Document and Entity Information
| Document and Entity Information - shares | 3 Months Ended | |
| Mar. 31, 2016 | Apr. 29, 2016 | |
| Document and Entity Information | ||
| Entity Registrant Name | MONARCH CASINO & RESORT INC | |
| Entity Central Index Key | 907,242 | |
| Document Type | 10-Q | |
| Document Period End Date | Mar. 31, 2016 | |
| Amendment Flag | false | |
| Current Fiscal Year End Date | --12-31 | |
| Entity Current Reporting Status | Yes | |
| Entity Filer Category | Accelerated Filer | |
| Entity Common Stock, Shares Outstanding | 17,233,295 | |
| Document Fiscal Year Focus | 2,016 | |
| Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED STATEMEN
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
| Mar. 31, 2016 | Mar. 31, 2015 | |
| Revenues | ||
| Casino | $ 39,732 | $ 37,439 |
| Food and beverage | 13,414 | 13,103 |
| Hotel | 5,103 | 4,737 |
| Other | 2,671 | 2,600 |
| Gross revenues | 60,920 | 57,879 |
| Less promotional allowances | (11,171) | (10,708) |
| Net revenues | 49,749 | 47,171 |
| Operating expenses | ||
| Casino | 17,330 | 16,336 |
| Food and beverage | 5,780 | 5,219 |
| Hotel | 1,614 | 1,519 |
| Other | 959 | 934 |
| Selling, general and administrative | 13,151 | 12,579 |
| Depreciation and amortization | 3,700 | 4,131 |
| Loss (gain) on disposition of assets | 56 | (18) |
| Total operating expenses | 42,590 | 40,700 |
| Income from operations | 7,159 | 6,471 |
| Other expenses | ||
| Interest expense, net of amounts capitalized | (85) | (219) |
| Total other expense | (85) | (219) |
| Income before income taxes | 7,074 | 6,252 |
| Provision for income taxes | (2,499) | (2,209) |
| Net income | $ 4,575 | $ 4,043 |
| Net income | ||
| Basic (in dollars per share) | $ 0.27 | $ 0.24 |
| Diluted (in dollars per share) | $ 0.26 | $ 0.24 |
| Weighted average number of common shares and potential common shares outstanding | ||
| Basic (in shares) | 17,211 | 16,821 |
| Diluted (in shares) | 17,540 | 17,198 |
CONDENSED CONSOLIDATED BALANCE
| CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
| Current assets | ||
| Cash and cash equivalents | $ 18,409 | $ 21,164 |
| Receivables, net | 3,480 | 3,729 |
| Income taxes receivable | 611 | |
| Inventories | 2,838 | 2,881 |
| Prepaid expenses | 3,696 | 3,402 |
| Total current assets | 28,423 | 31,787 |
| Property and equipment | ||
| Land | 29,549 | 29,549 |
| Land improvements | 6,701 | 6,701 |
| Buildings | 150,860 | 150,966 |
| Buildings improvements | 23,250 | 23,255 |
| Furniture and equipment | 136,432 | 134,704 |
| Construction in Progress | 41,870 | 37,424 |
| Leasehold improvements | 1,347 | 1,347 |
| Gross property and equipment | 390,009 | 383,946 |
| Less accumulated depreciation and amortization | (181,392) | (180,792) |
| Net property and equipment | 208,617 | 203,154 |
| Other assets | ||
| Goodwill | 25,111 | 25,111 |
| Intangible assets, net | 5,909 | 6,200 |
| Deferred income taxes | 7,415 | 7,415 |
| Other assets, net | 1,103 | 1,179 |
| Total other assets | 39,538 | 39,905 |
| Total assets | 276,578 | 274,846 |
| Current liabilities | ||
| Current portion of long-term debt | 35,400 | 40,900 |
| Accounts payable | 8,000 | 6,747 |
| Construction accounts payable | 1,873 | 1,407 |
| Accrued expenses | 20,478 | 21,873 |
| Income taxes payable | 1,830 | |
| Total current liabilities | 67,581 | 70,927 |
| Total liabilities | $ 67,581 | $ 70,927 |
| 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; 17,233,295 outstanding at March 31, 2016; 17,202,699 outstanding at December 31, 2015 | $ 191 | $ 191 |
| Additional paid-in capital | 22,673 | 22,728 |
| Treasury stock, 1,863,005 shares at March 31, 2016; 1,893,601 shares at December 31, 2015 | (25,846) | (26,404) |
| Retained earnings | 211,979 | 207,404 |
| Total stockholders' equity | 208,997 | 203,919 |
| Total liabilities and stockholders' equity | $ 276,578 | $ 274,846 |
CONDENSED CONSOLIDATED BALANCE4
| CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
| Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
| Preferred stock, shares issued | 0 | 0 |
| Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
| Common stock, shares authorized | 30,000,000 | 30,000,000 |
| Common stock, shares issued | 19,096,300 | 19,096,300 |
| Common stock, shares outstanding | 17,233,295 | 17,202,699 |
| Treasury stock, shares | 1,863,005 | 1,893,601 |
CONDENSED CONSOLIDATED STATEME5
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
| Mar. 31, 2016 | Mar. 31, 2015 | |
| Cash flows from operating activities: | ||
| Net income | $ 4,575 | $ 4,043 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 3,700 | 4,131 |
| Amortization of deferred loan costs | 76 | 76 |
| Stock-based compensation | 127 | 291 |
| Excess tax benefit from stock-based compensation | (70) | |
| Provision for bad debts | 18 | 7 |
| Loss (gain) on disposition of assets | 56 | (18) |
| Changes in operating assets and liabilities: | ||
| Receivables | 231 | 152 |
| Inventories | 43 | (8) |
| Prepaid expenses | (294) | (315) |
| Accounts payable | 1,253 | (1,674) |
| Accrued expenses | (1,395) | (655) |
| Income taxes | 2,441 | 2,209 |
| Net cash provided by operating activities | 10,761 | 8,239 |
| Cash flows from investing activities: | ||
| Proceeds from sale of assets | 20 | |
| Change in construction payable | 466 | 411 |
| Acquisition of property and equipment | (8,928) | (7,780) |
| Net cash used in investing activities | (8,462) | (7,349) |
| Cash flows from financing activities: | ||
| Net exercise of stock options | 376 | 297 |
| Excess tax benefit from stock-based compensation | 70 | |
| Principal payments on long-term debt | (5,500) | (4,300) |
| Net cash used in financing activities | (5,054) | (4,003) |
| Net decrease in cash | (2,755) | (3,113) |
| Cash and cash equivalents at beginning of period | 21,164 | 21,583 |
| Cash and cash equivalents at end of period | 18,409 | 18,470 |
| Supplemental disclosure of cash flow information | ||
| Cash paid for interest, net of amounts capitalized | $ 9 | $ 142 |
SUMMARY OF SIGNIFICANT ACCOUNTI
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
| Mar. 31, 2016 | |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation : Monarch Casino & Resort, Inc. was incorporated in 1993 and through its wholly-owned subsidiary, Golden Road Motor Inn, Inc. (“Golden Road”), owns and operates the Atlantis Casino Resort Spa, a hotel/casino facility in Reno, Nevada (the “Atlantis”). Monarch’s wholly-owned subsidiaries, High Desert Sunshine, Inc. (“High Desert”), Golden East, Inc. (“Golden East”) and Golden North, Inc. (“Golden North”), each own separate parcels of land located proximate to the Atlantis. Monarch’s wholly-owned subsidiary, Monarch Growth Inc. (“Monarch Growth”), formed in 2011, acquired Riviera Black Hawk, Inc., owner of the Riviera Black Hawk Casino, on April 26, 2012. Riviera Black Hawk, Inc. was renamed Monarch Black Hawk, Inc. and Riviera Black Hawk Casino was renamed Monarch Casino Black Hawk in October 2013. Monarch Growth also owns a parcel of land in Black Hawk, Colorado contiguous to the Monarch Casino Black Hawk. In addition to owning the Monarch Casino Black Hawk, Monarch Black Hawk, Inc. wholly owns Chicago Dogs Eatery, Inc. and Monarch Promotional Association, both of which were formed in relation to extended licensure for extended hours of liquor operation in Black Hawk. The unaudited condensed consolidated financial statements include the accounts of Monarch and its subsidiaries. Intercompany balances and transactions are eliminated. Unless otherwise indicated, “Monarch,” “Company,” “we,” “our” and “us” refer to Monarch Casino & Resort, Inc. and its subsidiaries. Interim Financial Statements : The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles 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 generally accepted accounting principles for complete financial statements. In the opinion of management of the Company, all adjustments considered necessary for a fair presentation are included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The balance sheet at December 31, 2015 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles 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, 2015. Fair Value of Financial Instruments : The estimated fair value of the Company’s financial instruments has been determined by the Company, using available market information and valuation methodologies. However, considerable judgment is required to develop the estimates of fair value; thus, the estimates provided herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The carrying amounts of cash, receivables, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. Additionally, the carrying value of our debt approximates fair value due to the variable nature of applicable interest rates and short-term maturity. Change in Accounting Estimate of Depreciable Life of Monarch Casino Black Hawk Parking Structure: In December 2013, the Company began construction of a new parking facility at the Monarch Casino Black Hawk. Upon completion of that new structure, the Company plans to demolish the existing parking structure. At December 31, 2013, the existing parking structure had a net book value of approximately $4.8 million and a remaining depreciable life of approximately 37 years. The new parking facility was estimated to be completed on March 31, 2015. In accordance with ASC 250-10-45-17, effective January 1, 2014, the Company modified the estimated depreciable life of the existing parking structure to 15 months; the period from January 1, 2014 through the estimated demolition commencement date of March 31, 2015. As a result of this modification to the estimated depreciable life, depreciation expense of the existing parking structure increased by approximately $0.3 million per month (approximately $0.2 million net of tax). In July 2014, because of a delayed construction schedule, the Company revised the new parking facility completion date to December 31, 2015. At this time, the existing parking structure had a net book value of approximately $2.9 million. The Company modified the estimated depreciable life of the existing parking structure to 18 months; the period from July 1, 2014 through the revised estimated demolition commencement date of December 31, 2015. In October 2015, the general contractor notified the Company that further delay is expected and completion is now expected in the second quarter of 2016 at which time demolition of the existing structure will commence. At September 30, 2015, the existing parking structure had a net book value of approximately $0.4 million. Beginning in October 2015, the Company reduced the monthly depreciation expense to $0.04 million to reflect the revised depreciable life of the existing parking structure. For the three months ended March 31, 2016, the effect of the change in estimate was an increase of depreciation expense by $133 thousand, a decrease of net income by $87 thousand and a decrease of basic and diluted earnings per share by approximately $0.01. For the three months ended March 31, 2015, the effect of the change in estimate was an increase of depreciation expense by $451 thousand, a decrease of net income by $293 thousand and a decrease of basic and diluted earnings per share by approximately $0.02. 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 operating segments, Atlantis and Monarch Casino Black Hawk, meet all of the aggregation criteria stipulated by ASC 280-10-50-11. The Company views each property as an operating segment and the two operating segments have been aggregated into one reporting segment. |
STOCK-BASED COMPENSATION
| STOCK-BASED COMPENSATION | 3 Months Ended |
| Mar. 31, 2016 | |
| STOCK-BASED COMPENSATION | |
| STOCK-BASED COMPENSATION | NOTE 2. STOCK-BASED COMPENSATION The Company accounts for its stock-based compensation in accordance with the authoritative guidance requiring the compensation cost relating to stock-based payment transactions to be recognized in the Company’s consolidated statements of income. Reported stock-based compensation expense was classified as follows (in thousands): Three months ended March 31, 2016 2015 Casino $ $ Food and beverage Hotel Selling, general and administrative Total stock-based compensation, before taxes Tax benefit ) ) Total stock-based compensation, net of tax $ $ |
EARNINGS PER SHARE
| EARNINGS PER SHARE | 3 Months Ended |
| Mar. 31, 2016 | |
| EARNINGS PER SHARE | |
| EARNINGS PER SHARE | NOTE 3. 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, 2016 2015 Shares Per Share Amount Shares Per Share Amount Basic $ $ Effect of dilutive stock options ) — Diluted $ $ 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, 2016 and 2015, options for approximately 566 thousand and 420 thousand shares, respectively, were excluded from the computation. |
NEW ACCOUNTING PRONOUNCEMENTS
| NEW ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
| Mar. 31, 2016 | |
| NEW ACCOUNTING PRONOUNCEMENTS | |
| NEW ACCOUNTING PRONOUNCEMENTS | NOTE 4. NEW ACCOUNTING PRONOUNCEMENTS In May 2014, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update that amends the FASB Accounting Standards Codification and creates a new topic for Revenue from Contracts with Customers. The new guidance is expected to clarify the principles for revenue recognition and to develop a common revenue standard for U.S. GAAP applicable to revenue transactions. This guidance provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. This guidance also provides substantial revision of interim and annual disclosures. The update allows for either full retrospective adoption, meaning the guidance is applied for all periods presented, or modified retrospective adoption, meaning the guidance is applied only to the most current period presented in the financial statements with the cumulative effect of initially applying the guidance recognized at the date of initial application. In July 2015, FASB voted to delay the effective date of the new revenue standard by one year. The new effective date is for the annual and interim periods beginning after December 15, 2017. Reporting entities may choose to adopt the standard as of the original effective date. The Company plans to adopt this standard effective January 1, 2018. The Company is currently assessing the impact the adoption of this standard will have on its Consolidated Financial Statements. In August 2014, FASB issued an accounting standard update that requires management to assess an entity’s ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. Substantial doubt about an entity’s ability to continue as a going concern exist when relevant conditions and events, consolidated and aggregated, indicate that it is probable that an entity will be unable to meet its obligations as they become due within one year after the date that the financial statement are issued. Currently, there is no guidance in U.S. GAAP for management’s responsibility to perform an evaluation. Under the update, management’s evaluation is to be performed when preparing financial statements for each annual and interim reporting period and based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued. The effective date for this update is for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early application is permitted. The Company will adopt this standard effective January 1, 2017. The adoption of this standard is not expected to have a material impact on our Consolidated Financial Statements. In April 2015, FASB issued an accounting standards update that requires debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. In August 2015, FASB issued an accounting standards update which clarifies that the guidance issued in April 2015 does not apply to line-of-credit arrangements. According to the additional guidance, line-of-credit arrangements will continue to present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the arrangement. The effective date for this update is for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company adopted this standard effective January 1, 2016. Because the current credit facility we have is a line-of-credit arrangement, the adoption of this standard does not have any impact on our Consolidated Financial Statements. In July 2015, FASB issued an accounting standards update which changes the measurement principle for inventories valued under the first-in, first-out or weighted-average methods from the lower of cost or market to the lower of cost and net realizable value. Net realizable value is defined by FASB as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The effective date for this guidance is for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The Company is currently assessing the impact the adoption of this standard will have on its Consolidated Financial Statements. In February 2016, the FASB issued an accounting standards update which addresses the recognition and measurement of leases. Under the new guidance, for all leases (with the exception of short-term leases), at the commencement date, lessees will be required to recognize a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Further, the new lease guidance simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and liabilities, which no longer provides a source for off-balance sheet financing. The effective date for this update is for the annual and interim periods beginning after December 15, 2018 with early adoption permitted. Lessees and lessors must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The Company is currently assessing the impact the adoption of this standard will have on its 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, we have 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. |
RELATED PARTY TRANSACTIONS
| RELATED PARTY TRANSACTIONS | 3 Months Ended |
| Mar. 31, 2016 | |
| RELATED PARTY TRANSACTIONS | |
| RELATED PARTY TRANSACTIONS | 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 (“Farahi Family Stockholders”) of Monarch and each also beneficially own 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 formerly held positions of Co-Chairman of the Board, Secretary, Treasurer and Chief Financial Officer of the Company. On August 28, 2015, Monarch, through its subsidiary Golden Road, entered into a 20-year lease agreement with BLI for a portion of the Shopping Center (the “Parking Lot Lease”) consisting of an approximate 46,000 square-foot commercial building on approximately 4.15 acres of land adjacent to the Atlantis (the “Leased Property”). We have demolished the building and are in the process of converting the now vacant 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, we are responsible for payment of property taxes, utilities and maintenance expenses related to the Leased Property. We have an option to renew the Parking Lot Lease for an additional 10-year term. If we elect not to exercise its renewal option, we will be obligated to pay BLI $1.6 million. For the three months ended March 31, 2016, the Company paid $174 thousand in rent, plus $9 thousand for operating expenses related to this lease. In addition, we share a driveway with and lease approximately 37,000 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 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 successive five-year renewal terms beyond the initial 15 year term in the existing Driveway Lease Agreement. At the end of the renewal terms, we have the option to purchase the leased driveway section of the Shopping Center. As of March 31, 2016, the annual rent is $377 thousand. For each of the three months ended March 31, 2016 and 2015, the Company paid $94 thousand in rent, plus $5 thousand and $28 thousand, respectively, for operating expenses to this lease. We occasionally lease billboard advertising, storage space and parking lot space from affiliates controlled by Farahi Family Stockholders and paid $28 thousand and $43 thousand for the three months ended March 31, 2016 and 2015, respectively. |
LONG-TERM DEBT
| LONG-TERM DEBT | 3 Months Ended |
| Mar. 31, 2016 | |
| LONG-TERM DEBT | |
| LONG-TERM DEBT | NOTE 6. LONG-TERM DEBT On November 15, 2011, we amended and restated our $60.0 million credit facility with a new $100 million facility (the “Credit Facility”). We utilized the Credit Facility to finance the acquisition of Black Hawk and the Credit Facility is available to be used for working capital needs, general corporate purposes and for ongoing capital expenditure requirements. Borrowings are secured by liens on substantially all of the Company’s real and personal property. In addition to other customary covenants for a facility of this nature, as of March 31, 2016, we are required to maintain a leverage ratio, defined as consolidated debt divided by Adjusted EBITDA, of no more than 2.0:1 and a fixed charge coverage ratio (Adjusted EBITDA divided by fixed charges, as defined) of at least 1.15:1. As of March 31, 2016, the Company’s leverage ratio and fixed charge coverage ratios were 0.7:1 and 40.5:1, respectively. We may prepay borrowings under the Credit Facility 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 borrowed so long as the total borrowings outstanding do not exceed the maximum principal available. The Credit Facility is structured to reduce the maximum principal available by $1.5 million each quarter beginning June 30, 2013. The Credit Facility also allows us to permanently reduce the maximum principal available at any time so long as the amount of such reduction is at least $0.5 million and a multiple of $50,000. During the second quarter of 2015, we exercised this option and permanently reduced the amount available under the credit facility by $20 million and in the fourth quarter of 2015 by an additional $15 million. As of March 31, 2016, the maximum principle available under the credit facility is $47.0 million. The maturity date of the Credit Facility is November 15, 2016. As such, the entire amounts outstanding under the credit facility of $35.4 million as of March 31, 2016 and $40.9 million as of December 31, 2015 are classified as a current liability in the Consolidated Balance Sheet. At March 31, 2016, our leverage ratio was such that pricing for borrowings under the Credit Facility was LIBOR plus 1.25%. At March 31, 2016, the one-month LIBOR interest rate was 0.44%. The carrying value of the debt outstanding under the Credit Facility approximates fair value because the interest fluctuates with the lender’s prime rate or other market rates of interest. Subject to entering into a new or amended credit facility with sufficient borrowing capacity to refinance the outstanding balance and to complete the Black Hawk Expansion Plan, we believe, based on the relationship with our current lenders and our recent and projected financial performance, that our existing cash balances, cash flow from operations and borrowings available under the existing, amended or new Credit Facility will provide us with sufficient resources to fund our operations, meet our debt obligations, and fulfill our capital expenditure plans over the next twelve months; however, our operations are subject to financial, economic, competitive, regulatory, and other factors, many of which are beyond our control. If we are unable to enter into a new or amended credit facility or to generate sufficient cash flow, we could be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, selling assets, restructuring debt or obtaining additional equity capital. |
TAXES
| TAXES | 3 Months Ended |
| Mar. 31, 2016 | |
| TAXES | |
| TAXES | NOTE 7. TAXES For each of the three months ended March 31, 2016 and 2015 the Company’s effective tax rate was 35.3%. The Company early adopted ASU No. 2015-17, at December 31, 2015, which simplifies presentation of the deferred tax assets and liabilities by allowing all such balances to be treated as noncurrent. |
STOCK REPURCHASE PLAN
| STOCK REPURCHASE PLAN | 3 Months Ended |
| Mar. 31, 2016 | |
| STOCK REPURCHASE PLAN. | |
| STOCK REPURCHASE PLAN | NOTE 8. STOCK REPURCHASE PLAN On October 22, 2014, the board of directors 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, 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 our 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 no purchases under the Repurchase Plan. |
SUMMARY OF SIGNIFICANT ACCOUN14
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
| Mar. 31, 2016 | |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
| Basis of Presentation | Basis of Presentation : Monarch Casino & Resort, Inc. was incorporated in 1993 and through its wholly-owned subsidiary, Golden Road Motor Inn, Inc. (“Golden Road”), owns and operates the Atlantis Casino Resort Spa, a hotel/casino facility in Reno, Nevada (the “Atlantis”). Monarch’s wholly-owned subsidiaries, High Desert Sunshine, Inc. (“High Desert”), Golden East, Inc. (“Golden East”) and Golden North, Inc. (“Golden North”), each own separate parcels of land located proximate to the Atlantis. Monarch’s wholly-owned subsidiary, Monarch Growth Inc. (“Monarch Growth”), formed in 2011, acquired Riviera Black Hawk, Inc., owner of the Riviera Black Hawk Casino, on April 26, 2012. Riviera Black Hawk, Inc. was renamed Monarch Black Hawk, Inc. and Riviera Black Hawk Casino was renamed Monarch Casino Black Hawk in October 2013. Monarch Growth also owns a parcel of land in Black Hawk, Colorado contiguous to the Monarch Casino Black Hawk. In addition to owning the Monarch Casino Black Hawk, Monarch Black Hawk, Inc. wholly owns Chicago Dogs Eatery, Inc. and Monarch Promotional Association, both of which were formed in relation to extended licensure for extended hours of liquor operation in Black Hawk. The unaudited condensed consolidated financial statements include the accounts of Monarch and its subsidiaries. Intercompany balances and transactions are eliminated. Unless otherwise indicated, “Monarch,” “Company,” “we,” “our” and “us” refer to Monarch Casino & Resort, Inc. and its subsidiaries. |
| Interim Financial Statements | Interim Financial Statements : The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles 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 generally accepted accounting principles for complete financial statements. In the opinion of management of the Company, all adjustments considered necessary for a fair presentation are included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The balance sheet at December 31, 2015 has been derived from the audited financial statements at that date, but does not include all of the information and footnotes required by U.S. generally accepted accounting principles 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, 2015. |
| Fair Value of Financial Instruments | Fair Value of Financial Instruments : The estimated fair value of the Company’s financial instruments has been determined by the Company, using available market information and valuation methodologies. However, considerable judgment is required to develop the estimates of fair value; thus, the estimates provided herein are not necessarily indicative of the amounts that the Company could realize in a current market exchange. The carrying amounts of cash, receivables, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. Additionally, the carrying value of our debt approximates fair value due to the variable nature of applicable interest rates and short-term maturity. |
| Change in Accounting Estimate of Depreciable Life of Monarch Casino Black Hawk Parking Structure | Change in Accounting Estimate of Depreciable Life of Monarch Casino Black Hawk Parking Structure: In December 2013, the Company began construction of a new parking facility at the Monarch Casino Black Hawk. Upon completion of that new structure, the Company plans to demolish the existing parking structure. At December 31, 2013, the existing parking structure had a net book value of approximately $4.8 million and a remaining depreciable life of approximately 37 years. The new parking facility was estimated to be completed on March 31, 2015. In accordance with ASC 250-10-45-17, effective January 1, 2014, the Company modified the estimated depreciable life of the existing parking structure to 15 months; the period from January 1, 2014 through the estimated demolition commencement date of March 31, 2015. As a result of this modification to the estimated depreciable life, depreciation expense of the existing parking structure increased by approximately $0.3 million per month (approximately $0.2 million net of tax). In July 2014, because of a delayed construction schedule, the Company revised the new parking facility completion date to December 31, 2015. At this time, the existing parking structure had a net book value of approximately $2.9 million. The Company modified the estimated depreciable life of the existing parking structure to 18 months; the period from July 1, 2014 through the revised estimated demolition commencement date of December 31, 2015. In October 2015, the general contractor notified the Company that further delay is expected and completion is now expected in the second quarter of 2016 at which time demolition of the existing structure will commence. At September 30, 2015, the existing parking structure had a net book value of approximately $0.4 million. Beginning in October 2015, the Company reduced the monthly depreciation expense to $0.04 million to reflect the revised depreciable life of the existing parking structure. For the three months ended March 31, 2016, the effect of the change in estimate was an increase of depreciation expense by $133 thousand, a decrease of net income by $87 thousand and a decrease of basic and diluted earnings per share by approximately $0.01. For the three months ended March 31, 2015, the effect of the change in estimate was an increase of depreciation expense by $451 thousand, a decrease of net income by $293 thousand and a decrease of basic and diluted earnings per share by approximately $0.02. |
| Segment Reporting | 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 operating segments, Atlantis and Monarch Casino Black Hawk, meet all of the aggregation criteria stipulated by ASC 280-10-50-11. The Company views each property as an operating segment and the two operating segments have been aggregated into one reporting segment. |
STOCK-BASED COMPENSATION (Table
| STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
| Mar. 31, 2016 | |
| STOCK-BASED COMPENSATION | |
| Schedule of stock-based compensation expense | Reported stock-based compensation expense was classified as follows (in thousands): Three months ended March 31, 2016 2015 Casino $ $ Food and beverage Hotel Selling, general and administrative Total stock-based compensation, before taxes Tax benefit ) ) Total stock-based compensation, net of tax $ $ |
EARNINGS PER SHARE (Tables)
| EARNINGS PER SHARE (Tables) | 3 Months Ended |
| Mar. 31, 2016 | |
| EARNINGS PER SHARE | |
| Schedule of reconciliation of the number of shares (denominator) used in the basic and diluted earnings per share computations | 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, 2016 2015 Shares Per Share Amount Shares Per Share Amount Basic $ $ Effect of dilutive stock options ) — Diluted $ $ |
SUMMARY OF SIGNIFICANT ACCOUN17
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Change in Accounting Estimate (Details) $ / shares in Units, $ in Thousands | Dec. 31, 2013USD ($) | Oct. 31, 2015USD ($) | Mar. 31, 2016USD ($)item$ / shares | Mar. 31, 2015USD ($)$ / shares | Dec. 31, 2014USD ($) | Mar. 31, 2015 | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jul. 31, 2014USD ($) |
| Change in Accounting Estimate | |||||||||
| Net book value | $ 208,617 | $ 203,154 | |||||||
| Net income | $ 4,575 | $ 4,043 | |||||||
| SEGMENT INFORMATION | |||||||||
| Number of operating segments | item | 2 | ||||||||
| Number of reportable segments | item | 1 | ||||||||
| Monarch Black Hawk Parking Structure | |||||||||
| Change in Accounting Estimate | |||||||||
| Net book value | $ 4,800 | ||||||||
| Estimated depreciable life | P37Y | ||||||||
| Monarch Black Hawk Parking Structure | Service Life | |||||||||
| Change in Accounting Estimate | |||||||||
| Net book value | $ 400 | $ 2,900 | |||||||
| Estimated depreciable life | P15M | P18M | |||||||
| Depreciation expense per month | $ 40 | $ 300 | |||||||
| Depreciation expense net of tax per month | $ 200 | ||||||||
| Depreciation expense | $ 133 | 451 | |||||||
| Net income | $ (87) | $ (293) | |||||||
| Basic and diluted earnings per share (in dollars per share) | $ / shares | $ (0.01) | $ (0.02) |
STOCK-BASED COMPENSATION (Detai
| STOCK-BASED COMPENSATION (Details) - USD ($) $ in Thousands | 3 Months Ended | |
| Mar. 31, 2016 | Mar. 31, 2015 | |
| Stock-based compensation expense | ||
| Total stock-based compensation, before taxes | $ 127 | $ 291 |
| Tax benefit | (45) | (102) |
| Total stock-based compensation, net of tax | 82 | 189 |
| Casino | ||
| Stock-based compensation expense | ||
| Total stock-based compensation, before taxes | 21 | 16 |
| Food and beverage | ||
| Stock-based compensation expense | ||
| Total stock-based compensation, before taxes | 25 | 24 |
| Hotel | ||
| Stock-based compensation expense | ||
| Total stock-based compensation, before taxes | 11 | 3 |
| Selling, general and administrative | ||
| Stock-based compensation expense | ||
| Total stock-based compensation, before taxes | $ 70 | $ 248 |
EARNINGS PER SHARE (Details)
| EARNINGS PER SHARE (Details) - $ / shares shares in Thousands | 3 Months Ended | |
| Mar. 31, 2016 | Mar. 31, 2015 | |
| Shares | ||
| Basic (in shares) | 17,211 | 16,821 |
| Effect of dilutive stock options (in shares) | 329 | 377 |
| Diluted (in shares) | 17,540 | 17,198 |
| Per Share Amount | ||
| Basic (in dollars per share) | $ 0.27 | $ 0.24 |
| Effect of dilutive stock options (in dollars per share) | (0.01) | |
| Diluted (in dollars per share) | $ 0.26 | $ 0.24 |
| Stock options | ||
| Anti-dilutive securities | ||
| Anti-dilutive securities excluded from the computation of diluted earnings per share (in shares) | 566 | 420 |
RELATED PARTY TRANSACTIONS (Det
| RELATED PARTY TRANSACTIONS (Details) $ in Thousands | Aug. 28, 2015USD ($)aft²item | Sep. 30, 2004USD ($) | Mar. 31, 2016USD ($)ft²item | Mar. 31, 2015USD ($) |
| Members of Management Holding Noncontrolling Interests | BLI Driveway Lease | ||||
| RELATED PARTY TRANSACTIONS | ||||
| Lease term under each renewal | 5 years | |||
| Area of property leased (in square feet) | ft² | 37,000 | |||
| Minimum lease term | 15 years | |||
| Original annual rent expense | $ 300 | |||
| Annual rent | $ 377 | |||
| Number of terms for which the lease can be renewed | item | 3 | |||
| Lease rent paid | $ 94 | $ 94 | ||
| Operating expenses related to lease | 5 | 28 | ||
| Affiliates of Controlling Stockholders | ||||
| RELATED PARTY TRANSACTIONS | ||||
| Lease rent paid | 28 | $ 43 | ||
| Golden Road | Members of Management Holding Noncontrolling Interests | BLI Parking Lot Lease | ||||
| RELATED PARTY TRANSACTIONS | ||||
| Lease term | 20 years | |||
| Area of property leased (in acres) | a | 4.15 | |||
| Area of building being demolished (in square feet) | ft² | 46,000 | |||
| Number of parking spaces | item | 300 | |||
| Minimum annual rent | $ 695 | |||
| Anniversary years subject to cost of living adjustment rent increases | 5 years | |||
| Lease term under each renewal | 10 years | |||
| Amount due to related party if lease is not renewed | $ 1,600 | |||
| Lease rent paid | 174 | |||
| Operating expenses related to lease | $ 9 |
LONG-TERM DEBT (Details)
| LONG-TERM DEBT (Details) | 3 Months Ended | ||||||||||||
| Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Jun. 30, 2015USD ($) | Sep. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Sep. 30, 2014USD ($) | Jun. 30, 2014USD ($) | Mar. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Sep. 30, 2013USD ($) | Jun. 30, 2013USD ($) | Nov. 15, 2011USD ($) | |
| Long-term debt | |||||||||||||
| Current portion of long-term debt | $ 35,400,000 | $ 40,900,000 | |||||||||||
| Credit Facility | |||||||||||||
| Long-term debt | |||||||||||||
| Maximum borrowing capacity | 47,000,000 | $ 100,000,000 | |||||||||||
| Amount in which the maximum borrowing capacity was permanently reduced | 15,000,000 | $ 20,000,000 | |||||||||||
| Reduction in maximum borrowing capacity each quarter | 1,500,000 | $ 1,500,000 | $ 1,500,000 | $ 1,500,000 | $ 1,500,000 | $ 1,500,000 | $ 1,500,000 | $ 1,500,000 | $ 1,500,000 | $ 1,500,000 | $ 1,500,000 | $ 1,500,000 | |
| Multiple which may be used to permanently reduce the maximum borrowing capacity under the credit facility | $ 50,000 | ||||||||||||
| Variable interest rate base | LIBOR | ||||||||||||
| Percentage points added to the reference rate | 1.25% | ||||||||||||
| One-month LIBOR interest rate (as a percent) | 0.44% | ||||||||||||
| Credit Facility | Actual | |||||||||||||
| Long-term debt | |||||||||||||
| Leverage ratio | 0.7 | ||||||||||||
| Fixed charge coverage ratio | 40.50 | ||||||||||||
| Credit Facility | Minimum | |||||||||||||
| Long-term debt | |||||||||||||
| Amount in which the maximum borrowing capacity was permanently reduced | $ 500,000 | ||||||||||||
| Credit Facility | Minimum | Requirement | |||||||||||||
| Long-term debt | |||||||||||||
| Fixed charge coverage ratio | 1.15 | ||||||||||||
| Credit Facility | Maximum | Requirement | |||||||||||||
| Long-term debt | |||||||||||||
| Leverage ratio | 2 | ||||||||||||
| Old Credit Facility | |||||||||||||
| Long-term debt | |||||||||||||
| Maximum borrowing capacity | $ 60,000,000 | ||||||||||||
TAXES (Details)
| TAXES (Details) | 15 Months Ended |
| Mar. 31, 2016 | |
| TAXES | |
| Effective tax rate (as a percent) | 35.30% |
STOCK REPURCHASE PLAN (Details)
| STOCK REPURCHASE PLAN (Details) - shares | Mar. 31, 2016 | Oct. 22, 2014 |
| Purchases of treasury stock | 0 | |
| Maximum | ||
| Authorized repurchase of Company's common stock | 3,000,000 |