-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WToO0EdYe2EUnVqVGsin7PmZF1l4gy4SFtTiOg9G1YSoQ0enlglHKohiHYy9mh6d sn5c1RIRVeqGf5RfGy5G8A== /in/edgar/work/20000814/0000907242-00-000017/0000907242-00-000017.txt : 20000921 0000907242-00-000017.hdr.sgml : 20000921 ACCESSION NUMBER: 0000907242-00-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONARCH CASINO & RESORT INC CENTRAL INDEX KEY: 0000907242 STANDARD INDUSTRIAL CLASSIFICATION: [7990 ] IRS NUMBER: 880300760 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22088 FILM NUMBER: 695563 BUSINESS ADDRESS: STREET 1: 1175 W MOANA LANE STREET 2: STE 200 CITY: RENO STATE: NV ZIP: 89509 BUSINESS PHONE: 7758253355 MAIL ADDRESS: STREET 1: 1175 W MOANA LANE STREET 2: STE 200 CITY: RENO STATE: NV ZIP: 89509 10-Q 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______TO______. Commission File No. 0-22088 MONARCH CASINO & RESORT, INC. (Exact name of registrant as specified in its charter) ------------------------- NEVADA 88-0300760 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1175 W. MOANA LANE, SUITE 200 RENO, NEVADA 89509 (Address of principal (Zip code) executive offices) Registrant's telephone number, including area code: (775) 825-3355 ------------------------- NOT APPLICABLE (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES _X_ NO ___ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES ___ NO ___ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of July 31, 2000, there were 9,436,275 shares of Monarch Casino & Resort, Inc. $0.01 par value common stock outstanding. PART 1. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS MONARCH CASINO & RESORT, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Six Months Ended June 30, June 30, -------------------------- -------------------------- 2000 1999 2000 1999 ------------ ------------ ------------ ------------ (Unaudited) (Unaudited) (Unaudited) (Unaudited) Revenues Casino........................... $ 15,501,459 $ 11,827,740 $ 29,550,188 $ 21,878,446 Food and beverage................ 7,400,521 5,802,959 14,175,898 10,364,446 Hotel............................ 4,642,868 3,415,218 8,752,129 5,778,110 Other............................ 896,375 666,772 1,706,151 1,299,828 ------------ ------------ ------------ ------------ Gross revenues................ 28,441,223 21,712,689 54,184,366 39,320,830 Less promotional allowances...... (3,462,731) (3,134,502) (6,556,147) (5,809,109) ------------ ------------ ------------ ------------ Net revenues.................. 24,978,492 18,578,187 47,628,219 33,511,721 ------------ ------------ ------------ ------------ Operating expenses Casino........................... 6,386,124 5,091,534 12,220,027 9,620,009 Food and beverage................ 4,585,251 3,632,785 8,836,887 6,163,093 Hotel............................ 1,608,437 950,546 3,224,901 1,658,144 Other............................ 357,119 282,268 664,195 499,040 Selling, general and administrative.................. 6,068,891 5,548,029 12,026,962 10,379,260 Depreciation and amortization.... 2,518,646 1,555,122 5,018,401 2,733,066 ------------ ------------ ------------ ------------ Total operating expenses...... 21,524,468 17,060,284 41,991,373 31,052,612 ------------ ------------ ------------ ------------ Income from operations........ 3,454,024 1,517,903 5,636,846 2,459,109 ------------ ------------ ------------ ------------ Other expense Interest expense................. 2,178,903 920,265 4,218,012 1,540,200 ------------ ------------ ------------ ------------ Total other expenses.......... 2,178,903 920,265 4,218,012 1,540,200 ------------ ------------ ------------ ------------ Income before income taxes.... 1,275,121 597,638 1,418,834 918,909 Provision for income taxes......... 445,301 203,197 495,809 312,429 ------------ ------------ ------------ ------------ Net income.................... $ 829,820 $ 394,441 $ 923,025 $ 606,480 ============ ============ ============ ============ Income per share of common stock Net income Basic.......................... $ 0.09 $ 0.04 $ 0.10 $ 0.06 Diluted........................ $ 0.09 $ 0.04 $ 0.10 $ 0.06 Weighted average number of common shares and potential common shares outstanding Basic.......................... 9,436,275 9,436,275 9,436,275 9,436,275 Diluted........................ 9,478,796 9,493,765 9,481,390 9,497,903
The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements. -2- MONARCH CASINO & RESORT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31, 2000 1999 ------------ ------------ (Unaudited) ASSETS Current assets Cash................................................. $ 3,903,609 $ 6,367,507 Receivables, net..................................... 3,258,471 1,954,447 Related party receivables............................ 59,773 83,205 Inventories.......................................... 1,233,955 1,456,602 Prepaid expenses..................................... 2,049,791 1,600,249 Prepaid federal income taxes ........................ 443,870 443,870 Deferred income taxes................................ 1,602,772 1,174,626 ------------- ------------ Total current assets.............................. 12,552,241 13,080,506 ------------- ------------ Property and equipment Land................................................. 10,339,530 10,339,530 Land improvements.................................... 3,074,414 3,034,095 Buildings............................................ 78,785,911 78,432,078 Furniture and equipment.............................. 50,332,559 49,392,494 Building improvements................................ 4,515,799 4,462,520 ------------- ------------ 147,048,213 145,660,717 Less accumulated depreciation and amortization....... (32,980,850) (27,964,180) ------------- ------------ 114,067,363 117,696,537 Construction in progress............................. 419,042 - ------------- ------------ Net property and equipment........................ 114,486,405 117,696,537 ------------- ------------ Other assets, net...................................... 774,026 877,382 ------------- ------------ Total assets...................................... $ 127,812,672 $ 131,654,425 ============= ============
The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements. -3- MONARCH CASINO & RESORT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31, 2000 1999 ------------ ------------ (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current maturities of long-term debt................. $ 8,287,476 $ 7,333,921 Accounts payable..................................... 5,797,581 7,238,084 Accounts payable-construction........................ 496,557 942,264 Accrued expenses..................................... 5,241,093 5,156,363 Federal income taxes payable......................... 580,080 213,686 ------------- ------------ Total current liabilities......................... 20,402,787 20,884,318 Long-term debt, less current maturities................ 77,394,700 82,235,509 Deferred income taxes.................................. 3,223,579 2,666,017 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; 9,436,275 outstanding............................... 95,363 95,363 Additional paid-in capital........................... 17,241,788 17,241,788 Treasury stock....................................... (329,875) (329,875) Retained earnings.................................... 9,784,330 8,861,305 ------------- ------------ Total stockholders' equity........................ 26,791,606 25,868,581 ------------- ------------ Total liabilities and stockholders' equity........ $127,812,672 $131,654,425 ============= ============
The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements. -4- MONARCH CASINO & RESORT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, ---------------------------- 2000 1999 ------------ ------------ (Unaudited) (Unaudited) Cash flows from operating activities: Net income............................................ $ 923,025 $ 606,480 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization....................... 5,109,154 2,823,559 Gain on disposal of assets.......................... (87,980) (5,294) Deferred income taxes............................... 129,416 (97,143) Increase in receivables, net........................ (1,280,592) (311,759) Decrease (increase) in inventories.................. 222,647 (435,245) (Increase) decrease in prepaid expenses............. (449,542) 352,707 Decrease in other assets............................ 10,872 19,228 (Decrease) increase in accounts payable............. (1,440,503) 1,543,214 Increase (decrease) in accrued expenses, and federal income taxes.......................... 451,124 (203,754) ------------ ------------ Net cash provided by operating activities.......... 3,587,621 4,291,993 ------------ ------------ Cash flows from investing activities: Proceeds from sale of assets.......................... 87,980 11,268 Acquisition of property and equipment................. (1,670,529) (24,876,590) Decrease in accounts payable construction............. (445,707) (2,056,375) ------------ ------------ Net cash used in investing activities.............. (2,028,256) (26,921,697) ------------ ------------ Cash flows from financing activities: Proceeds from long-term debt.......................... - 23,249,498 Principal payments on long-term debt.................. (4,023,263) (746,082) ------------ ------------ Net cash (used in) provided by financing activities.............................. (4,023,263) 22,503,416 ------------ ------------ Net decrease in cash............................... (2,463,898) (126,288) Cash at beginning of period............................. 6,367,507 4,919,143 ------------ ------------ Cash at end of period................................... $ 3,903,609 $ 4,792,855 ============ ============ Supplemental disclosure of cash flow information: Cash paid for interest, net of capitalized interest.......................... $ 4,101,751 $ 1,642,151 Capitalized interest.................................. $ - $ 1,090,428 Supplemental schedule of non-cash investing and financing activities: The Company financed the purchase of property and equipment in the following amounts............... $ 136,009 $ 6,425,760
The accompanying Notes to the Condensed Consolidated Financial Statements are an integral part of these statements. -5- MONARCH CASINO & RESORT, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation Monarch Casino & Resort, Inc. ("Monarch") was incorporated in 1993. Monarch's wholly-owned subsidiary, Golden Road Motor Inn, Inc. ("Golden Road"), owns and operates the Atlantis Casino Resort (the "Atlantis"), a hotel/casino facility in Reno, Nevada. Unless stated otherwise, "Monarch" or the "Company" refers to Monarch Casino & Resort, Inc. and its Golden Road subsidiary. The consolidated financial statements include the accounts of Monarch and Golden Road. Intercompany balances and transactions are eliminated. Use of Estimates In preparing these financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the year. Actual results could differ from those estimates. Reclassifications Certain amounts in the 1999 consolidated financial statements have been reclassified to conform with the 2000 presentation. These reclassifications had no effect on the Company's previously reported net income. Related Party Receivables Receivables from officers, employees, or affiliated companies are primarily for banquet related services and are priced at the retail value of the goods or services provided. NOTE 2. INTERIM FINANCIAL STATEMENTS The accompanying condensed consolidated financial statements for the three month and six month periods ended June 30, 2000 and June 30, 1999 are unaudited. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of the Company's financial position and results of operations for such periods, have been included. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 1999. The results for the three month and six month periods ended June 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000, or for any other period. -6- NOTE 3. EARNINGS PER SHARE In 1997, the Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." SFAS No. 128 replaces previously reported earnings per share with "basic" earnings per share and "diluted" earnings per share. Basic earnings per share is computed by dividing reported net earnings by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects the additional dilution for all potentially dilutive securities such as stock options. The following is a reconciliation of the number of shares (denominator) used in the basic and diluted earnings per share computations (shares in thousands):
Three Months ended June 30, ----------------------------------- 2000 1999 ---------------- ---------------- Per Share Per Share Shares Amount Shares Amount ------ --------- ------ --------- Net Income Basic..................... 9,436 $0.09 9,436 $0.04 Effect of dilutive stock options............ 43 - 58 - ------ ------- ------ ------- Diluted................... 9,479 $0.09 9,494 $0.04 ====== ======= ====== =======
Six Months ended June 30, ----------------------------------- 2000 1999 ---------------- ---------------- Per Share Per Share Shares Amount Shares Amount ------ --------- ------ --------- Net Income Basic..................... 9,436 $0.10 9,436 $0.06 Effect of dilutive stock options............ 45 - 62 - ------ ------ ------ ------ Diluted................... 9,481 $0.10 9,498 $0.06 ====== ====== ====== ======
The following options were not included in the computation of diluted earnings per share because the options' exercise price was greater than the average market price of the common shares and their inclusion would be antidilutive. -7-
Three Months ended June 30, ---------------------------- 2000 1999 ----------- ----------- Options to purchase shares of common stock (in thousands)..... 19 - Exercise prices.................. $5.25-$6.00 - Expiration dates................. 6/03-2/10 -
Six Months ended June 30, ---------------------------- 2000 1999 ----------- ----------- Options to purchase shares of common stock (in thousands)..... 19 - Exercise prices.................. $5.25-$6.00 - Expiration dates................. 6/03-2/10 -
-8- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS STATEMENT ON FORWARD-LOOKING INFORMATION Certain information included herein contains statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, such as statements relating to anticipated expenses, capital spending and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include, but are not limited to, those relating to competitive industry conditions, and expansion of Indian casinos in California, Reno-area tourism conditions, dependence on existing management, leverage and debt service (including sensitivity to fluctuations in interest rates), the regulation of the gaming industry (including actions affecting licensing), outcome of litigation, domestic or global economic conditions, changes in federal or state tax laws or the administration of such laws. RESULTS OF OPERATIONS Comparison of Operating Results for the Three Month Periods Ended June 30, 2000 and 1999 For the three month period ended June 30, 2000, the Company earned $830 thousand, or $0.09 per share, on net revenues of $25.0 million, compared to earnings of $394 thousand, or $0.04 per share, on net revenues of $18.6 million for the three months ended June 30, 1999. Income from operations for the three months ended June 30, 2000 totaled $3.5 million, compared to $1.5 million for the 1999 second quarter. Net revenues for the second quarter of 2000 represents a new second quarter record for the Company, but net income and earnings per share were negatively impacted primarily due to a 62.0% increase in depreciation and amortization and a 136.8% increase in interest expense when compared to last year's second quarter, both as a direct result of the Atlantis expansion. Casino revenues totaled $15.5 million in the second quarter of 2000, an increase of 31.1% from $11.8 million in the 1999 second quarter, reflecting increases in both slot and table game win. Slot revenues were up 23.4% in the second quarter of 2000 compared to the second quarter of 1999 due to an increase in the volume of slot machine play and an increase in the average number of slot machines for the quarter. Table game revenue for the three months ended June 30, 2000 increased 57.0% compared to the same period in 1999, primarily due to an increase in table game drop and an increase in the average number of table games for the quarter. Casino operating expenses amounted to 41.2% of casino revenues in the 2000 second quarter, compared to 43.0% in the 1999 second quarter, primarily due to a decrease in operating costs. Food and beverage revenues for the 2000 second quarter totaled $7.4 million, an increase of 27.5% from $5.8 million in the 1999 second quarter, due primarily to the operation of one new restaurant, an additional beverage lounge, expansion of the buffet, and an increase in the hotel guest traffic -9- created by the new hotel rooms. Food and beverage operating expenses remained relatively constant as a percent of food and beverage revenue at 62.0% in the 2000 second quarter compared to 62.6% in the second quarter of 1999. Hotel revenues increased 35.9% to $4.6 million from the 1999 second quarter, as a result of opening 385 new hotel tower rooms, a slight decrease in the average daily room rate, and an occupancy rate increase. The Atlantis' average daily room rate ("ADR") was $51.73 for the 2000 second quarter compared to $52.45 in the second quarter of 1999. The Atlantis experienced an occupancy rate of 96.7% during the 2000 second quarter, up from an occupancy rate of 90.8% during the same period last year. Hotel operating expenses in the 2000 second quarter were 34.6% of hotel revenues, compared to 27.8% in the 1999 second quarter, as a result of increased payroll and operating costs for the hotel expansion, including the new concierge tower rooms. Other revenues totaled $896 thousand in the second quarter of 2000, up 34.4% from $667 thousand in the second quarter of 1999, primarily reflecting the opening of a logo gift shop. Other expenses in the 2000 second quarter were 39.8% of other revenues, compared to 42.3% in the 1999 second quarter. Selling, general and administrative expenses were $6.1 million in the 2000 second quarter or 24.3% of net revenues, compared to $5.5 million or 29.9% of net revenues in the second quarter of 1999. The decrease in these expenses as a percentage of revenue reflects the fact that certain payroll and operating costs have not increased to the same extent as revenues have increased, thereby resulting in certain economies of scale from the expansion. Interest expense for the 2000 second quarter totaled $2.2 million, an increase of 136.8% from $920 thousand in the second quarter of 1999. The increase reflects the Company's increased debt incurred in connection with the Atlantis expansion and an increase in interest rates. Because the Atlantis expansion was in operation in the second quarter of 2000, the Company did not capitalize any interest costs; however, during the 1999 second quarter, while construction was still in progress, $561 thousand in interest costs were capitalized. Comparison of Operating Results for the Six Month Periods Ended June 30, 2000 and 1999 For the six months ended June 30, 2000, the Company earned $923 thousand, or $0.10 per share, on net revenues of $47.6 million, compared to earnings of $606 thousand, or $0.06 per share, on net revenues of $33.5 million during the six months ended June 30, 1999. Operating income for the 2000 six month period totaled $5.6 million, compared to $2.5 million for the same period in 1999. Net revenues for the six months ended June 30, 2000 represents a new record for the Company, but net income and earnings per share were negatively impacted primarily due to an 83.6% increase in depreciation and amortization and a 173.9% increase in interest expense when compared to last year's six month period. Casino revenues for the first six months of 2000 totaled $29.6 million, a 35.1% increase from $21.9 million for the first six months of 1999, reflecting increases in both slot and table game win. Slot revenues were up 31.5% in the first six months of 2000 compared to the first six months of -10- 1999 due to an increase in the volume of slot machine play and an increase in the average number of slot machines for the six month period. Table game revenue for the six months ended June 30, 2000 increased 45.7% compared to the same period in 1999, primarily due to an increase in table game drop and an increase in the average number of table games for the six month period. Casino operating expenses amounted to 41.4% of casino revenues for the six months ended June 30, 2000, compared to 44.0% for the same period in 1999, primarily due to a decrease in operating costs. Food and beverage revenues totaled $14.2 million for the six months ended June 30, 2000, an increase of 36.8% from the $10.4 million for the six months ended June 30, 1999, due primarily to the addition of two new restaurants, an additional beverage lounge, expansion of the buffet, and an increase in the number of hotel guests in the newly expanded hotel. While food and beverage operating margins remained relatively constant, reported food and beverage expenses amounted to 62.3% of food and beverage revenues during the 2000 six month period, compared to 59.5% for the same period in 1999, which was primarily caused by classifying certain food and beverage costs in accordance with accounting requirements prescribed by the Securities and Exchange Commission. Hotel revenues for the first six months of 2000 increased 51.5% to a total of $8.8 million, up from $5.8 million for the first six months of 1999. The increase reflects a 45.6% increase in room nights available in the first six month period of 2000 compared to the same period for 1999 and an increased occupancy rate. The Atlantis experienced a 91.6% occupancy rate during the 2000 six month period, compared to 89.1% for the same period in 1999. The average daily room rate ("ADR") was $51.23 for the six month period in 2000, down only slightly compared to $51.39 for the same period in 1999. Hotel operating expenses in the first six months of 2000 were 36.8% of hotel revenues, compared to 28.7% for the same period in 1999. This increase in operating expenses as a percentage of hotel revenues resulted from increased payroll and operating costs for the expanded hotel and additional amenities. Other revenues were $1.7 million for the six months ended June 30, 2000, an increase of 31.3% from $1.3 million in the same period in 1999, reflecting the opening of a logo gift shop. Other expenses as a percentage of revenue remained fairly constant at 38.9% and 38.4% for the six month periods ended June 30, 2000 and 1999, respectively. Selling, general and administrative expenses were $12.0 million in the first six months of 2000, or 25.3% of net revenues, compared to $10.4 million or 31.0% of net revenues in the first six months of 1999. The decrease in these expenses as a percentage of revenue reflects the fact that certain payroll and operating costs have not increased to the same extent as revenues have increased, thereby resulting in certain economies of scale from the expansion. Interest expense for the first six months of 2000 totaled $4.2 million, an increase of 173.9%, compared to $1.5 million for the same period one year earlier. The increase reflects the Company's increased debt due to the Atlantis expansion and an increase in interest rates. Because the Atlantis expansion was in operation in the first six months of 2000, the Company did not capitalize any interest costs; however, during the first six months of 1999, while construction was still in progress, $1.1 million in interest costs were capitalized. -11- OTHER FACTORS AFFECTING CURRENT AND FUTURE RESULTS The recent constitutional amendment approved by California voters allowing the expansion of Indian casinos in California will have an impact on casino revenues in Nevada in general, and many analysts have predicted the impact will be more significant on the Reno-Lake Tahoe market. The extent of this impact is difficult to predict, but the Company believes that the impact on the Company will be mitigated to an extent due to the Atlantis' emphasis on Reno area residents as a significant base of its business. However, if other Reno area casinos suffer business losses due to increased pressure from California Indian casinos, they may intensify their marketing efforts to Reno area residents as well. However, the Company's numerous amenities such as a wide array of restaurants and other venues are a key factor in the Company's ability to attract Reno area residents which competitor facilities will not easily be able to match. The Company also believes that unlimited land-based casino gaming in or near any major metropolitan area in the Atlantis' key marketing areas, such as San Francisco or Sacramento, could have a material adverse effect on its business. The gaming industry represents a significant source of tax revenues to the State of Nevada. A recent proposal in Nevada, which is currently under discussion, would increase the tax on gaming revenues from 6.25% to 11.25%. If enacted, this proposal would have a material impact on the Company's results of operations. LIQUIDITY AND CAPITAL RESOURCES For the six months ended June 30, 2000, net cash provided by operating activities totaled $3.6 million. Net cash used in investing activities for the same period totaled $2.0 million, which consisted primarily of acquisitions of property and equipment at the Atlantis. Net cash used in financing activities totaled $4.0 million as the Company used funds to reduce long-term debt. As a result, at June 30, 2000, the Company had cash of $3.9 million, compared to $6.4 million at December 31, 1999. The Company has an $80 million construction and reducing revolving credit facility with a group of banks (the "Credit Facility"). The principal terms of the Credit Facility are summarized in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. At June 30, 2000, the outstanding balance of the Credit Facility was $77.9 million. The Company continues to monitor expansion and development opportunities at its other Reno site and elsewhere in Nevada and in other jurisdictions. The decision by the Company to proceed with any substantial project will require the Company to secure adequate financing on acceptable terms. No assurances can be made that if such projects are pursued that adequate financing would be available on acceptable terms, if at all. The Company believes that its existing cash balances, cash flow from operations and borrowings available under the Credit Facility will provide the Company with sufficient resources to fund its operations, meet its existing debt obligations and fund its capital expenditure requirements; however, the Company's operations are subject to financial, economic, competitive, regulatory, and other factors, many of which are beyond its control. If the Company is unable to generate sufficient cash flow, it could -12- be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, selling assets, restructuring debt or obtaining additional equity capital. PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On June 21, 2000, the Company conducted its annual meeting of stockholders in Reno, Nevada, in which the only action taken was the election of directors whose term expired in 2000. The results were as follows: Votes Cast -------------------- Against or Name of Director Elected For Withheld ------------------------ -------------------- John Farahi 9,349,688 14,750 Ronald R. Zideck 9,349,688 14,750 Craig F. Sullivan 9,349,688 14,750 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit No. Description ----------- ----------- EX-27.01 Financial Data Schedule (b) Reports on Form 8-K None -13- 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 thereunto duly authorized. MONARCH CASINO & RESORT, INC. (Registrant) Date: August 11, 2000 By: /s/ BEN FARAHI ------------------------------------ Ben Farahi, Co-Chairman of the Board, Secretary, Treasurer and Chief Financial Officer(Principal Financial Officer and Duly Authorized Officer)
-14- EXHIBIT INDEX Exhibit No. Description Page No. - ----------- ----------- -------- EX-27.01 Financial Data Schedule 16
-15- EX-27 2 0002.txt
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGISTRANT'S CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2000 AND THE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS. 6-MOS DEC-31-2000 JUN-30-2000 3,903,609 0 4,182,431 864,187 1,233,955 12,552,241 147,467,255 32,980,850 127,812,672 20,402,787 0 0 0 95,363 26,696,243 127,812,672 0 47,628,219 0 24,946,010 5,018,401 0 4,218,012 1,418,834 495,809 923,025 0 0 0 923,025 0.10 0.10
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