United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2020~~2021

☐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.~~INC.

(Exact name of registrant as specified in its charter)


Nevada		88-0300760
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

3800 S. Virginia St.
Reno, Nevada		89502
(Address of Principal Executive Offices)		(ZIP Code)

Registrant’s telephone number, including area code: (775) 335-4600

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

~~Registrant’s telephone number, including area code:~~ ~~(775) 335-4600~~

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, $0.01 par value per share	MCRI	The Nasdaq Stock Market LLC (Nasdaq-GS)

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☒ ⌧No ☐◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒⌧ No ☐◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐◻	Accelerated filer ☒⌧	Non-accelerated filer ☐◻
Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒⌧

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~18,185,829~~18,524,061 shares of common stock are outstanding as of ~~June 12, 2020.~~April 30, 2021.

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~~EXPLANATORY NOTE~~

~~As previously disclosed in the Company’s Current Report on Form 8-K as filed with the SEC on May 8, 2020 (the “Form 8-K”) and in accordance with the~~ Securities and Exchange Commission’s Order under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions From the Reporting and Proxy Delivery Requirements for Public Companies dated March 25, 2020 (Release No. 34-88465) (the “Order”)~~, the Company (i) relied on the relief provided by the Order in connection with the filing of the Form 10-Q~~ ~~for the quarter ended March 31, 2020 (“Form 10-Q”)~~ and (ii) the Form 10-Q was delayed to provide an adequate time for the Company to continue the discussions with its lenders on the immediate and evolving impacts of COVID-19 on the Company’s operations and financial results and to obtain additional relief and default waivers on the Amended Credit Facility. The Company is filing the Form 10-Q on June 22, 2020, which is within the timetable stated in the Form 8-K and the Order.”

TABLE OF CONTENTS


Item	Page Number
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements	3
Consolidated Statements of ~~Income~~Operations for the three months ended March 31, 2021 and 2020 ~~and 2019~~ (unaudited)	3
Consolidated Balance Sheets at March 31, ~~2020~~2021 (unaudited) and December 31, ~~2019~~2020	4
Consolidated Statements of Stockholder’s Equity for the three months ended March 31, 2021 and 2020 ~~and March 31, 2019~~ (unaudited)	5
Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020 ~~and 2019~~ (unaudited)	6
Notes to Consolidated Financial Statements (unaudited)	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3. Quantitative and Qualitative Disclosures About Market Risk	25

Item 4. Controls and Procedures	25

PART II - OTHER INFORMATION

Item 1. Legal Proceedings	25

Item 1A. Risk Factors	26

Item ~~4. Controls and Procedures~~6. Exhibits	26

~~PART II - OTHER INFORMATION~~

~~Item 1. Legal Proceedings~~	26

~~Item 1A. Risk Factors~~	27

~~Item 5. Other Information~~Signatures	28

~~Item 6. Exhibits~~	29

~~Signatures~~	2927

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS

(In thousands, except per share data)

(Unaudited)

Three months ended

March 31,


2020

2019

Revenues

Casino

$
27,065

$
28,976

Food and beverage

14,763

17,692

Hotel

6,417

8,505

Other

2,766

3,567

Net revenues

51,011

58,740

Operating expenses

Casino

9,618

10,820

Food and beverage

12,524

13,998

Hotel

2,988

3,130

Other

1,451

1,580

Selling, general and administrative

17,194

16,452

Depreciation and amortization

3,820

3,603

Other operating items, net

1,305

436

Total operating expenses

48,900

50,019

Income from operations

2,111

8,721

Income before income taxes

2,111

8,721

Provision for income taxes

(91)

(1,706)

Net income

$
2,020

$
7,015

Earnings per share of common stock

Net income

Basic

$
0.11

$
0.39

Diluted

$
0.11

$
0.38

Weighted average number of common shares and potential common shares outstanding

Basic

18,158

17,937

Diluted

18,874

18,619


	Three months ended
	March 31,
	2021		2020
Revenues
Casino	$	46,911	$	27,065
Food and beverage		16,206		14,763
Hotel		8,635		6,417
Other		3,208		2,766
Net revenues		74,960		51,011

Operating expenses
Casino		13,618		9,618
Food and beverage		14,095		12,524
Hotel		4,251		2,988
Other		1,520		1,451
Selling, general and administrative		19,925		17,194
Depreciation and amortization		9,514		3,820
Other operating items, net		754		1,305
Total operating expenses		63,677		48,900
Income from operations		11,283		2,111

Other expense
Interest expense, net of amounts capitalized		(1,619)		—

Income before income taxes		9,664		2,111
Provision for income taxes		(1,510)		(91)
Net income	$	8,154	$	2,020

Earnings per share of common stock
Net income
Basic	$	0.44	$	0.11
Diluted	$	0.42	$	0.11

Weighted average number of common shares and potential common shares outstanding
Basic		18,481		18,158
Diluted		19,283		18,874

The Notes to the Consolidated Financial Statements are an integral part of these statements.

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MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except shares)

March 31, 2020

December 31, 2019

ASSETS

(Unaudited)

Current assets

Cash and cash equivalents

$
39,358

$
60,539

Receivables, net

4,194

5,458

Income taxes receivable

94

185

Inventories

6,889

6,735

Prepaid expenses

5,393

6,238

Total current assets

55,928

79,155

Property and equipment

Land

30,769

30,769

Land improvements

7,842

7,842

Buildings

193,235

193,235

Buildings improvements

31,986

31,986

Furniture and equipment

153,661

152,461

Construction in progress

295,429

285,789

Right of use assets

15,369

15,574

Leasehold improvements

3,848

3,848

732,139

721,504

Less accumulated depreciation and amortization

(223,550)

(220,021)

Net property and equipment

508,589

501,483

Other assets

Goodwill

25,111

25,111

Intangible assets, net

1,246

1,538

Deferred income taxes

2,683

2,683

Other assets, net

908

908

Total other assets

29,948

30,240

Total assets

$
594,465

$
610,878

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Current portion of long-term debt

$
22,500

$
20,000

Accounts payable

6,579

17,037

Construction accounts payable

4,652

7,528

Accrued expenses

28,208

34,109

Short-term lease liability

788

791

Total current liabilities

62,727

79,465

Long-term lease liability

14,595

14,797

Long-term debt, net

173,049

175,415

Total liabilities

250,371

269,677

Stockholders’ equity

Preferred stock, $.01 par value, 10,000,000 shares authorized; none issued

—

—

Common stock, $.01 par value, 30,000,000 shares authorized; 19,096,300 shares issued; 18,171,928 outstanding at March 31, 2020; 18,141,383 outstanding at December 31, 2019

191

191

Additional paid-in capital

35,660

35,215

Treasury stock, 924,372 shares at March 31, 2020; 954,917 shares at December 31, 2019

(12,349)

(12,777)

Retained earnings

320,592

318,572

Total stockholders’ equity

344,094

341,201

Total liabilities and stockholders’ equity

$
594,465

$
610,878


	March 31, 2021		December 31, 2020
ASSETS		(Unaudited)
Current assets
Cash and cash equivalents	$	24,143	$	28,310
Receivables, net		7,722		3,736
Income taxes receivable		23,383		24,894
Inventories		6,968		7,823
Prepaid expenses		7,322		8,393
Total current assets		69,538		73,156
Property and equipment, net		569,544		572,507
Goodwill		25,111		25,111
Intangible assets, net		651		973
Deferred income taxes		130		130
Total assets	$	664,974	$	671,877
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt	$	15,000	$	12,500
Accounts payable		12,358		11,655
Construction accounts payable		50,268		49,771
Accrued expenses		37,167		34,705
Short-term lease liability		737		813
Total current liabilities		115,530		109,444
Deferred income taxes		13,221		13,220
Long-term lease liability		13,858		13,984
Long-term debt, net		142,455		167,162
Total liabilities		285,064		303,810
Stockholders’ equity
Preferred stock, $.01 par value, 10,000,000 shares authorized; NaN issued		—		—
Common stock, $.01 par value, 30,000,000 shares authorized; 19,096,300 shares issued; 18,517,961 outstanding at March 31, 2021; 18,426,130 outstanding at December 31, 2020		191		191
Additional paid-in capital		36,921		34,498
Treasury stock, 578,339 shares at March 31, 2021; 670,170 shares at December 31, 2020		(7,606)		(8,872)
Retained earnings		350,404		342,250
Total stockholders’ equity		379,910		368,067
Total liabilities and stockholders’ equity	$	664,974	$	671,877

The Notes to the Consolidated Financial Statements are an integral part of these statements.

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MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' ~~EQUITY~~EQUITY

(In thousands, except shares, Unaudited)

Common Stock

Additional

Shares

Paid-in

Retained

Treasury


Outstanding

Amount

Capital

Earnings

Stock

Total

Balance, January 1, 2020

18,141,383

$
191

$
35,215

$
318,572

$
(12,777)

$
341,201

Net exercise of stock options

30,545

—

(428)

—

428

—

Stock-based compensation expense

—

—

873

—

—

873

Net income

—

—

—

2,020

—

2,020

Balance, March 31, 2020

18,171,928

$
191

$
35,660

$
320,592

$
(12,349)

$
344,094


	Common Stock			Additional
	Shares			Paid-in		Retained		Treasury
	Outstanding	Amount		Capital		Earnings		Stock		Total
Balance, January 1, 2021	18,426,130	$	191	$	34,498	$	342,250	$	(8,872)	$	368,067
Exercise of stock options, net	91,831		—		1,143		—		1,266		2,409
Stock-based compensation expense	—		—		1,280		—		—		1,280
Net income	—		—		—		8,154		—		8,154
Balance, March 31, 2021	18,517,961	$	191	$	36,921	$	350,404	$	(7,606)	$	379,910


	Common Stock			Additional
	Shares			Paid-in		Retained		Treasury
	Outstanding	Amount		Capital		Earnings		Stock		Total
Balance, January 1, 2020	18,141,383	$	191	$	35,215	$	318,572	$	(12,777)	$	341,201
Exercise of stock options, net	30,545		—		(428)		—		428		—
Stock-based compensation expense	—		—		873		—		—		873
Net income	—		—		—		2,020		—		2,020
Balance, March 31, 2020	18,171,928	$	191	$	35,660	$	320,592	$	(12,349)	$	344,094

Common Stock

Additional

Shares

Paid-in

Retained

Treasury


Outstanding

Amount

Capital

Earnings

Stock

Total

Balance, January 1, 2019

17,919,021

$
191

$
30,111

$
286,756

$
(15,876)

$
301,182

Net exercise of stock options

57,670

—

241

—

804

1,045

Stock-based compensation expense

—

—

915

—

—

915

Net income

—

—

—

7,015

—

7,015

Balance, March 31, 2019

17,976,691

$
191

$
31,267

$
293,771

$
(15,072)

$
310,157

The Notes to the Consolidated Financial Statements are an integral part of these statements.

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MONARCH CASINO & RESORT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, Unaudited)

Three Months Ended March 31,


2020

2019

Cash flows from operating activities:

Net income

$
2,020

$
7,015

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation and amortization

3,820

3,603

Amortization of deferred loan costs

134

134

Stock-based compensation

873

1,960

Provision (recovery) for bad debts

76

(26)

Changes in operating assets and liabilities:

Receivables

1,188

1,378

Income taxes

91

1,706

Inventories

(154)

75

Prepaid expenses

845

817

Right of use asset, net

—

3

Accounts payable

(10,458)

(1,660)

Accrued expenses

(5,901)

(1,537)

Net cash (used in) provided by operating activities

(7,466)

13,468

Cash flows from investing activities:

Change in construction payable

(2,876)

2,084

Acquisition of property and equipment

(10,839)

(38,217)

Net cash used in investing activities

(13,715)

(36,133)

Cash flows from financing activities:

Long-term debt borrowings

—

16,020

Net cash provided by financing activities

—

16,020

Change in cash and cash equivalents

(21,181)

(6,645)

Cash and cash equivalents at beginning of period

60,539

30,462

Cash and cash equivalents at end of period

$
39,358

$
23,817


	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net income	$	8,154	$	2,020
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,514		3,820
Amortization of deferred loan costs		293		134
Stock-based compensation		1,280		873
Provision for bad debts		39		76
Non cash operating lease expense		(4)		—
Deferred income taxes		1		—
Changes in operating assets and liabilities:
Receivables		(4,025)		1,188
Income taxes		1,511		91
Inventories		855		(154)
Prepaid expenses		1,071		845
Accounts payable		703		(10,458)
Accrued expenses		2,462		(5,901)
Net cash provided by (used in) operating activities		21,854		(7,466)

Cash flows from investing activities:
Change in construction payable		497		(2,876)
Acquisition of property and equipment		(6,427)		(10,839)
Net cash used in investing activities		(5,930)		(13,715)

Cash flows from financing activities:
Proceeds from exercise of stock options		2,409		—
Principal payments on long-term debt		(22,500)		—
Net cash (used in) provided by financing activities		(20,091)		—

Change in cash and cash equivalents		(4,167)		(21,181)
Cash and cash equivalents at beginning of period		28,310		60,539
Cash and cash equivalents at end of period	$	24,143	$	39,358

Supplemental disclosure of cash flow information:
Cash paid for interest, net of amounts capitalized	$	1,328	$	—

The Notes to the Consolidated Financial Statements are an integral part of these statements.

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MONARCH CASINO & RESORT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

QUARTERLY PERIOD ENDED MARCH 31, ~~2020~~2021

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation:

Monarch Casino & Resort, Inc. was incorporated in 1993. Unless otherwise indicated, “Monarch,” “us,” “we,” and the “Company” refer to Monarch Casino & Resort, Inc. and its subsidiaries. Monarch owns and operates the Atlantis Casino Resort Spa, a hotel and casino in Reno, Nevada (the “Atlantis”) and Monarch Casino Resort Spa Black Hawk, a casino in Black Hawk, ~~Colorado.~~Colorado (the “Monarch Casino Black Hawk”). In addition, Monarch owns separate parcels of land located next to the Atlantis and a parcel of land with an industrial warehouse located between Denver, Colorado and Monarch Casino Black Hawk. Monarch also owns Chicago Dogs Eatery, Inc. and Monarch Promotional Association, both of which were formed in relation to licensure requirements for extended hours of liquor operation in Black Hawk, Colorado.

The accompanying unaudited consolidated financial statements include the accounts of Monarch and its subsidiaries (the “Consolidated Financial Statements”). Intercompany balances and transactions are eliminated.

Interim Financial Statements:

The Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of the management of the Company, all adjustments considered necessary for a fair presentation are included. Operating results for the three months ended March 31, ~~2020~~2021 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2020.~~2021.

The balance sheet at December 31, ~~2019~~2020 has been derived from the audited consolidated financial statements of the Company at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Impact of COVID-19:

In March 2020, a global pandemic was declared due to an outbreak of a new strain of coronavirus (“COVID-19”). In an effort to contain the virus, on March 16,th 2020 the state of Colorado mandated a temporary shutdown of all casinos including Monarch Casino Resort Spa Black Hawk and on March 17,th 2020 the state of Nevada mandated the temporary closure of all casinos including Atlantis Casino Resort Spa in Reno. The COVID-19 outbreak has had, and ~~will~~may continue to have, an adverse effect on the Company's results of operations.

Our Nevada and Colorado properties reopened with limited operations on June 4, 2020 and June 17, 2020, respectively. During the first quarter of 2021, we continued to operate under government-enforced capacity restrictions. Changes were made from routine operations relating to restrictions in occupancy and social distancing requirements, which include reduced seating at table games at and in all restaurants, and a decreased number of active slot machines on the casino floors. The convention business at Atlantis was adversely affected by the state-mandated gathering limits. We have experienced hotel stay and convention booking cancelations, and since the reopening, guest visitation and hotel and convention bookings have been lower than prior to the state-mandated closures, and are expected to remain lower for the near future. At the same time, however, our results of operation for the first quarter of 2021 benefited from pent-up demand with patrons across the gaming industry, particularly in regional gaming markets.

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The Company has taken steps to mitigate the effects of the ~~economic downturn~~COVID-19 pandemic and uncertainty by reducing the operating expenses taking advantage of federal and state government programs that support companies affected by the COVID-19 pandemic and their employees, and ~~engaging~~entering in ~~continuing discussions~~an amended and restated credit agreement with its lender, ~~for~~ ~~relief~~which extended the maturity date of the Company’s credit facility to September 3, 2023 and ~~default waivers on~~increased the ~~Amended Credit Facility. Our lender has granted the Company a limited covenant and default waivers through May 31, 2020, including a waiver of its mandatory~~aggregated principal ~~payment, which was due on March 31, 2020, in the~~ amount of ~~$5.0 million. Subsequently,~~ the ~~Company was granted~~facility from $241.3 million to $270.0 million (consisting of a $200.0 million term loan and a $70.0 million revolving credit facility) with an option to increase the facility by up to an additional ~~credit facility waivers and relief.~~$75.0 million revolving line of credit. See NOTE ~~10. SUBSEQUENT EVENTS.~~6. LONG-TERM DEBT.

The Company is forecasting a successful opening and achievement of EBITDA from our properties to remain in compliance with its current financial covenants for the next twelve months. Our forecasts take into consideration reduced capacity and social distancing restrictions as required by each state due to the COVID-19 pandemic, for which we do not anticipate, will have a significant impact on our operations given the average percentage of capacity we historically operate within.

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The Company believes that its anticipated cash flows from operating activities, combined with the ~~$37.3 million cash in our interest-bearing money market fund and the $50.0~~$70.0 million available under ~~our~~its Fourth Amended Credit Facility, ~~as of March 31, 2020~~ will be sufficient to fund its ~~operation,~~operations, meets its debt obligations and fulfill its capital expenditure ~~plans.~~ Given the Company's liquidity position at March 31, 2020 and the steps the Company has taken subsequent to March 31, 2020 as further described in Note 6, "Long-Term Debt," as well as the anticipated revenue to be generated with the opening of our properties, ~~management believes the Company has sufficient liquidity to fund operations and satisfy its obligations~~plans for the next twelve months.

Goodwill:

The Company accounts for goodwill in accordance with ASC Topic 350, Intangibles-Goodwill and Other (“ASC Topic 350”). ASC Topic 350 gives companies the option to perform a qualitative assessment that may allow them to skip the quantitative test as appropriate. The Company tests its goodwill for impairment annually during the fourth quarter of each year, or whenever events or circumstances make it more likely than not that impairment may have occurred. Impairment testing for goodwill is performed at the reporting unit level, and each of the Company’s casino properties is considered to be a reporting unit.

Goodwill consists of the excess of the acquisition cost over the fair value of the net assets acquired in business combinations in April 2012. As of March 31, ~~2020,~~2021, we had goodwill totaling $25.1 million related to the purchase of Monarch Casino Black Hawk, Inc.

~~Due to the COVID-19 pandemic and subsequent government order to suspend operations at our properties, we performed testing~~ASC Topic 350 requires goodwill be tested for impairment ~~of the Company’s goodwill. The valuations used to assess the Company’s goodwill for impairment incorporate inherent uncertainties~~between annual tests if an even or circumstances change that are difficult to predict in the current economic environment. When evaluating for impairment, we make numerous highly subjective and judgmental estimates and assumptions, all of which are subject to a variety of risks and uncertainties, and many of which are based on significant unobservable inputs. The most significant assumptions and inputs used in evaluating for impairment are projected short-term and long-term operating results and cash flows, projected capital expenditures, estimated long-term growth rates and the weighted-average cost of capital of market participants, adjusted for the risk profile of the assets being evaluated. The timing and trajectory of the expected post-pandemic economic recovery is unknown, and accordingly, estimates and assumptions are likely to change as more information becomes available.

The Company tested its goodwill for impairment by comparing the estimated fair value to the carrying amount of Monarch Casino Black Hawk, Inc, including goodwill. The fair value was estimated using discounted cash flow techniques and market indications of value. At March 31, 2020, the estimated fair value exceeded its carrying amount by approximately 24%.

~~Based on the analysis and the assessment of the current events and circumstances, we concluded that it is not~~would more likely than not ~~that~~reduce the fair value of ~~the~~a reporting unit ~~is less than~~below its carrying amount. We performed an assessment to determine whether events or circumstances such as those described in ASC 350-20-35-3C existed and we determined that they did not exist during the ~~carrying amount and~~interim period; therefore, ~~there is no~~an interim impairment ~~of the Company’s goodwill.~~ test was not performed.

The Company believes that it has made reasonable estimates and judgments in performing its analysis in light of the risks and uncertainties surrounding the COVID-19 pandemic. However, if the excess of fair value over the carrying amount declines by a significant amount in the future as a result of changes in actual and projected operating results or other internal or external economic factors, the Company could be required to recognize goodwill impairment charges in future periods.

Property and Equipment, net:

Property and Equipment, net consist of the following (in thousands):


	March 31, 2021		December 31, 2020
Land	$	32,986	$	32,986
Land improvements		9,848		9,847
Buildings		469,119		471,819
Buildings improvements		33,681		33,681
Furniture and equipment		233,939		229,052
Construction in progress		10,495		6,257
Right of use assets		14,586		14,784
Leasehold improvements		3,848		3,848
		808,502		802,274
Less accumulated depreciation and amortization		(238,958)		(229,767)
Property and equipment, net	$	569,544	$	572,507

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Property and equipment are stated at cost, less accumulated depreciation and amortization. Property and equipment is depreciated principally on a straight line basis over the estimated useful lives as follows:


Land improvements	15	-	40	years
Buildings	30	-	40	years
Building improvements	5	-	40	years
Furniture	5	-	10	years
Equipment	3	-	20	years

The Company evaluates property and equipment and other long-lived assets for impairment in accordance with the guidance for accounting for the impairment or disposal of long-lived assets. For assets to be disposed of, the Company recognizes the asset to be sold at the lower of carrying value or fair value less costs of disposal. Fair value for assets to be disposed of is generally estimated based on comparable asset sales, solicited offers or a discounted cash flow model.

For assets to be held and used, the Company reviews fixed assets for impairment annually during the fourth quarter of each year or whenever indicators of impairment exist. If an indicator of impairment exists, we compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, the impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model or market comparables, when available. For the three-month periods ended March 31, 2021 and 2020, there were 0 impairment charges.

Segment Reporting:

The accounting guidance for disclosures about segments of an enterprise and related information requires separate financial information to be disclosed for all operating segments of a business. The Company determined that the Company’s ~~two~~2 operating segments, Atlantis and Monarch Casino Black Hawk, meet the aggregation criteria stipulated by ASC 280-10-50-11. The Company views each property as an operating segment and the ~~two~~2 operating segments have been aggregated into ~~one~~1 reporting segment.

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Inventories:

~~Inventories:~~

Inventories, consisting primarily of food, beverages, and retail merchandise, are stated at the lower of cost and net realizable value. Cost is determined by the weighted average and specific identification methods. Net realizable value is defined by the Financial Accounting Standards Board (“FASB”) as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation.

Debt Issuance Costs:

Costs incurred in connection with the issuance of long-term debt are amortized to interest expense over the term of the related debt agreement utilizing the ~~effective-interest~~effective interest rate method. Unamortized amounts of debt issuance costs are recorded as a reduction of the outstanding debt and included in “Long-term debt, net”.

As of March 31, ~~2020,~~2021, debt issuance costs, net of amortization, were ~~$0.7~~$2.5 million.

Capitalized Interest:

The Company capitalizes interest costs associated with debt incurred in connection with major construction projects. When no debt is specifically identified as being incurred in connection with a construction project, the Company capitalizes interest on amounts expended on the project at the Company’s average borrowing cost. Interest capitalization is ceased when the project is substantially complete. The Company capitalized $1.8 million ~~and $1.2 million~~ during the three months ended March 31, ~~2020 and 2019, respectively.~~2020. No capitalized interest was recognized in the first three months ending March 31, 2021, as the Monarch Black Hawk expansion project was substantially completed in the fourth quarter of 2020.

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Revenue Recognition:

The majority of the Company’s revenue is recognized when products are delivered or services are performed. For certain revenue transactions (when a patron uses a club loyalty card), in accordance with accounting standard update No. 2014-09 (“ASC 606”), a portion of the revenue is deferred until the points earned by the patron are redeemed or expire.

Casino revenue: Casino revenues represent the net win from gaming activity, which is the difference between the amounts won and lost, which represents the transaction price. Jackpots, other than the incremental amount of progressive jackpots, are recognized at the time they are won by customers. Funds deposited by customers in advance and outstanding chips and slot tickets in the customers’ possession are recognized as a liability until such amounts are redeemed or used in gaming play by the customer. Additionally, net win is reduced by the performance obligations for the players’ club program, progressive jackpots and any pre-arranged marker discounts. Progressive jackpot provisions are recognized in two components: 1) as wagers are made for the share of players’ wagers that are contributed to the progressive jackpot award, and 2) as jackpots are won for the portion of the progressive jackpot award contributed by the Company. Cash discounts and other cash incentives to guests related to gaming play are recorded as a reduction to gaming revenue.

Players’ Club Program: The Company operates a players’ club program under which as players perform gaming activities they earn and accumulate points, which may be redeemed for a variety of goods and services. Given the significance of the players’ club program and the ability for members to bank such points based on their past play, the Company has determined that players’ club program points granted in conjunction with gaming activity constitute a material right and, as such, represent a performance obligation associated with the gaming contracts. At the time points are earned, the Company recognizes deferred revenue at the standalone selling prices (“SSP”) of the goods and services that the points are expected to be redeemed for, with a corresponding decrease in gaming revenue. The points estimated SSP is computed as the cash redemption value of the points expected to be redeemed, which is determined through an analysis of all redemption activity over the preceding ~~twelve-month~~twelve-month period.

As of March 31, ~~2020,~~2021, the Company had estimated the obligations related to the players’ club program at ~~$9.3~~$9.7 million, which is included in Accrued Expenses in the Liabilities and Stockholders’ Equity section in the Consolidated Balance Sheet.

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Food and Beverage, Hotel and Other (retail) Revenues: Food and Beverage, Hotel and Other Revenues in general are recognized when products are delivered or services are performed. The Company recognizes revenue related to the products and services associated with the players points’ redemptions at the time products are delivered or services are performed, with corresponding reduction in the deferred revenue, at SSP. Other complimentaries in conjunction with the gaming and other business are also valued at SSP. Hotel revenue is presented net of non-third-party rebates and commissions. The cost of providing these complimentary goods and services are included as expenses within their respective categories.

Other Revenues: Other revenues (excluding retail) primarily consist of commissions received on ATM transactions and cash advances, which are recorded on a net basis as the Company represents the agent in its relationship with the third-party service providers, and commissions and fees received in connection with pari-mutuel wagering, which are also recorded on a net basis.

Sales and other taxes: Sales taxes and other taxes collected from customers on behalf of governmental authorities are accounted for on a net basis and are not included in revenues or operating expenses. In addition, tips and other gratuities, excluding service charges, collected from customers on behalf of the Company’s employees are also accounted for on a net basis and are not included in revenues or operating expenses.

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Credit Losses

~~Other Operating items, net~~

Other operating items, net, in general consist of miscellaneous operating charges or proceeds. For the three months ended March 31, 2020, Other operating items, net, was $1.3 million, which includes $0.8 million in pre-opening expenses relating to the Monarch Black Hawk Expansion project, $0.1 million in professional service fees relating to our construction litigation and $0.4 million in Colorado legislation lobbying expenses. For the three months ended March 31, 2019, Other operating items, net, was $0.4 million, which represents pre-opening expenses relating to the Monarch Black Hawk Expansion project.

~~Impact of Recently Adopted Accounting Standards~~

~~Financial Instruments - Credit Losses:~~ In June 2016, the FASB issued amended accounting guidance for the measurement of credit losses on financial instruments. The Accounting Standards Update (“ASU”) 2016-13 significantly changes the way entities account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The amended accounting guidance replaces the incurred loss impairment model with a forward-looking expected loss model, and is applicable to most financial assets, including trade receivables other than those arising from operating leases. In the first quarter of 2020, the Company adopted ASU 2016-13. The adoption of this ASU did not have a material impact on the Company’s Consolidated Financial Statements.

The Company extends short-term credit to its gaming customers. Such credit is non-interest bearing and is due on demand. In addition, the Company also has receivables due from hotel guests and convention groups and events, which are primarily secured with a credit card. An allowance for doubtful accounts is set up for all Company receivables based upon the Company’s historical collection and write-off experience and taking in consideration the current economic conditions and management’s expectations of future economic conditions. The allowance is applied even when the risk of credit loss is remote. When a situation warrants, the Company may create a specific identification reserve for a high collection risk receivables. The Company writes off its uncollectible receivables once all efforts have been made to collect such receivables. The book value of receivables approximates fair value due to the short-term nature of the receivables.

~~Cloud Computing Arrangement Implementation Costs:~~ ~~In August 2018,~~Other Operating items, net:

Other operating items, net, in general consist of miscellaneous operating charges or proceeds. For the ~~FASB issued an ASU~~three months ended March 31, 2021, Other operating items, net, was $0.7 million and included: $0.6 million in professional service fees relating to ~~align~~our construction litigation; and $0.1 million equipment, supplies and employee testing expenses directly attributable to the ~~requirements~~pandemic for capitalizing implementation costs incurred in a hosting arrangement with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The implementation costs incurred in a hosting arrangement that is a service contract should be presented as a prepaid asset in the balance sheet and expensed over the termreopening of the ~~hosting arrangement~~properties and incremental to normal operations. For the three months ended March 31, 2020, Other operating items, net, was $1.3 million and included: $0.8 million in pre-opening expenses relating to the ~~same line item~~Monarch Black Hawk Expansion project; $0.4 million in ~~the statement~~Colorado legislation lobbying expenses; and $0.1 million in professional service fees relating to our construction litigation.

Impact of ~~income as the costs related to the hosting fees.~~ Recently Adopted Accounting Standards:

The Company ~~adopted~~has evaluated the ~~guidance effective January 1, 2020. The~~recently issued or proposed by the Financial Accounting Standards Board (“FASB”) or other standards-setting bodies accounting standards and does not believe the future adoption of ~~this FASB did not~~any such pronouncements will have a material ~~impact~~effect on the Company’s Consolidated Financial Statements.

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~~Goodwill impairment:~~In January 2017, the FASB issued an ASU that simplifies the accounting for goodwill impairment for all entities by eliminating the requirement to calculate the implied fair value of goodwill (i.e., Step 2 of today’s goodwill impairment test) to measureaddition, a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value (i.e., measure the charge based on today’s Step 1). The standard does not change the guidance on completing Step 1 of the goodwill impairment test. An entity will still be able to perform today’s optional qualitative goodwill impairment assessment before determining whether to proceed to Step 1. The adoption of this FASB did not have a material impact on the Company’s Consolidated Financial Statements.

A variety of proposed or otherwise potential accounting standards are currently under review and study by standard-setting organizations and certain regulatory agencies. Because of the tentative and preliminary nature of such proposed standards, the Company has not yet determined the effect, if any, the implementation of any such proposed or revised standards would have on the Company’s Consolidated Financial Statements.

NOTE 2. ACCOUNTING FOR LEASES

For leases with terms greater than 12 months, the Company records the related asset and obligation at the present value of the lease payments over the lease term. Many of the Company’s leases include rental escalation clauses, renewal options and/or termination options that are factored into its determination of lease payments when appropriate. As permitted by ASC 842, the Company elected not to separate non-lease components from their related lease components.

As of March 31, ~~2020,~~2021, the Company’s right of use assets consisted of the Parking Lot Lease, the Driveway Lease (as defined and discussed in NOTE 5. RELATED PARTY TRANSACTIONS), as well as certain billboard leases.

Upon adoption of the new lease standard, incremental borrowing rates used for existing leases were established using the rates in effect as of the lease inception or modification date. The weighted-average incremental borrowing rate of the leases presented in the lease liability as of March 31, ~~2020~~2021 was 4.33%.

The weighted-average remaining lease term of the leases presented in the lease liability as of March 31, ~~2020~~2021 was ~~21.6~~21.1 years.

Cash paid related to the operating leases presented in the lease liability for each of the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, was $0.4 million.

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NOTE 3. STOCK-BASED COMPENSATION

In accordance with ASU No. 2016-09, the Company records any excess tax benefits or deficiencies from its equity awards in its Consolidated Statements of Income in the reporting periods in which vesting occurs. As a result, the Company’s income tax expense and associated effective tax rate are impacted by fluctuations in stock price between the grant dates and vesting dates of equity awards.

For the three months ended March 31, 2020 and 2019, the effect of the excess tax benefits or deficiencies from the equity awards was a decrease of tax expense by $446 thousand and $253 thousand, respectively, resulting in an increase of basic and diluted earnings per share by approximately $0.02 and $0.01, respectively.

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Reported stock-based compensation expense was classified as follows (in thousands):

Three months ended

March 31,


2020

2019

Casino

$
—

$
46

Food and beverage

57

50

Hotel

28

21

Selling, general and administrative

788

798

Total stock-based compensation, before taxes

873

915

Tax benefit

(183)

(192)

Total stock-based compensation, net of tax

$
690

$
723


	Three months ended
	March 31,
	2021		2020
Casino	$	42	$	—
Food and beverage		46		57
Hotel		32		28
Selling, general and administrative		1,160		788
Total stock-based compensation, before taxes		1,280		873
Tax benefit		(269)		(183)
Total stock-based compensation, net of tax	$	1,011	$	690

NOTE 4. 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 reflect 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  March 31,

2020

2019

Per Share

Per Share


Shares

Amount

Shares

Amount

Basic

18,158

$
0.11

17,937

$
0.39

Effect of dilutive stock options

716

—

682

(0.01)

Diluted

18,874

$
0.11

18,619

$
0.38


	Three months ended March 31,
	2021			2020
		Per Share			Per Share
	Shares	Amount		Shares	Amount
Basic	18,481	$	0.44	18,158	$	0.11
Effect of dilutive stock options	802		(0.02)	716		—
Diluted	19,283	$	0.42	18,874	$	0.11

Excluded from the computation of diluted earnings per share are options where the exercise prices are greater than the market price as their effects would be anti-dilutive in the computation of diluted earnings per share. For the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, options for approximately ~~1,036~~210 thousand and ~~725~~1,036 thousand shares, respectively, were excluded from the computation.

NOTE 5. RELATED PARTY TRANSACTIONS

The shopping center adjacent to the Atlantis (the “Shopping Center”) is owned by Biggest Little Investments, L.P. (“BLI”). John Farahi and Bob Farahi, Co-Chairmen of the Board and executive officers of the Company, and Ben Farahi ~~are the three largest stockholders~~have significant holdings (the “Farahi Family Stockholders”) ofin Monarch and each also beneficially owns limited partnership interests in BLI. Maxum LLC is the sole general partner of BLI, and Ben Farahi is the sole managing member of Maxum LLC. Neither John Farahi nor Bob Farahi has any management or operational control over BLI or the Shopping Center. Until May 2006, Ben Farahi held the positions of Co-Chairman of the Board, Secretary, Treasurer and Chief Financial Officer of the Company.

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On August 28, 2015, Monarch, through its subsidiary Golden Road Motor Inn, Inc., entered into a 20-year lease agreement with BLI for a portion of the Shopping Center, consisting of an approximate 46,000 square-foot commercial building on approximately 4.2 acres of land adjacent to the Atlantis (the “Parking Lot Lease”). This lease gives the Atlantis the right to use a parcel, approximately 4.2 acres, comprised of a commercial building and surrounding land adjacent to the Atlantis. The primary purpose of the Parking Lot Lease is to provide additional, convenient, Atlantis surface parking. The Company demolished the building and converted the land into approximately 300 additional surface parking spaces for the Atlantis. The minimum annual rent under the Parking Lot Lease is $695 thousand commencing on November 17, 2015. The minimum annual rent is subject to a cost of living adjustment increase on each five-year anniversary. In addition, the Company is responsible for the payment of property taxes, utilities and maintenance expenses related to the Leased Property. The Company has an option to renew the Parking Lot Lease for an additional ten-year term. If the Company elects not to exercise its renewal option, the Company will be obligated to pay BLI $1.6 million. For each of the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company paid $174 thousand in rent, plus $7 thousand ~~and $12 thousand, respectively,~~ in operating expenses relating to this lease. The right of use asset and lease liability balances as of March 31, ~~2020,~~2021, recognized in the Consolidated Balance Sheet, was ~~$10.7~~$10.4 million.

In addition, the Atlantis shares a driveway with the Shopping Center and leases approximately 37,400 square feet from BLI (the “Driveway Lease”) for an initial lease term of 15 years, which commenced on September 30, 2004, at an original annual rent of $300 thousand plus common area expenses. The annual rent is subject to a cost of living adjustment increase on each five-year anniversary of the Driveway Lease. Effective August 28, 2015, in connection with the Company entering into the Parking Lot Lease, the Driveway Lease was amended to: (i) make the Company solely responsible for the operation and maintenance costs of the shared driveway (including the fountains thereon); (ii) eliminate the Company’s obligation to reimburse the Shopping Center for its proportionate share of common area expenses; and (iii) exercise the ~~three~~3 successive five-year renewal terms beyond the initial 15-year term in the existing Driveway Lease agreement. At the end of the renewal terms, the Company has the option to purchase the leased driveway section of the Shopping Center. For each of the three-month periods ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company paid $101 thousand ~~and $94 thousand~~ in rent ~~respectively,~~ plus $8 thousand ~~and $9 thousand, respectively,~~ in operating expenses relating to this lease. The right of use asset and lease liability balances as of March 31 ~~2020,~~, 2021, recognized in the Consolidated Balance Sheet, was ~~$4.1~~$3.9 million.

The Company occasionally leases billboard advertising, storage space and parking lot space from affiliates controlled by the Farahi Family Stockholders and paid $42 thousand and $36 thousand for ~~each of~~ the three-month periods ended March 31, 2021 and 2020 ~~and 2019~~respectively, for such leases.

NOTE 6. LONG-TERM DEBT

On ~~July 20, 2016,~~September 3, 2020, the Company entered into ~~an amended~~the Fourth Amended and ~~restated credit facility agreement~~Restated Credit Agreement with Wells Fargo Bank, N.A., as administrative agent and certain banks (the ~~“Amended~~“Fourth Amended Credit Facility”). ~~Under~~The Fourth Amended Credit Facility amends and restates the Company’s $250.0 million credit facility, dated as of July 20, 2016 (the “Prior Credit Facility”).

The Fourth Amended Credit Facility extends the maturity date of the Amended Credit Facility ~~the Company’s available borrowing capacity was $250.0 million, and the maturity date was~~from July 20, ~~2021.~~

~~At December 31, 2019,~~2021 to September 3, 2023. In addition, the ~~total revolving loan commitment under the~~Fourth Amended Credit Facility ~~was automatically~~increases the aggregate principal amount of the credit facilities to $270.0 million. The $270.0 million Fourth Amended Credit Facility consists of: $200 million term loan (“Term Loan Facility”) and ~~permanently reduced~~$70 million revolving credit facility (“Revolving Credit Facility”), together with an option to ~~$50.0~~increase the facility by up to an additional $75.0 million ~~and all $200.0 million (Conversion Amount) outstanding~~Revolving Credit Facility.

The Company is required to make quarterly principal payments under the ~~revolving loan was converted to a Term Loan. Prior to the conversion, the Company drew all available borrowings up to $200.0 million. Following the conversion to a~~ Term Loan Facility on each Term Loan Installment Date, commencing on December 31, ~~2019,~~2020, in an amount equal to (x) the percentage set forth opposite the applicable period during which such Term Loan Installment Date occurs (i.e., 1.25% for the period from December 31, 2020 to September 30, 2021, and 2.50% for the period from December 31, 2021 and thereafter) multiplied by (y) $200.0 million. The estimated amount of the mandatory principal payments due in the next twelve months is $15.0 million.

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Commencing with the delivery of the compliance certificate for fiscal year 2021, the Company ~~made a $3.8 million mandatory principal payment.~~may be required to prepay borrowings under the Fourth Amended Credit Facility using excess cash flows for each fiscal year, depending on the Company’s leverage ratio.

As of March 31, ~~2020,~~2021, the Company had an outstanding principal balance of ~~$196.3~~$160.0 million under the ~~Amended Credit~~Term Loan Facility, ~~term loan,~~from which $15 million is expected to have a ~~$0.6 million Standby Letter of Credit, and $50.0 million remaining~~maturity date in ~~available borrowings under the Amended Credit Facility revolving loan.~~next twelve months. As of March 31, ~~2020, there have been no withdrawals from~~2021, the ~~Standby Letter of Credit.~~Company had no borrowings under the Revolving Credit Facility, therefore all $70.0 million remained available for borrowing.

Borrowings are secured by liens on substantially all of the Company’s real and personal property.

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In addition to other customary covenants for a facility of this nature, as of March 31, ~~2020,~~2021, the Company is required to maintain a Total Leverage Ratio ~~(at any time, the ratio of (a) Total Funded Debt at such time, to (b) EBITDA for the four consecutive fiscal quarter period most recently ended for which Financial Statements are available, as~~(as defined in the Fourth Amended Credit Facility) of no more than ~~3.5:~~4.75:1 and a Fixed Charge Coverage Ratio (for the period of four consecutive fiscal quarters ending on or most recently ended prior to such date (a) the sum of (i) EBITDA minus (ii) income taxes paid in cash during such period minus (iii) Distributions made during such period (other than Distributions made pursuant to Section 5.02(f)(i)) minus (iv) Investments in Excluded Subsidiaries made during such period minus (v) Maintenance Capital Expenditures made during such period divided by (b) Fixed Charges for such period, as(as defined in the Fourth Amended Credit Facility) of at least 1.15:1. As of March 31, ~~2020,~~2021, the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio were ~~3.5:~~2.1:1 and ~~3.5:1, respectively.~~4.6:1.

~~The~~As of March 31, 2021, the interest rate under the Fourth Amended Credit Facility is LIBOR plus a margin ranging from ~~1.00%~~1.75% to ~~2.50%~~3.25%, or a base rate (as defined in the Fourth Amended Credit Facility) plus a margin ranging from ~~0.00%~~0.75% to ~~1.50%~~2.25%, or the Prime Rate. The applicable margins vary depending on Company’s leverage ratio.

~~At March 31, 2020,~~ Commitment fees are equal to the ~~Company’s interest rate was~~daily average unused revolving commitment multiplied by the commitment fee percentage, ranging from 0.35% to 0.575%, based on ~~LIBOR and its~~our leverage ratio was such that pricing for borrowings under the Amended Credit Facility was LIBOR plus 1.75%. At March 31, 2020, the one-month LIBOR interest rate was approximately 0.99%. The carrying value of the debt outstanding under the Amended Credit Facility approximates fair value because the interest fluctuates with the lender’s prime rate or other market rates of interest.ratio.

The Company may prepay borrowings under the Amended Credit Facility revolving loan without penalty (subject to certain charges applicable to the prepayment of LIBOR borrowings prior to the end of the applicable interest period). Amounts prepaid may be re-borrowed so long as the total borrowings outstanding do not exceed the maximum principal available.

On the terms and subject to some conditions, the Company may, at any time before the Maturity Date, request an increase of ~~the total revolving loan commitment,~~Revolving Credit Facility, provided that each such increase is equal to $15.0 million or an integral multiple of $1.0 million in excess and, after giving effect to the requested increase, the aggregate amount of the increases in the total revolving loan commitment shall not exceed $75.0 million.

The Company ~~is required~~may prepay borrowings under the Fourth Amended Credit Facility revolving loan without penalty (subject to ~~make principal payments on~~certain conditions and certain charges applicable to the ~~amount~~prepayment of LIBOR borrowings prior to the end of the ~~Term Loans~~applicable interest period). Once reduced or cancelled, the Revolving Credit Facility may not be increased or reinstated without the prior written consent of all lenders. During the first quarter of 2021, the Company made a $20.0 million optional prepayment on ~~each~~its Term Loan ~~Installment Date (last business day~~Facility in addition to a $2.5 million mandatory payment.

As of ~~each quarter, starting with~~March 31, 2021, $142.5 million “Long-term debt, net” in the ~~quarter ending December 31, 2019) in an~~Company’s consolidated balance sheet represents the $160.0 million outstanding loan amount ~~equal to (x)~~under the ~~percentage set forth opposite the applicable year during which such Term Loan Installment Date occurs multiplied by (y) the Conversion Amount. The estimated amount~~Fourth Amended Credit facility, net of ~~the~~$2.5 million unamortized debt issuance costs and $15.0 million mandatory principal payment that are due in next twelve months ~~is $22.5 million.~~

~~In relation to~~and are presented as “Current portion of long-term debt” in the ~~global spread~~Current liabilities section of the ~~COVID-19 pandemic and subsequent mandated closure of~~ Company’s properties in mid-March, the lender granted the Company a limited covenant waiver, including a waiver of its mandatory principal payment, which was due on March 31, 2020, in the amount of $5.0 million. In addition, the lender agreed to waive any default or event of default under the Amended Credit Facility resulting from (i) the failure to have either or both of the Atlantis Casino Resort or the Monarch Casino Black Hawk open and operating during the period commencing on March 18, 2020 and ending on May 31, 2020; (ii) the construction of the Monarch Black Hawk Expansion being stopped at any time prior to May 31, 2020; and (iii) the occurrence of a material adverse change on or prior to May 31, 2020 as a result of a mandated business cessation order. As a part of the limited waiver, the Amended Credit Facility was also amended to provide that during the period from March 31, 2020 through May 31, 2020, the Company shall not make any distributions or make any investments in an Excluded Subsidiary, as defined in the Amended Credit Facility. Monarch is in continuing discussions with its lenders regarding additional relief options under the Amended Credit Facility that may be requested in light of currently-changing circumstances.consolidated balance sheets.

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The Company believes that the expected cash ~~in its interest-bearing money market fund~~flows from operating activities and the ~~$50.0~~$70.0 million available under its Fourth Amended Credit Facility as of March 31, ~~2020~~2021 will be sufficient to ~~fund the Company’s cash burn through the~~support its current ~~state-mandated property closures in both Reno~~operations, meet its debt obligations and ~~Black Hawk,~~ fulfill its capital expenditure plans ~~and allow to~~for the ~~resumption~~twelve months from filing of ~~operating cash flow;~~Form 10-Q for the quarter ended March 31, 2021; however, the Company is surrounded by uncertainty about COVID-19 and the reopening of its operations, as well as financial, economic, competitive, regulatory, and other factors, many of which are beyond its control. If the Company is unable to generate sufficient cash flow in the upcoming months or if its cash needs exceed the Company’s borrowing capacity under the Fourth Amended Credit Facility, it could be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, selling assets, restructuring debt or issuing additional equity.

NOTE 7. TAXES

For the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company’s effective tax rate was ~~4.3%~~15.6% and ~~19.6%~~4.3%, respectively. The ~~low~~effective tax rate for the three months ended March 31, 2021 was a result of the excess tax benefit on stock option exercises The effective tax rate for the three months ended March 31, 2020 was a result of the high weight of tax credits and excess tax benefit on stock option exercises on the ~~Provision~~provision for income taxes, as the quarterly income was negatively impacted by the suspension of the operations in mid-March of 2020.

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As of March 31, 2021, $23.4 million “Income taxes receivable” in the ~~mid-March due to COVID-19 pandemic.~~Company’s consolidated balance sheet represents the $24.9 million expected federal and state tax refund for 2020 tax year, net of $1.5 million provision for income tax for the first quarter of 2021.

Deferred tax assets were evaluated by considering historical levels of income, estimates of future taxable income and the impact of tax planning strategies.

NoNaN uncertain tax positions were recorded as of March 31, ~~2020~~2021 and ~~2019. No~~2020. NaN change in uncertain tax positions is anticipated over the next ~~twelve~~12 months.

NOTE 8. STOCK REPURCHASE PLAN

On October 22, 2014, the board of directors of Monarch authorized a stock repurchase plan (the “Repurchase Plan”). Under the Repurchase Plan, the board of directors authorized a program to repurchase up to 3,000,000 shares of the Company’s common stock in the open market or in privately negotiated transactions from time to time, in compliance with Rule 10b-18 of the Securities and Exchange Act of 1934, as amended, subject to market conditions, applicable legal requirements and other factors. The Repurchase Plan does not obligate the Company to acquire any particular amount of common stock and the plan may be suspended at any time at the Company’s discretion, and it will continue until exhausted. The actual timing, number and value of shares repurchased under the repurchase program will be determined by management at its discretion and will depend on a number of factors, including the market price of the Company’s stock, general market economic conditions and applicable legal requirements. The Company has made no0 purchases under the Repurchase Plan.

NOTE 9. LEGAL ~~MATTERS:~~MATTERS

On August 30, 2019, PCL Construction Services, Inc. (“PCL”) filed a complaint in District Court, City and County of Denver, Colorado, against the Company and its Colorado subsidiaries, in connection with the Company’s expansion plans for Monarch Casino Resort Spa Black Hawk. The complaint alleges, among other things, the defendants breached the construction contract with PCL and certain implied warranties. On December 5, 2019, the Company filed its answer and counterclaim, which alleges, among other items, that PCL breached the construction contract, duties of good faith and fair dealing, and implied and express warranties, made fraudulent or negligent misrepresentations on which the Company and its Colorado subsidiaries relied, and included claims for monetary damages as well as equitable and declaratory relief.

The trial date for this matter has been rescheduled for March 21, 2022. Discovery in the action is ongoing, and we are currently unable to determine the probability of the outcome or reasonably estimate the loss or gain, if any.

In connection with the expansion of the Monarch Black Hawk described above, our general contractor PCL and certain subcontractors have provided Monarch with purported notice of their intent to file a lien against the real property on which the Monarch Black Hawk is situated, for sums allegedly owed for construction of the expansion. Some of the subcontractors have recorded such liens in the property records of Gilpin County, Colorado.

On ~~May 28, 2020,~~March 26, 2021, PCL filed a mechanics’ lien foreclosure action in District Court, County of Gilpin, Colorado, against the Company and its Colorado subsidiaries, in connection with the Company’s expansion plans for Monarch Casino Resort Spa Black Hawk. The complaint essentially mirrors the claims and allegations made by PCL in the lawsuit it previously filed in the City and County of Denver, Colorado, as described above. The new lawsuit includes an additional claim, however, for foreclosure of PCL’s purported mechanics’ lien against the property on which the Monarch Casino Resort Spa Black Hawk is situated (the “Property”). PCL also joined additional parties who may claim a purported lien against the Property, as is typical. On April 16, 2021, PCL filed an amended complaint, joining more such parties.

Because PCL’s mechanics’ lien action in the County of Gilpin mirrors the claims and allegations in the action PCL filed in the City and County of Denver, Monarch filed a motion ~~seeking injunctive relief related~~ to ~~its rights to phased occupancy~~consolidate both actions into one action in the County of Gilpin. The motion was filed on April 19, 2021, before the ~~Monarch Casino Black Hawk expansion project. Specifically,~~Colorado Panel on Consolidated Multidistrict Litigation. The Panel has set the motion sought relief with respect to the Company’s right to occupy and use the Podium, or floors 1 through 5 of the new tower, which includes the expanded casino, restaurants, hotel administration, and lounges, as well as the first six floors of hotel rooms, or floors 6 throughfor hearing on June 11, of the new tower. PCL has refused to allow phased occupancy of the designated areas unless the Company makes certain concessions. As set forth in the motion, the Company believes PCL’s position violates the construction agreement between PCL and the Company. PCL opposed the motion, and the court set a hearing for July 9, 2020. No assurance can be given that the Company will be successful on its motion or that it will otherwise be permitted to open the designated areas of the new hotel tower while remaining construction at the Project continues. The designated areas of the new hotel tower also remain subject to approval for occupancy by certain authorities.2021.

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Monarch has not yet filed an answer or otherwise responded to PCL’s amended complaint, nor has a trial of the matter been set. Monarch intends to defend against PCL’s claim and seek to expunge or reduce the liens.

~~During the first quarter of 2020, we~~The Company recognized ~~$0.1~~$0.6 million and $0.2 million in construction litigation expense relating to this lawsuit for the three months ended March 31, 2021 and 2020, respectively, which isare included in Other operating items, net on the Consolidated Statements of ~~Income.~~Operations.

From time to time, we may be subject to other legal proceedings and claims in the ordinary course of business. Management believes that the amount of any reasonably possible or probable loss for such other known matters would not have a material adverse impact on our financial conditions, cash flows or results of operations; however, the outcome of these actions is inherently difficult to predict.

NOTE 10. SUBSEQUENT ~~EVENTS:~~EVENT

~~Credit facility:~~

~~In relation~~The Company entered into an amendment to the closure of the Company’s properties in relation to the global spread of the COVID-19 pandemic, the Company and the lender executed, on June 9, 2020, A Limited Waiver and Amendment to Credit Agreement.

~~The lender agreed to waive any default or event of default under the~~Fourth Amended Credit Facility ~~resulting from (i)~~with an effective date of April 30, 2021. Based on the ~~failure~~amendment the Company is required to ~~have~~maintain a Total Leverage Ratio of no more than 4.00:1.00. The amendment removes the ~~Atlantis Casino Resort or the Monarch Casino Black Hawk open and operating during the period commencing on April 1, 2020 and ending on September 30, 2020; (ii) the construction~~requirement for 0.50% LIBOR floor.

As of the Monarch Black Hawk Expansion being stopped at any time prior to September 30, 2020; and (iii) the occurrence of a material adverse change on or prior to September 30, 2020, as a result of a mandated business cessation order. The lender also agreed to waive any default on the financial covenants under the Amended Credit Facility for a period commencing on April 1, 2020 and ending on September 29, 2020.

~~The Amended Credit Facility was amended by adding a new definition, “Operational Liquidity”, to the Amended Credit facility. Operational liquidity as defined is, as of any~~effective date of determination, the amount by which (a) (i) the Unused Revolving Commitment as of such date, plus (ii) cash (including cage cash) as of such date exceeds (b) (i) $24,000,000 minus (ii) any retainage costs with respect to the expansion project and any settlement or judgment under the PCL litigation paid in cash; provided that from and after the expansion project completion date, the receipt of a final certificate of occupancy (or its local equivalent) for the expansion project and the final resolution or disposition of the PCL Litigation, the amount in this clause (b) shall be deemed to be zero. The Borrowers shall not permit Operational Liquidity to be less than $25,000,000 at any time. In addition, any borrowing under the Amended Credit Facility, greater than $26,000,000 shall be used solely to pay retainage costs with respect to the Expansion Project and any settlement or judgment under the PCL Litigation.

~~As a part of the limited waiver and~~ amendment, ~~for a period starting on June 9, 2020 until the first adjustment to occur after the fiscal quarter ending September 30, 2020,~~ the interest rate is ~~set as~~ LIBOR plus ~~2.50%~~a margin ranging from 1.00% to 2.00%, or a base rate (as defined in the Fourth Amended Credit Facility) plus ~~1.50% and~~a margin ranging from 0.00% to 1.00%, or the Prime Rate. The applicable margins vary depending on the Company’s leverage ratio. Commitment fees are equal to the daily average unused revolving commitment multiplied by the commitment ~~fees are set at 0.45%.~~ fee percentage, ranging from 0.175% to 0.325%, based on our leverage ratio.

~~Monarch is in continuing discussions with its lenders regarding additional relief options and amendments of the Amended Credit Facility.If negotiations are not successful, that could have a material adverse impact to the Company’s financial condition.~~

~~Other event:~~

On June 4, 2020, Atlantis Casino Resort Spa re-opened, after approximately two and a half months of closure ordered by the Nevada governor in response to the COVID-19 pandemic, and resumed limited operations. On June 17, 2020, Monarch Casino Black Hawk re-opened, after approximately three months of closure ordered by the Colorado governor in response to the COVID-19 pandemic, and resumed limited operations.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Unless otherwise indicated, “Monarch,” “Company,” “we,” ~~“our”~~“our,” and “us” refer to Monarch Casino & Resort, Inc. and its subsidiaries.

~~STATEMENT~~CAUTIONARY NOTE ON FORWARD-LOOKING ~~INFORMATION~~STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of ~~Section 21E~~the safe harbor provisions of the U.S. Private Securities ~~Exchange~~Litigation Reform Act of ~~1934,~~1995. Forward-looking statements can be identified by words such as: “believes,” “expects,” “anticipates,” “estimates,” “plans,” “intends,” “objectives,” “goals,” “aims,” “projects,” “forecasts,” “possible,” “seeks,” “may,” “will,” “could,” “should,” “might,” “likely,” “enable,” or similar words or expressions, as ~~amended, (the “Exchange Act”) including, but not limited to~~well as statements containing phrases such as “in our view,” or “we cannot assure you,” “although no assurance can be given,” Examples of forward-looking statements include, among others, statements we make regarding: (i) the impact of the COVID-19 pandemic on our revenues, cash flows, liquidity, construction projects, results of operations and financial ~~condition~~condition; (ii) our expectations regarding the ~~re-opening date of our properties and the potential implementation of social-distancing requirements;~~return to normalized operations; (iii) our beliefs regarding the sufficiency of our cash and other financial ~~resources during the government mandated shutdowns;~~resources; (iv) our expectations regarding discussions with our lenders about refinancing and/or additional relief options and steps under the Amended Credit Facility that may be requested in light of currently-changing ~~circumstances;~~circumstances, as well as our expectations regarding credit facility covenant compliance and our ability to continue to obtain necessary covenant waivers; (v) our expectations regarding changes in our operations and services relating to restrictions in occupancy and social distancing requirements; (vi) our beliefs regarding the effectiveness of the actions we've taken with respect to the COVID-19 pandemic and the quality of our properties as key factors in Monarch's long-term success; (vii) our expectations and beliefs concerning the project scope, timing for completion, receipt of all occupancy and other regulatory approvals for portion of the expansion project, impact of the ongoing construction litigation, budget and estimated costs, pre-opening expenses, transformative potential and our continued investment in our expansion project at the Monarch Casino Black Hawk (the "Monarch Black Hawk Expansion"); (viii) our expectations regarding financing of the Monarch Black Hawk Expansion; (ix) our expectations and intentions regarding the expenses, defenses and outcomes of the lawsuit filed by the construction project general contractor against us; (x) our expectations regarding our business prospects, strategies and outlook; (xi) our expectations regarding the positioning of our properties to benefit from future macro and local economic growth; (xii) our expectations regarding future capital requirements; (xiii) our anticipated sources of funds and adequacy of such funds to meet our debt obligations and capital requirements; and (xiv) our expectations regarding legal and other matters. ~~The Private Securities Litigation Reform Act~~

Forward-looking statements are neither historical facts nor assurances of ~~1995 provides a safe harbor for~~future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. ~~We note~~Therefore, you should not rely on any of these forward-looking statements. Important factors that ~~many factors~~ could cause our actual results and ~~experience~~financial condition to ~~change significantly~~differ materially from ~~the anticipated results or expectations expressed~~those indicated in our forward-looking statements. When words and expressions such as “believes,” “expects,” “anticipates,” “estimates,” “plans,” “intends,” “objectives,” “goals,” “aims,” “projects,” “forecasts,” “possible,” “seeks,” “may,” “will,” “could,” “should,” “might,” “likely,” “enable,” or similar words or expressions are used in this Form 10-Q, as well as statements containing phrases such as “in our view,” “we cannot assure you,” “although no assurance can be given,” or “there is no way to anticipate with certainty,”the forward-looking statements ~~are being made..~~ include, among others, the following:

Various risks and uncertainties may affect the operation, performance, development and results of our business and could cause future outcomes to change significantly from those set forth in our forward-looking statements, including the following factors:

●

continuing adverse impacts of the COVID-19 ~~outbreak~~pandemic on our business, constructions projects, financial condition and operating ~~results;~~

results, including access to capital markets;

●

continuing adverse impacts of the COVID-19 ~~outbreak~~pandemic on short-term and long-term travel, leisure and discretionary spending habits and practices of our guests;

●

continuing actions by government officials at the federal, state or local level, ~~with respect to steps to be taken,~~ including, without limitation, further temporary or extended shutdowns, travel restrictions, social distancing and shelter-in-place orders, in connection with the COVID-19 ~~outbreak;~~

pandemic;

●

~~our ability to effectively manage and control expenses during temporary or extended shutdown periods;~~

impact of any further temporary or extended shutdowns on our ability to maintain compliance with the terms and conditions of our credit facilities and other material contracts;

●

our ability to manage guest safety concerns caused by the COVID-19 pandemic;

●

our ability to negotiate relief options and any further amendments to our Fourth Amended Credit Facility;

●

our ability to maintain strong relationships with our regulators, employees, lenders, suppliers, ~~customers,~~ insurance carriers, customers and other stakeholders;

●

impact of any uninsured losses;

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the adverse impact of cancellations and/or postponements of hotel stays and convention and trade shows on our business, market position, growth, financial condition and operating results;

●

a delay in or failure of the changes in guest visitation, orentertainment choices and spending patterns, ~~due to health or other concerns,~~ including a decrease in overall long-term demand after reopening our ~~casinos;~~

casinos and the initial pent-up demand, due to health and other concerns, to return to normalized pre-pandemic levels;

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●

the impact of ~~restrictions and~~ social distancing requirements ~~placed on~~and other health and safety protocols implemented at our ~~operations~~properties, including a reduction in operating margins (or negative operating margins);

●

potentially uninsurable liability exposure to customers and ~~services after reopening~~staff should they become (or allege that they have become) infected with COVID-19 while at one of our ~~casinos, including an increase~~resorts;

●

unwillingness of employees to report to work due to the adverse effects of the COVID-19 pandemic or to otherwise conduct work under any revised work environment protocols;

●

the potential of increases in ~~operations costs;~~

state and federal taxation to address budgetary and other impacts of the COVID-19 pandemic;

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the potential of increased regulatory and other burdens to address the direct and indirect impacts of the COVID-19 pandemic;

●

our ability to successfully implement our business and growth strategies;

●

our ability to realize the anticipated benefits of our expansion and renovation projects, including the Monarch Black Hawk Expansion;

●

construction factors, including delays, disruptions, construction defects, increased costs of labor and materials, contractor disagreements, availability of labor and materials, zoning issues, environmental restrictions, soil and water conditions, weather and other hazards, site access matters, occupancy and building permit issues and other regulatory approvals or issues;

●

our ongoing ~~disagreements~~disputes over costs of and responsibility for delays, construction defects and other construction related matters with our Monarch Casino Black Hawk general contractor, PCL Construction Services, Inc.(“PCL”), including, as previously reported, the litigation against us by such contractor and our filing of affirmative defenses and extensive counterclaims against ~~the Monarch Casino Black Hawk contractor;~~

PCL;

●

our potential need to post bonds or other forms of surety to support our legal remedies;

●

risks related to development and construction activities (including disputes with and defaults by contractors and subcontractors; construction, equipment or staffing problems and delays; construction defects; shortages of materials or skilled labor; environmental, health and safety issues; weather and other hazards, site access matters, and unanticipated cost increases);

●

risks related to pending litigation, which is costly and time-consuming to defend, and if decided against us, could require us to pay substantial judgments or settlements. We cannot predict with certainty the outcomes of such legal proceedings, and the costs incurred in litigation can be substantial, regardless of the outcome. Substantial unanticipated verdicts, fines and rulings do sometimes occur;

●

~~risks and uncertainties relating to obtaining court and governmental approval or permits necessary to open the Monarch Black Hawk Expansion to the public;~~

our ability to generate sufficient operating cash flow to service our debt obligations and working capital needs and to help finance our expansion plans;

●

our ability to effectively manage expenses to optimize our margins and operating results;

●

guest acceptance of our expanded facilities once completed and the resulting impact on our market position, growth and future financial results;

●

our ability to successfully complete potential acquisitions and investments;

●

~~successful integration of acquisitions;~~

access to capital and credit, including our ability to finance future business requirements ~~and the Monarch Black Hawk Expansion;~~

;

●

risks related to our present indebtedness and future borrowings;

●

adverse trends in the gaming industry;

●

changes in patron demographics;

●

general market and economic conditions, including but not limited to, the effects of local and national economic, housing and energy conditions on the economy in general and on the gaming and lodging industries in particular;

●

the impact of rising interest rates and our ability to refinance debt as it matures at commercially reasonable rates or at all;

●

fluctuations in interest rates, including the impact of any discontinuance, modification or other reform of LIBOR, or the establishment of alternative reference rates;

●

our ability to continue to comply with the covenants and terms of our credit instruments;

●

our dependence on two resorts;

●

ability of large stockholders to influence our affairs;

●

our dependence on key personnel;

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the availability of adequate levels of insurance;

●

changes in federal, state, and local laws and regulations, including environmental and gaming licenses or legislation and regulations, and laws and regulations permitting expanded and other forms of gaming in our key markets;

●

ability to obtain and maintain gaming and other governmental licenses and regulatory approvals;

●

any violations by us of the anti-money laundering laws;

●

cybersecurity risks, including misappropriation of customer information or other breaches of information security;

●

impact of natural disasters, severe weather, terrorist activity and similar events;

●

our competitive environment, including increased competition in our target market areas;

●

increases in the effective rate of taxation at any of our properties or at the corporate level;

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our ability to successfully estimate the impact of accounting, tax and legal matters; and

●

risks, uncertainties and other factors described in ~~“Item 1A - Risk~~Part I, Item 1A. “Risk Factors” inand Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our ~~annual report~~Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 (the ~~“2019~~"2020 Form ~~10-K”~~10-K") and our other filings with the Securities and Exchange Commission.

Any forward-looking statement made by us in this Form 10-Q is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update or revise any forward-looking statements as a result of future developments, events or conditions, except as required by law. New risks emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ significantly from those forecast in any forward-looking statements.

OVERVIEW

Monarch was incorporated in the state of Nevada in 1993. We own and operate the Atlantis Casino Resort Spa, a hotel and casino in Reno, Nevada (the “Atlantis”) and Monarch Casino Resort Spa Black Hawk (the “Monarch Black Hawk”), a casino in Black Hawk, Colorado. In addition, we own separate parcels of land located next to the Atlantis and a parcel of land with an industrial warehouse located between Denver, Colorado and Monarch Casino Black Hawk. We also own Chicago Dogs Eatery, Inc. and Monarch Promotional Association, both of which were formed in relation to licensure requirements for extended hours of liquor operation in Black Hawk, Colorado.

We earn revenues, operating income and cash flow from Atlantis and Monarch ~~Casino~~ Black Hawk, primarily through our casino, food and beverage operations, and ~~at Atlantis, our~~ hotel operations. ~~The Monarch Casino Black Hawk does not have a hotel; however, we are in the process of renovations and construction that will include a hotel.~~ We focus on delivering exceptional service and value to our guests. Our hands-on management style focuses on ~~exceptional~~ customer services and cost efficiencies.

Atlantis: Our business strategy is to maximize revenues, operating income and cash flow primarily through our casino, food and beverage operations and hotel operations. We continuously upgrade our ~~property.~~property and invest in technology. Reno remains a very healthy local-oriented market. The tight employment environment and wage pressure remain key challenges. We expect this to be a recurring trend for the market and Atlantis in the years ahead but we remain confident that our operating strategies will allow Atlantis to grow revenue as our market share continues to expand. With quality gaming, hotel and dining products, we believe the Atlantis is well positioned to benefit from future macro and local economic growth, as well as for possible adverse macro-economic conditions. On June 4, 2020, Atlantis Casino Resort Spa re-opened, after approximately two and a half months of closure ordered by the Nevada governor in response to the COVID-19 pandemic, and resumed limited operations.conditions

Monarch Casino Black Hawk: Since the acquisition of Monarch Casino Black Hawk in April 2012, our focus has been to maximize casino and food and beverage revenues while upgrading the existing facility and working on the major expansion. ~~There is currently no hotel on the property.~~ In August 2015, we completed the redesign and upgrade of the existing Monarch ~~Casino~~ Black Hawk bringing to the facility’s interior the same quality, ambiance and finishes of the ongoing master planned expansion that we expect will transform Monarch Casino Black Hawk into a full-scale casino resort. In the fourth quarter of 2013, we began work on the Monarch Black Hawk Expansion.property. In November 2016, we opened for guest use ~~our elegant~~a new nine-story parking ~~facility~~structure with ~~about~~approximately 1,350 spaces ~~for guest use. Construction~~and additional valet parking, with total property capacity of ~~a new hotel tower and casino expansion on~~approximately 1,500 spaces. In the site where the old parking structure was sitting is under way. (See CAPITAL SPENDING AND DEVELOPMENT – Monarch Black Hawk Expansion). Once completed, the Monarch Black Hawk Expansion will nearly double the casino space and will add a 23-story hotel tower with approximately 500 guest rooms and suites, an upscale spa and pool facility, three additional restaurants (increasing the total to four), additional bars and associated support facilities. The COVID-19 outbreak and the ongoing litigation with our general contractor over costsfourth quarter of ~~and responsibility for delays, construction defects and other construction related matters has delayed completion and delivery of our expanded casino resort, and~~2020 we ~~do not yet have a definitive timeline for the opening of the expanded casino resort. We continue to plan for~~began a phased opening of our hotel tower and expanded casino floor. Construction at the ~~expanded property. On June 17, 2020, Monarch Casino Black Hawk re-opened, after approximately three months~~property is currently underway to redesign and upgrade part of ~~closure ordered by~~ the ~~Colorado governor~~legacy building, which will complete the transformation of the property into a full-scale casino resort. This last stage of the project, which includes converting the existing buffet to a specialty restaurant and adding a poker room, a sports lounge, a keno counter and additional slot machines, is expected to open in ~~response~~2021. Through its superior product and service, the property is designed to attract and retain the ~~COVID-19 pandemic, and resumed limited operations.~~

highest tier guests in the market.

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KEY PERFORMANCE INDICATORS

We use certain Key Performance Indicators (“KPI”) to manage our operation and measure our performance.

Gaming revenue KPI: Our management reviews on a consistent basis the volume metrics and hold percentage metrics for each gaming area. The main volume measurements are slot coin-in, table games drop, sportsbook write and keno write. Slot coin-in represents the dollar amount wagered in slot machines, including free promotional wagers. Table games drop represents the total amount of cash and net markers deposited in the table drop box. Keno write and sportsbook write represents the dollar amount wagered at our counters, along with sportsbook write made through our mobile wagering system. Volume metrics are important in managing the business, as our gaming win is affected by actual hold percentage, which in general varies from the expected hold percentage and historical hold percentage. Gaming win represents the amount of wagers retained by us. Hold percentage represents win as a percentage of slot coin-in, table game drop, sportsbook write, or keno write. Our win and hold percentages are calculated before discounts, commissions, deferring revenue associated with our loyalty programs and allocating casino revenues related to goods and services provided to patrons on a complimentary basis.

Food and Beverage revenue KPI: The main KPIs in managing our food and beverage operations are covers and average revenue per cover. A cover represents the number of guests served and is an indicator of volume. Average revenue per cover represents the average amount spent per food and beverage outlets’ served guests. Changes in the average revenue per cover might be an indicator for changes in menu offerings, changes in menu prices or may indicate changes in our guests’ preferences and purchasing habits.

Hotel revenue KPI: The main KPIs used in managing our hotel operation are the occupancy rate (a volume indicator), which is the average percentage of available hotel rooms occupied during a period, and the average daily rate (“ADR”, a price indicator), which is the average price per sold room. Available rooms exclude those rooms unavailable for occupancy during the period due to renovation, development, or other requirements. Sold rooms include rooms where the guests do not show up for their stay and lose their deposit.The calculations of the occupancy rate and ADR include the impact of rooms provided on a complimentary basis. Revenue per available room ("RevPAR") represents total hotel revenue per available room and is a representation of the occupancy rate, ADR and miscellaneous hotel sales.

Operating margins: Our management is consistently focused on controlling expenses and finding cost savings, without affecting the quality of the product we offer and our guests’ services and experience. We measure our performance using expense margin, which is a percentage of direct expenses, including labor, cost of product and any other operating expenses related to the gaming, food and beverage, or hotel operation to the net gaming, food and beverage, or hotel revenues. Selling, general and administrative (“SG&A”) margin represents SG&A expenses for a period as a percentage of total net revenue for a period. In managing the food and beverage operation we use Cost Of Goods Sold (“COGS”) percentage, which represents a percentage of product cost to the food and beverage revenue and is a measurement of commodity prices and menu sales prices.

Our management evaluates the KPI as compared to prior periods, the peer group, or market, as well as for any trends.

RESULTS OF OPERATIONS

Impact of the COVID-19 Pandemic

Monarch operating results for the three months ended March 31, 2020 and 2021 were impacted by the COVID-19 pandemic. The first quarter of 2020 was a study in contrasts, with Monarch delivering strong financial performance in the first two months of the quarter followed by a March which demonstrated the impact of the significant operational challenges createdsignificantly impacted by the ~~global spread~~unprecedented government-mandated closure of our Nevada and Colorado properties in response to the COVID 19 pandemic, which lasted approximately three months. The first quarter of 2021 was impacted by the ongoing government imposed restrictions on our operations and additional COVID-19 ~~pandemic.~~

~~Consolidated net revenue and net income~~safety protocols after resuming operations. At the same time our results of operation for the first ~~two months~~quarter of 2021 benefitted from the ~~year were up year-over-year by 14.2% and 37.6%, respectively, and Adjusted EBITDA grew 26.1%. This strong early performance was driven by an increase~~pent-up demand with patrons across the gaming industry, particularly in ~~guests’ spend per visit, as well as an increase in market share at both locations.~~regional gaming markets.

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In March 2020, the World Health Organization declared the rapidly growing COVID-19 outbreak a global pandemic. On March 16,2020, in an effort to contain the virus, the state of Colorado mandated a temporary shutdown of all casinos including Monarch Casino Black Hawk and, on March 17, 2020, the state of Nevada mandated the temporary closure of all casinos including the Atlantis in Reno. ~~As a result of the slowdown in our~~

Our Nevada and Colorado properties partially reopened with limited operations ~~at the beginning of March~~on June 4, 2020 and the temporary closure of our properties in mid-March due to the COVID-19 pandemic, consolidated revenue, net income and Adjusted EBITDA for the full month of March year-over-year declined 59.6%, 179.4% and 126.2%, respectively.

~~In connection with reopening of our Colorado and Nevada properties, which occurred on~~ June 17, 2020, ~~and June 4, respectively, changes~~respectively. Changes were made from routine operations relating to restrictions in occupancy and social distancing requirements, which include reduced seating at table games and in all restaurants, and a decreased number of active slot machines on the casino ~~floor. Additionally, we~~floors. The convention business at Atlantis was affected by the state-mandated gathering limits. We have experienced hotel stay and convention booking cancelations, and since the reopening, guest visitation and hotel and convention bookings ~~after the reopening of our properties are expected to be~~have been lower than prior to ~~COVID-19.~~the state-mandated closures, and are expected to remain lower for the near future.

~~There~~Despite a strong reopening, we are operating in an environment of high uncertainty and there may be additional government restrictions placed on all of our services, such as gaming, restaurants, spas and salons, entertainment venues and convention and meeting space, which could lead to lower demand and revenue. Such restrictions could also increase our costs, further decrease our operating margins and have a material adverse effect on our operations, cash flows and financial results.

While we have incurred significant disruptions from the COVID-19 outbreak, we are unable to accurately predict the full impact that COVID-19 will have due to numerous uncertainties, including the duration and severity of the disease, the possibility of the outbreak levels seen to return, the long-term impact on demand following the reopening of our casinos, and other actions or restrictions that may be taken by governmental authorities, the impact thereof to the general U.S economy and to our ~~customers and other factors identified in Part II, Item 1A “Risk Factors” in this Form 10-Q.~~customers. We will continue to evaluate the nature and extent of the impact to our business, ~~consolidated~~ results of operations, and financial condition.

Monarch Casino Resort Spa Black Hawk expansion

First quarter of 2021 results benefited from the phased opening of operations at our newly transformed Monarch Casino Resort Spa Black Hawk, which opening started in the fourth quarter of 2020. By the end of the first quarter of 2021, we had approximately 350 hotel rooms available for guest occupancy. In February we opened our spa, pool and fitness center. The new restaurants were gradually increasing hours of operation and operational capacity up to the limits allowed by the government at that time. In the face of continued COVID limitation during the first quarter of 2021, with the opening of our expanded casino floor, we had increased the slot machines by approximately 150 and table games by 6, compared to the pre-COVID active gaming devices at Monarch Black Hawk.

Comparison of Operating Results for the Three-Month Periods Ended March 31, ~~2020~~2021 and ~~2019~~2020

For the three months ended March 31, ~~2020,~~2021, our net income totaled ~~$2.0~~$8.2 million, or ~~$0.11~~$0.42 per diluted share, compared to net income of ~~$7.0~~$2.0 million, or ~~$0.38~~$0.11 per diluted share for the same period in ~~2019,~~2020, reflecting a ~~71.2%~~303.7% and ~~71.1% decrease~~281.8% increase in net income and diluted earnings per share, respectively. Net revenues in the three months ended March 31, ~~2020,~~2021, totaled ~~$51.0~~$75.0 million, ~~a decrease~~an increase of ~~$7.7~~$23.9 million, or ~~13.2%~~46.9%, compared to the three months ended March 31, ~~2019.~~2020. Income from operations for the three months ended March 31, ~~2020~~2021 totaled ~~$2.1~~$11.3 million compared to ~~$8.7~~$2.1 million for the same period in ~~2019.~~2020.

Casino revenue ~~decreased 6.6%~~increased 73.3% in the first quarter of ~~2020~~2021 compared to the first quarter of ~~2019 and~~2020. The increase in casino revenue was driven by the ~~COVID-19 outbreak, which culminated in a suspension~~increase is gaming devices with the opening of our expanded casino in Black Hawk, a full quarter of operations at the Company’s properties in ~~mid-March 2020,~~Reno and Black Hawk (the prior year quarter was partially ~~offset~~impacted by ~~an increase in guests’~~pandemic-related shutdowns), and higher guest spend per ~~visit during the first two months of 2020 compared to the same period in 2019.~~visit. Casino operating expense as a percentage of casino revenue decreased to 29.0% for the three months ended March 31, 2021 compared to 35.5% for the three months ended March 31, 2020, ~~compared to 37.3% for the three months ended March 31, 2019.~~as a result of effective cost management and higher casino revenue at both properties.

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Food and beverage revenue for the first quarter of ~~2020 decreased 16.6%~~2021 increased 9.8% compared to the first quarter of ~~2019~~2020 due to ~~a 24.7%~~food and beverage revenue per cover increased year-over-year by 21.5% an 9.7% decrease in food and beverage ~~covers, partially offset by a 10.9%~~covers. The increase in food and beverage revenue per ~~cover.~~cover is a result of an increase in fine dining restaurants, with the opening of new restaurants in Monarch Black Hawk and menu price adjustments. The decrease in covers is a result of capacity and other regulatory limitations which remain in effect in Reno and Black Hawk due to the ongoing pandemic. Food and beverage operating expense as a percentage of food and beverage revenue increased in the first quarter of ~~2020~~2021 to ~~84.8%~~87.0% compared to ~~79.1%~~84.8% for the same ~~period~~quarter in ~~2019~~2020 primarily as a result of ~~a loss of revenue later~~ongoing capacity restrictions in the ~~quarter due to the COVID-19 pandemic~~Company’s food and ~~the subsequent shutdown of our operations.~~beverage outlets.

Hotel revenue ~~decreased 24.6%~~increased 34.6% in the first quarter of ~~2020~~2021 compared to the ~~first~~same quarter of ~~2019 due to~~2020 as a ~~decrease~~result of increase in available rooms by 390 daily on average, primarily as a result of the phased opening of the hotel in Monarch Black Hawk. Hotel occupancy was 71.1% during the period compared to 75.4% during the first quarter of ~~2020 from 84.3% during the first quarter of 2019, partially offset~~2020. The ADR decreased by ~~a $4.27 increase in the Average Daily Rate (“ADR”), from $122.04~~$14.61 ($111.70 in the first quarter of ~~2019 to $126.31~~2021and 126.31 in the first quarter of ~~2020. Revenue per Available Room (“REVPAR”), calculated~~2020). Occupancy and ADR were negatively impacted by ~~dividing total hotel revenue~~the continuing COVID-19 pandemic government-enforced restrictions and by ~~total rooms available,~~the continuing decline of travel and convention businesses in general due to the pandemic. REVPAR, was ~~$100.57~~$86.59 and ~~$114.72~~$100.57 for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively. Hotel operating expense as a percentage of hotel revenue increased to ~~46.6%~~49.2% in the first quarter of ~~2020~~2021 compared to ~~36.8%~~46.6% for the comparable prior year period primarily as a result of the ~~COVID-19 pandemic~~decrease in ADR and the ~~subsequent shutdown of our operations.~~ramp-up in hotel operation at Monarch Black Hawk. In addition, higher housekeeping expenses related to labor shortage and wage pressure, as well as to COVID-19 safety protocols had a negative effect on the hotel margins.

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Other revenue ~~decreased 22.5%~~increased 16.0% in the first quarter of ~~2020~~2021 compared to the same prior year period.

~~Selling, general and administrative (“~~SG~~&A”)~~&A expense increased to $19.9 million in the first quarter of 2021 from $17.2 million in the first quarter of 2020 ~~from $16.5 million in the first quarter of 2019~~ primarily due ~~to an~~to: a $1.2 million increase in ~~salaries, wages~~advertising expenses; a $0.9 million increase in labor expense; and ~~employee benefits~~a $0.6 million increase in property tax expense. As a percentage of net revenue, SG&A expense ~~increased~~decreased to ~~33.7%~~26.6% in the first quarter of ~~2020~~2021 compared to ~~28.0%~~33.7% in the same period in ~~2019.~~2020.

Depreciation and amortization expense increased to ~~$3.8~~$9.5 million for the three months ended March 31, ~~2020~~2021 compared to ~~$3.6~~$3.8 million for the same prior year period, due to new assets placed into service ~~during~~with the ~~current quarter.~~opening of our hotel building and expanded casino at Monarch Black Hawk.

During the first quarter of 2021, we recognized $0.6 million in professional service fees relating to our construction litigation, and $0.1 million in equipment, supplies and employee testing expenses directly attributable to the pandemic for reopening of the properties and incremental to normal operations. During the first quarter of 2020, we recognized $0.8 million in pre-opening expense related to the upcoming opening of the new hotel and expanded casino in Black Hawk, ~~$0.1 million in construction litigation expense related to the lawsuit filed by the Monarch Black Hawk Expansion construction project general contractor against the Company and~~ $0.4 million Colorado legislation lobbing ~~expenses. During the~~ ~~first quarter~~ ~~of 2019, we recognized $0.4~~expenses, and $0.1 million in ~~pre-opening expense related~~professional service fees relating to ~~the upcoming opening of the new hotel and expanded casino in Black Hawk. Those~~our construction litigation. These expenses are included in Other operating items, net in the Consolidated Statement of ~~Income.~~Operations.

During the first ~~quarters~~quarter of 2021 we recognized $1.6 million in interest expense. In the first quarter of 2020, ~~and 2019,~~ we capitalized $1.8 million ~~and $1.2 million~~ of interest, ~~respectively, which is all interest, paid and accrued during those quarters,~~ as the borrowings on our Amended Credit Facility were exclusively used to finance the Monarch Black Hawk ~~Expansion.~~Expansion ongoing at that time project. See further discussion of our Fourth Amended Credit Facility in the LIQUIDITY AND CAPITAL RESOURCES section below.

CAPITAL SPENDING AND DEVELOPMENT

We seek to continually upgrade and maintain our facilities in order to present a fresh, high quality product to our guests. In addition, we have invested, and continue to invest, in our Monarch Black Hawk Expansion.

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Cash paid for capital expenditures for the three-month periods ended March 31, 2021 and 2020 ~~and 2019~~ totaled ~~approximately~~$5.9 million and $13.7 million, respectively. During the three-month period ended March 31, 2021 our capital expenditures related primarily to redesign of part of the legacy Monarch Black Hawk building and ~~$36.1 million, respectively.~~the acquisition of gaming and other equipment to upgrade and replace existing equipment at Atlantis and Monarch Black Hawk. During the three-month period ended March 31, 2020, our capital expenditures related primarily to the new hotel tower and casino expansion at Monarch ~~Casino~~ Black Hawk and the acquisition of gaming and other equipment to upgrade and replace existing equipment at Atlantis and Monarch Casino Black Hawk. During the three-month period ended March 31, 2019, our capital expenditures related primarily to the new hotel tower and casino expansion at Monarch Casino Black Hawk, the renovation of hotel suites at Atlantis and the acquisition of gaming and other equipment to upgrade and replace existing equipment at Atlantis and Monarch Casino Black Hawk. The capital expenditures during ~~this period~~both periods were funded from ~~operating cash flows, and~~ available cash and borrowings from the credit facility and in the first quarter of 2021 with cash ~~equivalents.~~from Company’s operating cash flows.

Monarch Black Hawk Expansion

In the fourth quarter of 2013, we began work to convert the Monarch Casino Black Hawk into a full-scale casino resort (the “Monarch Black Hawk Expansion”).

~~The~~.The Monarch Black Hawk Expansion includes a multi-phased expansion of Monarch Casino Black Hawk, which involves construction of a new parking structure, demolition of the existing parking structure, and construction of a new hotel tower and casino expansion.

In November 2016, the new nine-story parking structure, offering approximately 1,350 parking spaces, was completed and became available for use by Monarch Casino Black Hawk guests. The demolition and removal of the old parking structure, which included a controlled implosion of the old garage, was completed in the first quarter of 2017.

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On February 8, 2017, we broke ground on the hotel tower and casino expansion. ~~The~~

In the fourth quarter of 2020, we began the phased opening of our new ~~23-story~~hotel tower ~~will nearly double~~and casino expansion, which increased the ~~existing~~ casino space and ~~will include approximately 500~~added a 23-story hotel tower with 516 guest rooms and suites, banquet and meeting room space, a retail store, a concierge lounge, an upscale spa and pool facility located on the top floor of the tower, three ~~additional~~new restaurants, and additional ~~bars. Our total overall budget for~~bars and lounges. We are currently working on converting the ~~completion of~~existing buffet to a specialty restaurant, and adding a poker room, a keno counter, a sports lounge, as well as additional slot machines, in the ~~Monarch Casino Black Hawk hotel tower and casino expansion is approximately $264 million~~existing facility. We expect this work to ~~$269 million. The COVID-19 outbreak and~~be completed later in 2021.

We are confident that the ~~ongoing litigation with our general contractor over costs of and responsibility for delays, construction defects and other construction related matters has delayed completion and delivery~~quality of our expanded ~~casino resort,~~product and ~~we do not yet have a definitive timeline for~~exceptional guest service will meet the ~~opening~~demand of the ~~expanded casino resort. We continue to plan for a phased opening~~high-end segment of the ~~expanded property.~~ market and will derive accelerated market share and revenue growth.

We expect to finance the remaining cost through a combination of operating cash flows, available cash and ~~cash equivalents~~available and the Fourth Amended Credit ~~Facility.~~Facility, if necessary. We can provide no assurance that any project will be completed on schedule, if at all, or within established budgets, or that any project will result in increased earnings to us. Further, although we intend to seek recovery from our general contractor through the current litigation, we may be required to fund certain costs of correcting construction defects and deficiencies until, and if, recovered from the general contractor.

LIQUIDITY AND CAPITAL RESOURCES

Our principal sources of liquidity have been cash provided by operations, and available cash, and, ~~cash equivalents, and,~~ for capital expansion projects, borrowings available under our Amended Credit Facility. On June 4, 2020, Atlantis Casino Resort Spa re-opened, after approximately two and a half months of closure ordered by the Nevada governor in response to the COVID-19 pandemic, and resumed limited operations. On June 17, 2020, Monarch Casino Black Hawk, re-opened, after approximately three months of closure ordered by the Colorado governor in response to the COVID-19 pandemic, and resumed limited operations.credit facility.

For the three months ended March 31, ~~2020,~~2021, net cash provided by operating activities totaled $21.9 million, compared to net cash used in operating activities ~~totaled~~of $7.5 ~~million, compared to net cash provided by operating activities of $13.5~~ million in the same prior year period. This ~~decrease~~increase was primarily a result of an increase in net income and increase in depreciation, combined with a decrease in ~~net income combined with an increase in~~ working ~~capital, especially a decrease in accounts payable and accrued expenses.~~capital.

Net cash used in investing activities totaled ~~$13.7~~$5.9 million and ~~$36.1~~$13.7 million during the three months ended March 31, 2021 and 2020, respectively. Net cash used in investing activities during the first three months of 2021 consisted primarily of cash used for redesign of part of the legacy Monarch Black Hawk building and ~~2019, respectively.~~for acquisition of gaming and other equipment at both properties. Net cash used in investing activities during the first three months of 2020 consisted primarily of cash used for the new hotel tower and casino expansion at Monarch Casino Black Hawk and for acquisition of gaming and other equipment at both properties.

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Net cash used ~~in investing activities during the first three months of 2019 consisted primarily of cash used~~ for ~~the new hotel tower and casino expansion at Monarch Casino Black Hawk, for the renovation of hotel suites at Atlantis and for acquisition of gaming and other equipment at both properties.~~

~~There were no~~ financing activities in the first three months of ~~2020. In~~2021 totaled $20.1 million and consisted of $22.5 million principal payments offset by $2.4 million proceeds from the stock options exercise. There were no financing activities during the first three months of ~~2019, we borrowed $16.0 million under the~~2020.

Fourth Amended Credit ~~Facility.~~Facility

On September 3, 2020, we entered into the Fourth Amended and Restated Credit Agreement with Wells Fargo Bank, N.A., as administrative agent and certain banks (the “Fourth Amended Credit Facility”). The ~~borrowings were used to fund the Monarch Casino Black Hawk Expansion.~~

Fourth Amended Credit Facility

On amends and restates the Company’s $250.0 million credit facility, dated as of July 20, 2016 ~~the Company entered into an~~(the “Amended Credit Facility”).

The Fourth Amended Credit ~~Facility. Under~~Facility extends the maturity date of the Amended Credit Facility ~~the Company’s available borrowing capacity was $250.0 million, and the maturity date was~~from July 20, ~~2021.~~

We are required to ~~$50.0 million and all $200.0 million outstanding~~make quarterly principal payments under the ~~revolving loan was converted to a Term Loan. Prior to the conversion, we drew all available borrowings up to $200.0 million. Following the conversion to a~~ Term Loan Facility on each Term Loan Installment Date, commencing on December 31, ~~2019,~~2020, in an amount equal to (x) the percentage set forth opposite the applicable period during which such Term Loan Installment Date occurs (i.e., 1.25% for the period from December 31, 2020 to September 30, 2021, and 2.50% for the period from December 31, 2021 and thereafter) multiplied by (y) $200.0 million. The estimated amount of the mandatory principle payment due in next twelve months is $15.0 million.

Commencing with the delivery of the compliance certificate for fiscal year 2021, we ~~made a $3.8 million mandatory principal payment.~~may be required to prepay borrowings under the Fourth Amended Credit Facility using excess cash flows for each fiscal year, depending on our leverage ratio.

As of March 31, ~~2020,~~2021, we had an outstanding principal balance of ~~$196.3~~$160.0 million under the ~~Amended~~Term Loan Facility, from which $15 million is expected to have a maturity date in next twelve months. As of March 31, 2021, we had $70.0 million available borrowings under the Revolving Credit ~~Facility term loan,~~Facility. We have a $0.6 million Standby Letter of Credit, ~~and $50.0 million remaining in available borrowings under the Amended Credit Facility revolving loan. As of March 31, 2020,~~from which there have been no ~~withdrawals from the Standby Letter of Credit.~~withdrawals.

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Borrowings are secured by liens on substantially all of ~~the Company’s~~our real and personal property.

In addition to other customary covenants for a facility of this nature, as of March 31, ~~2020,~~2021, we are required to maintain a Total Leverage Ratio ~~(Total Funded Debt divided by EBITDA, as~~(as defined in the Fourth Amended Credit Facility) of no more than ~~3.5:1 and a~~4.75:1; Fixed Charge Coverage Ratio ~~(EBITDA divided by fixed charges, as~~(as defined in the Fourth Amended Credit Facility) of at least 1.15:1.1; and Minimum Operational Liquidity (as defined in the Fourth Amended Credit Facility) of $25.0 million. As of March 31, ~~2020, we were in compliance with the financial covenants contained in the Amended Credit Facility, as~~2021, our Total Leverage Ratio and Fixed Charge Coverage Ratio were ~~3.5:~~2.1:1 and ~~3.5:~~4.6:1, respectively.

~~The interest rate under~~We entered into an amendment to the Fourth Amended Credit Facility effective as of April 30, 2021. Based on the amendment, we are required to maintain a Total Leverage Ratio of no more than 4.00:1.00. The amendment removes the requirement for 0.50% LIBOR floor. As of the effective date of this amendment, the interest rate is LIBOR plus a margin ranging from 1.00% to ~~2.50%~~2.00%, or a base rate (as defined in the Fourth Amended Credit Facility) plus a margin ranging from 0.00% to ~~1.50%~~1.00%, or the Prime Rate. The applicable margins vary depending on ~~Company’s~~our leverage ratio.

~~At March 31, 2020, our interest rate was~~ Commitment fees are equal to the daily average unused revolving commitment multiplied by the commitment fee percentage, ranging from 0.175% to 0.325%, based on ~~LIBOR and the~~our leverage ratio was such that pricing for borrowings under the Amended Credit Facility was LIBOR plus 1.75%. At March 31, 2020, the one-month LIBOR interest rate was approximately 0.99%. The carrying value of the debt outstanding under the Amended Credit Facility approximates fair value because the interest fluctuates with the lender’s prime rate or other market rates of interest.ratio.

We may prepay borrowings under the Amended Credit Facility revolving loan without penalty (subject to certain charges applicable to the prepayment of LIBOR borrowings prior to the end of the applicable interest period). Amounts prepaid may be re-borrowed so long as the total borrowings outstanding do not exceed the maximum principal available.

On the terms and subject to some conditions, we may, at any time before the Maturity Date, request an increase of ~~the total revolving loan commitment,~~Revolving Credit Facility, provided that each such increase is equal to $15.0 million or an integral multiple of $1.0 million in excess and, after giving effect to the requested increase, the aggregate amount of the increases in the total revolving loan commitment shall not exceed $75.0 million.

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We ~~are required to make principal payments on~~may prepay borrowings under the amount of the Term Loans on each Term Loan Installment Date (last business day of each quarter, starting with the quarter ending December 31, 2019) in an amount equal to (x) the percentage set forth opposite the applicable year during which such Term Loan Installment Date occurs multiplied by (y) the Conversion Amount. The estimated amount of the mandatory principal payment due in next twelve months is $22.5 million.

~~In relation to the global spread of the COVID-19 pandemic and subsequent mandated closure of Company’s properties in mid-March, our lender under the~~Fourth Amended Credit Facility ~~granted us a limited covenant waiver, including a waiver~~revolving loan without penalty (subject to certain conditions and certain charges applicable to the prepayment of LIBOR borrowings prior to the end of the ~~mandatory principal payment, which was due on March 31, 2020, in~~applicable interest period). Once reduced or cancelled, the ~~amount of $5.0 million. In addition, the lender agreed to waive any default or event of default under the Amended~~Revolving Credit Facility ~~resulting from (i)~~may not be increased or reinstated without the ~~failure to have either or both~~prior written consent of all lenders. During the ~~Atlantis Casino Resort or the Monarch Casino Black Hawk open and operating during the period commencing on March 18, 2020 and ending on May 31, 2020; (ii) the construction~~first quarter of ~~the Monarch Black Hawk Expansion being stopped at any time prior to May 31, 2020; and (iii) the occurrence of~~2021, we made a material adverse change on or prior to May 31, 2020 as a result of a mandated business cessation order. As a part of the limited waiver, the Amended Credit Facility was also amended to provide that during the period from March 31, 2020 through May 31, 2020, the Company shall not make any distributions or make any investments in an Excluded Subsidiary, as defined in the Amended Credit Facility. Subsequently, the Company was granted additional credit facility waivers and relief. See ~~NOTE 10. SUBSEQUENT EVENTS.~~ ~~We are in continuing discussions with our lenders regarding additional relief options under the Amended Credit Facility that may be requested in light of currently-changing circumstances.~~

We are forecasting a successful opening and achievement of EBITDA from our properties to remain in compliance with our current financial covenants for the next twelve months. Our forecasts take into consideration reduced capacity and social distancing restrictions as required by each state due to the COVID-19 pandemic, for which we do not anticipate will have a significant impact$20.0 million optional prepayment on our ~~operations given the average percentage of capacity we historically operate within.~~Term Loan Facility in addition to a $2.5 million mandatory payment.

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We believe that ~~the $37.3 million~~our anticipated operating cash ~~in our interest-bearing money market fund~~flow and the ~~$50.0~~$70.0 million available under our Fourth Amended Credit Facility as of March 31, ~~2020~~2021 will be sufficient to sustain operations for the twelve months from filing of Form 10-Q for the quarter ended March 31, ~~2020: fund the Company’s cash burn through the current state-mandated property closures in both Reno~~2021 and ~~Black Hawk for the foreseeable future,~~ fulfill our capital expenditure ~~plans and allow to the resumption of operating cash flow.~~plans. However, we are surrounded by uncertainty about COVID-19, ~~and the timing for the reopening of our operations,~~ as well as financial, economic, competitive, regulatory, and other factors, many of which are beyond our control. If we are unable to generate sufficient cash flow in the upcoming months or if our cash needs exceed our borrowing capacity under the Fourth Amended Credit Facility, we could be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, selling assets, restructuring debt or issuing additional equity.

CRITICAL ACCOUNTING POLICIES

A description of our critical accounting policies and estimates can be found in Item 7 — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our ~~2019~~2020 Form 10-K. For a more extensive discussion of our accounting policies, see Note 1. “Summary of Significant Accounting Policies” in the Notes to the Consolidated Financial Statements in our ~~2019~~2020 Form 10-K filed with the SEC on March 12, ~~2020.~~2021.

~~CONTRACTUAL OBLIGATIONS~~

~~Our contractual obligations as of March 31, 2020 and the next five years and thereafter are as follow (in millions):~~

Payments due by period (1)




Less



Greater

than 1

1 to 3

3 to 5

than 5

Total

year

years

years

years

Operating Leases (2)

$
23.7

$
1.1

$
2.5

$
2.1

$
18.0

Purchase Obligations (3)

26.7

22.3

2.7

1.7

—

Borrowings Under Amended Credit Facility (4)

196.3

22.5

173.8

—

—

Total Contractual Cash Obligations

$
246.7

$
45.9

$
179.0

$
3.8

$
18.0

~~(1)~~

Because interest payments under our Amended Credit Facility are subject to factors that, in our judgment, vary materially, the amount of future interest payments is not presently determinable. These factors include: i) future short-term interest rates; ii) our future leverage ratio which varies with EBITDA and our borrowing levels; and iii) the rate at which we deploy capital and other spending which, in turn, impacts the level of future borrowings. The interest rate under the Amended Credit Facility is LIBOR plus a margin ranging from 1.00% to 2.50%, or a base rate (as defined in the Amended Credit Facility) plus a margin ranging from 0.00% to 1.50%, or the Prime Rate. The interest rate is adjusted quarterly based on our leverage ratio, which is calculated using operating results over the previous four quarters and borrowings at the end of the most recent quarter. Based on our leverage ratio, at March 31, 2020, pricing was LIBOR plus 1.75%. At March 31, 2020, the one-month LIBOR was approximately 0.99%.

~~(2)~~

~~Operating leases include the Driveway Lease, the Parking Lot Lease and billboards leases.~~

~~(3)~~

Purchase obligations represent approximately $19.5 million of commitments related to capital projects and approximately $7.2 million of materials and supplies used in the normal operation of our business. All of the purchase orders and construction commitments are cancelable by us upon providing a 30-day notice.

~~(4)~~

~~The amount represents payment obligations of outstanding draws against the Amended Credit Facility as of March 31, 2020.~~

As described in the “CAPITAL SPENDING AND DEVELOPMENT” section above, we commenced a substantial expansion of our Monarch Casino Black Hawk facility starting in 2014. While we have disclosed the estimated cost of that expansion, we have not entered into contracts for substantial portions of the work. For this reason, we have included in the table above only the amounts for which we have contractual commitments. At March 31, 2020, we estimate that the remaining cost to complete the Monarch Black Hawk Expansion is between $15 million and $22 million.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in interest rates, foreign currency exchange rates and commodity prices. Our current primary market risk exposure is interest rate risk relating to the impact of interest rate movements under our Fourth Amended Credit Facility.

As of March 31, ~~2020,~~2021, we had ~~$196.3~~$160.0 million of outstanding ~~principal~~ balance under our Fourth Amended Credit ~~Facility which bears interest at variable rates.~~Facility. A hypothetical 1% increase in the interest rate on the balance outstanding under the Fourth Amended Credit Facility at March 31, ~~2020~~2021 would result in a change in our annual interest cost of approximately ~~$2.0~~$1.6 million. See “Liquidity and Capital Resources” for further discussion of our Fourth Amended Credit Facility and capital structure.

We have not entered into derivative financial instruments for trading or speculative purposes.

We do not have any cash or cash equivalents as of March 31, ~~2020~~2021 that are subject to market risk.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”), an evaluation was carried out by our management, with the participation of our Chief Executive Officer and our Chief Accounting Officer, of the effectiveness of our disclosure controls and procedures (as defined by Rule 13a-15(e) under the Exchange Act). Based upon the evaluation, our Chief Executive Officer and Chief Accounting Officer concluded that our disclosure controls and procedures were effective as of the Evaluation Date. During the ~~three-month period~~quarter ended March 31, ~~2020,~~2021, there were no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On August 30, 2019, PCL Construction Services, Inc. (“PCL”) filed a complaint in District Court, City and County of Denver, Colorado, against the Company and its Colorado subsidiaries, in connection with the Company’s expansion plans for Monarch Casino Black Hawk. The complaint alleges, among other things, the defendants breached the construction contract with PCL and certain implied warranties. On December 5, 2019, the Company filed its answer and counterclaim, which alleges, among other items, that PCL breached the construction contract, duties of good faith and fair dealing, and implied and express warranties, made fraudulent or negligent misrepresentations on which the Company and its Colorado subsidiaries relied, and included claims for monetary damages as well as equitable and declaratory relief.

On May 28, 2020, the Company filed a motion seeking injunctive relief related to its rights to phased occupancy of the Monarch Casino Black Hawk expansion project. Specifically, the motion sought relief with respect to the Company’s right to occupy and use the Podium, or floors 1 through 5 of the new tower, which includes the expanded casino, restaurants, hotel administration, and lounges, as well as the first six floors of hotel rooms, or floors 6 through 11 of the new tower. PCL has refused to allow phased occupancy of the designated areas unless the Company makes certain concessions. Asinformation set forth in ~~the motion, the Company believes PCL’s position violates the construction agreement between PCL and the Company. PCL opposed the motion, and the court set a hearing for July~~Note 9 ~~2020. No assurance can be given that the Company will be successful on its motion or that it will otherwise be permitted~~"Legal Matters” to ~~open the designated areas~~our consolidated financial statements in Part I, Item 1 of ~~the new hotel tower while remaining construction at the Project continues. The designated areas of the new hotel tower also remain subject to approval for occupancy~~this Form 10-Q is incorporated by ~~certain authorities.~~reference herein.

~~This action is in the preliminary stages, and we are currently unable to determine the probability of the outcome or reasonably estimate the loss or gain, if any.~~

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ITEM 1A. RISK FACTORS

~~In addition~~There have been no material changes to the risk factors we previously disclosed in ~~the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, the following risk factor was identified:~~

The COVID-19 pandemic has disrupted and is expected to continue to disrupt our business operations, which could have a material adverse impact on our businesses, results of operations, liquidity and financial condition for an extended period of time.

~~The impact of the COVID-19 pandemic and measures to prevent its spread are expected to continue to impact our financial and operational results, operations, cash flows and liquidity.~~

We expect the impact of these disruptions, including the extent of their adverse impact on our financial and operational results, will be dictated by the length of time that such disruptions continue. We were allowed to open the Atlantis on June 4, 2020, and Monarch Black Hawk Casino on June 17, 2020. We cannot predict whether there will be a subsequent closing order due to pandemic spikes or other reasons or whether additional or changed conditions upon which these re-openings may occur or continue, nor the effects of any such conditions. Even once travel, social distancing and self-quarantine restrictions are modified or cease to be necessary, demand for our properties may remain weak for a significant length of time and we cannot predict if and when the gaming and non-gaming activitiesItem 1A of our properties will return to pre-outbreak levels of volume or pricing. In particular, future demand for properties may be negatively impacted by the adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels and loss of personal wealth or reduced business spending for meetings, incentives, conventions and exhibitions resulting from the impact of the COVID-19 pandemic.2020 Form 10-K.

Our businesses would also be impacted should the disruptions from the COVID-19 pandemic lead to prolonged changes in consumer behavior and could impact our current construction project at Monarch Casino Black Hawk. There are certain limitations on our ability to mitigate the adverse financial impact of these matters, such as the fixed costs at our properties. The COVID-19pandemic also makes it more challenging for management to estimate the future performance of our businesses, particularly over the near to medium term. Any of these events may continue to disrupt our ability to staff our business adequately, could continue to generally disrupt our operations or construction projects and, if the global response to contain the COVID-19 pandemic escalates or is unsuccessful, would have a material adverse effect on our business, financial condition, results of operations and cash flows.

If we are required to raise additional capital in the future, our access to and cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings. If our credit ratings were to be downgraded, or general market conditions were to ascribe higher risk to our rating levels, our industry, or us, our access to capital and the cost of any debt financing would be further negatively impacted. In addition, the terms of future debt agreements could include more restrictive covenants, or require incremental collateral, which may further restrict our business operations or be unavailable due to our covenant restrictions then in effect. There is no guarantee that debt financings will be available in the future to fund our obligations, or that they will be available on terms consistent with our expectations. Our current debt service obligations contain a number of restrictive covenants that impose significant operating and financial restrictions on us, and the Amended Credit Facility contains various financial covenants. We have entered into a waiver and amendment letter with our lenders to waive certain of our obligations through September 29, 2020.In addition, our lenders have granted us a waiver of the mandatory principal payment, which was due on March 31, 2020 in the amount of $5.0 million. While we are in continuing discussions with our lenders regarding additional relief options under the Amended Credit Facility that may be requested in light of currently-changing circumstances, we cannot assure you that the impact of the COVID-19 pandemic will not cause us to no longer be able to comply with the financial covenants in the future, nor can we assure you that we would be able to obtain further waivers or modifications from our lenders in the event of noncompliance in the future.

The COVID-19 pandemic has had and will continue to have an adverse effect on our results of operations. Given the uncertainty around the extent and timing of the potential future spread or mitigation of the COVID-19 pandemic and around the imposition or relaxation of protective measures, we cannot reasonably estimate the impact to our future results of operations, cash flows or financial condition.

~~Table of Contents~~

We encourage investors to review the risks and uncertainties relating to our business disclosed under the heading Risk Factors or otherwise in the ~~2019~~2020 Form 10-K, as well as those contained in Part I - Forward-Looking Statements thereof, as revised or supplemented by our Quarterly Reports filed with the SEC since the filing of the ~~2019~~2020 Form 10-K.

ITEM 5: OTHER INFORMATION

~~Item 5. Other Information~~

~~Entry into a Material Definitive Agreement:~~

On June 9, 2020, we entered into a Limited Waiver and Amendment (the "Waiver and Amendment") to our Amended Credit Facility with Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto. The lenders agreed to waive any default or event of default under the Amended Credit Facility resulting from (i) the failure to have the Atlantis Casino Resort or the Monarch Casino Black Hawk open and operating during the period commencing on April 1, 2020 and ending on September 30, 2020; (ii) the construction of the Monarch Black Hawk Expansion being stopped at any time prior to September 30, 2020; and (iii) the occurrence of a material adverse change on or prior to September 30, 2020, as a result of a mandated business cessation order. The lenders also agreed to waive any default on the financial covenants under the Amended Credit Facility for a period commencing on April 1, 2020 and ending on September 29, 2020.

The Amended Credit Facility was amended by adding a new definition, “Operational Liquidity”, to the Amended Credit Facility. Operational Liquidity as defined is, as of any date of determination, the amount by which (a) (i) the Unused Revolving Commitment as of such date, plus (ii) cash (including cage cash) as of such date exceeds (b) (i) $24,000,000 minus (ii) any retainage costs with respect to the Monarch Casino Black Hawk expansion project and any settlement or judgment under the PCL litigation paid in cash; provided that from and after the expansion project completion date, the receipt of a final certificate of occupancy (or its local equivalent) for the expansion project and the final resolution or disposition of the PCL Litigation, the amount in this clause (b) shall be deemed to be zero. We shall not permit Operational Liquidity to be less than $25,000,000 at any time. In addition, any borrowing under the Amended Credit Facility, greater than $26,000,000 shall be used solely to pay retainage costs with respect to the Expansion Project and any settlement or judgment under the PCL Litigation.

As a part of the Waiver and Amendment, for a period starting on June 9, 2020 until the first adjustment to occur after the fiscal quarter ending September 30, 2020, the interest rate is set as LIBOR plus 2.50%, or base rate plus 1.50% and the commitment fees are set at 0.45%.

~~We are in continuing discussions with our lenders regarding additional relief options and amendments of the Amended Credit Facility.We cannot express any assurances that additional relief options or amendments will be obtained.~~

2826

Table of Contents

ITEM 6. EXHIBITS



Exhibit No		Description
~~Exhibit No~~				~~Description~~
10.110.3		~~Limited Waiver~~Amendment to Fourth Amended and ~~Amendment to~~Restated Credit Agreement, dated ~~June 9, 2020,~~as of April 30, 2021, among Monarch Casino & ~~Resorts,~~Resort, Inc., Golden Road Motor Inn, Inc. and ~~certain subsidiaries,~~Monarch Growth Inc., as Borrowers, the Lenders named therein, and Wells Fargo Bank, National Association, as ~~administrative agent~~Administrative Agent, L/C Issuer and ~~a lender, and the other lenders party thereto~~Swing Line..
31.1*		Certification of Principal Executive Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer Pursuant to Exchange Act Rule 13a-14(a)/15d-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		Certification of Principal Executive Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		Certification of Principal Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		Inline XBRL Instance - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH*		Inline XBRL Taxonomy Extension Schema
101.CAL*		Inline XBRL Taxonomy Extension Calculation
101.DEF*		Inline XBRL Taxonomy Extension Definition
101.LAB*		Inline XBRL Taxonomy Extension Labels
101.PRE*	104		Inline XBRL Taxonomy Extension Presentation Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** Furnished herewith

~~SIGNATURES~~

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: ~~June 22, 2020~~May 7, 2021	By:	/s/ EDWIN S. KOENIG
	Edwin S. Koenig, Chief Accounting Officer
	(Principal Financial and Accounting Officer and Duly Authorized Officer)

2927


	Three months ended
	March 31,
	2020		2019
Revenues
Casino	$	27,065	$	28,976
Food and beverage		14,763		17,692
Hotel		6,417		8,505
Other		2,766		3,567
Net revenues		51,011		58,740

Operating expenses
Casino		9,618		10,820
Food and beverage		12,524		13,998
Hotel		2,988		3,130
Other		1,451		1,580
Selling, general and administrative		17,194		16,452
Depreciation and amortization		3,820		3,603
Other operating items, net		1,305		436
Total operating expenses		48,900		50,019
Income from operations		2,111		8,721

Income before income taxes		2,111		8,721
Provision for income taxes		(91)		(1,706)
Net income	$	2,020	$	7,015

Earnings per share of common stock
Net income
Basic	$	0.11	$	0.39
Diluted	$	0.11	$	0.38

Weighted average number of common shares and potential common shares outstanding
Basic		18,158		17,937
Diluted		18,874		18,619


	March 31, 2020		December 31, 2019
ASSETS		(Unaudited)
Current assets
Cash and cash equivalents	$	39,358	$	60,539
Receivables, net		4,194		5,458
Income taxes receivable		94		185
Inventories		6,889		6,735
Prepaid expenses		5,393		6,238
Total current assets		55,928		79,155
Property and equipment
Land		30,769		30,769
Land improvements		7,842		7,842
Buildings		193,235		193,235
Buildings improvements		31,986		31,986
Furniture and equipment		153,661		152,461
Construction in progress		295,429		285,789
Right of use assets		15,369		15,574
Leasehold improvements		3,848		3,848
		732,139		721,504
Less accumulated depreciation and amortization		(223,550)		(220,021)
Net property and equipment		508,589		501,483
Other assets
Goodwill		25,111		25,111
Intangible assets, net		1,246		1,538
Deferred income taxes		2,683		2,683
Other assets, net		908		908
Total other assets		29,948		30,240
Total assets	$	594,465	$	610,878
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt	$	22,500	$	20,000
Accounts payable		6,579		17,037
Construction accounts payable		4,652		7,528
Accrued expenses		28,208		34,109
Short-term lease liability		788		791
Total current liabilities		62,727		79,465
Long-term lease liability		14,595		14,797
Long-term debt, net		173,049		175,415
Total liabilities		250,371		269,677
Stockholders’ equity
Preferred stock, $.01 par value, 10,000,000 shares authorized; none issued		—		—
Common stock, $.01 par value, 30,000,000 shares authorized; 19,096,300 shares issued; 18,171,928 outstanding at March 31, 2020; 18,141,383 outstanding at December 31, 2019		191		191
Additional paid-in capital		35,660		35,215
Treasury stock, 924,372 shares at March 31, 2020; 954,917 shares at December 31, 2019		(12,349)		(12,777)
Retained earnings		320,592		318,572
Total stockholders’ equity		344,094		341,201
Total liabilities and stockholders’ equity	$	594,465	$	610,878


	Common Stock			Additional
	Shares			Paid-in		Retained		Treasury
	Outstanding	Amount		Capital		Earnings		Stock		Total
Balance, January 1, 2020	18,141,383	$	191	$	35,215	$	318,572	$	(12,777)	$	341,201
Net exercise of stock options	30,545		—		(428)		—		428		—
Stock-based compensation expense	—		—		873		—		—		873
Net income	—		—		—		2,020		—		2,020
Balance, March 31, 2020	18,171,928	$	191	$	35,660	$	320,592	$	(12,349)	$	344,094


	Three Months Ended March 31,
	2020		2019
Cash flows from operating activities:
Net income	$	2,020	$	7,015
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		3,820		3,603
Amortization of deferred loan costs		134		134
Stock-based compensation		873		1,960
Provision (recovery) for bad debts		76		(26)
Changes in operating assets and liabilities:
Receivables		1,188		1,378
Income taxes		91		1,706
Inventories		(154)		75
Prepaid expenses		845		817
Right of use asset, net		—		3
Accounts payable		(10,458)		(1,660)
Accrued expenses		(5,901)		(1,537)
Net cash (used in) provided by operating activities		(7,466)		13,468

Cash flows from investing activities:
Change in construction payable		(2,876)		2,084
Acquisition of property and equipment		(10,839)		(38,217)
Net cash used in investing activities		(13,715)		(36,133)

Cash flows from financing activities:
Long-term debt borrowings		—		16,020
Net cash provided by financing activities		—		16,020

Change in cash and cash equivalents		(21,181)		(6,645)
Cash and cash equivalents at beginning of period		60,539		30,462
Cash and cash equivalents at end of period	$	39,358	$	23,817


	Payments due by period (1)
			Less						Greater
			than 1		1 to 3		3 to 5		than 5
	Total		year		years		years		years
Operating Leases (2)	$	23.7	$	1.1	$	2.5	$	2.1	$	18.0
Purchase Obligations (3)		26.7		22.3		2.7		1.7		—
Borrowings Under Amended Credit Facility (4)		196.3		22.5		173.8		—		—
Total Contractual Cash Obligations	$	246.7	$	45.9	$	179.0	$	3.8	$	18.0