8-K 1 earn2q04k8.txt 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, 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 12. Results of Operations and Financial Condition On July 26, 2004, Monarch Casino & Resort, Inc. (the "Company") issued a press release reporting the Company's financial results for the second quarter ended June 30, 2004. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. ITEM 7. Financial Statements and Exhibits (c) EXHIBITS 99.1 Text of press release dated July 26, 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: July 27, 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 SECOND QUARTER ENDED JUNE 30, 2004 - EPS BEATS 2003 RECORD SECOND QUARTER BY $0.21 - RENO, NV?July 26, 2004? Monarch Casino & Resort, Inc. (Nasdaq: MCRI) (the "Company") continued its formidable run of positive growth today when it announced an all-time Company record for the quarter ended June 30, 2004. The Company?s net income, earnings per share, EBITDA (1), casino revenue, hotel revenue, and net revenue during the 2004 second quarter shattered all such previous quarterly results. The Company generated net income of $4,352,013, or $0.46 per diluted share, in the second quarter ended June 30, 2004, an 86.7% improvement over net income of $2,331,109, or $0.25 per diluted share, in the second quarter of 2003. EBITDA (1) for the second quarter was $9,528,821, or 37.5% better than the $6,927,868 EBITDA (1) from the second quarter last year. Second quarter 2004 casino revenue of $20,944,838 beat last year?s second quarter record of $18,614,452 by 12.5%. The improvement in casino revenue was attributable to overall increases in the volume of play at the Company?s Atlantis Casino Resort in Reno, combined with slightly higher hold percentages in all casino areas. Hotel revenue was $6,434,299 in the second quarter ended June 30, 2004, a 16.8% improvement over last year?s $5,507,037 second quarter hotel revenue. This improvement was mainly due to an increase in the average daily room rate and was supported by an increase in the occupancy at the hotel. Second quarter food and beverage revenue grew 8.1% to $9,440,893 from $8,736,201 achieved in last year?s second quarter. The significant increases in casino, hotel and food and beverage revenues contributed to an 11.6% increase in gross revenues during the second quarter, which, combined with an increase in promotional allowances of only 5.9%, led to a 12.5% improvement in net revenue during the 2004 second quarter over the 2003 second quarter. Operating expenses in the quarter ended June 30, 2004, increased only 3.9% as compared to the quarter ended June 30, 2003, resulting in a 63.7% increase in income from operations. Interest expense decreased by 14.3% over last year?s second quarter as a direct result of lower outstanding indebtedness, and, as of February 20, 2004, Monarch ceased incurring any stockholder guarantee fees, as its new credit facility does not require the personal guarantees of the Company?s principal stockholders. John Farahi, Monarch?s Chief Executive Officer and Co-Chairman explained: ?Our all-time record numbers during this second quarter clearly reflect on our property as one of the premier casino resorts in northern Nevada. Our entire team has worked very hard to deliver a superior product in a tight market and all team members are to be congratulated. We have welcomed and accommodated a growing clientele to the Atlantis while successfully managing our expenses. I am especially proud of the flow through resulting in improved margins in almost every department. The resulting improvement to cash flow has been partially re-invested into the property by way of capital improvements in order to continuously offer a competitive product. We have also taken advantage of this increased cash flow to aggressively pay down our debt.? During the three months ended June 30, 2004, the Company reduced outstanding debt by approximately $6.6 million. -4- 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 Six Months Ended June 30, June 30, -------------------------- -------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Revenues Casino............................. $ 20,944,838 $ 18,614,452 $ 40,847,689 $ 36,354,157 Food and beverage.................. 9,440,893 8,736,201 18,266,716 16,947,609 Hotel.............................. 6,434,299 5,507,037 11,952,604 10,223,215 Other.............................. 945,812 989,068 1,808,842 1,871,813 ------------ ------------ ------------ ------------ Gross revenues.................. 37,765,842 33,846,758 72,875,851 65,396,794 Less promotional allowances........ (5,051,841) (4,771,688) (9,675,872) (9,156,796) ------------ ------------ ------------ ------------ Net revenues.................... 32,714,001 29,075,070 63,199,979 56,239,998 ------------ ------------ ------------ ------------ Operating expenses Casino............................. 7,666,678 7,358,723 15,107,349 14,484,826 Food and beverage.................. 4,817,753 4,475,173 9,209,475 8,598,911 Hotel.............................. 1,988,888 1,738,320 4,056,875 3,384,299 Other.............................. 376,191 308,676 694,654 613,242 Selling, general and administrative.................... 8,335,670 8,266,310 16,855,076 16,115,494 Depreciation and amortization...... 2,636,131 2,716,420 5,639,490 5,316,829 ------------ ------------ ------------ ------------ Total operating expenses........ 25,821,311 24,863,622 51,562,919 48,513,601 ------------ ------------ ------------ ------------ Income from operations.......... 6,892,690 4,211,448 11,637,060 7,726,397 ------------ ------------ ------------ ------------ Other expenses Interest expense................... (361,677) (422,203) (791,638) (872,083) Stockholder guarantee fee expense.. - (260,936) (136,164) (542,278) ------------ ------------ ------------ ------------ Total other expenses............ (361,677) (683,139) (927,802) (1,414,361) ------------ ------------ ------------ ------------ Income before income taxes...... 6,531,013 3,528,309 10,709,258 6,312,036 Provision for income taxes........... 2,179,000 1,197,200 3,599,000 2,143,000 ------------ ------------ ------------ ------------ Net income...................... $ 4,352,013 $ 2,331,109 $ 7,110,258 $ 4,169,036 ============ ============ ============ ============ Earnings per share of common stock Net income Basic............................ $ 0.46 $ 0.25 $ 0.76 $ 0.44 Diluted.......................... $ 0.46 $ 0.25 $ 0.76 $ 0.44 Weighted average number of common shares and potential common shares outstanding Basic.......................... 9,372,603 9,331,877 9,358,670 9,399,716 Diluted........................ 9,399,580 9,361,060 9,390,727 9,431,942
-6- MONARCH CASINO & RESORT, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31, 2004 2003 ------------- ------------- (Unaudited) ASSETS Current assets Cash............................................ $ 10,530,729 $ 9,711,310 Receivables, net................................ 3,058,752 2,818,727 Federal income tax refund receivable............ - 756,698 Inventories..................................... 1,168,302 1,245,967 Prepaid expenses................................ 2,271,708 2,234,773 Deferred income taxes........................... 542,457 542,457 ------------- ------------- Total current assets......................... 17,571,948 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......................... 64,116,953 63,230,354 ------------- ------------- 163,699,614 162,056,977 Less accumulated depreciation and amortization.. (65,527,631) (63,618,047) ------------- ------------- Net property and equipment................... 98,171,983 98,438,930 ------------- ------------- Other assets, net................................. 452,456 128,263 ------------- ------------- Total assets................................. $ 116,196,387 $ 115,877,125 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Current maturities of long-term debt............ $ 1,585,304 $ 6,059,591 Accounts payable................................ 7,212,867 8,407,887 Accrued expenses................................ 6,531,616 6,707,257 Federal income taxes payable.................... 1,643,461 - ------------- ------------- Total current liabilities.................... 16,973,248 21,174,735 Long-term debt, less current maturities........... 38,275,000 41,125,000 Deferred income taxes............................. 4,933,427 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; 9,329,830 outstanding at 03/31/2003, 9,474,830 outstanding at 12/31/2002............ 95,363 95,363 Additional paid-in capital...................... 17,345,057 17,432,635 Treasury stock, 206,445 shares at 03/31/2003, 61,445 shares at 12/31/2002, at cost......................... (1,168,385) (1,437,614) Retained earnings............................... 39,742,677 32,632,419 ------------- ------------- Total stockholders' equity................... 56,014,712 48,722,803 ------------- ------------- Total liabilities and stockholders' equity... $ 116,196,387 $ 115,877,125 ============= =============
-7- MONARCH CASINO & RESORT, INC. RECONCILIATION OF NET INCOME TO EBITDA (1)
Three Months Ended Six Months Ended June 30, June 30, ----------------------- ------------------------ 2004 2003 2004 2003 (unaudited) (unaudited) (unaudited) (unaudited) ----------- ----------- ----------- ----------- Net income......................... $4,352,013 $2,331,109 $ 7,110,258 $4,169,036 Adjustments: Provision for income taxes....... 2,179,000 1,197,200 3,599,000 2,143,000 Stockholder guarantee fee expense - 260,936 136,164 542,278 Interest expense................. 361,677 422,203 791,638 872,083 Depreciation and amortization.... 2,636,131 2,716,420 5,639,490 5,316,829 ----------- ----------- ----------- ----------- EBITDA (1) $9,528,821 $6,927,868 $17,276,550 $13,043,226 =========== =========== =========== ===========
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