fountains. The water feature and
-4-
expanded driveway, which opened on September 30, 2004, is another
distinguishing feature which will both provide a more customer efficient
entrance to our resort and enhance our mystique as one of the premier hotel
casinos in northern Nevada.?
Continuing its trend of aggressively paying down debt, the Company
reduced its bank debt by $6.5 million during the third quarter of 2004, and by
$14.2 million for the first nine months of 2004. The Company?s long-term debt
balance of $32.8 million at September 30, 2004, represented 95.6% of the
Company?s trailing twelve months EBITDA (1).
Monarch Casino & Resort, Inc., through its wholly-owned subsidiary, owns
and operates the tropically-themed Atlantis Casino Resort in Reno, Nevada.
The Atlantis is the closest hotel-casino to and is directly across the street
from the Reno-Sparks Convention Center. The Atlantis is recognizable due to
its Sky Terrace, a unique structure rising approximately 55 feet from street
level and spanning 160 feet across the street with no intermediate support
pillars. The Sky Terrace connects the Atlantis to a 16-acre parcel of land
owned by the Company, that is compliant with all casino zoning requirements
and is suitable and available for future expansion of the Atlantis facilities
and is currently being used by the Company as additional paved parking for the
Atlantis. The existing Atlantis site offers almost 1,000 guest rooms in three
contiguous high-rise hotel towers and a motor lodge. The tropically-themed
Atlantis features approximately 51,000 square feet of high-energy casino space
with 37 table games and approximately 1,450 slot and video poker machines, a
sports book, Keno and a poker room, and offers a variety of dining choices in
the form of nine high-quality food outlets.
This press release contains forward-looking statements within the meaning
of Section 21E of the Securities Exchange Act of 1934 which are subject to
change, including, but not limited to, comments relating to (i) future
operating performance and (ii) the financial benefits that may result from
future operations. The actual results may differ materially from those
described in any forward-looking statements. Additional information
concerning potential factors that could affect the Company?s financial results
is included in the Company?s Securities and Exchange Commission filings, which
are available on the Company's web site.
Contacts: Ben Farahi at (775) 825-3355 or benfarahi@monarchcasino.com
Karl G. Brokmann at (775) 825-3355 or kbrokmann@monarchcasino.com
For additional information including artist renditions and photographs,
visit Monarch's web site at monarchcasino.com.
(1) "EBITDA" consists of net income plus provision for income taxes, other
expenses (income), and depreciation and amortization. EBITDA should not be
construed as an alternative to operating income (as determined in accordance
with generally accepted accounting principles) as an indicator of the
Company's operating performance, or as an alternative to cash flows from
operating activities (as determined in accordance with generally accepted
accounting principles) as a measure of liquidity. This item enables
comparison of the Company's performance with the performance of other
companies that report EBITDA, although some companies do not calculate this
measure in the same manner and therefore, the measure as presented, may not be
comparable to similarly titled measures presented by other companies.
-5-
MONARCH CASINO & RESORT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Revenues
Casino............................. $ 22,642,767 $ 19,893,383 $ 63,490,456 $ 56,247,540
Food and beverage.................. 9,689,843 9,146,124 27,956,559 26,093,733
Hotel.............................. 7,021,432 6,259,807 18,974,036 16,483,022
Other.............................. 1,066,081 1,169,165 2,874,923 3,040,978
------------ ------------ ------------ ------------
Gross revenues.................. 40,420,123 36,468,479 113,295,974 101,865,273
Less promotional allowances........ (5,359,370) (5,021,786) (15,035,242) (14,178,582)
------------ ------------ ------------ ------------
Net revenues.................... 35,060,753 31,446,693 98,260,732 87,686,691
------------ ------------ ------------ ------------
Operating expenses
Casino............................. 7,870,607 7,550,337 22,977,956 22,035,163
Food and beverage.................. 4,912,576 4,530,680 14,122,051 13,129,591
Hotel.............................. 1,949,466 1,846,802 6,006,341 5,231,101
Other.............................. 352,855 357,879 1,047,509 971,121
Selling, general and
administrative.................... 9,117,102 8,363,361 25,972,178 24,478,855
Depreciation and amortization...... 2,047,706 2,611,621 7,687,196 7,928,450
------------ ------------ ------------ ------------
Total operating expenses........ 26,250,312 25,260,680 77,813,231 73,774,281
------------ ------------ ------------ ------------
Income from operations.......... 8,810,441 6,186,013 20,447,501 13,912,410
------------ ------------ ------------ ------------
Other expenses
Interest expense................... (333,483) (372,063) (1,125,121) (1,244,145)
Stockholder guarantee fee expense.. - (250,334) (136,164) (792,613)
------------ ------------ ------------ ------------
Total other expenses............ (333,483) (622,397) (1,261,285) (2,036,758)
------------ ------------ ------------ ------------
Income before income taxes...... 8,476,958 5,563,616 19,186,216 11,875,652
Provision for income taxes........... 2,924,520 1,897,802 6,523,520 4,040,802
------------ ------------ ------------ ------------
Net income...................... $ 5,552,438 $ 3,665,814 $ 12,662,696 $ 7,834,850
============ ============ ============ ============
Earnings per share of common stock
Net income
Basic............................ $ 0.59 $ 0.39 $ 1.35 $ 0.84
Diluted.......................... $ 0.59 $ 0.39 $ 1.35 $ 0.83
Weighted average number of common
shares and potential common
shares outstanding
Basic.......................... 9,388,922 9,339,567 9,368,824 9,379,446
Diluted........................ 9,408,872 9,373,006 9,397,211 9,411,771
-6-
MONARCH CASINO & RESORT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2004 2003
------------- -------------
(Unaudited)
ASSETS
Current assets
Cash............................................ $ 6,893,209 $ 9,711,310
Receivables, net................................ 2,711,752 2,818,727
Federal income tax refund receivable............ - 756,698
Inventories..................................... 1,227,314 1,245,967
Prepaid expenses................................ 2,741,176 2,234,773
Deferred income taxes........................... 1,071,457 542,457
------------- -------------
Total current assets......................... 14,644,908 17,309,932
------------- -------------
Property and equipment
Land............................................ 10,339,530 10,339,530
Land improvements............................... 3,226,913 3,226,913
Buildings....................................... 78,955,538 78,955,538
Building improvements........................... 7,060,680 6,304,642
Furniture and equipment......................... 65,241,991 63,230,354
Leasehold improvement........................... 1,200,000 -
------------- -------------
166,024,652 162,056,977
Less accumulated depreciation and amortization.. (67,575,337) (63,618,047)
------------- -------------
Net property and equipment................... 98,449,315 98,438,930
------------- -------------
Other assets, net................................. 429,495 128,263
------------- -------------
Total assets................................. $ 113,523,718 $ 115,877,125
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt............ $ - $ 6,059,591
Accounts payable................................ 6,234,682 8,407,887
Accrued expenses................................ 5,810,263 6,707,257
Federal income taxes payable.................... 1,390,981 -
------------- -------------
Total current liabilities.................... 13,435,926 21,174,735
Long-term debt, less current maturities........... 32,800,000 41,125,000
Deferred income taxes............................. 5,639,426 4,854,587
Commitments and contingencies.....................
Stockholders' equity
Preferred stock, $.01 par value, 10,000,000
shares authorized; none issued................. - -
Common stock, $.01 par value, 30,000,000
shares authorized; 9,536,275 issued;
9,405,224 outstanding at 09/30/2004,
9,340,328 outstanding at 12/31/2003............ 95,363 95,363
Additional paid-in capital...................... 17,219,376 17,432,635
Treasury stock,
131,051 shares at 09/30/2004, 195,947 shares
at 12/31/2003, at cost......................... (961,488) (1,437,614)
Retained earnings............................... 45,295,115 32,632,419
------------- -------------
Total stockholders' equity................... 61,648,366 48,722,803
------------- -------------
Total liabilities and stockholders' equity... $ 113,523,718 $ 115,877,125
============= =============
-7-
MONARCH CASINO & RESORT, INC.
RECONCILIATION OF NET INCOME TO EBITDA (1)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- ------------------------
2004 2003 2004 2003
(unaudited) (unaudited) (unaudited) (unaudited)
----------- ----------- ----------- -----------
Net income......................... $ 5,552,438 $3,665,814 $12,662,696 $7,834,850
Adjustments:
Provision for income taxes....... 2,924,520 1,897,802 6,523,520 4,040,802
Stockholder guarantee fee expense - 250,334 136,164 792,613
Interest expense................. 333,483 372,063 1,125,121 1,244,145
Depreciation and amortization.... 2,047,706 2,611,621 7,687,196 7,928,450
----------- ----------- ----------- -----------
EBITDA (1) $10,858,147 $8,797,634 $28,134,697 $21,840,860
=========== =========== =========== ===========
-8-