Monarch Casino announces results for the third quarter of 2006
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, 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
 
Not applicable.
(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


MONARCH CASINO REPORTS RECORD THIRD QUARTER RESULTS

·  
Record quarterly net revenue of $41.9 million
·  
Record income from operations of $11.4 million ($11.8 excluding share-based compensation)
·  
Record EBITDA (1) of $13.5 million ($14.0 million excluding share-based compensation)
·  
Record diluted EPS of 38 cents (40 cents excluding share-based compensation)

RENO, NV - October 25, 2006 - Monarch Casino & Resort, Inc. (NASDAQ: MCRI) (the "Company"), owner of the Atlantis Casino Resort in Reno, Nevada, today announced record quarterly results for net revenue, income from operations, EBITDA (1) and diluted EPS.
The Company reported record net revenues of $41.9 million, a 9.3% increase over the comparative quarter in 2005, and announced that each of its revenue centers delivered record results. Specifically, casino, food and beverage, hotel and ‘other revenue centers’ drove revenue increases over the same quarter of the prior year of 9.1%, 7.1%, 11.0% and 10.7%, respectively.
The Company announced Income from operations of $11.4 million, EBITDA (1) of $13.5 million and diluted EPS of 38 cents, each of which were also all-time records. Excluding the effects of $489,000 of share-based compensation, the Company would have posted income from operations of $11.8 million, EBITDA (1) of $14.0 million and diluted EPS of 40 cents. Compared to the same quarter of the prior year, the results excluding the effects of share-based compensation represent increases of 6.2%, 5.4% and 8.1%, respectively.
The Company reported a $2.0 million, or 20.9% increase in selling, general and administrative expenses over the same quarter of the prior year. The drivers of this increase were share-based compensation resulting from the implementation of FAS 123R in the first quarter of 2006; increased marketing and promotional expense; increased payroll costs; increased legal fees; higher bad debt expense and higher energy costs.
Monarch’s CEO and Co-Chairman John Farahi commented on the Company’s performance: “These record results are a tribute to our team and demonstrate our ability to continually raise the performance bar on the strong results we have delivered in the past. We will continue the push toward peak performance from our existing facility as we proceed with its expansion. We are on schedule with the expansion plans we announced last May and expect to break ground in the first quarter of 2007.”
The Company remained debt free during the quarter.
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 features a 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 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 JohnFarahi@monarchcasino.com

For additional information 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
  
Nine Months Ended
     
September 30,
  
September 30,
     
2006
  
2005
  
2006
  
2005
     
(Unaudited)
  
(Unaudited)
  
(Unaudited)
  
(Unaudited)
Revenues
              
 
Casino
$27,716,814
 
$25,397,320
 
$77,621,373
 
$70,322,452
 
Food and beverage
10,889,609
 
10,164,356
 
30,769,768
 
28,595,670
 
Hotel
8,101,167
 
7,296,627
 
20,580,811
 
18,668,109
 
Other
1,408,494
 
1,272,052
 
3,839,594
 
3,460,808
   
Gross revenues
48,116,084
 
44,130,355
 
132,811,546
 
121,047,039
Less promotional allowances
(6,213,477)
  
(5,782,463)
  
(17,644,527)
  
(16,154,058)
   
Net revenues
41,902,607
 
38,347,892
 
115,167,019
 
104,892,981
Operating Expenses
              
 
Casino
8,991,885
 
8,189,181
 
25,483,766
 
23,676,274
 
Food and beverage
5,143,751
 
4,862,299
 
14,634,537
 
14,030,259
 
Hotel
2,206,631
 
2,024,190
 
6,312,500
 
5,863,026
 
Other
384,033
 
354,625
 
1,116,317
 
999,689
 
Selling, general, and administrative
11,653,283
 
9,640,312
 
35,056,128
 
28,222,479
 
Gaming development costs
27,892
 
13,382
 
100,724
 
274,090
 
Depreciation and amortization
2,139,592
 
2,113,060
 
6,430,831
 
6,251,172
   
Total operating expenses
30,547,067
 
27,197,049
 
89,134,803
 
79,316,989
   
Income from operations
11,355,540
 
11,150,843
 
26,032,216
 
25,575,992
                   
Other expense
              
 
Interest expense
(15,401)
  
(301,629)
  
(74,845)
  
890,966)
                   
   
Income before income taxes
11,340,139
 
10,849,214
 
25,957,371
 
24,685,026
                   
Provision for income taxes
3,969,098
 
3,762,000
 
8,996,000
 
8,550,000
                   
   
Net income
$ 7,371,041
 
$ 7,087,214
 
$16,961,371
 
$16,135,026
                   
Earnings per share of common stock
              
 
Net income
              
   
Basic
$ 0.39
 
$ 0.38
 
$ 0.89
 
$ 0.86
   
Diluted
$ 0.38
 
$ 0.37
 
$ 0.88
 
$ 0.85
                   
Weighted average number of common
              
shares and potential common
              
shares outstanding
              
   
Basic
19,058,896
 
18,867,748
 
18,965,694
 
18,840,034
   
Diluted
19,245,639
 
19,103,711
 
19,263,869
 
19,082,667



Monarch Casino & Resort, Inc.
Condensed Consolidated Balance Sheets
 
     
September 30,
 
December 31,
     
2006
  
2005
ASSETS
(UNAUDITED)
    
Current assets
      
 
Cash
$ 28,658,340
 
$ 12,886,494
 
Receivables, net
3,470,359
 
3,559,602
 
Federal income tax refund receivable
-
 
286,760
 
Inventories
1,489,634
 
1,456,453
 
Prepaid expenses
3,054,855
 
2,401,619
 
Deferred income taxes
1,919,043
 
1,326,224
   
Total current assets
38,592,231
 
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 & equipment
71,293,190
 
67,393,755
 
Leasehold improvements
1,346,965
 
1,346,965
     
175,500,144
 
171,600,709
 
Less accumulated depreciation and amortization
(82,299,289)
  
(76,117,346)
   
Net property and equipment
93,200,855
 
95,483,363
           
Other assets, net
254,122
 
269,524
 
Total assets
$ 132,047,208
 
$117,670,039
           
LIABILITIES AND STOCKHOLDERS' EQUITY
      
Current liabilities
      
 
Accounts payable
7,082,667
 
7,335,630
 
Accrued expenses
8,199,026
 
8,722,221
 
Federal income taxes payable
1,338,218
 
-
   
Total current liabilities
16,619,911
 
16,057,851
           
Long-term debt, less current maturities
-
 
8,100,000
Deferred income taxes
5,403,193
 
5,953,193
           
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;
      
 
19,059,968 outstanding at 9/30/06
      
 
18,879,310 outstanding at 12/31/05
190,726
 
190,726
 
Additional paid-in capital
22,723,844
 
17,882,827
 
Treasury stock, 12,582 shares at 9/30/06
      
 
193,240 shares at 12/31/05, at cost
(46,156)
  
(708,877)
 
Retained earnings
87,155,690
 
70,194,319
   
Total stockholders' equity
110,024,104
 
87,558,995
Total liabilities and stockholders’ equity
$ 132,047,208
 
$117,670,039

 
 
 

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

     
Three Months Ended
  
Nine Months Ended
     
September 30,
  
September 30,
     
2006
  
2005
  
2006
  
2005
     
(Unaudited)
  
(Unaudited)
  
(Unaudited)
  
(Unaudited)
Net Income
$7,371,041
  
$7,087,214
  
$16,961,371
  
$16,135,026
Adjustments
              
 
Provision for income taxes
3,969,098
 
3,762,000
 
8,996,000
 
8,550,000
 
Interest expense
15,401
 
301,629
 
74,845
 
890,966
 
Depreciation & amortization
2,139,592
 
2,113,060
 
6,430,831
 
6,251,172
EBITDA (1)
$13,495,132
 
$13,263,903
 
$32,463,047
 
$31,827,164
                   


(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.


 
 
 
 
 
 
 
 
 
 

 

 
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 October 25, 2006
  
 
/s/ John Farahi
 
John Farahi
Co-Chairman of the Board, Chief Executive Officer and Chief Operating Officer