Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 22, 2022 | Jun. 30, 2021 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Dec. 31, 2021 | ||
Entity File Number | 0-22088 | ||
Entity Registrant Name | MONARCH CASINO & RESORT, INC | ||
Entity Incorporation, State or Country Code | NV | ||
Entity Tax Identification Number | 88-0300760 | ||
Entity Address, Address Line One | 3800 S. Virginia Street | ||
Entity Address, City or Town | Reno | ||
Entity Address, State or Province | NV | ||
Entity Address, Postal Zip Code | 89502 | ||
City Area Code | 775 | ||
Local Phone Number | 335-4600 | ||
Title of 12(b) Security | Common Stock, $0.01 par value per share | ||
Trading Symbol | MCRI | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Entity Public Float | $ 963.9 | ||
Entity Common Stock, Shares Outstanding | 18,700,620 | ||
Auditor Name | Ernst & Young LLP | ||
Auditor Firm ID | 42 | ||
Auditor Location | Las Vegas, Nevada | ||
Entity Central Index Key | 0000907242 | ||
Document Fiscal Year Focus | 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Revenues | |||
Net revenues | $ 395,377 | $ 184,413 | $ 249,166 |
Operating expenses | |||
Selling, general and administrative | 84,427 | 60,395 | 69,312 |
Depreciation and amortization | 38,428 | 17,324 | 14,875 |
Other operating items, net | 4,929 | 6,711 | 3,112 |
Total operating expenses | 305,500 | 169,142 | 209,591 |
Income from operations | 89,877 | 15,271 | 39,575 |
Other expense | |||
Interest expense, net of amounts capitalized | (4,506) | (273) | 1 |
Income before income taxes | 85,371 | 14,998 | 39,576 |
(Provision) benefit for income taxes | (16,883) | 8,680 | (7,760) |
Net income | $ 68,488 | $ 23,678 | $ 31,816 |
Earnings per share of common stock | |||
Basic | $ 3.68 | $ 1.30 | $ 1.77 |
Diluted | $ 3.53 | $ 1.25 | $ 1.70 |
Weighted average number of common shares and potential common shares outstanding | |||
Basic | 18,617 | 18,218 | 18,025 |
Diluted | 19,427 | 18,877 | 18,684 |
Casino | |||
Revenues | |||
Net revenues | $ 233,413 | $ 111,550 | $ 128,010 |
Operating expenses | |||
Operating expenses | 75,258 | 34,020 | 45,259 |
Food and beverage | |||
Revenues | |||
Net revenues | 91,080 | 43,162 | 72,578 |
Operating expenses | |||
Operating expenses | 72,684 | 36,123 | 57,367 |
Hotel | |||
Revenues | |||
Net revenues | 54,374 | 20,133 | 35,222 |
Operating expenses | |||
Operating expenses | 22,106 | 10,104 | 13,123 |
Other | |||
Revenues | |||
Net revenues | 16,510 | 9,568 | 13,356 |
Operating expenses | |||
Operating expenses | $ 7,668 | $ 4,465 | $ 6,543 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 33,526 | $ 28,310 |
Receivables, net | 8,881 | 3,736 |
Income taxes receivable | 26,946 | 24,894 |
Inventories | 7,159 | 7,823 |
Prepaid expenses | 7,552 | 8,393 |
Total current assets | 84,064 | 73,156 |
Property and equipment, net | 580,807 | 572,507 |
Goodwill | 25,111 | 25,111 |
Intangible assets, net | 477 | 973 |
Deferred income taxes | 130 | |
Total assets | 690,459 | 671,877 |
Current liabilities | ||
Current portion of long-term debt | 20,000 | 12,500 |
Accounts payable | 18,575 | 11,655 |
Construction accounts payable | 58,891 | 49,771 |
Accrued expenses | 42,967 | 34,705 |
Short-term lease liability | 745 | 813 |
Total current liabilities | 141,178 | 109,444 |
Deferred income taxes | 19,617 | 13,220 |
Long-term lease liability | 13,498 | 13,984 |
Long-term debt, net | 68,152 | 167,162 |
Total liabilities | 242,445 | 303,810 |
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; 18,764,540 outstanding at December 31, 2021; 18,426,130 outstanding at December 31, 2020 | 191 | 191 |
Additional paid-in capital | 41,426 | 34,498 |
Treasury stock, 331,760 shares at December 31, 2021; 670,170 shares at December 31, 2020 | (4,341) | (8,872) |
Retained earnings | 410,738 | 342,250 |
Total stockholders' equity | 448,014 | 368,067 |
Total liabilities and stockholders' equity | $ 690,459 | $ 671,877 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
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 | 18,764,540 | 18,426,130 |
Treasury stock, shares | 331,760 | 670,170 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Total |
Balance at Dec. 31, 2018 | $ 191 | $ 30,111 | $ 286,756 | $ (15,876) | $ 301,182 |
Balance (in shares) at Dec. 31, 2018 | 17,919,021 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Exercise of stock options, net | 979 | 3,099 | 4,078 | ||
Exercise of stock options, net (in shares) | 222,362 | ||||
Stock-based compensation expense | 4,125 | 4,125 | |||
Net income | 31,816 | 31,816 | |||
Balance at Dec. 31, 2019 | $ 191 | 35,215 | 318,572 | (12,777) | 341,201 |
Balance (in shares) at Dec. 31, 2019 | 18,141,383 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Exercise of stock options, net | (4,650) | 3,905 | (745) | ||
Exercise of stock options, net (in shares) | 284,747 | ||||
Stock-based compensation expense | 3,855 | 3,855 | |||
Capital contribution | 78 | 78 | |||
Net income | 23,678 | 23,678 | |||
Balance at Dec. 31, 2020 | $ 191 | 34,498 | 342,250 | (8,872) | $ 368,067 |
Balance (in shares) at Dec. 31, 2020 | 18,426,130 | 18,426,130 | |||
Increase (Decrease) in Stockholders' Equity | |||||
Exercise of stock options, net | 2,868 | 4,531 | $ 7,399 | ||
Exercise of stock options, net (in shares) | 338,410 | ||||
Stock-based compensation expense | 4,060 | 4,060 | |||
Net income | 68,488 | 68,488 | |||
Balance at Dec. 31, 2021 | $ 191 | $ 41,426 | $ 410,738 | $ (4,341) | $ 448,014 |
Balance (in shares) at Dec. 31, 2021 | 18,764,540 | 18,764,540 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | |||
Net income | $ 68,488 | $ 23,678 | $ 31,816 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 38,428 | 17,324 | 14,875 |
Amortization of deferred loan costs | 990 | 764 | 538 |
Stock-based compensation | 4,060 | 3,855 | 8,203 |
Provision for bad debts | 245 | 159 | 189 |
Loss on disposition of assets | 136 | 63 | |
Write off of unamortized debt issuance costs | 95 | ||
Non-cash operating lease expense | (16) | (1) | 14 |
Deferred income taxes | 6,527 | 15,774 | 1,344 |
Changes in operating assets and liabilities: | |||
Receivables | (5,390) | 1,563 | 1,093 |
Income taxes receivable | (2,052) | (24,709) | 94 |
Inventories | 664 | (1,088) | (3,043) |
Prepaid expenses | 841 | (1,247) | (730) |
Accounts payable | 6,920 | (5,382) | 5,855 |
Accrued expenses | 8,262 | 596 | 2,998 |
Net cash provided by operating activities | 128,103 | 31,444 | 63,246 |
Cash flows from investing activities: | |||
Proceeds from sale of assets | 22 | 31 | 72 |
Change in construction accounts payable | 9,120 | 42,243 | (9,624) |
Acquisition of property and equipment | (46,928) | (88,667) | (125,367) |
Net cash used in investing activities | (37,786) | (46,393) | (134,919) |
Cash flows from financing activities: | |||
Payroll taxes from net exercise of stock options | (730) | (4,428) | |
Proceeds from exercise of stock options | 8,129 | 3,760 | |
Long-term debt borrowings | 10,813 | 105,500 | |
Principal payments on long-term debt | (92,500) | (24,563) | (3,750) |
Loan issuance cost | (2,862) | ||
Net cash (used in) provided by financing activities | (85,101) | (17,280) | 101,750 |
Change in cash and cash equivalents | 5,216 | (32,229) | 30,077 |
Cash and cash equivalents at beginning of period | 28,310 | 60,539 | 30,462 |
Cash and cash equivalents at end of period | 33,526 | 28,310 | 60,539 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest, net of amounts capitalized | 3,069 | 380 | |
Cash paid for income taxes | $ 12,410 | $ 6,322 | |
Conversion of long-term deposit to short term deposit | $ 908 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
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. Through its wholly-owned subsidiary, Golden Road Motor Inn, Inc. (“Golden Road”), Monarch owns and operates the Atlantis Casino Resort Spa, a hotel and casino in Reno, Nevada (the “Atlantis”). In addition, Monarch’s wholly owned subsidiaries, High Desert Sunshine, Inc. (“High Desert”), Golden East, Inc. (“Golden East”) and Golden North, Inc. (“Golden North”), each owns separate parcels of land located proximate to the Atlantis. Monarch’s wholly owned subsidiary Monarch Growth Inc. (“Monarch Growth”), formed in 2011, owns and operates Monarch Casino Resort Spa Black Hawk, a hotel and casino in Black Hawk, Colorado (the “Monarch Black Hawk”). Monarch owns a parcel of land with an industrial warehouse located between Denver, Colorado and Monarch Casino Resort Spa 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 consolidated financial statements include the accounts of Monarch and its subsidiaries. Intercompany balances and transactions are eliminated. Reference to the number of square feet or acreage are unaudited and considered outside the scope of our independent registered public accounting firm’s audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board. Unless otherwise indicated, “Monarch,” “Company,” “we,” “our,” and “us,” refer to Monarch Casino & Resort, Inc. and its subsidiaries. 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, 2020 the state of Colorado mandated a temporary shutdown of all casinos including Monarch Black Hawk and on March 17, 2020 the state of Nevada mandated the temporary closure of all casinos including Atlantis Casino Resort Spa in Reno. The COVID-19 pandemic has had, and may continue to have, an adverse effect on the Company's results of operations. Use of Estimates In preparing financial statements in conformity with U.S. Generally Accepted Accounting Principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the year. Actual results could differ from those estimates. Segment Reporting The accounting guidance for disclosures about segments of an enterprise and related information requires separate financial information to be disclosed for all reporting segments of a business. The Company determined that the Company’s two operating segments, Atlantis and Monarch 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. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and in bank, as well as money market funds with an original maturity of 90 days or less. 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. Property and Equipment Property and Equipment, net consists of the following (in thousands): December 31, 2021 December 31, 2020 Land $ 32,986 $ 32,986 Land improvements 9,898 9,847 Buildings 474,571 471,819 Buildings improvements 55,432 33,681 Furniture and equipment 235,233 229,052 Construction in progress 8,211 6,257 Right of use assets 14,246 14,784 Leasehold improvements 3,848 3,848 834,425 802,274 Less accumulated depreciation and amortization (253,618) (229,767) Property and equipment, net $ 580,807 $ 572,507 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 recorded $37.9 million, $16.1 million and $13.7 million depreciation expense for the years ended December 31, 2021, 2020 and 2019, respectively. 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 indicators quarterly. 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 comparable, when available. For the years ended December 31, 2021, 2020 and 2019, there were no impairment charges. 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 December 31, 2021, we had goodwill totaling $25.1 million related to the purchase of Monarch Casino Resort Spa Black Hawk, Inc. The Company assessed its goodwill balance for impairment using the quarterly assessment. Based on the impairment assessment, we do not believe that it is more likely than not that the fair value of the reporting unit is less than the carrying amount. Accordingly, the two-step impairment test is not necessary. The evaluations used to assess the Company’s goodwill for impairment incorporate inherent uncertainties 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 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. 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 had not capitalized any interest in 2021. The Company capitalized $6.8 million and $5.8 million during the years ended December 31, 2020 and 2019, respectively. Capitalized interest of $16.5 million, related to the Monarch Black Hawk expansion project, was allocated to the fixed assets placed in service at the project completion date in the fourth quarter of 2020 and is amortized over the respective assets’ recovery period. 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 rate method. Unamortized amounts of debt issuance costs are recorded as a reduction of the outstanding debt and included in “Long-term debt, net”. On September 3, 2020, the Company refinanced its credit facility. The unamortized costs related to the existing credit facility as of August 31, 2020 were $476 thousand. As the credit facility is a loan syndication with separate debt instruments existing between the debtor and the individual creditors participating in the syndication, in accordance with ASC 470-50, the Company expensed $95 thousand, representing a portion of unamortized debt issuance cost, allocated to the lenders that left the syndication and deferred the rest of the unamortized debt issuance cost of the existing credit facility, together with the issuance costs of the new facility. As of December 31, 2021, debt issuance costs, net of amortization, were $1.8 million. Self-insurance Reserves We are currently self-insured up to certain stop loss amounts for Atlantis workers’ compensation and certain medical benefit costs provided to all of our employees. As required by the state of Colorado, we are fully-insured for Monarch Black Hawk workers’ compensation costs. The Company reviews self-insurance reserves at least quarterly. The reserve is determined by reviewing the actual expenditures for the previous twelve-month period and reports prepared by the third-party plan administrator for any significant unpaid claims. The Company engages a third-party actuarial firm at least once per year for a more precise reserves review and calculation. The reserve is an amount estimated to pay both reported and unreported claims as of the balance sheet date, which management believes is adequate. 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 (“ASU”) 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: Players’ Club Program: As of December 31, 2021, and 2020, the Company had estimated the obligations related to the players’ club program at $9.4 million and $9.8 million, respectively, which is included in Accrued Expenses in the Liabilities and Stockholders’ Equity section in the Consolidated Balance Sheets. Food and Beverage, Hotel and Other (retail) Revenues: 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 Casino Jackpots The Company does not accrue a liability for base jackpots because it has the ability to avoid such payment as gaming devices can legally be removed from the gaming floor without payment of the base amount. When the Company is unable to avoid payment of a jackpot such as the incremental jackpot amounts of progressive-type slot machines, due to legal requirements, the jackpot is accrued as the obligation becomes unavoidable. This liability is accrued over the time period in which the incremental progressive jackpot amount is generated commensurate with a corresponding reduction in casino revenue. Gaming Taxes The Company is subject to taxes based on gross gaming revenue in the jurisdictions in which it operates, subject to applicable jurisdictional adjustments. These gaming taxes are an assessment on the Company’s gaming revenue and are recorded as casino expense in the accompanying Consolidated Statements of Income. These taxes totaled $45.5 million, $17.2 million and $23.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. Advertising Costs All advertising costs are expensed as incurred. Advertising expense, which is included in selling, general and administrative expense, was $9.3 million, $4.5 million and $5.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. Other Operating items, net Other operating items, net, in general consist of miscellaneous operating charges. For the year ended December 31, 2021, Other operating items, net, was $4.9 million and included: $5.1 million in professional service fees relating to our construction litigation; $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; and $0.1 million loss on disposal of assets, offset by $0.3 million of litigation proceeds and $0.1 million of insurance claims proceeds. For the year ended December 31, 2020, Other operating items, net, was $6.7 million and included: $2.8 million in pre-opening expenses relating to the Monarch Black Hawk Expansion project; $1.6 million in professional service fees relating to our construction litigation; $1.4 million in Colorado legislation lobbying expenses; $0.7 million in equipment, supplies and employee testing expenses directly attributable to the pandemic for reopening of the properties and incremental to normal operations; and $0.2 million in unamortized debt issuance cost write off and loss on disposal of assets. Income Taxes Income taxes are recorded in accordance with the liability method pursuant to authoritative guidance. Under the asset and liability approach for financial accounting and reporting for income taxes, the following basic principles are applied in accounting for income taxes at the date of the financial statements: (a) a current liability or asset is recognized for the estimated taxes payable or refundable on taxes for the current year; (b) a deferred income tax liability or asset is recognized for the estimated future tax effects attributable to temporary differences, carryback and carryforwards; (c) the measurement of current and deferred tax liabilities and assets is based on the provisions of the enacted tax law; the effects of future changes in tax laws or rates are not anticipated; and (d) the measurement of deferred income taxes is reduced, if necessary, by the amount of any tax benefits that, based upon available evidence, are not expected to be realized. Under the accounting guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50.0% likelihood of being realized upon ultimate settlement. Stock-based Compensation The Company accounts for stock-based compensation in accordance with the authoritative guidance requiring that compensation cost relating to stock-based payment transactions be recognized in the Company’s consolidated statements of income. The cost is measured at the grant date, based on the calculated fair value of the award using the Black-Scholes option pricing model for stock options, and based on the closing share price of the Company’s stock on the grant date for restricted stock awards. The cost is recognized as an expense over the employee’s requisite service period (the vesting period of the equity award). The Company’s stock-based employee compensation plan is more fully discussed in NOTE 10. Earnings Per Share Basic earnings per share are 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 (in thousands, except per share data): Years ended December 31, 2021 2020 2019 Per Share Per Share Per Share Shares Amount Shares Amount Shares Amount Basic 18,617 $ 3.68 18,218 $ 1.30 18,025 $ 1.77 Effect of dilutive stock options 810 (0.15) 659 (0.05) 659 (0.07) Diluted 19,427 $ 3.53 18,877 $ 1.25 18,684 $ 1.70 The following table represents weighted average number of shares that are antidilutive because the weighted average assumed proceeds per share are greater than the options’ exercise prices: Years ended December 31, 2021 2020 2019 Weighted Average Options to purchase shares of common shares 274,741 1,086,244 843,980 Weighted Average Proceeds per Share $ 76.84 - $ 102.01 $ 43.09 - $ 85.68 $ 44.55 - $ 59.07 Expiration dates (month/year) 12/2030-12/2031 11/2027-12/2030 11/2027-12/2029 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 and cash equivalents, account receivables, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. Additionally, the carrying value of our long-term debt approximates fair value due to the variable nature of applicable interest rates and relative short-term maturity. Concentrations of Credit Risk and Credit Losses Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of bank deposits and trade receivables. The Company accounts for credit losses in accordance with ASU 2016-13 using forward-looking expected loss model. The Company maintains its surplus cash in bank accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. 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 determined to reduce the Company’s receivables to their carrying value, which approximates fair value. The allowance is estimated based on historical collection experience, specific review of individual customer accounts, current economic and business conditions and management’s expectations of future economic and business 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. As of December 31, 2021 and 2020, the Company has recorded a reserve of $0.2 million and $0.1 million, respectively, for gaming and non-gaming receivables. The Company writes off its uncollectible receivables once all efforts have been made to collect such receivables. Recoveries of accounts previously written off are recorded when received. Concentrations of credit risk with respect to gaming and non-gaming receivables are limited due to the large number of customers comprising the Company’s customer base. Historically, the Company has not incurred any significant credit-related losses. The Company believes it is not exposed to any significant credit risk on cash and accounts receivable. Certain Risks and Uncertainties The Company’s operations are dependent on its continued licensing by the Nevada and Colorado gaming regulatory bodies. The loss of a license could have a material adverse effect on future results of operations. The Company is dependent on the Northern Nevada and Denver, Colorado markets for a significant number of its patrons and revenues. If economic conditions in these areas deteriorate or additional gaming licenses are awarded, the Company’s results of operations could be adversely affected. The Company is dependent on the U.S. economy in general, and any deterioration in the national economic, energy, credit and capital markets could have a material adverse effect on future results of operations. The Company is dependent on the travel industry and any disruption or restriction on national or international travel and entertainment, like a pandemic disease or a risk of pandemic disease, could materially and adversely affect our future results of operations. The Company is dependent upon a stable gaming and admission tax structure in the locations in which it operates. Any change in the tax structure could have a material adverse effect on future results of operations. Impact of Recently Issued Accounting Standards Reference Rate Reform: Simplifying the Accounting for Income Taxes 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. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 12 Months Ended |
Dec. 31, 2021 | |
ACCOUNTS RECEIVABLE | |
ACCOUNTS RECEIVABLE | NOTE 2. ACCOUNTS RECEIVABLE Accounts receivable consist of the following (in thousands): December 31, 2021 2020 Casino $ 4,291 $ 2,701 Hotel 1,339 510 Other 3,433 636 9,063 3,847 Less allowance for doubtful accounts (182) (111) $ 8,881 $ 3,736 The Company calculates an allowance for doubtful accounts by applying a percentage, estimated by management based on historical aging experience, current economic conditions and management’s expectations of future economic conditions, to the accounts receivable balance. The Company recorded bad debt expense of $245 thousand, $159 thousand and $189 thousand in 2021, 2020 and 2019, respectively. The increase in accounts receivable in 2021 year-over-year is primarily a result of the expanded operation at Monarch Black Hawk. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2021 | |
GOODWILL AND INTANGIBLE ASSETS | |
GOODWILL AND INTANGIBLE ASSETS | NOTE 3. GOODWILL AND INTANGIBLE ASSETS Goodwill was $25.1 million at December 31, 2021 and 2020. The Company’s goodwill is related to the acquisition of Monarch Black Hawk in 2012. The Company’s finite-lived intangible assets at December 31, 2021 consist of assets related to Cloud Computing Arrangement (CCA). On January 1, 2020, the Company adopted Estimated amortization expenses for the years ending December 31, 2022 through 2025 are as follows (in thousands): Year Expense 2022 $ 124 2023 $ 124 2024 $ 124 2025 $ 105 Total $ 477 The Company’s finite-lived intangible assets at December 31, 2020 consist of assets related to CCA and assets related to its customer relationships. The customer relationships net intangible asset was fully amortized during 2021. Customer list intangible assets at December 31, 2021 and 2020 are (in thousands except years): 2021 2020 Customer list Total intangible assets $ 11,111 $ 11,111 Less accumulated amortization: (11,111) (10,138) Intangible assets, net $ — $ 973 Weighted-average life in years — 0.6 In 2021, we recognized amortization expense of $0.5 million. The Company periodically evaluates the remaining useful lives of its finite-lived intangible assets to determine whether events and circumstances warrant a revision to the remaining period of amortization. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2021 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | NOTE 4. ACCRUED EXPENSES Accrued expenses consist of the following (in thousands): December 31, 2021 2020 Accrued salaries, wages and related benefits $ 12,716 $ 9,833 Progressive slot machine and other gaming accruals 18,577 16,699 Accrued gaming taxes 5,226 2,774 Accrued interest 3 14 Other accrued liabilities 6,445 5,385 $ 42,967 $ 34,705 |
ACCOUNTING FOR LEASES
ACCOUNTING FOR LEASES | 12 Months Ended |
Dec. 31, 2021 | |
ACCOUNTING FOR LEASES | |
ACCOUNTING FOR LEASES | NOTE 5. ACCOUNTING FOR LEASES The Company adopted ASU No. 2016-02, “Leases (Topic 842), (“ASC 842”)” which requires leases with durations greater than twelve months to be recognized on the balance sheet. 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. When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of its leases do not provide a readily determinable implicit rate. Therefore, the Company must estimate its incremental borrowing rate to discount the lease payments based on information available at lease commencement. As of December 31, 2021, the Company’s right of use assets consisted of the Parking Lot Lease, the Driveway Lease (both as defined and discussed in NOTE 12. RELATED PARTY TRANSACTIONS) The table below presents information related to the lease costs for operating leases during 2021 and 2020 (in thousands): Year ended Year ended December 31, 2021 December 31, 2020 Short-term lease costs $ 382 $ 451 Long-term lease costs 1,432 1,444 Total lease costs $ 1,814 $ 1,895 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 December 31, 2021 and 2020 was 4.34% and 4.33%, respectively. The weighted-average remaining lease term of the leases presented in the lease liability as of December 31, 2021 and 2020 was 20.4 and 21.2 years, respectively. Following is the undiscounted cash flow for the next five years and total of the remaining years to the operating lease liabilities recorded on the balance sheet (in thousands): Operating Leases Year ending December 31, 2022 $ 1,342 2023 1,072 2024 1,072 2025 1,072 2026 1,072 Thereafter 15,868 Total minimum lease payments 21,498 Less: amount of lease payment representing interest (7,255) Present value of future minimum payments 14,243 Less: current obligations under leases (745) Long-term lease obligations $ 13,498 Cash paid related to the operating leases presented in the lease liability for the twelve months ended December 31, 2021 and 2020 were $1.5 million and $1.4 million, respectively. In addition, we lease gaming equipment and had paid $2.5 million, $1.2 million and $1.6 million in the years ended December 31, 2021, 2020 and 2019, respectively. The lease cost is included in the operating expenses. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2021 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | NOTE 6. LONG-TERM DEBT On September 3, 2020, the Company 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”). On April 30, 2021, the Company entered into an amendment to the Fourth Amended Credit Facility (collectively, with all prior amendments, the “Amended Credit Facility”). The maturity date of the Amended Credit Facility is September 3, 2023. The Amended Credit Facility increases the aggregate principal amount to $270 million. The $270 million Amended Credit Facility consists of: a $200 million term loan (“Term Loan Facility”) and a $70 million revolving credit facility (“Revolving Credit Facility”), together with an option to increase the Revolving Credit Facility by up to an additional $75 million. The Company is required to make quarterly principal payments under the Term Loan Facility on each Term Loan Installment Date, commencing on December 31, 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 million. The estimated amount of the mandatory principal payments due in the next twelve months is $20 million. Commencing with the delivery of the compliance certificate for fiscal year 2021, the Company may be required to prepay borrowings under the Amended Credit Facility using excess cash flows for each fiscal year, depending on the Company’s leverage ratio. As of December 31, 2021, the Company had an outstanding principal balance of $90 million under the Term Loan Facility, a $0.6 million letter of credit and no borrowings under the Revolving Credit Facility; $69.4 million remained available for borrowing. 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 December 31, 2021, the Company is required to maintain a Total Leverage Ratio (as defined in the Amended Credit Facility) of no more than 4.50:1 and Fixed Charge Coverage Ratio (as defined in the Amended Credit Facility) of at least 1.15:1. As of December 31, 2021, the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.7:1 and 5.7:1. The interest rate under the Amended Credit Facility is LIBOR plus a margin ranging from 1.00% to 2.00%, or a base rate (as defined in the Amended Credit Facility) plus a margin ranging from 0.00% to 1.00%, or the Prime Rate. The applicable margins vary depending on Company’s leverage ratio. 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 our leverage ratio. At December 31, 2021, the Term Loan interest rate was 1.11%, or LIBOR plus interest margin of 1.00%. 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. On the terms and subject to some conditions, the Company may, at any time before the Maturity Date, request an increase of the Revolving Credit Facility, provided that each such increase is equal to $15 million or an integral multiple of $1 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 million. The Company may prepay borrowings under the Amended Credit Facility revolving loan without penalty (subject to certain conditions and certain charges applicable to the prepayment of LIBOR borrowings prior to the end of the 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 nine months of 2021, the Company made a $67.0 million in optional prepayments on its Term Loan Facility in addition to $7.5 million in mandatory payments. During the twelve months ended December 31, 2021, the Company made $80.0 million in optional prepayments on its Term Loan Facility in addition to $12.5 million in mandatory payments. As of December 31, 2021, $68.2 million “Long-term debt, net” in the Company’s consolidated balance sheet represents the $90.0 million outstanding loan amount under the Amended Credit facility, net of $1.8 million unamortized debt issuance costs and $20.0 million mandatory principal payment that are due in next twelve months and are presented as “Current portion of long-term debt” in the Current liabilities section of the Company’s consolidated balance sheet. |
TAXES
TAXES | 12 Months Ended |
Dec. 31, 2021 | |
TAXES | |
TAXES | NOTE 7. TAXES Income Taxes The Company’s income tax provision (benefit) consists of the following (in thousands): Years ended December 31, 2021 2020 2019 Federal $ 10,091 $ (24,576) $ 6,080 State 265 123 336 Current tax provision (benefit) 10,356 (24,453) 6,416 Federal 4,836 15,096 1,215 State 1,691 677 129 Deferred tax provision (benefit) 6,527 15,773 1,344 Total tax provision (benefit) $ 16,883 $ (8,680) $ 7,760 In conformity with the ASC Topic 718, Compensation-Stock Compensation: Improvements to Employee Share-based Payment Accounting (ASU 2016-09), all excess tax benefits and deficiencies are recognized as income tax expense (income tax benefit) in the Company’s Consolidated Statement of Income. This may result in increased volatility in the Company’s effective tax rate. Years ended December 31, 2021 2020 2019 Federal tax at the statutory rate 21.00 % 21.00 % 21.00 % State tax (net of federal benefit) 1.47 % 1.11 % 1.00 % Permanent items 0.38 % 3.52 % 0.90 % Tax credits (0.25) % (2.82) % (0.84) % Excess tax benefits on stock-based compensation (3.14) % (17.89) % (2.49) % Impact of CARES Act — % (65.55) % — % Change in Tax Rate and Apportionment 0.34 % 4.31 % — % Other (0.02) % (1.56) % 0.04 % 19.78 % (57.88) % 19.61 % In 2021, the Company returned to a positive tax rate, recognizing income tax expense on pretax book income. The effective tax rate is below the statutory rates due primarily to excess tax benefits on stock compensation. The negative effective tax rate in 2020 is a result of the CARES Act granting the ability to carry back the net operating loss generated as a result of recognizing accelerated tax depreciation of some assets put in service in 2020 back to prior years with higher income tax rates, and the increase in excess tax benefits on stock-based compensation. In 2020, the Company completed and opened to the public a substantial part of the new hotel and casino expansion project at Monarch Black Hawk. This decrease was partially offset by the increase in nondeductible “permanent items” which consisted primarily of the $1.4 million in Colorado legislation lobbying expenses. In 2021, 2020 and 2019, the Company recorded against the tax expense $2.7 million, $2.7 million and $1.0 million tax benefit for employee stock-based compensation, respectively. 31, 2021 and 2020, as presented in the consolidated balance sheets, are as follows (in thousands): 2021 2020 DEFERRED TAX ASSETS Stock-based compensation $ 3,231 $ 3,011 Compensation and benefits 751 580 Accrued expenses 288 486 Right of use lease liability 3,350 3,425 Federal deduction on state taxes 155 — Bad debt reserves 16 26 Charitable contribution carry-forwards — 63 Other reserves 40 33 NOLs & credit carry-forwards 1,014 2,440 Deferred income tax asset $ 8,845 $ 10,064 DEFERRED TAX LIABILITIES Intangibles and amortization $ — $ (86) Prepaid expenses (1,547) (1,234) Fixed assets and depreciation (23,504) (18,136) Right of use asset (3,351) (3,422) Base stock (60) (249) Federal deduction on state taxes — (27) Deferred income tax liability $ (28,462) $ (23,154) NET DEFERRED INCOME TAX (LIABILITY) ASSET $ (19,617) $ (13,090) As of December 31, 2021, the Company has utilized all federal net operating loss (“NOL”) carryforwards. The Company has general business credit (“GBC”) carryforwards of $0.3 million and $14.7 million of state NOL carryforwards. The federal GBC carryforwards expire in 2023 through 2032. The state NOL carryforwards expire in 2030 through 2040. The state NOL of $14.7 million and federal GBC carryforwards of $0.3 million, acquired as part of the Monarch Black Hawk acquisition, are subject to Internal Revenue Code change of ownership limitations. Accordingly, future utilization of the carryforwards is subject to an annual base limitation of $1.25 million that can be applied against future taxable income. The Company acquired NOLs of Monarch Black Hawk generated in tax years 2000 through 2012. The statute of limitation for assessment for these NOL years is determined by reference to the year the NOL is used to reduce taxable income. Consequently, the separate returns that included Monarch Black Hawk for 2001 through 2012 remain subject to examination by taxing authorities. The Company’s income tax returns from 2018 forward are subject to examination by the taxing authorities. Accounting standards require that tax positions be assessed for recognition using a two-step process. A tax position is recognized if it meets a “more likely than not” threshold, and is measured at the largest amount of benefit that is greater than 50 percent likely of being realized. Uncertain tax positions must be reviewed at each balance sheet date. Liabilities recorded as a result of this analysis must generally be recorded separately from any current or deferred income tax accounts. The Company’s policy regarding interest and penalties associated with uncertain tax positions is to classify such amounts as income tax expense. No uncertain tax positions were recorded as of December 31, 2021, 2020 and 2019. No change in uncertain tax positions is anticipated over the next twelve months. No interest expense or penalties for uncertain tax positions were recorded for years ended December 31, 2021, 2020 and 2019. |
BENEFIT PLANS
BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2021 | |
BENEFIT PLANS | |
BENEFIT PLANS | NOTE 8. BENEFIT PLANS Effective November 1, 1995, the Company adopted a savings plan, which qualifies under Section 401(k) of the Internal Revenue Code. Under the plan, participating employees may defer up to 100% of their pre-tax compensation, but not more than statutory limits. The Company’s matching contributions were approximately $611 thousand, $423 thousand, and $482 thousand for years ended December 31, 2021, 2020 and 2019, respectively. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2021 | |
STOCK-BASED COMPENSATION. | |
STOCK-BASED COMPENSATION | NOTE 9. STOCK-BASED COMPENSATION On May 21, 2014, we adopted the 2014 Equity Incentive Plan (the “2014 Plan”). The purposes of the 2014 Plan are to attract and retain the best available personnel, to provide additional incentives to employees, directors and consultants and to promote the success of the Company’s business. The 2014 Plan is an “omnibus plan” under which stock options, stock appreciation rights, performance awards, dividend equivalents, restricted stock, and restricted stock units can be awarded to employees, directors and consultants of the Company. The 2014 Plan serves as the successor to our 1993 Employee Stock Option Plan, 1993 Executive Long-Term Incentive Plan and 1993 Directors’ Stock Option Plan (which plan terminated on June 13, 2013) (the “Predecessor Plans”). The 2014 Plan became effective as of May 21, 2014, and the remaining two Predecessor Plans terminated on that date (except with respect to awards previously granted under the Predecessor Plans that remain outstanding). The maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan, and the Amendment No. 1 and Amendment No. 2 to the 2014 Plan includes 3,400,000 new shares and the shares available for grant or subject to outstanding awards under the Predecessor Plans. The share reserve as of December 31, 2021 is 979,600. By its terms, the 2014 Plan will expire in May 2024 after which no options may be granted unless the 2014 Plan is amended or replaced. Pursuant to the terms of the 2014 Plan, either the Board of Directors or a committee designated by the Board of Directors is authorized to administer the plan. The administrator has the authority, in its discretion, to select employees, consultants and directors to whom awards under the 2014 Plan may be granted from time to time, to determine whether and to what extent awards are granted, to determine the number of shares or the amount of other consideration to be covered by each award (subject to certain limitations), to approve award agreements for use under the 2014 Plan, to determine the terms and conditions of any award (including the vesting schedule applicable to the award), to amend the terms of any outstanding award granted under the 2014 Plan (subject to certain limitations), to construe and interpret the terms of the 2014 Plan and awards granted, and to take such other action not inconsistent with the terms of the 2014 Plan as the administrator deems appropriate. A summary of the stock option activity as of and for the year ended December 31, 2021 is presented below: Weighted Average Remaining Aggregate Exercise Contractual Intrinsic Stock Options Shares Price Term Value Stock Option Shares outstanding at beginning of period 2,194,779 $ 35.01 — — Stock Option Shares granted 429,302 68.34 — — Stock Option Shares exercised (382,716) 27.27 — — Stock Option Shares forfeited (236,666) 40.83 — — Stock Option Shares expired (5,000) 9.80 — — Stock Option Shares outstanding at end of period 1,999,699 42.05 6.5 yrs. $ 61,774,500 Stock Option Shares exercisable at end of period 1,028,375 $ 29.26 4.6 yrs. $ 45,958,184 A summary of the status of the Company’s nonvested stock option shares as of, and for the year ended, December 31, 2021 is presented below: Weighted-Average Grant Date Fair Nonvested Stock Option Shares Shares Value Nonvested at January 1, 2021 1,177,954 $ 14.49 Granted 429,302 26.37 Vested (399,266) 13.50 Forfeited (236,666) 16.91 Nonvested at December 31, 2021 971,324 $ 19.62 Expense Measurement and Recognition The Company recognizes stock-based compensation for all current stock option award grants and for the unvested portion of previous stock option award grants based on grant date fair values. Unrecognized costs related to all stock option awards outstanding at December 31, 2021 totaled approximately $14.9 million and is expected to be recognized over a weighted average period of 2.8 years. The Company uses historical data and projections to estimate expected employee, executive and director behaviors related to stock option exercises and forfeitures. The Company estimates the fair value of each stock option award on the grant date using the Black-Scholes valuation model incorporating the assumptions noted in the following table. Option valuation models require the input of highly subjective assumptions, and changes in assumptions used can materially affect the fair value estimate. Option valuation assumptions for options granted during each year were as follows (dollars in thousands, except weighted average grant date fair value per share): Year ended December 31, 2021 2020 2019 Weighted average expected volatility for options granted 45.72 % 40.87 % 30.13 % Expected life (in years) Directors’ plan 3.90 3.26 3.04 Executives plan 5.38 5.22 5.07 Employees plan 4.20 4.13 4.18 Weighted average risk-free rate 0.93 % 0.48 % 1.83 % Weighted average grant date fair value per share of options granted $ 26.37 $ 17.33 $ 12.19 Total fair value of shares vested $ 5,389 $ 3,852 $ 2,407 Total intrinsic value of options exercised $ 16,028 $ 15,258 $ 5,932 Cash received for all stock option exercises $ 10,435 $ 7,813 $ 4,060 Tax benefit realized from stock awards exercised $ 3,366 $ 3,204 $ 1,246 The risk-free interest rate is based on the U.S. Treasury security rate in effect as of the date of grant. The expected lives of options are based on historical data of the Company. The Company has determined that an implied volatility is more reflective of market conditions and a better indicator of expected volatility as compared to the Company’s experience. Reported stock-based compensation expense was classified as follows (in thousands) and it is included in the Operating expenses in the Consolidated Statement of Income: For the Year ended December 31, 2021 2020 2019 Casino $ 236 $ 168 $ 205 Food and beverage 125 (26) 211 Hotel 191 127 109 Selling, general and administrative 3,508 3,586 3,600 Total stock-based compensation, before taxes 4,060 3,855 4,125 Tax benefit (853) (810) (866) Total stock-based compensation, net of tax $ 3,207 $ 3,045 $ 3,259 |
STOCK REPURCHASE PLAN
STOCK REPURCHASE PLAN | 12 Months Ended |
Dec. 31, 2021 | |
STOCK REPURCHASE PLAN | |
STOCK REPURCHASE PLAN | NOTE 10. 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, 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. As of December 31,2021, the Company has made no purchases under the Repurchase Plan. On January 19, 2022, under the authority of the Repurchase Plan, the Company purchased 100,000 shares for $6.5 million in a privately negotiated transaction. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 11. COMMITMENTS AND CONTINGENCIES Self-Insurance The Company is also self-insured for Atlantis workers’ compensation. The maximum liability for workers’ compensation under the Atlantis stop-loss agreement is $500,000 per claim. The Company is fully-insured for Monarch Black Hawk workers compensation claims. Legal dispute: The trial date for this matter has again been rescheduled and is now set for September 6, 2022, based on PCL’s failure to produce relevant documents. The Court has entered a preliminary finding of bad faith against PCL based on PCL’s failure to timely disclose the production failure upon PCL’s discovery of the same. Discovery in the action is thus 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, as described above, PCL and certain subcontractors have provided purported notice of liens filed against the real property on which the Monarch Black Hawk is situated (the “Monarch Black Hawk Property”), 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 March 26, 2021, PCL filed a mechanics’ lien foreclosure action in District Court, County of Gilpin, Colorado (the “Gilpin Action”), against the Company and its Colorado subsidiaries, in connection with the Company’s expansion plans for the Monarch Black Hawk Property. The complaint essentially mirrors the claims and allegations made by PCL in the Denver Action, as described above. The new lawsuit includes an additional claim, however, for foreclosure of PCL’s purported mechanics’ lien against the Monarch Black Hawk Property. PCL also joined additional subcontractors as defendants who have claimed a purported lien against the Monarch Black Hawk Property. Effective May 10, 2021, PCL filed its second amended complaint, joining more such parties as defendants. Many of the Company’s co-defendants have filed cross claims against Monarch for foreclosure of mechanics’ liens and related claims, including unjust enrichment, and have also filed counterclaims against PCL. The Company and its Colorado subsidiaries filed an answer and counterclaims in the Gilpin Action on July 15, 2021. Monarch has also filed answers to all cross claims, denying the claimants’ rights to relief. The Company and its Colorado subsidiaries intend to defend against PCL’s claims and the cross claims filed by certain subcontractors, and will vigorously prosecute its counterclaims for damages. The case was stayed pending the outcome of the Denver Action. The Company recognized $5.1 million and $1.6 million in construction litigation expense relating to this lawsuit for the twelve months ended December 31, 2021 and 2020, respectively, which are included in Other operating items, net on the Consolidated Statements of 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. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2021 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 12. RELATED PARTY TRANSACTIONS The shopping center adjacent to the Atlantis is owned by BLI. John Farahi and Bob Farahi, Co-Chairmen of the Board and executive officers of the Company, and Ben Farahi each of whom has significant holdings in 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. 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 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. In 2021, the Company paid $695 thousand for rent and $28 thousand for operating expenses relating to this lease. In 2020, the Company paid $695 thousand for rent and $27 thousand for operating expenses relating to this lease. In 2019, the Company paid $695 thousand for rent and $32 thousand for operating expenses relating to this lease. The right of use asset and lease liability In addition, the Atlantis shares a driveway with the Shopping Center and leases approximately 37,400 square feet from BLI 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 successive five-year renewal terms beyond the initial 15-year lease liability The Company occasionally leases billboard advertising, storage space and parking lot space from affiliates controlled by Farahi Family Stockholders and paid $194 thousand, $145 thousand and $150 thousand for the years ended December 31, 2021, 2020 and 2019, respectively, for such leases. |
Schedule II. - VALUATION AND QU
Schedule II. - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2021 | |
Schedule II. - VALUATION AND QUALIFYING ACCOUNTS | |
Schedule II. - VALUATION AND QUALIFYING ACCOUNTS | Schedule II. - VALUATION AND QUALIFYING ACCOUNTS Year ended December 31, Balance at beginning of year Charged to costs and expenses (F1) Deductions (F1) Other Balance at end of year 2019 Allowance for doubtful accounts $ 245 $ 189 $ (334) $ — $ 100 2020 Allowance for doubtful accounts $ 100 $ 159 $ (148) $ — $ 111 2021 Allowance for doubtful accounts $ 111 $ 245 $ (174) $ — $ 182 (F1) The Company reviews receivables monthly and, accordingly, adjusts the allowance for doubtful accounts monthly. The Company records write-offs annually. The amount charged to costs and expenses reflects the bad debt expense recorded in the consolidated statements of income, while the amount recorded for deductions reflects the adjustment to actual allowance for doubtful accounts reserve at the end of the period. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation Monarch Casino & Resort, Inc. was incorporated in 1993. Through its wholly-owned subsidiary, Golden Road Motor Inn, Inc. (“Golden Road”), Monarch owns and operates the Atlantis Casino Resort Spa, a hotel and casino in Reno, Nevada (the “Atlantis”). In addition, Monarch’s wholly owned subsidiaries, High Desert Sunshine, Inc. (“High Desert”), Golden East, Inc. (“Golden East”) and Golden North, Inc. (“Golden North”), each owns separate parcels of land located proximate to the Atlantis. Monarch’s wholly owned subsidiary Monarch Growth Inc. (“Monarch Growth”), formed in 2011, owns and operates Monarch Casino Resort Spa Black Hawk, a hotel and casino in Black Hawk, Colorado (the “Monarch Black Hawk”). Monarch owns a parcel of land with an industrial warehouse located between Denver, Colorado and Monarch Casino Resort Spa 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 consolidated financial statements include the accounts of Monarch and its subsidiaries. Intercompany balances and transactions are eliminated. Reference to the number of square feet or acreage are unaudited and considered outside the scope of our independent registered public accounting firm’s audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board. Unless otherwise indicated, “Monarch,” “Company,” “we,” “our,” and “us,” refer to Monarch Casino & Resort, Inc. and its subsidiaries. |
Impact of COVID-19 | 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, 2020 the state of Colorado mandated a temporary shutdown of all casinos including Monarch Black Hawk and on March 17, 2020 the state of Nevada mandated the temporary closure of all casinos including Atlantis Casino Resort Spa in Reno. The COVID-19 pandemic has had, and may continue to have, an adverse effect on the Company's results of operations. |
Use of Estimates | Use of Estimates In preparing financial statements in conformity with U.S. Generally Accepted Accounting Principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the year. Actual results could differ from those estimates. |
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 reporting segments of a business. The Company determined that the Company’s two operating segments, Atlantis and Monarch 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. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand and in bank, as well as money market funds with an original maturity of 90 days or less. |
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. |
Property and Equipment, net | Property and Equipment Property and Equipment, net consists of the following (in thousands): December 31, 2021 December 31, 2020 Land $ 32,986 $ 32,986 Land improvements 9,898 9,847 Buildings 474,571 471,819 Buildings improvements 55,432 33,681 Furniture and equipment 235,233 229,052 Construction in progress 8,211 6,257 Right of use assets 14,246 14,784 Leasehold improvements 3,848 3,848 834,425 802,274 Less accumulated depreciation and amortization (253,618) (229,767) Property and equipment, net $ 580,807 $ 572,507 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 recorded $37.9 million, $16.1 million and $13.7 million depreciation expense for the years ended December 31, 2021, 2020 and 2019, respectively. 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 indicators quarterly. 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 comparable, when available. For the years ended December 31, 2021, 2020 and 2019, there were no impairment charges. |
Goodwill | 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 December 31, 2021, we had goodwill totaling $25.1 million related to the purchase of Monarch Casino Resort Spa Black Hawk, Inc. The Company assessed its goodwill balance for impairment using the quarterly assessment. Based on the impairment assessment, we do not believe that it is more likely than not that the fair value of the reporting unit is less than the carrying amount. Accordingly, the two-step impairment test is not necessary. The evaluations used to assess the Company’s goodwill for impairment incorporate inherent uncertainties 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 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. |
Capitalized Interest | 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 had not capitalized any interest in 2021. The Company capitalized $6.8 million and $5.8 million during the years ended December 31, 2020 and 2019, respectively. Capitalized interest of $16.5 million, related to the Monarch Black Hawk expansion project, was allocated to the fixed assets placed in service at the project completion date in the fourth quarter of 2020 and is amortized over the respective assets’ recovery period. |
Debt Issuance Costs | 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 rate method. Unamortized amounts of debt issuance costs are recorded as a reduction of the outstanding debt and included in “Long-term debt, net”. On September 3, 2020, the Company refinanced its credit facility. The unamortized costs related to the existing credit facility as of August 31, 2020 were $476 thousand. As the credit facility is a loan syndication with separate debt instruments existing between the debtor and the individual creditors participating in the syndication, in accordance with ASC 470-50, the Company expensed $95 thousand, representing a portion of unamortized debt issuance cost, allocated to the lenders that left the syndication and deferred the rest of the unamortized debt issuance cost of the existing credit facility, together with the issuance costs of the new facility. As of December 31, 2021, debt issuance costs, net of amortization, were $1.8 million. |
Self-insurance Reserves | Self-insurance Reserves We are currently self-insured up to certain stop loss amounts for Atlantis workers’ compensation and certain medical benefit costs provided to all of our employees. As required by the state of Colorado, we are fully-insured for Monarch Black Hawk workers’ compensation costs. The Company reviews self-insurance reserves at least quarterly. The reserve is determined by reviewing the actual expenditures for the previous twelve-month period and reports prepared by the third-party plan administrator for any significant unpaid claims. The Company engages a third-party actuarial firm at least once per year for a more precise reserves review and calculation. The reserve is an amount estimated to pay both reported and unreported claims as of the balance sheet date, which management believes is adequate. |
Revenues Recognition | 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 (“ASU”) 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: Players’ Club Program: As of December 31, 2021, and 2020, the Company had estimated the obligations related to the players’ club program at $9.4 million and $9.8 million, respectively, which is included in Accrued Expenses in the Liabilities and Stockholders’ Equity section in the Consolidated Balance Sheets. Food and Beverage, Hotel and Other (retail) Revenues: 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 |
Casino Jackpots | Casino Jackpots The Company does not accrue a liability for base jackpots because it has the ability to avoid such payment as gaming devices can legally be removed from the gaming floor without payment of the base amount. When the Company is unable to avoid payment of a jackpot such as the incremental jackpot amounts of progressive-type slot machines, due to legal requirements, the jackpot is accrued as the obligation becomes unavoidable. This liability is accrued over the time period in which the incremental progressive jackpot amount is generated commensurate with a corresponding reduction in casino revenue. |
Gaming taxes | Gaming Taxes The Company is subject to taxes based on gross gaming revenue in the jurisdictions in which it operates, subject to applicable jurisdictional adjustments. These gaming taxes are an assessment on the Company’s gaming revenue and are recorded as casino expense in the accompanying Consolidated Statements of Income. These taxes totaled $45.5 million, $17.2 million and $23.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. |
Advertising Costs | Advertising Costs All advertising costs are expensed as incurred. Advertising expense, which is included in selling, general and administrative expense, was $9.3 million, $4.5 million and $5.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. |
Other Operating items, net | Other Operating items, net Other operating items, net, in general consist of miscellaneous operating charges. For the year ended December 31, 2021, Other operating items, net, was $4.9 million and included: $5.1 million in professional service fees relating to our construction litigation; $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; and $0.1 million loss on disposal of assets, offset by $0.3 million of litigation proceeds and $0.1 million of insurance claims proceeds. For the year ended December 31, 2020, Other operating items, net, was $6.7 million and included: $2.8 million in pre-opening expenses relating to the Monarch Black Hawk Expansion project; $1.6 million in professional service fees relating to our construction litigation; $1.4 million in Colorado legislation lobbying expenses; $0.7 million in equipment, supplies and employee testing expenses directly attributable to the pandemic for reopening of the properties and incremental to normal operations; and $0.2 million in unamortized debt issuance cost write off and loss on disposal of assets. |
Income Taxes | Income Taxes Income taxes are recorded in accordance with the liability method pursuant to authoritative guidance. Under the asset and liability approach for financial accounting and reporting for income taxes, the following basic principles are applied in accounting for income taxes at the date of the financial statements: (a) a current liability or asset is recognized for the estimated taxes payable or refundable on taxes for the current year; (b) a deferred income tax liability or asset is recognized for the estimated future tax effects attributable to temporary differences, carryback and carryforwards; (c) the measurement of current and deferred tax liabilities and assets is based on the provisions of the enacted tax law; the effects of future changes in tax laws or rates are not anticipated; and (d) the measurement of deferred income taxes is reduced, if necessary, by the amount of any tax benefits that, based upon available evidence, are not expected to be realized. Under the accounting guidance, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50.0% likelihood of being realized upon ultimate settlement. |
Stock-based Compensation | Stock-based Compensation The Company accounts for stock-based compensation in accordance with the authoritative guidance requiring that compensation cost relating to stock-based payment transactions be recognized in the Company’s consolidated statements of income. The cost is measured at the grant date, based on the calculated fair value of the award using the Black-Scholes option pricing model for stock options, and based on the closing share price of the Company’s stock on the grant date for restricted stock awards. The cost is recognized as an expense over the employee’s requisite service period (the vesting period of the equity award). The Company’s stock-based employee compensation plan is more fully discussed in NOTE 10. |
Earnings Per Share | Earnings Per Share Basic earnings per share are 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 (in thousands, except per share data): Years ended December 31, 2021 2020 2019 Per Share Per Share Per Share Shares Amount Shares Amount Shares Amount Basic 18,617 $ 3.68 18,218 $ 1.30 18,025 $ 1.77 Effect of dilutive stock options 810 (0.15) 659 (0.05) 659 (0.07) Diluted 19,427 $ 3.53 18,877 $ 1.25 18,684 $ 1.70 The following table represents weighted average number of shares that are antidilutive because the weighted average assumed proceeds per share are greater than the options’ exercise prices: Years ended December 31, 2021 2020 2019 Weighted Average Options to purchase shares of common shares 274,741 1,086,244 843,980 Weighted Average Proceeds per Share $ 76.84 - $ 102.01 $ 43.09 - $ 85.68 $ 44.55 - $ 59.07 Expiration dates (month/year) 12/2030-12/2031 11/2027-12/2030 11/2027-12/2029 |
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 and cash equivalents, account receivables, accounts payable and accrued expenses approximate fair value because of the short-term nature of these instruments. Additionally, the carrying value of our long-term debt approximates fair value due to the variable nature of applicable interest rates and relative short-term maturity. |
Concentrations of Credit Risk and Credit Losses | Concentrations of Credit Risk and Credit Losses Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of bank deposits and trade receivables. The Company accounts for credit losses in accordance with ASU 2016-13 using forward-looking expected loss model. The Company maintains its surplus cash in bank accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. 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 determined to reduce the Company’s receivables to their carrying value, which approximates fair value. The allowance is estimated based on historical collection experience, specific review of individual customer accounts, current economic and business conditions and management’s expectations of future economic and business 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. As of December 31, 2021 and 2020, the Company has recorded a reserve of $0.2 million and $0.1 million, respectively, for gaming and non-gaming receivables. The Company writes off its uncollectible receivables once all efforts have been made to collect such receivables. Recoveries of accounts previously written off are recorded when received. Concentrations of credit risk with respect to gaming and non-gaming receivables are limited due to the large number of customers comprising the Company’s customer base. Historically, the Company has not incurred any significant credit-related losses. The Company believes it is not exposed to any significant credit risk on cash and accounts receivable. |
Certain Risks and Uncertainties | Certain Risks and Uncertainties The Company’s operations are dependent on its continued licensing by the Nevada and Colorado gaming regulatory bodies. The loss of a license could have a material adverse effect on future results of operations. The Company is dependent on the Northern Nevada and Denver, Colorado markets for a significant number of its patrons and revenues. If economic conditions in these areas deteriorate or additional gaming licenses are awarded, the Company’s results of operations could be adversely affected. The Company is dependent on the U.S. economy in general, and any deterioration in the national economic, energy, credit and capital markets could have a material adverse effect on future results of operations. The Company is dependent on the travel industry and any disruption or restriction on national or international travel and entertainment, like a pandemic disease or a risk of pandemic disease, could materially and adversely affect our future results of operations. The Company is dependent upon a stable gaming and admission tax structure in the locations in which it operates. Any change in the tax structure could have a material adverse effect on future results of operations. |
Impact of Recently Issued Accounting Standards | Impact of Recently Issued Accounting Standards Reference Rate Reform: Simplifying the Accounting for Income Taxes 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. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of Property and Equipment, net | December 31, 2021 December 31, 2020 Land $ 32,986 $ 32,986 Land improvements 9,898 9,847 Buildings 474,571 471,819 Buildings improvements 55,432 33,681 Furniture and equipment 235,233 229,052 Construction in progress 8,211 6,257 Right of use assets 14,246 14,784 Leasehold improvements 3,848 3,848 834,425 802,274 Less accumulated depreciation and amortization (253,618) (229,767) Property and equipment, net $ 580,807 $ 572,507 |
Property and equipment, estimated useful lives | Land improvements 15 - 40 years Buildings 30 - 40 years Building improvements 5 - 40 years Furniture 5 - 10 years Equipment 3 - 20 years |
Schedule of reconciliation of number of shares (denominator) used in 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 (in thousands, except per share data): Years ended December 31, 2021 2020 2019 Per Share Per Share Per Share Shares Amount Shares Amount Shares Amount Basic 18,617 $ 3.68 18,218 $ 1.30 18,025 $ 1.77 Effect of dilutive stock options 810 (0.15) 659 (0.05) 659 (0.07) Diluted 19,427 $ 3.53 18,877 $ 1.25 18,684 $ 1.70 |
Schedule of antidilutive options | Years ended December 31, 2021 2020 2019 Weighted Average Options to purchase shares of common shares 274,741 1,086,244 843,980 Weighted Average Proceeds per Share $ 76.84 - $ 102.01 $ 43.09 - $ 85.68 $ 44.55 - $ 59.07 Expiration dates (month/year) 12/2030-12/2031 11/2027-12/2030 11/2027-12/2029 |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
ACCOUNTS RECEIVABLE | |
Schedule of accounts receivable | Accounts receivable consist of the following (in thousands): December 31, 2021 2020 Casino $ 4,291 $ 2,701 Hotel 1,339 510 Other 3,433 636 9,063 3,847 Less allowance for doubtful accounts (182) (111) $ 8,881 $ 3,736 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
GOODWILL AND INTANGIBLE ASSETS | |
Schedule of intangible assets | Estimated amortization expenses for the years ending December 31, 2022 through 2025 are as follows (in thousands): Year Expense 2022 $ 124 2023 $ 124 2024 $ 124 2025 $ 105 Total $ 477 |
Schedule of estimated future amortization expense | 2021 2020 Customer list Total intangible assets $ 11,111 $ 11,111 Less accumulated amortization: (11,111) (10,138) Intangible assets, net $ — $ 973 Weighted-average life in years — 0.6 |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
ACCRUED EXPENSES | |
Schedule of accrued expenses | Accrued expenses consist of the following (in thousands): December 31, 2021 2020 Accrued salaries, wages and related benefits $ 12,716 $ 9,833 Progressive slot machine and other gaming accruals 18,577 16,699 Accrued gaming taxes 5,226 2,774 Accrued interest 3 14 Other accrued liabilities 6,445 5,385 $ 42,967 $ 34,705 |
ACCOUNTING FOR LEASES (Tables)
ACCOUNTING FOR LEASES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
ACCOUNTING FOR LEASES | |
Schedule of information related to the lease costs | The table below presents information related to the lease costs for operating leases during 2021 and 2020 (in thousands): Year ended Year ended December 31, 2021 December 31, 2020 Short-term lease costs $ 382 $ 451 Long-term lease costs 1,432 1,444 Total lease costs $ 1,814 $ 1,895 |
Schedule of future minimum lease payments | Following is the undiscounted cash flow for the next five years and total of the remaining years to the operating lease liabilities recorded on the balance sheet (in thousands): Operating Leases Year ending December 31, 2022 $ 1,342 2023 1,072 2024 1,072 2025 1,072 2026 1,072 Thereafter 15,868 Total minimum lease payments 21,498 Less: amount of lease payment representing interest (7,255) Present value of future minimum payments 14,243 Less: current obligations under leases (745) Long-term lease obligations $ 13,498 |
TAXES (Tables)
TAXES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
TAXES | |
Schedule of income tax provision (benefit) | The Company’s income tax provision (benefit) consists of the following (in thousands): Years ended December 31, 2021 2020 2019 Federal $ 10,091 $ (24,576) $ 6,080 State 265 123 336 Current tax provision (benefit) 10,356 (24,453) 6,416 Federal 4,836 15,096 1,215 State 1,691 677 129 Deferred tax provision (benefit) 6,527 15,773 1,344 Total tax provision (benefit) $ 16,883 $ (8,680) $ 7,760 |
Schedule of income tax provision differences to federal statutory rate | Years ended December 31, 2021 2020 2019 Federal tax at the statutory rate 21.00 % 21.00 % 21.00 % State tax (net of federal benefit) 1.47 % 1.11 % 1.00 % Permanent items 0.38 % 3.52 % 0.90 % Tax credits (0.25) % (2.82) % (0.84) % Excess tax benefits on stock-based compensation (3.14) % (17.89) % (2.49) % Impact of CARES Act — % (65.55) % — % Change in Tax Rate and Apportionment 0.34 % 4.31 % — % Other (0.02) % (1.56) % 0.04 % 19.78 % (57.88) % 19.61 % |
Schedule of components of the deferred income tax assets and liabilities | 31, 2021 and 2020, as presented in the consolidated balance sheets, are as follows (in thousands): 2021 2020 DEFERRED TAX ASSETS Stock-based compensation $ 3,231 $ 3,011 Compensation and benefits 751 580 Accrued expenses 288 486 Right of use lease liability 3,350 3,425 Federal deduction on state taxes 155 — Bad debt reserves 16 26 Charitable contribution carry-forwards — 63 Other reserves 40 33 NOLs & credit carry-forwards 1,014 2,440 Deferred income tax asset $ 8,845 $ 10,064 DEFERRED TAX LIABILITIES Intangibles and amortization $ — $ (86) Prepaid expenses (1,547) (1,234) Fixed assets and depreciation (23,504) (18,136) Right of use asset (3,351) (3,422) Base stock (60) (249) Federal deduction on state taxes — (27) Deferred income tax liability $ (28,462) $ (23,154) NET DEFERRED INCOME TAX (LIABILITY) ASSET $ (19,617) $ (13,090) |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
STOCK-BASED COMPENSATION. | |
Summary of stock option activity | Weighted Average Remaining Aggregate Exercise Contractual Intrinsic Stock Options Shares Price Term Value Stock Option Shares outstanding at beginning of period 2,194,779 $ 35.01 — — Stock Option Shares granted 429,302 68.34 — — Stock Option Shares exercised (382,716) 27.27 — — Stock Option Shares forfeited (236,666) 40.83 — — Stock Option Shares expired (5,000) 9.80 — — Stock Option Shares outstanding at end of period 1,999,699 42.05 6.5 yrs. $ 61,774,500 Stock Option Shares exercisable at end of period 1,028,375 $ 29.26 4.6 yrs. $ 45,958,184 |
Summary of status of nonvested shares | Weighted-Average Grant Date Fair Nonvested Stock Option Shares Shares Value Nonvested at January 1, 2021 1,177,954 $ 14.49 Granted 429,302 26.37 Vested (399,266) 13.50 Forfeited (236,666) 16.91 Nonvested at December 31, 2021 971,324 $ 19.62 |
Schedule of stock options granted, vested and exercised | Year ended December 31, 2021 2020 2019 Weighted average expected volatility for options granted 45.72 % 40.87 % 30.13 % Expected life (in years) Directors’ plan 3.90 3.26 3.04 Executives plan 5.38 5.22 5.07 Employees plan 4.20 4.13 4.18 Weighted average risk-free rate 0.93 % 0.48 % 1.83 % Weighted average grant date fair value per share of options granted $ 26.37 $ 17.33 $ 12.19 Total fair value of shares vested $ 5,389 $ 3,852 $ 2,407 Total intrinsic value of options exercised $ 16,028 $ 15,258 $ 5,932 Cash received for all stock option exercises $ 10,435 $ 7,813 $ 4,060 Tax benefit realized from stock awards exercised $ 3,366 $ 3,204 $ 1,246 |
Schedule of stock-based compensation expense | Reported stock-based compensation expense was classified as follows (in thousands) and it is included in the Operating expenses in the Consolidated Statement of Income: For the Year ended December 31, 2021 2020 2019 Casino $ 236 $ 168 $ 205 Food and beverage 125 (26) 211 Hotel 191 127 109 Selling, general and administrative 3,508 3,586 3,600 Total stock-based compensation, before taxes 4,060 3,855 4,125 Tax benefit (853) (810) (866) Total stock-based compensation, net of tax $ 3,207 $ 3,045 $ 3,259 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Segment Reporting (Details) | 12 Months Ended |
Dec. 31, 2021segment | |
Segment Reporting | |
Number of operating segments | 2 |
Number of reportable segments | 1 |
Self-insurance Reserves | |
Period for reviewing actual expenditure to determine self-insurance reserve | 12 months |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Property and Equipment | ||
Gross property and equipment | $ 834,425 | $ 802,274 |
Less accumulated depreciation and amortization | (253,618) | (229,767) |
Property and equipment, net | 580,807 | 572,507 |
Land | ||
Property and Equipment | ||
Gross property and equipment | 32,986 | 32,986 |
Land improvements | ||
Property and Equipment | ||
Gross property and equipment | 9,898 | 9,847 |
Buildings | ||
Property and Equipment | ||
Gross property and equipment | 474,571 | 471,819 |
Building improvements | ||
Property and Equipment | ||
Gross property and equipment | 55,432 | 33,681 |
Furniture and equipment | ||
Property and Equipment | ||
Gross property and equipment | 235,233 | 229,052 |
Construction in progress | ||
Property and Equipment | ||
Gross property and equipment | 8,211 | 6,257 |
Right of use assets | ||
Property and Equipment | ||
Gross property and equipment | 14,246 | 14,784 |
Leasehold improvements | ||
Property and Equipment | ||
Gross property and equipment | $ 3,848 | $ 3,848 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment Useful Lives and Impairment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property and Equipment | |||
Depreciation expense | $ 37,900 | $ 16,100 | $ 13,700 |
Impairment charge | $ 0 | $ 0 | $ 0 |
Land improvements | At least | |||
Property and Equipment | |||
Estimated useful life | 15 years | ||
Land improvements | Maximum | |||
Property and Equipment | |||
Estimated useful life | 40 years | ||
Buildings | At least | |||
Property and Equipment | |||
Estimated useful life | 30 years | ||
Buildings | Maximum | |||
Property and Equipment | |||
Estimated useful life | 40 years | ||
Building improvements | At least | |||
Property and Equipment | |||
Estimated useful life | 5 years | ||
Building improvements | Maximum | |||
Property and Equipment | |||
Estimated useful life | 40 years | ||
Furniture and equipment | At least | |||
Property and Equipment | |||
Estimated useful life | 5 years | ||
Furniture and equipment | Maximum | |||
Property and Equipment | |||
Estimated useful life | 10 years | ||
Equipment | At least | |||
Property and Equipment | |||
Estimated useful life | 3 years | ||
Equipment | Maximum | |||
Property and Equipment | |||
Estimated useful life | 20 years |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Goodwill from business combinations | ||
Goodwill | $ 25,111 | $ 25,111 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Debt Issuance Costs and Capitalized Interest (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Debt Issuance Costs | |||||
Debt issuance costs, net of amortization | $ 1,800 | ||||
Amortization of deferred loan costs | $ 990 | $ 764 | $ 538 | ||
Capitalized Interest | |||||
Capitalized interest | $ 6,800 | $ 5,800 | |||
Capitalized interest, related to the Monarch Black Hawk expansion project | $ 16,500 | ||||
Revolving Credit Facility | |||||
Debt Issuance Costs | |||||
Unamortized debt issuance cost | $ 476 | ||||
Amortization of deferred loan costs | $ 95 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Players Club Program (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Obligations related to the players' club program | $ 9.4 | $ 9.8 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising Costs and Gaming Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Gaming Taxes | |||
Gaming Taxes | $ 45.5 | $ 17.2 | $ 23 |
Selling, general and administrative | |||
Advertising Costs | |||
Advertising Expense | $ 9.3 | $ 4.5 | $ 5 |
SUMMARY OF SIGNIFICANT ACCOU_11
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Other Operating items, net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Other operating items, net | $ 4,929 | $ 6,711 | $ 3,112 |
Professional service fees | 5,100 | 1,600 | |
Loss on disposition of assets | 100 | ||
Litigation proceeds | 300 | ||
Insurance claim proceeds | 100 | ||
Pre-opening expenses relating to the Monarch Black Hawk Expansion project | 2,800 | ||
Colorado legislation lobbying expenses | 1,400 | ||
Equipment, supplies and employee testing expenses due to the COVID-19 pandemic | $ 100 | 700 | |
Write off of Deferred Debt Issuance Cost | 95 | ||
Unamortized debt issuance cost write off and loss on disposal of assets | $ 200 |
SUMMARY OF SIGNIFICANT ACCOU_12
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Earnings Per Share (Details) - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Shares | |||
Basic (in shares) | 18,617 | 18,218 | 18,025 |
Effect of dilutive stock options (in shares) | 810 | 659 | 659 |
Diluted (in shares) | 19,427 | 18,877 | 18,684 |
Per Share Amount | |||
Basic (in dollars per share) | $ 3.68 | $ 1.30 | $ 1.77 |
Effect of dilutive stock options (in dollars per share) | (0.15) | (0.05) | (0.07) |
Diluted (in dollars per share) | $ 3.53 | $ 1.25 | $ 1.70 |
SUMMARY OF SIGNIFICANT ACCOU_13
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Antidilutive Options (Details) - Stock options - $ / shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Options not included in the computation of diluted earnings per share: | |||
Excluded from the computation of diluted earnings per share (in shares) | 274,741 | 1,086,244 | 843,980 |
At least | |||
Options not included in the computation of diluted earnings per share: | |||
Weighted Average Proceeds per Share (in dollars per share) | $ 76.84 | $ 43.09 | $ 44.55 |
Maximum | |||
Options not included in the computation of diluted earnings per share: | |||
Weighted Average Proceeds per Share (in dollars per share) | $ 102.01 | $ 85.68 | $ 59.07 |
SUMMARY OF SIGNIFICANT ACCOU_14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Credit losses) (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Reserve for gaming and nin-gaming receivables | $ 0.2 | $ 0.1 |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accounts receivable | |||
Accounts receivable, gross | $ 9,063 | $ 3,847 | |
Less allowance for doubtful accounts | (182) | (111) | |
Accounts receivable, net | 8,881 | 3,736 | |
Bad debt expense | 245 | 159 | $ 189 |
Casino | |||
Accounts receivable | |||
Accounts receivable, gross | 4,291 | 2,701 | |
Hotel. | |||
Accounts receivable | |||
Accounts receivable, gross | 1,339 | 510 | |
Other. | |||
Accounts receivable | |||
Accounts receivable, gross | $ 3,433 | $ 636 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Carrying Amount and Intangible Weighted Average Life (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Business Combination, Goodwill [Abstract] | |||
Amount of goodwill recorded | $ 25,111 | $ 25,111 | |
Finite-Lived Intangible Assets | |||
Total Intangible assets | 11,111 | 11,111 | |
Less accumulated amortization | (11,111) | (10,138) | |
Intangible assets, net | 477 | $ 973 | |
Weighted-average life | 7 months 6 days | ||
Amortization expense | $ 500 | $ 1,200 | $ 1,200 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Customer Lists Valuation (Details) - Cloud Computing Arrangement (CCA) $ in Thousands | 3 Months Ended |
Dec. 31, 2020USD ($) | |
Valuation | |
CCA implementation costs | $ 622 |
Useful life of finite-lived intangible assets | 5 years |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS - Estimated Amortization Expense (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Estimated amortization expense | ||
2022 | $ 124 | |
2023 | 124 | |
2024 | 124 | |
2025 | 105 | |
Intangible assets, net | $ 477 | $ 973 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
ACCRUED EXPENSES | ||
Accrued salaries, wages and related benefits | $ 12,716 | $ 9,833 |
Progressive slot machine and other gaming accruals | 18,577 | 16,699 |
Accrued gaming taxes | 5,226 | 2,774 |
Accrued interest | 3 | 14 |
Other accrued liabilities | 6,445 | 5,385 |
Accrued expenses | $ 42,967 | $ 34,705 |
ACCOUNTING FOR LEASES - Narrati
ACCOUNTING FOR LEASES - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
ACCOUNTING FOR LEASES | |||
Lease, Practical Expedient, Lessor Single Lease Component [true false] | true | ||
Weighted-average incremental borrowing rate of operating leases | 4.34% | 4.33% | |
weighted-average remaining lease term | 20 years 4 months 24 days | 21 years 2 months 12 days | |
Cash paid related to operating leases | $ 1.5 | $ 1.4 | |
Lease Costs On Gaming Equipment | $ 2.5 | $ 1.2 | $ 1.6 |
ACCOUNTING FOR LEASES - Lease c
ACCOUNTING FOR LEASES - Lease costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
ACCOUNTING FOR LEASES | ||
Short-term lease costs | $ 382 | $ 451 |
Long-term lease costs | 1,432 | 1,444 |
Total lease costs | $ 1,814 | $ 1,895 |
ACCOUNTING FOR LEASES - Undisco
ACCOUNTING FOR LEASES - Undiscounted cash flow operating lease liability (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
ACCOUNTING FOR LEASES | ||
2022 | $ 1,342 | |
2023 | 1,072 | |
2024 | 1,072 | |
2025 | 1,072 | |
2026 | 1,072 | |
Thereafter | 15,868 | |
Total minimum lease payments | 21,498 | |
Less: amount of lease payment representing interest | (7,255) | |
Present value of future minimum payments | 14,243 | |
Less: current obligations under leases | (745) | $ (813) |
Long-term lease obligations | $ 13,498 | $ 13,984 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2020USD ($) | Sep. 03, 2020USD ($) | |
Long-term debt | ||||
Long-term debt, net | $ 68,152 | $ 167,162 | ||
At least | ||||
Long-term debt | ||||
Commitment fee percentage | 0.175% | |||
Maximum | ||||
Long-term debt | ||||
Commitment fee percentage | 0.325% | |||
Term Loan Facility. | ||||
Long-term debt | ||||
Face amount of debt | $ 200,000 | |||
Optional prepayment | $ 67,000 | $ 80,000 | ||
Fourth Amended Credit Facility | ||||
Long-term debt | ||||
Maximum borrowing capacity | 270,000 | |||
Long-term debt, net | 90,000 | |||
Unamortized debt issuance costs | 1,800 | |||
Revolving Credit Facility | ||||
Long-term debt | ||||
Maximum borrowing capacity | 75,000 | 70,000 | ||
Remaining available borrowings | 69,400 | |||
Amount drawn under the facility | $ 0 | |||
Total leverage ratio | 0.7 | |||
Fixed charge coverage ratio | 5.7 | |||
Additional borrowing capacity | 75,000 | |||
Revolving Credit Facility | At least | ||||
Long-term debt | ||||
Fixed charge coverage ratio | 1.15 | |||
Additional borrowing capacity | $ 15,000 | |||
Integral multiple additional borrowing capacity | $ 1,000 | |||
Revolving Credit Facility | At least | LIBOR | ||||
Long-term debt | ||||
Percentage points added to the reference rate | 1.00% | |||
Revolving Credit Facility | At least | Base Rate | ||||
Long-term debt | ||||
Percentage points added to the reference rate | 0.00% | |||
Revolving Credit Facility | Maximum | ||||
Long-term debt | ||||
Total leverage ratio | 4.50 | |||
Revolving Credit Facility | Maximum | LIBOR | ||||
Long-term debt | ||||
Percentage points added to the reference rate | 2.00% | |||
Revolving Credit Facility | Maximum | Base Rate | ||||
Long-term debt | ||||
Percentage points added to the reference rate | 1.00% | |||
Term Loan Facility | ||||
Long-term debt | ||||
Face amount of debt | $ 200,000 | |||
Amount outstanding | $ 90,000 | |||
Payment that are due in next twelve months | $ 20,000 | |||
Interest rate (Percent) | 1.11% | |||
Percentage points added to the reference rate | 1.00% | |||
Mandatory payment | $ 7,500 | $ 12,500 | ||
Term Loan Facility | Period From December 31, 2020 To September 30, 2021 | ||||
Long-term debt | ||||
Interest rate | 1.25% | |||
Term Loan Facility | Period From December 31, 2021 And Thereafter | ||||
Long-term debt | ||||
Interest rate | 2.50% | |||
Term Loan Facility | Due in the next twelve months | ||||
Long-term debt | ||||
Mandatory principal payment due in next twelve months | $ 20,000 | |||
Standby Letter of Credit | ||||
Long-term debt | ||||
Amount outstanding | $ 600 |
TAXES - Income Tax Provision (B
TAXES - Income Tax Provision (Benefit) Components (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income tax provision (benefit) | |||
Federal | $ 10,091 | $ (24,576) | $ 6,080 |
State | 265 | 123 | 336 |
Current tax provision (benefit) | 10,356 | (24,453) | 6,416 |
Federal | 4,836 | 15,096 | 1,215 |
State | 1,691 | 677 | 129 |
Deferred tax provision (benefit) | 6,527 | 15,773 | 1,344 |
Total tax provision (benefit) | $ 16,883 | $ (8,680) | $ 7,760 |
TAXES - Income Tax Provision Di
TAXES - Income Tax Provision Differences from Federal Statutory Rate (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income tax provision differences from that computed at federal statutory rate | |||
Federal tax at the statutory rate (as a percent) | 21.00% | 21.00% | 21.00% |
State tax (net of federal benefits) (as a percent) | 1.47% | 1.11% | 1.00% |
Permanent items (as a percent) | 0.38% | 3.52% | 0.90% |
Tax credits (as a percent) | (0.25%) | (2.82%) | (0.84%) |
Excess tax benefits on stock-based compensation (as a percent) | (3.14%) | (17.89%) | (2.49%) |
Impact of CARES Act (as a percent) | (65.55%) | ||
Change in Tax Rate and Apportionment (as a percent) | 0.34% | 4.31% | |
Other (as a percent) | (0.02%) | (1.56%) | 0.04% |
Income tax provision (as a percent) | 19.78% | (57.88%) | 19.61% |
TAXES (Details)
TAXES (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Effective tax rate (as a percent) | 19.78% | (57.88%) | 19.61% |
Income taxes receivable | $ 26,946,000 | $ 24,894,000 | |
Liability for uncertain tax positions recorded | 0 | 0 | $ 0 |
Change in uncertain tax positions, increase | 0 | ||
Colorado legislation lobbing expenses | 1,400,000 | ||
Tax benefit for employee stock-based compensation | (853,000) | (810,000) | (866,000) |
ASU 2016-09 | |||
Tax benefit for employee stock-based compensation | $ (2,700,000) | $ (2,700,000) | $ (1,000,000) |
TAXES - Components of Deferred
TAXES - Components of Deferred Income Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
DEFERRED TAX ASSETS | ||
Stock-based compensation | $ 3,231 | $ 3,011 |
Compensation and benefits | 751 | 580 |
Accrued expenses | 288 | 486 |
Right of use lease liability | 3,350 | 3,425 |
Federal deduction on state taxes | 155 | |
Bad debt reserves | 16 | 26 |
Charitable contribution carry-forwards | 63 | |
Other reserves | 40 | 33 |
NOLs and credit carry-forwards | 1,014 | 2,440 |
Deferred income tax asset | 8,845 | 10,064 |
DEFERRED TAX LIABILITIES | ||
Intangibles and amortization | (86) | |
Prepaid expenses | (1,547) | (1,234) |
Fixed assets and depreciation | (23,504) | (18,136) |
Right of use asset | (3,351) | (3,422) |
Base stock | (60) | (249) |
Federal deduction on deferred state taxes | (27) | |
Deferred income tax liability | (28,462) | (23,154) |
NET DEFERRED INCOME TAX ASSET | $ (19,617) | $ (13,090) |
TAXES - NOL and GBC Carryforwar
TAXES - NOL and GBC Carryforwards (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Taxes | |
NOL carryforwards | $ 14,700 |
General business credit (GBC) carryforwards | 300 |
Annual base limitation for future utilization of acquired carryforwards | 1,250 |
Monarch Black Hawk | State of Nevada | |
Taxes | |
NOL carryforwards | 14,700 |
Monarch Black Hawk | IRS | |
Taxes | |
General business credit (GBC) carryforwards | $ 300 |
TAXES - Unrecognized Tax Benefi
TAXES - Unrecognized Tax Benefits (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
TAXES | |||
Interest expense or penalties for uncertain tax positions recorded | $ 0 | $ 0 | $ 0 |
Liability for uncertain tax positions recorded | 0 | $ 0 | $ 0 |
Change in uncertain tax positions, increase | $ 0 |
BENEFIT PLANS (Details)
BENEFIT PLANS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
BENEFIT PLANS | |||
Maximum percentage of pre-tax compensation that participating employees may defer under the plan | 100.00% | ||
Company's matching contributions | $ 611 | $ 423 | $ 482 |
STOCK-BASED COMPENSATION - 2014
STOCK-BASED COMPENSATION - 2014 Equity Incentive Plan (Details) | May 21, 2014plan | Dec. 31, 2021shares |
STOCK-BASED COMPENSATION | ||
Number Predecessor Plans terminated | plan | 2 | |
2014 Plan | ||
STOCK-BASED COMPENSATION | ||
Number of new shares available for grant | 3,400,000 | |
Aggregate amount of common shares available for grant or subject to outstanding awards under Predecessor Plans | 979,600 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Option Activity (Details) | 12 Months Ended |
Dec. 31, 2021USD ($)$ / sharesshares | |
Shares | |
Stock Option Shares expired (in shares) | shares | (5,000) |
Weighted-Average Exercise Price | |
Stock Option Shares expired (in dollars per share) | $ / shares | $ 9.80 |
Stock options | |
Shares | |
Stock Option Shares outstanding at beginning of period (in shares) | shares | 2,194,779 |
Stock Option Shares granted (in shares) | shares | 429,302 |
Stock Option Shares exercised (in shares) | shares | (382,716) |
Stock Option Shares forfeited (in shares) | shares | (236,666) |
Stock Option Shares outstanding at end of period (in shares) | shares | 1,999,699 |
Stock Option Shares exercisable at end of period (in shares) | shares | 1,028,375 |
Weighted-Average Exercise Price | |
Stock Option Shares outstanding at beginning of period (in dollars per share) | $ / shares | $ 35.01 |
Stock Option Shares granted (in dollars per share) | $ / shares | 68.34 |
Stock Option Shares exercised (in dollars per share) | $ / shares | 27.27 |
Stock Option Shares forfeited (in dollars per share) | $ / shares | 40.83 |
Stock Option Shares outstanding at end of period (in dollars per share) | $ / shares | 42.05 |
Stock Option Shares exercisable at end of period (in dollars per share) | $ / shares | $ 29.26 |
Weighted Average Remaining Contractual Term | |
Stock Option Shares outstanding at end of period | 6 years 6 months |
Stock Option Shares exercisable at end of period | 4 years 7 months 6 days |
Aggregate Intrinsic Value | |
Stock Option Shares outstanding at end of period (in dollars) | $ | $ 61,774,500 |
Stock Option Shares exercisable at end of period (in dollars) | $ | $ 45,958,184 |
STOCK-BASED COMPENSATION - Stat
STOCK-BASED COMPENSATION - Status of Nonvested Shares and Unrecognized Costs (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Unrecognized costs | |||
Unrecognized costs related to all share-based awards outstanding | $ 14.9 | ||
Weighted average period for recognition of unrecognized compensation costs | 2 years 9 months 18 days | ||
Stock options | |||
Nonvested Stock Option Shares | |||
Nonvested at the beginning of the period (in shares) | 1,177,954 | ||
Granted (in shares) | 429,302 | ||
Vested (in shares) | (399,266) | ||
Forfeited (in shares) | (236,666) | ||
Nonvested at the end of the period (in shares) | 971,324 | 1,177,954 | |
Weighted-Average Grant Date Fair Value | |||
Nonvested at the beginning of the period (in dollars per share) | $ 14.49 | ||
Granted (in dollars per share) | 26.37 | $ 17.33 | $ 12.19 |
Vested (in dollars per share) | 13.50 | ||
Forfeited (in dollars per share) | 16.91 | ||
Nonvested at the end of the period (in dollars per share) | $ 19.62 | $ 14.49 |
STOCK-BASED COMPENSATION - Valu
STOCK-BASED COMPENSATION - Valuation Assumptions and Other Information (Details) - Stock options - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Option valuation assumptions for options granted | |||
Weighted average expected volatility for options granted (as a percent) | 45.72% | 40.87% | 30.13% |
Weighted average risk free rate (as a percent) | 0.93% | 0.48% | 1.83% |
Weighted average grant date fair value per share of options granted (in dollars per share) | $ 26.37 | $ 17.33 | $ 12.19 |
Total fair value of shares vested | $ 5,389 | $ 3,852 | $ 2,407 |
Total intrinsic value of options exercised | 16,028 | 15,258 | 5,932 |
Cash received for all stock option exercises | 10,435 | 7,813 | 4,060 |
Tax benefit realized from stock awards exercised | $ 3,366 | $ 3,204 | $ 1,246 |
Directors | |||
Option valuation assumptions for options granted | |||
Expected life | 3 years 10 months 24 days | 3 years 3 months 3 days | 3 years 14 days |
Executives | |||
Option valuation assumptions for options granted | |||
Expected life | 5 years 4 months 17 days | 5 years 2 months 19 days | 5 years 25 days |
Employees | |||
Option valuation assumptions for options granted | |||
Expected life | 4 years 2 months 12 days | 4 years 1 month 17 days | 4 years 2 months 4 days |
STOCK-BASED COMPENSATION - Repo
STOCK-BASED COMPENSATION - Reported Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Stock-based compensation expense | |||
Total stock-based compensation, before taxes | $ 4,060 | $ 3,855 | $ 4,125 |
Tax benefit for employee stock-based compensation | (853) | (810) | (866) |
Total stock-based compensation, net of tax | 3,207 | 3,045 | 3,259 |
Casino | |||
Stock-based compensation expense | |||
Total stock-based compensation, before taxes | 236 | 168 | 205 |
Food and beverage | |||
Stock-based compensation expense | |||
Total stock-based compensation, before taxes | 125 | (26) | 211 |
Hotel | |||
Stock-based compensation expense | |||
Total stock-based compensation, before taxes | 191 | 127 | 109 |
Selling, general and administrative | |||
Stock-based compensation expense | |||
Total stock-based compensation, before taxes | $ 3,508 | $ 3,586 | $ 3,600 |
STOCK REPURCHASE PLAN (Details)
STOCK REPURCHASE PLAN (Details) - USD ($) $ in Millions | Jan. 19, 2022 | Dec. 31, 2021 | Oct. 22, 2014 |
Stock repurchase plan | |||
Stock Repurchased | $ 6.5 | ||
Stock Repurchased, Shares | 100,000 | ||
Repurchase Plan | |||
Stock repurchase plan | |||
Shares authorized for repurchase under program | 3,000,000 | ||
Stock repurchases made | 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
COMMITMENTS AND CONTINGENCIES | ||
Professional service fees | $ 5,100,000 | $ 1,600,000 |
PCL Construction Services, Inc. | ||
COMMITMENTS AND CONTINGENCIES | ||
Professional service fees | 5,100,000 | $ 1,600,000 |
Monarch Black Hawk, Inc. (owner of Monarch Casino Black Hawk) | Self-Insurance | ||
COMMITMENTS AND CONTINGENCIES | ||
Individual health care liability retained | 250,000 | |
Golden Road Motor Inn, Inc. (owner and operator of Atlantis) | Self-Insurance | ||
COMMITMENTS AND CONTINGENCIES | ||
Individual health care liability retained | $ 250,000 | |
Liability for claims in excess of stop loss (as a percent) | 10.00% | |
Maximum claim liability for workers' compensation | $ 500,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | Nov. 17, 2015USD ($) | Aug. 28, 2015ft²aUSD ($)item | Sep. 30, 2004USD ($) | Dec. 31, 2021USD ($)ft² | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
RELATED PARTY TRANSACTIONS | ||||||
Operating lease liability | $ 14,243,000 | |||||
Biggest Little Investments, L.P. (BLI) | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Area of property | ft² | 37,400 | |||||
Biggest Little Investments, L.P. (BLI) | Parking Lot Lease | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Lessee, Operating Lease, Existence of Option to Extend [true false] | true | |||||
Rent paid | $ 695,000 | $ 695,000 | $ 695,000 | |||
Operating expenses related to lease | 28,000 | 27,000 | 32,000 | |||
Right of use asset | 10,300,000 | |||||
Operating lease liability | 10,300,000 | |||||
Biggest Little Investments, L.P. (BLI) | Driveway Lease | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Lease term | 15 years | |||||
Minimum annual rent | $ 300,000 | |||||
Anniversary years subject to cost of living adjustment rent increases | 5 years | |||||
Number of terms for which the lease can be renewed | 3 | |||||
Lease renewal option additional term | 5 years | |||||
Rent paid | 404,000 | 404,000 | 383,000 | |||
Operating expenses related to lease | 34,000 | 23,000 | 29,000 | |||
Right of use asset | 3,700,000 | |||||
Operating lease liability | 3,700,000 | |||||
Affiliates | Billboard advertising, storage space and parking lot space | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Rent paid | $ 194,000 | $ 145,000 | $ 150,000 | |||
Golden Road | Parking Lot Lease | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Area of land | a | 4.2 | |||||
Minimum annual rent | $ 695,000 | |||||
Golden Road | Parking Lot Lease | Land | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Number of parking spaces | item | 300 | |||||
Golden Road | Biggest Little Investments, L.P. (BLI) | Parking Lot Lease | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Lease term | 20 years | |||||
Anniversary years subject to cost of living adjustment rent increases | 5 years | |||||
Lease renewal option additional term | 10 years | |||||
Amount due to related party if lease is not renewed | $ 1,600,000 | |||||
Golden Road | Biggest Little Investments, L.P. (BLI) | Parking Lot Lease | Buildings | ||||||
RELATED PARTY TRANSACTIONS | ||||||
Area of property | ft² | 46,000 | |||||
Area of land | a | 4.2 |
Schedule II. - VALUATION AND _2
Schedule II. - VALUATION AND QUALIFYING ACCOUNTS (Details) - Allowance for doubtful accounts - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Valuation and Qualifying Accounts | |||
Balance at beginning of year | $ 111 | $ 100 | $ 245 |
Charged to cost and expenses | 245 | 159 | 189 |
Deductions | (174) | (148) | (334) |
Balance at end of year | $ 182 | $ 111 | $ 100 |