Q2 2006 Earnings Press Release
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):
July 26, 2006
 
Monarch Casino & Resort, Inc.
(Exact name of registrant as specified in its charter)

 
Nevada
 
0-22088
 
88-0300760
(State or other jurisdiction
(Commission
(IRS Employer
of incorporation)
File Number)
Identification No.)

 
3800 South Virginia Street, Reno, Nevada
 
89502
(Address of principal executive offices)
(Zip Code)
   
Registrant’s telephone number, including area code:
(775) 335-4600
 
1175 W. Moana Lane, Suite 200, Reno, Nevada 89509
(Former name or former address, if changed since last report.)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 

 
 
 

ITEM 2.02 Results Of Operations And Financial Condition
 

On July 26, 2006, Monarch Casino & Resort, Inc. (the "Company") issued a press release reporting the Company's financial results for the second quarter ended June 30, 2006. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.


ITEM 9.01 Financial Statements and Exhibits

(c) Exhibits

99.1 Text of press release dated July 26, 2006.

 

 
 
 

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
Monarch Casino and Resort, Inc.
 
(Registrant)
   
Date: July 26, 2006
/S/ Ronald Rowan
 
Ronald Rowan
Chief Financial Officer



 
 
 

Exhibit 99.1

PRESS RELEASE

MONARCH CASINO REPORTS RECORD SECOND QUARTER REVENUES

- DILUTED EPS DECLINES $0.02 PRIMARILLY DUE TO
STOCK OPTION COSTS OF $0.06 CENTS PER SHARE -

RENO, NV—July 26, 2006— Monarch Casino & Resort, Inc. (nasdaq: MCRI) (the "Company"), owner of the Atlantis Casino Resort in Reno, Nevada, today announced record revenues and also announced decreases in EBITDA (1) and net income primarily driven by one-time stock option charges taken in the quarter ended June 30, 2006.
The Company reported record revenue from each of its revenue centers. Specifically, casino, food and beverage, hotel and ‘other revenue centers’ drove increases of 7.3%, 7.8%, 11.5% and 17.6%, respectively, over the same quarter of the prior year. These revenue increases, partially offset by a 12.6% increase in promotional allowances, led to a 7.7% increase in net revenues over the comparative quarter in 2005.
Despite the increase in revenue, the Company reported an 8.4% decrease in EBITDA (1) from $10.3 million in the second quarter of 2005 to $9.5 million for the same quarter of the current year. The decrease in EBITDA (1) was due primarily to a one-time non-cash charge of $1.2 million related to the accelerated vesting of stock options awarded to former CFO Ben Farahi, and recurring stock option expense of $495 thousand. Starting January 1, 2006, pursuant to SFAS No. 123R, the Company began recognizing expenses related to stock options and, therefore, the Company did not recognize any such expense in 2005.
Net income for the 2006 second quarter decreased 7.2% to $4.8 million, or $0.25 per diluted share (“EPS”), from $5.2 million, or $0.27 per diluted share for the same period last year.
Absent the one-time and recurring stock option expenses, EBITDA (1) for the second quarter would have been $11.2 million or 8.2% better than EBITDA (1) in the second quarter of 2005, and diluted EPS would have been $0.31, or 15% higher than diluted EPS in the second quarter of 2005.
Consensus published reports by analysts covering the Company estimated second quarter EBITDA (1) of $11.5 million and EPS of $0.31; however, several of the analyst estimates excluded an allowance for stock option expense.
Monarch’s CEO and Co-Chairman John Farahi commented on the Company’s performance: “The increase in our revenues indicates that our fundamentals remain very strong and that we continue to do a good job of not only attracting new guests, but also of retaining the loyalty of our long-time patrons. Margins in three of our four primary revenue centers improved over last year which indicates that we continue to effectively manage our costs.” Mr. Farahi added: “We continue to work on our Atlantis expansion plans and look to begin construction early next year.”
The Company remained debt free during the quarter with $24 million available under its revolving credit facility at June 30, 2006.
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 above street level and spanning 160 feet across Virginia 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 and growth. Currently, the Company uses it 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 38 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) future expansion plans. 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:     Ron Rowan, CFO at (775) 825-4700 or rrowan@monarchcasino.com
John Farahi, CEO at (775) 825-4700 or John_Farahi@atlantiscasino.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, interest expense, 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, as an alternative to cash flows from operating activities (as determined in accordance with generally accepted accounting principles) or 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.

 
 
 

Monarch Casino & Resort, Inc.
Condensed Consolidated Statements of Income

     
Three Months Ended
  
Six Months Ended
     
June 30,
  
June 30,
     
2006
  
2005
  
2006
  
2005
     
(UNAUDITED)
  
(UNAUDITED)
  
(UNAUDITED)
  
(UNAUDITED)
Revenues
              
 
Casino
$25,780,512
  
$24,023,224
  
$49,904,559
  
$44,925,132
 
Food and beverage
10,135,342
  
9,404,978
 
19,880,159
  
18,431,314
 
Hotel
6,445,709
  
5,783,330
 
12,479,644
  
11,371,482
 
Other
1,340,524
  
1,140,419
 
2,431,100
  
2,188,756
   
Gross revenues
43,702,087
  
40,351,951
  
84,695,462
  
76,916,684
Less promotional allowances
(6,043,336)
  
(5,369,564)
  
(11,431,050)
 
(10,371,595)
   
Net revenues
37,658,751
  
34,982,387
  
73,264,412
  
66,545,089
Operating expenses
              
 
Casino
8,479,719
  
7,952,246
 
16,491,881
  
15,487,093
 
Food and beverage
4,700,015
  
4,730,595
 
9,490,786
  
9,167,960
 
Hotel
2,002,146
  
1,810,963
 
4,105,869
  
3,838,836
 
Other
417,830
  
323,418
 
732,284
  
645,064
 
Selling, general and administrative
12,561,359
  
9,772,874
 
23,402,845
  
18,582,167
 
Gaming development cost
29,067
  
56,310
  
72,832
  
260,708
 
Depreciation and amortization
2,144,481
  
2,099,912
 
4,291,239
  
4,138,112
   
Total operating expenses
30,334,617
  
26,746,318
  
58,587,736
  
52,119,940
   
Income from operations
7,324,134
  
8,236,069
  
14,676,676
  
14,425,149
                   
Other expense
              
 
Interest expense
-
  
(283,963)
  
(59,444)
  
(589,337)
                   
   
Income before income taxes
7,324,134
  
7,952,106
  
14,617,232
  
13,835,812
                   
Provision for income taxes
2,501,902
  
2,758,000
  
5,026,902
  
4,788,000
         
 
        
   
Net income
$ 4,822,232
  
$ 5,194,106
  
$9,590,330
 
$ 9,047,812
                   
Earnings per share of common stock:
              
   
Basic
$0.25
 
$ 0.28
 
$0.51
  
$ 0.48
   
Diluted
$0.25
  
$ 0.27
 
$0.50
  
$ 0.47
                   
Weighted average number of common
              
shares and potential common
              
shares outstanding:
              
   
Basic
18,950,687
  
18,834,974
 
18,918,321
  
18,825,947
   
Diluted
19,282,501
  
19,099,112
  
19,268,889
  
19,072,009


 
 
 

Monarch Casino & Resort, Inc.
Condensed Consolidated Balance Sheets

     
June 30,
2006
(UNAUDITED)
  
December 31, 2005
ASSETS
      
Current assets
      
 
Cash
$ 18,086,552
  
$ 12,886,494
 
Receivables, net
3,334,252
  
3,559,602
 
Federal income tax refund receivable
266,252
  
286,760
 
Inventories
1,467,337
  
1,456,453
 
Prepaid expenses
2,620,561
  
2,401,619
 
Deferred income taxes
1,721,883
  
1,326,224
   
Total current assets
27,496,837
  
21,917,152
           
Property and equipment
      
 
Land
10,339,530
  
10,339,530
 
Land improvements
3,166,107
  
3,166,107
 
Buildings
78,955,538
  
78,955,538
 
Building improvements
10,398,814
  
10,398,814
 
Furniture and equipment
70,285,434
  
67,393,755
 
Leasehold improvement
1,346,965
  
1,346,965
     
174,492,388
  
171,600,709
 
Less accumulated depreciation and amortization
(80,228,943)
  
(76,117,346)
   
Net property and equipment
94,263,445
  
95,483,363
       
Other assets, net
269,524
  
269,524
 
Total assets
$122,029,806
  
$ 117,670,039
LIABILITIES AND STOCKHOLDERS' EQUITY
      
Current liabilities
      
 
Accounts payable
5,354,980
  
7,335,630
 
Accrued expenses
9,082,770
  
8,722,221
   
Total current liabilities
14,437,750
  
16,057,851
           
Long-term debt, less current maturities
-
  
8,100,000
Deferred income taxes
5,568,196
  
5,953,193
           
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; 19,072,550 shares issued; 19,052,636 outstanding at
6/30/06, 18,879,310 outstanding at 12/31/05
190,726
  
190,726
 
Additional paid-in capital
22,121,537
  
17,882,827
 
Treasury stock, 19,914 shares at 6/30/06, 193,240 shares
at 12/31/05, at cost
(73,052)
  
(708,877)
 
Retained earnings
79,784,649
  
70,194,319
   
Total stockholders' equity
102,023,860
  
87,558,995
 
Total liabilities and stockholders' equity
$122,029,806
  
$ 117,670,039

 
 
 

Monarch Casino & Resort, Inc.
Reconciliation of Net Income to EBITDA (1)
(unaudited)

   
Three Months Ended
June 30,
  
Six Months Ended
June 30,
   
2006
(unaudited)
  
2005
(unaudited)
  
2006
(unaudited)
  
2005
(unaudited)
Net income
  
$4,822,232
  
$5,194,106
  
$9,590,330
  
$9,047,812
Adjustments
                
Provision for income taxes
  
2,501,902
  
2,758,000
  
5,026,902
  
4,788,000
Interest expense
  
-
  
283,963
  
59,444
  
589,337
Depreciation & amortization
  
2,144,481
  
2,099,912
  
4,291,239
  
4,138,112
EBITDA (1) (unaudited)
  
$9,468,615
  
$10,335,981
  
$18,967,915
  
$18,563,261


(1) "EBITDA" consists of net income plus provision for income taxes, interest expense, 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, as an alternative to cash flows from operating activities (as determined in accordance with generally accepted accounting principles) or 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.