UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______TO______
Commission File No. 0-22088
MONARCH CASINO & RESORT, INC.
(Exact name of registrant as specified in its charter)
-------------------------
NEVADA 88-0300760
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1175 W. MOANA LANE, SUITE 200
RENO, NEVADA 89509
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code: (775) 825-3355
-------------------------
NOT APPLICABLE
(Former name, former address and former fiscal
year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES _X_ NO ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. YES ___ NO ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
As of November 9, 2001, there were 9,436,275 shares of Monarch Casino &
Resort, Inc. $0.01 par value common stock outstanding.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MONARCH CASINO & RESORT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues
Casino............................... $16,999,809 $ 15,812,024 $49,366,266 $ 45,362,212
Food and beverage.................... 8,277,641 8,116,661 23,899,200 22,292,559
Hotel................................ 5,724,628 5,604,076 14,775,607 14,356,205
Other................................ 940,966 968,159 2,566,639 2,674,310
----------- ------------ ----------- ------------
Gross revenues.................... 31,943,044 30,500,920 90,607,712 84,685,286
Less promotional allowances.......... (3,721,404) (3,959,558) (10,903,906) (10,515,705)
----------- ------------ ----------- ------------
Net revenues...................... 28,221,640 26,541,362 79,703,806 74,169,581
----------- ------------ ----------- ------------
Operating expenses
Casino............................... 6,554,379 6,923,629 19,315,168 19,143,656
Food and beverage.................... 4,838,560 5,010,792 13,748,428 13,847,679
Hotel................................ 1,785,388 1,737,449 5,165,409 4,962,350
Other................................ 346,748 371,929 982,510 1,036,124
Selling, general and administrative.. 6,925,282 6,930,928 20,261,583 18,957,890
Depreciation and amortization........ 2,548,013 2,555,859 7,538,787 7,574,260
----------- ------------ ----------- ------------
Total operating expenses.......... 22,998,370 23,530,586 67,011,885 65,521,959
----------- ------------ ----------- ------------
Income from operations............ 5,223,270 3,010,776 12,691,921 8,647,622
----------- ------------ ----------- ------------
Other expense
Interest expense, net................ 1,607,362 2,140,797 5,992,247 6,358,809
----------- ------------ ----------- ------------
Total other expense............... 1,607,362 2,140,797 5,992,247 6,358,809
----------- ------------ ----------- ------------
Income before income taxes........ 3,615,908 869,979 6,699,674 2,288,813
Provision for income taxes............. 1,232,887 287,705 2,280,288 783,514
----------- ------------ ----------- ------------
Net Income........................ $ 2,383,021 $ 582,274 $ 4,419,386 $ 1,505,299
=========== ============ =========== ============
Income per share of common stock
Net income
Basic.............................. $ 0.25 $ 0.06 $ 0.47 $ 0.16
Diluted............................ $ 0.25 $ 0.06 $ 0.47 $ 0.16
Weighted average number of common
shares and potential common
shares outstanding
Basic.............................. 9,436,275 9,436,275 9,436,275 9,436,275
Diluted............................ 9,480,840 9,481,878 9,477,677 9,479,076
The accompanying Notes to the Condensed Consolidated Financial Statements are
an integral part of these statements.
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MONARCH CASINO & RESORT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2001 2000
-------------- -------------
(Unaudited)
ASSETS
Current assets
Cash................................................. $ 8,308,938 $ 6,783,998
Receivables, net..................................... 3,171,646 2,963,648
Federal income tax refund receivable................. - 417,135
Related party receivables............................ 66,392 62,920
Inventories.......................................... 893,848 1,099,285
Prepaid expenses..................................... 1,988,466 1,875,909
Prepaid federal income taxes ........................ - 154,281
Deferred income taxes................................ 2,197,180 2,045,651
------------- ------------
Total current assets.............................. 16,626,470 15,402,827
------------- ------------
Property and equipment
Land................................................. 10,339,530 10,339,530
Land improvements.................................... 3,173,676 3,173,926
Buildings............................................ 78,955,538 78,955,538
Building improvements................................ 4,763,904 4,733,595
Furniture and equipment.............................. 53,888,561 50,924,021
------------- ------------
151,121,209 148,126,610
Less accumulated depreciation and amortization....... (44,995,727) (37,816,876)
------------- ------------
106,125,482 110,309,734
Construction in progress............................. 172,959 -
------------- ------------
Net property and equipment........................ 106,298,441 110,309,734
------------- ------------
Other assets, net...................................... 532,315 678,247
------------- ------------
Total assets...................................... $ 123,457,226 $ 126,390,808
============= =============
The accompanying Notes to the Condensed Consolidated Financial Statements are
an integral part of these statements.
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MONARCH CASINO & RESORT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2001 2000
-------------- -------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt................. $ 6,313,380 $ 7,537,893
Accounts payable..................................... 5,543,645 8,234,219
Accounts payable construction........................ - 34,650
Accrued expenses..................................... 7,734,351 5,690,888
Federal income taxes payable......................... 1,077,917 -
------------- ------------
Total current liabilities......................... 20,669,293 21,497,650
Long-term debt, less current maturities................ 66,577,277 73,480,788
Deferred income taxes.................................. 4,962,608 4,583,708
Commitments and contingencies
Stockholders' equity
Preferred stock, $.01 par value, 10,000,000
shares authorized; none issued...................... - -
Common stock, $.01 par value, 30,000,000
shares authorized; 9,536,275 issued;
9,436,275 outstanding............................... 95,363 95,363
Additional paid-in capital........................... 17,241,788 17,241,788
Treasury stock, at cost.............................. (329,875) (329,875)
Retained earnings.................................... 14,240,772 9,821,386
------------- ------------
Total stockholders' equity........................ 31,248,048 26,828,662
------------- ------------
Total liabilities and stockholders' equity........ $ 123,457,226 $ 126,390,808
============= =============
The accompanying Notes to the Condensed Consolidated Financial Statements are
an integral part of these statements.
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MONARCH CASINO & RESORT, INC.
CONDENSED CONSOLIDATED STATMENTS OF CASH FLOWS
Nine Months Ended
September 30,
----------------------------
2001 2000
------------ ------------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income............................................ $ 4,419,386 $ 1,505,299
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization....................... 7,673,357 7,710,391
Gain on disposal of assets.......................... (8,696) (89,995)
Deferred income taxes............................... 227,371 583,512
Decrease (increase) in receivables, net............. 205,665 (1,822,482)
Decrease in inventories............................. 205,437 313,302
Decrease in prepaid expenses........................ 41,724 246,418
Decrease in other assets............................ 8,765 16,306
Decrease in accounts payable........................ (2,690,574) (685,412)
Increase in accrued expenses and
federal income taxes payable....................... 3,121,380 1,445,745
------------ ------------
Net cash provided by operating activities.......... 13,203,815 9,223,084
------------ ------------
Cash flows from investing activities:
Proceeds from sale of assets.......................... 49,045 240,023
Acquisition of property and equipment................. (2,416,129) (2,018,065)
Decrease in accounts payable construction............. (34,650) (904,700)
------------ ------------
Net cash used in investing activities.............. (2,401,734) (2,682,742)
------------ ------------
Cash flows from financing activities:
Principal payments on long-term debt.................. (9,277,141) (6,374,760)
------------ ------------
Net cash used in financing activities.............. (9,277,141) (6,374,760)
------------ ------------
Net increase in cash............................... 1,524,940 165,582
Cash at beginning of period............................. 6,783,998 6,367,507
------------ ------------
Cash at end of period................................... $ 8,308,938 $ 6,533,089
============ ============
Supplemental disclosure of
cash flow information:
Cash paid for interest,
net of capitalized interest.......................... $ 5,315,115 $ 5,932,562
Cash paid for income taxes............................ 975,000 -
Supplemental schedule of non-cash
investing and financing activities:
The Company financed the purchase of property
and equipment in the following amounts............... $ 1,149,117 $ 350,507
The accompanying Notes to the Condensed Consolidated Financial Statements are
an integral part of these statements.
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MONARCH CASINO & RESORT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Monarch Casino & Resort, Inc. ("Monarch") was incorporated in 1993.
Monarch's wholly-owned subsidiary, Golden Road Motor Inn, Inc. ("Golden
Road"), owns and operates the Atlantis Casino Resort (the "Atlantis"), a
hotel/casino facility in Reno, Nevada. Unless stated otherwise, "Monarch" or
the "Company", collectively refers to Monarch and its Golden Road subsidiary.
The consolidated financial statements include the accounts of Monarch and
Golden Road. Intercompany balances and transactions are eliminated.
Use of Estimates
In preparing these financial statements in conformity with accounting
principles generally accepted in the United States, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the
date of the financial statements, and revenues and expenses during the year.
Actual results could differ from those estimates.
Reclassifications
Certain amounts in the three and nine months ended September 30, 2000
condensed consolidated financial statements have been reclassified to conform
with the 2001 presentation. These reclassifications had no effect on the
Company's previously reported net income.
Related Party Receivables
Receivables from officers, employees, or affiliated companies are
primarily for banquet related services and are priced at the retail value of
the goods or services provided.
Shareholder Guarantee Fees
All of the Company's bank debt is personally guaranteed by the Company's
three largest stockholders. Effective January 1, 2001 the Company is
compensating the guarantors at the rate of 2% per annum on the average
outstanding bank debt per quarter until the guarantees are cancelled or the
notes are paid off. In recording these shareholder guarantee fees, the
Company has accrued interest expense of $364,783 and $1,146,422, respectively,
for the three and nine months ended September 30, 2001.
NOTE 2. INTERIM FINANCIAL STATEMENTS
The accompanying condensed consolidated financial statements for the
three month and nine month periods ended September 30, 2001 and 2000 are
unaudited. In the opinion of management, all adjustments (which include
normal recurring adjustments) necessary for a fair presentation of the
Company's financial position and results of operations for such periods,
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have been included. The accompanying unaudited condensed consolidated
financial statements should be read in conjunction with the Company's audited
financial statements included in its Annual Report on Form 10-K for the year
ended December 31, 2000. The results for the three month and nine month
periods ended September 30, 2001 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2001, or for any other
period.
NOTE 3. EARNINGS PER SHARE
The Company reports "basic" earnings per share and "diluted" earnings per
share in accordance with the provisions of Statement of Financial Accounting
Standards No. 128 "Earnings Per Share". Basic earnings per share is computed
by dividing reported net earnings by the weighted-average number of common
shares outstanding during the period. Diluted earnings per share reflects the
additional dilution for all potentially dilutive securities such as stock
options.
The following is a reconciliation of the number of shares (denominator)
used in the basic and diluted earnings per share computations (shares in
thousands):
Three Months Ended September 30,
-----------------------------------
2001 2000
---------------- ----------------
Per Share Per Share
Shares Amount Shares Amount
------ --------- ------ ---------
Net Income
Basic..................... 9,436 $ 0.25 9,436 $ 0.06
Effect of dilutive
stock options............ 45 - 46 -
----- ------ ----- ------
Diluted................... 9,481 $ 0.25 9,482 $ 0.06
====== ======= ====== =======
Nine Months Ended September 30,
-----------------------------------
2001 2000
---------------- ----------------
Per Share Per Share
Shares Amount Shares Amount
------ --------- ------ ---------
Net Income
Basic..................... 9,436 $ 0.47 9,436 $ 0.16
Effect of dilutive
stock options............ 42 - 43 -
----- ------ ----- ------
Diluted................... 9,478 $ 0.47 9,479 $ 0.16
====== ======= ====== =======
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The following options were not included in the computation of diluted
earnings per share because the options' exercise price was greater than the
average market price of the common shares and their inclusion would be
antidilutive.
Three Months Ended September 30,
-----------------------------------
2001 2000
---------------- ----------------
Options to purchase shares of
common stock (in thousands)... 8 16
Exercise prices................. $5.68-$5.94 $5.50-$6.00
Expiration dates................ 9/03-2/10 6/03-2/10
Nine Months Ended September 30,
-----------------------------------
2001 2000
---------------- ----------------
Options to purchase shares of
common stock (in thousands)... 20 24
Exercise prices................. $5.50-$5.94 $5.25-$6.00
Expiration dates................ 9/03-2/10 6/03-2/10
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included herein contains statements that may be
considered forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
such as statements relating to anticipated expenses, capital spending, and
financing sources. Such forward-looking information involves important risks
and uncertainties that could significantly affect anticipated results in the
future and, accordingly, such results may differ from those expressed in any
forward-looking statements made herein. These risks and uncertainties
include, but are not limited to, those relating to competitive industry
conditions, and expansion of Indian casinos in California, Reno-area tourism
conditions, dependence on existing management, leverage and debt service
(including sensitivity to fluctuations in interest rates), the regulation of
the gaming industry (including actions affecting licensing), outcome of
litigation, domestic or global economic conditions, changes in federal or
state tax laws or the administration of such laws.
RESULTS OF OPERATIONS
Comparison of Operating Results for the Three Month
Periods Ended September 30, 2001 and 2000
For the three month period ended September 30, 2001, the Company earned
$2.4 million, or $0.25 per share, on net revenues of $28.2 million, compared
to earnings of $582 thousand, or $0.06 per share, on net revenues of $26.5
million for the three months ended September 30, 2000. The Company's income
from operations totaled $5.2 million in the 2001 third quarter, an increase of
73.5% when compared to $3.0 million in the 2000 third quarter. Both net
revenues and net income for the third quarter of 2001 constitute new third
quarter records for the Company, and net revenues increased 6.3% and net
income increased 309.3% when compared to last year's third quarter.
Casino revenues totaled $17.0 million in the third quarter of 2001, a
7.5% increase from $15.8 million in the 2000 third quarter, reflecting an
increase in slot, keno, and poker win and a decrease in table game win. Slot
revenues were up 10.7% in the third quarter of 2001 compared to the third
quarter of 2000 due to an increase in the volume of slot machine play. Table
game revenues were down 6.4% in the third quarter of 2001 compared to the
third quarter of 2000 due to a decrease in table game win percentage for the
three month period. Keno and poker room revenues both showed strong third
quarter increases at 25.6% and 24.3%, respectively, over the third quarter of
2000. Casino operating expenses dropped to 38.6% of casino revenues in the
2001 third quarter compared to 43.8% in the 2000 third quarter, primarily due
to efforts to reduce controllable expenses.
Food and beverage revenues for the 2001 third quarter totaled $8.3
million, an increase of 2.0% compared to $8.1 million for the 2000 third
quarter, primarily due to a slight decrease in covers offset by a 5.9%
increase in average revenue per cover. Food and beverage operating expenses
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during the 2001 third quarter amounted to 58.5% of food and beverage revenues,
down from 61.7% for the third quarter of 2000. The improved margins are
primarily the result of a reduction in both the average cost of sales and
variable operating expenses.
Hotel revenues in the 2001 third quarter increased 2.2% to $5.7 million
from $5.6 million in the 2000 third quarter as a result of a decrease in the
average daily room rate, offset by an occupancy rate increase of 1.6
percentage points. The Atlantis' average daily room rate ("ADR") was $60.55
for the 2001 third quarter, down from $62.68 in the third quarter of 2000.
During the third quarter of 2001, the Atlantis experienced a 96.1% occupancy
rate, up from a 94.5% occupancy rate for the same period in 2000. The impact
of the September 11 tragedy on hotel occupancy was negligible. Hotel
operating expenses remained relatively constant in the 2001 third quarter at
31.2% of hotel revenues, compared to 31.0% for the same quarter in 2000.
Other revenues in the 2001 third quarter totaled $941 thousand, down 2.8%
from $968 thousand in the 2000 third quarter, primarily due to a reduction in
commissions received in the 2001 third quarter compared to the 2000 third
quarter. Other expenses decreased slightly as a percentage of other revenues,
decreasing to 36.9% in the 2001 third quarter from 38.4% in the 2000 third
quarter.
Selling, general and administrative expenses were $6.9 million in the
2001 third quarter or 24.5% of net revenues, compared to $6.9 million or 26.1%
of net revenues in the third quarter of 2000. The continuing decrease in
these expenses as a percentage of revenues reflects certain economies of scale
achieved from the Atlantis expansion that was completed in 1999.
Interest expense for the 2001 third quarter totaled $1.6 million, down
24.9% from $2.1 million in the third quarter of 2000, despite the addition of
shareholder debt guarantee fees of nearly $365 thousand included in interest
expense for the third quarter of 2001. The decrease in interest expense
reflects both a decrease in applicable variable interest rates and a decrease
in the related average outstanding principal.
Comparison of Operating Results for the Nine Month
Periods Ended September 30, 2001 and 2000
For the nine months ended September 30, 2001, the Company earned $4.4
million, or $0.47 per share, on net revenues of $79.7 million, compared to
earnings of $1.5 million, or $0.16 per share, on net revenues of $74.2 million
during the nine months ended September 30, 2000. Income from operations for
the 2001 nine month period totaled $12.7 million, an increase of 46.8%
compared to $8.6 million for the same period in 2000. Both net revenues and
net income for the first nine months of 2001 reflect record highs for any of
the Company's comparable nine month periods, and net revenues increased 7.5%
and net income increased 193.6% when compared to the nine months period of
2000.
Casino revenues for the first nine months of 2001 represent a new Company
record totaling $49.4 million, an increase of 8.8% from $45.4 million for the
first nine months of 2000. The increase in casino revenues is due to an
increase in slot, keno, and poker win and a decrease in table game win. Slot
revenues were up 12.5% in the first nine months of 2001 compared to the
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first nine months of 2000 due to an increase in the average win per slot
machine. Table game revenues for the nine months ended September 30, 2001
decreased by 5.1% compared to the same period in 2000, due to a decrease in
table game win percentage for the nine month period. Keno and poker room
revenues both showed strong increases for the nine month period at 9.3% and
28.1%, respectively, over the nine months of 2000. Casino operating expenses
amounted to 39.1% of casino revenues for the nine months ended September 30,
2001, compared to 42.2% for the nine month period ended September 30, 2000,
primarily due to a decrease in operating costs.
Food and beverage revenues totaled $23.9 million for the nine months
ended September 30, 2001, an increase of 7.2% from the $22.3 million for the
nine months ended September 30, 2000, primarily due to a slight decrease in
covers offset by a 9.3% increase in average revenue per cover. Food and
beverage operating expenses during the nine month period ended September 30,
2001 amounted to 57.5% of food and beverage revenues, down from 62.1% for the
period ended September 30, 2000. The improved margins are primarily the
result of a reduction in both the average cost of sales and variable operating
expenses.
Hotel revenues for the first nine months of 2001 increased 2.9% to $14.8
million from $14.4 million for the first nine months of 2000. The increase
reflects a slight decrease in ADR offset by a slight increase in occupancy
rate during the nine month period of 2001 compared to the same period in 2000.
The Atlantis' ADR was $54.72 for the nine month period in 2001, down slightly
from $54.88 for the same period in 2000. The Atlantis experienced a 92.7%
occupancy rate for the 2001 nine month period, slightly up from a 92.6%
occupancy rate for the 2000 nine month period. Hotel operating expenses for
the nine month period ended September 30, 2001 increased to 35.0% of hotel
revenues compared to 34.6% for the first nine months of 2000.
Other revenues decreased by 4.0% to $2.6 million for the 2001 nine month
period compared to $2.7 million for the same period in 2000, primarily due to
a gain on sale of assets in the 2000 nine month period. Other expenses as a
percentage of revenue remained fairly constant for the nine month period in
2001 at 38.3%, compared to 38.7% for the same period in 2000.
Selling, general and administrative expenses were $20.3 million in the
first nine months of 2001, or 25.4% of net revenues, compared to $19.0 million
or 25.6% of net revenues in the first nine months of 2000. As a percentage of
net revenues, these expenses remained relatively constant.
Interest expense for the first nine months of 2001 totaled $6.0 million,
down 5.8% from $6.4 million in the first nine months of 2000, despite the
addition of shareholder debt guarantee fees of approximately $1.1 million
included in interest expense for the first nine months of 2001. The decrease
in interest expense reflects both a decrease in applicable variable interest
rates and a decrease in the related average outstanding principal.
OTHER FACTORS AFFECTING CURRENT AND FUTURE RESULTS
The recent constitutional amendment approved by California voters
allowing the expansion of Indian casinos in certain areas of California will
have an impact on casino revenues in Nevada in general, and many analysts have
predicted the impact will be more significant on the Reno-Lake Tahoe
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market. The extent of this impact is difficult to predict, but the Company
believes that the impact on the Company will be mitigated to an extent due to
the Atlantis' emphasis on Reno area residents as a significant base of its
business. However, if other Reno area casinos suffer business losses due to
increased pressure from California Indian casinos, they may intensify their
marketing efforts to Reno area residents as well.
The Company also believes that unlimited land-based casino gaming in or
near any major metropolitan area in the Atlantis' key non-Reno marketing
areas, such as San Francisco or Sacramento, could have a material adverse
effect on its business.
The September 11 terrorist attacks will have an impact on the Company,
however, given that the business depends on all segments of the market,
locals, travel and tourism, and convention visitors, and not just one segment
of the market, the Company does not expect the September 11 tragedy to have a
major impact on its business.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended September 30, 2001, net cash provided by
operating activities totaled $13.2 million. Net cash used in investing
activities for the same period totaled $2.4 million, which consisted primarily
of acquisitions of property and equipment at the Atlantis. Net cash used in
financing activities totaled $9.3 million, as the Company used funds to reduce
long-term debt. At September 30, 2001 the Company had cash of $8.3 million
compared to $6.5 million at September 30, 2000.
The Company has a reducing revolving credit facility with a group of
banks (the "Credit Facility"). At September 30, 2001, the total loan
commitment available on the Credit Facility was $68.9 million, of which $67.9
million was outstanding. This facility is guaranteed by certain of the
Company's shareholders who, beginning in 2001, earn a fee equal to 2% per
annum of the quarterly average outstanding amount. As of September 30, 2001,
approximately $1.1 million is due and payable to these shareholders for such
guarantees. The principal terms of the Credit Facility are summarized in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000.
The Company believes that its existing cash balances, cash flow from
operations, borrowings available under the Credit Facility, and equipment
financing will provide the Company with sufficient resources to fund its
operations, meet its existing debt obligations, and fulfill its capital
expenditure requirements; however, the Company's operations are subject to
financial, economic, competitive, regulatory, and other factors, many of which
are beyond its control. If the Company is unable to generate sufficient cash
flow, it could be required to adopt one or more alternatives, such as
reducing, delaying, or eliminating planned capital expenditures, selling
assets, restructuring debt, or obtaining additional equity capital.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not utilize derivative transactions to hedge the
Company's exposure to interest rate changes.
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PART II. OTHER INFORMATION
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MONARCH CASINO & RESORT, INC.
(Registrant)
Date: November 13, 2001 By:/s/Ben Farahi
------------------------------------
Ben Farahi, Co-Chairman of the Board,
Secretary, Treasurer and Chief
Financial Officer(Principal Financial
Officer and Duly Authorized Officer)
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