<PAGE>
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 June 30, 1996
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: (702) 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 August 9, 1996,
there were 9,506,275 shares of Monarch Casino & Resort, Inc. $0.01 par value
common stock outstanding.
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MONARCH CASINO & RESORT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues
Casino............................... $ 8,038,979 $ 7,901,076 $ 15,479,601 $ 14,589,835
Food and beverage.................... 4,301,091 4,409,940 8,596,426 8,516,536
Hotel................................ 2,401,115 3,002,313 4,913,341 5,433,942
Other................................ 839,884 498,856 1,272,037 924,910
------------ ------------ ------------ ------------
Gross revenues.................... 15,581,069 15,812,185 30,261,405 29,465,223
Less promotional allowances.......... (1,845,261) (1,613,286) (3,682,550) (3,258,812)
------------ ------------ ------------ ------------
Net revenues...................... 13,735,808 14,198,899 26,578,855 26,206,411
------------ ------------ ------------ ------------
Operating expenses
Casino............................... 3,581,334 3,241,413 6,973,924 6,222,815
Food and beverage.................... 2,413,570 2,766,487 4,785,206 5,216,051
Hotel................................ 903,674 1,230,701 1,836,530 2,240,053
Other................................ 96,048 94,265 187,747 161,243
Selling, general and administrative.. 3,913,731 3,273,322 7,448,302 6,151,286
Depreciation and amortization........ 1,012,656 1,021,770 2,074,947 1,974,151
Gaming development costs............. 36,356 117,037 70,262 133,742
------------ ------------ ------------ ------------
Total............................. 11,957,369 11,744,995 23,376,918 22,099,341
------------ ------------ ------------ ------------
Income from operations............ 1,778,439 2,453,904 3,201,937 4,107,070
------------ ------------ ------------ ------------
Other income (expense)
Interest expense..................... (924,527) (1,027,638) (1,848,007) (2,068,080)
Minority interests in net loss of
consolidated subsidiaries........... 7,271 27,000 14,052 27,000
------------ ------------ ------------ ------------
Total (917,256) (1,000,638) (1,833,955) (2,041,080)
------------ ------------ ------------ ------------
Income before income taxes........ 861,183 1,453,266 1,367,982 2,065,990
Income tax expense..................... 301,412 480,000 478,793 684,000
------------ ------------ ------------ ------------
Net income........................ $ 559,771 $ 973,266 $ 889,189 $ 1,381,990
============ ============ ============ ============
Net income per share.............. $ 0.06 $ 0.10 $ 0.09 $ 0.14
============ ============ ============ ============
Weighted average common
shares outstanding............... 9,525,396 9,536,275 9,530,835 9,536,275
============ ============ ============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
<PAGE>
MONARCH CASINO & RESORT, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash........................................ $ 3,040,480 $ 3,644,363
Receivables, net............................ 664,576 503,283
Inventories................................. 310,744 315,556
Prepaid expenses............................ 1,553,238 1,214,846
Deferred income taxes....................... 837,000 837,000
------------ ------------
Total current assets..................... 6,406,038 6,515,048
------------ ------------
Property and equipment
Land........................................ 10,359,792 10,359,792
Buildings................................... 38,421,528 37,748,526
Furniture and equipment..................... 20,931,782 20,511,243
Improvements................................ 4,770,157 4,780,000
------------ ------------
74,483,259 73,399,561
Less accumulated
depreciation and amortization.............. (13,223,199) (11,726,226)
------------ ------------
Net property and equipment............... 61,260,060 61,673,335
------------ ------------
Other assets.................................. 1,189,425 1,080,360
------------ ------------
$ 68,855,523 $ 69,268,743
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt........ $ 2,741,787 $ 3,993,447
Accounts payable............................ 2,955,007 3,581,469
Accrued expenses............................ 2,757,908 2,396,262
Federal income taxes payable................ 478,793 -
------------ ------------
Total current liabilities................ 8,933,495 9,971,178
Long-term debt, less current maturities....... 38,956,689 39,069,071
Deferred income taxes......................... 1,557,458 1,587,000
Minority interests............................ 192,404 206,456
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;
9,506,275 and 9,536,275 outstanding........ 95,363 95,363
Additional paid-in capital.................. 17,008,779 17,008,779
Treasury stock.............................. (108,750) -
Retained earnings........................... 2,220,085 1,330,896
------------ ------------
Total stockholders' equity............... 19,215,477 18,435,038
------------ ------------
$ 68,855,523 $ 69,268,743
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
<PAGE>
MONARCH CASINO & RESORT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------
1996 1995
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income.................................. $ 889,189 $ 1,381,990
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization............. 2,074,947 1,974,151
Gain on disposal of assets................ (30,415) -
Increase in receivables, net.............. (161,293) (254,767)
(Increase) decrease in inventories........ 4,812 (5,334)
Increase in prepaid expenses.............. (338,392) (384,465)
Increase in other assets.................. (109,065) (238,843)
Decrease in due to related parties........ - (404,603)
Increase (decrease) in accounts payable... (626,462) 717,522
Increase in accrued expenses.............. 840,439 523,542
Increase (decrease) in deferred
income tax liability..................... (29,542) 340,000
Decrease in minority interests............ (14,052) -
------------ ------------
Net cash provided by
operating activities.................... 2,500,166 3,649,193
------------ ------------
Cash flows from investing activities:
Acquisition of property and equipment....... (1,127,877) (1,060,716)
------------ ------------
Net cash used in investing activities.... (1,127,877) (1,060,716)
------------ ------------
Cash flows from financing activities:
Proceeds from long-term borrowings.......... - 7,937,092
Principal payments on long-term debt........ (1,867,422) (10,445,484)
Acquisition of treasury stock............... (108,750) -
------------ ------------
Net cash used in financing activities.... (1,976,172) (2,508,392)
------------ ------------
Net increase (decrease) in cash.......... (603,883) 80,085
Cash at beginning of period................... 3,644,363 2,324,081
------------ ------------
Cash at end of period......................... $ 3,040,480 $ 2,404,166
============ ============
Supplemental disclosure of cash flow information:
Cash paid for interest...................... $ 1,484,229 $ 2,020,023
Cash paid for income taxes.................. 327,542 433,847
Supplemental schedule of non-cash
investing and financing activities:
The Company financed the purchase of property
and equipment in the following amounts..... 503,380 65,582
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an
integral part of these statements.
<PAGE>
MONARCH CASINO & RESORT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Reorganization and Basis of Presentation
Monarch Casino & Resort, Inc. ("Monarch") was incorporated in 1993.
Golden Road Motor Inn, Inc., dba Atlantis Casino Resort ("Golden Road")
operates a hotel and casino in Reno, Nevada in facilities which were leased,
prior to August 6, 1993, from Farahi Investment Company ("FIC") and Galaxy
Enterprises, Inc. ("Galaxy"), entities owned by the principal stockholders of
Monarch. Unless stated otherwise, the "Company" refers collectively to
Monarch, its wholly owned subsidiary Golden Road, and majority owned
subsidiaries, Dunes-Marina Resort and Casino, Inc. ("Monarch-Marina"), formed
in December 1993, and Sea World Processors, Inc. ("Sea World") purchased in
February 1994. In a reorganization prior to Monarch's sale of common stock
pursuant to a public offering in August 1993, certain assets and liabilities
of Galaxy were distributed to its stockholders, Galaxy was merged into Golden
Road, FIC transferred the leased facilities and certain other real estate and
debt to Golden Road, and the Golden Road stockholders exchanged all of their
Golden Road shares for shares in Monarch common stock.
The consolidated financial statements include the accounts of Monarch,
Golden Road, Monarch-Marina and Sea World and give retroactive effect to the
merger of Galaxy, the transfer of assets and debt from FIC, and the
elimination of intercompany balances and transactions in a manner similar to a
pooling of interests. Accordingly, the assets acquired and related debt
assumed in the reorganization are included at the historical amounts recorded
by Galaxy and FIC at the times the assets were acquired and the debt was
incurred by those entities, with the net amount of assets contributed or
liabilities assumed related to each year presented as an adjustment to
stockholder equity accounts. The operations related to the transferred assets
and liabilities are included for all periods presented, with the intercompany
lease transactions eliminated. The number of shares and earnings per share
for all periods presented reflect the capital structure of Monarch.
In preparing these financial statements in conformity with 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.
NOTE 2. INTERIM FINANCIAL STATEMENTS
The accompanying consolidated financial statements for the three month
and six month periods ended June 30, 1996 and June 30, 1995 are unaudited. In
the opinion of management, all adjustments, consisting of normal recurring
adjustments necessary for a fair presentation of the Company's financial
position and results of operations for such periods, have been included. The
accompanying unaudited 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, 1995. The results
for the three-month and six-month periods ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1996, or for any other period.
<PAGE>
NOTE 3. INTERNAL REVENUE SERVICE AUDIT
The Internal Revenue Service ("IRS") is in the process of an audit of
Golden Road for the 1993 and 1994 tax years. The IRS has not notified the
Company of any significant findings, and in the opinion of management, the
ultimate liability, if any, resulting from the audit will not have a
significant effect on the Company's financial position.
<PAGE>
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, 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 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 and 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 June 30, 1996 and 1995
Net revenues for the three months ended June 30, 1996 totaled $13.7
million, down from $14.2 million for the three months ended June 30, 1995.
Operating expenses for the three month periods ended June 30, 1996 and 1995
totaled $12.0 million and $11.7 million, respectively, resulting in operating
expense margins (operating expenses as a percentage of net revenues) of 87.1%
for the three months ended June 30, 1996 and 82.7% for the three months ended
June 30, 1995. Income from operations for the three months ended June 30,
1996 totaled $1.8 million, down from $2.5 million for the three months ended
June 30, 1995. The Company's results for the 1996 second quarter were down
from the 1995 second quarter primarily due to lower hotel revenues and higher
marketing costs. The Company believes its business in the 1996 second quarter
was adversely impacted by increased hotel room capacity in the Reno area
market, lower levels of activity at the National Bowling Stadium in downtown
Reno, and relatively low levels of convention activity at the Reno Sparks
Convention Center compared to the same quarter a year ago.
Casino revenues in the 1996 second quarter increased 1.8% compared to the
1995 second quarter, with increases in slot revenues and table game revenues
more than offsetting a decline in keno revenues. Slot revenues were up 3.1%
in the 1996 second quarter compared to the 1995 second quarter due to an
increase in the average daily win per slot machine. Table game revenues were
up 4.5%, due to higher than average table game hold. Keno revenues declined
47.5% in the 1996 second quarter compared to the 1995 second quarter due to
several unusually large keno payouts which resulted in an abnormally low keno
hold percentage for the 1996 second quarter. Casino operating expenses
amounted to 44.6% of casino revenues in the 1996 second quarter, compared to
41.0% in the 1995 second quarter, due to higher levels of promotional
allowance costs in the 1996 second quarter than in the 1995 second quarter.
Food and beverage revenues declined 2.5% in the 1996 second quarter
compared to the 1995 second quarter due to decreased visitation to Atlantis'
food and beverage outlets, which the Company believes resulted from lower
hotel occupancy at the Company's Atlantis Casino Resort ("Atlantis") during
the 1996 second quarter. Food and beverage operating expenses during the 1996
second quarter amounted to 56.1% of food and beverage revenues, compared to
<PAGE>
62.7% in the 1995 second quarter, with the improvement due primarily to lower
food costs and improved operating efficiency.
Hotel revenues in the 1996 second quarter declined 20.0% from the 1995
second quarter, reflecting a 14.7% decrease in the average daily room rate
("ADR") and a 6.9 point decline in the average occupancy rate compared to the
1995 second quarter. The Atlantis' average daily room rate in the 1996 second
quarter was $49.12, compared to $57.57 in the 1995 second quarter. During the
1996 second quarter, the Atlantis had an average occupancy rate of 89.1%,
compared to 96.0% in the 1995 second quarter. The Atlantis' occupancy and ADR
were adversely impacted during the 1996 second quarter by a substantial
increase in hotel room capacity in the Reno area market and an intensified
competitive environment resulting from the capacity increase. The Company
estimates that there were approximately 2,600 more hotel rooms in operation in
the Reno area market in the 1996 second quarter than in the 1995 second
quarter, rising from approximately 12,600 to approximately 15,200. Management
also believes that a large, long-duration bowling tournament held at the
National Bowling Stadium in downtown Reno positively impacted its average
hotel occupancy and average daily room rate during the 1995 second quarter.
The National Bowling Stadium did not host any tournaments similar in scale or
duration during the 1996 second quarter.
Hotel operating expenses in the 1996 second quarter equaled 37.6% of
hotel revenues, down from 41.0% in the 1995 second quarter, with the decrease
due to a decrease in the amount of licensing fees paid and to improvements in
operating efficiency. The Company terminated its licensing agreement with
Choice Hotels International, Inc. ("Choice") as of April 28, 1996, and changed
the name of its Reno hotel casino to the Atlantis Casino Resort on April 29,
1996. Included in hotel operating expenses are fees paid to Choice of $87
thousand and $163 thousand in the second quarters of 1996 and 1995,
respectively, under the Company's licensing agreement with Choice.
Other revenues in the 1996 second quarter totaled $840 thousand, up from
$499 thousand in the 1995 second quarter. The increase primarily reflects the
inclusion in the 1996 second quarter of non-recurring income items totaling
approximately $300 thousand.
Selling, general and administrative expenses amounted to 28.5% of net
revenues in the second quarter of 1996, compared to 23.1% in the second
quarter of 1995. The Company incurred substantially higher marketing costs in
the 1996 second quarter compared to the 1995 second quarter, which were
attributable in part to activities undertaken in conjunction with the name
change at Atlantis, and to intensified competition in the Reno market.
Approximately $186 thousand in name change costs are included in selling,
general and administrative expenses in the 1996 second quarter.
Gaming development costs for the 1996 second quarter totaled $36
thousand, down from $117 thousand during the 1995 second quarter. The
decrease is due to lower levels of development activity by the Company during
the 1996 period than in the 1995 period. The Company was actively pursuing a
development opportunity in St. Louis, Missouri during the 1995 period.
Interest expense for the 1996 second quarter totaled $925 thousand,
compared to $1.0 million in the second quarter of 1995, reflecting lower
average outstanding debt and lower average interest costs during the 1996
second quarter.
<PAGE>
Management believes that competition in the Reno area market will remain
intense throughout the remainder of 1996, and that the factors which adversely
impacted the Company's hotel revenues during the 1996 second quarter and which
necessitated increased marketing expenditures during the 1996 second quarter
will persist into the 1996 third quarter and possibly through the remainder of
the year.
Comparison of Operating Results for the Six Month
Periods Ended June 30, 1996 and 1995
Net revenues for the six months ended June 30, 1996 totaled $26.6
million, compared to $26.2 million for the six months ended June 30, 1995.
Operating expenses for the six month periods ended June 30, 1996 and 1995
totaled $23.4 million and $22.1 million, respectively, resulting in operating
expense margins of 88.0% for the six months ended June 30, 1996 and 84.3% for
the six months ended June 30, 1995, and leaving income from operations for the
six month periods ended June 30, 1996 and 1995 of $3.2 million and $4.1
million, respectively. The Company's results for the first six months of 1996
were adversely impacted by a substantial increase in area hotel room capacity
compared to the same period in 1995, intensified competition resulting from
the increased capacity, and lower levels of activity at the National Bowling
Stadium.
Casino revenues for the first six months of 1996 totaled $15.5 million,
up 6.1% from casino revenues of $14.6 million for the first six months of
1995, driven by increases in slot and table game revenue during each of the
first and second quarters of 1996. Casino operating expenses amounted to
45.1% and 42.7% of casino revenues for the six months ended June 30, 1996 and
1995, respectively. The increase in casino operating expenses in the 1996 six
month period is primarily due to increased promotional allowance costs.
Food and beverage revenues totaled $8.6 million for the six months ended
June 30, 1996, up 1% from $8.5 million for the six months ended June 30, 1995.
Food and beverage operating expenses declined 8.3% over the same period,
however, falling to $4.8 million from $5.2 million, primarily due to lower
food costs and improved operating efficiencies. The food and beverage
operating expense margins for the six month periods ended June 30, 1996 and
1995 were 55.7% and 61.3%, respectively.
Hotel revenues for the first six months of 1996 totaled $4.9 million,
down 9.6% from $5.4 million for the same period in 1995, due primarily to the
softness experienced during the 1996 second quarter. The hotel operating
expense margin for the six month period ended June 30, 1996 was 37.4%,
compared to 41.2% for the six month period ended June 30, 1995. The
improvement is primarily due to improved operating efficiency and decreases in
the amount of license fees paid to Choice during the 1996 period.
Other revenues for the six months ended June 30, 1996 totaled $1.3
million, up from $925 thousand for the six months ended June 30, 1995. The
increase primarily reflects the inclusion in the 1996 period of non-recurring
income items totaling approximately $300 thousand.
Selling, general and administrative expenses totaled $7.4 million for the
first six months of 1996, compared to $6.2 million for the same period in
1995, with the increase due largely to increased marketing costs and name
change costs.
<PAGE>
Interest expense for the six months ended June 30, 1996 totaled $1.8
million, compared to $2.1 million for the six months ended June 30, 1995,
reflecting lower average outstanding debt and lower average interest costs
during the 1996 period.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 1996 net cash provided by operating
activities totaled $2.5 million. Net cash used in investing activities for
the same period totaled $1.1 million, which consisted entirely of acquisitions
of property and equipment at the Atlantis, and net cash used in financing
activities totaled $2.0 million, with funds used to reduce debt and repurchase
the Company's common stock. As a result, at June 30, 1996 the Company had
cash of $3.0 million, compared to $3.6 million at December 31, 1995.
On April 10, 1995, the Company announced that its Board of Directors
authorized the open market repurchase of up to 200,000 shares of the Company's
common stock to be used, in part, to fund future issuances of stock under the
Company's director, executive, and employee stock option and incentive
compensation plans. During the 1996 second quarter, the Company repurchased
30,000 shares of its common stock on the open market at a total cost of $109
thousand.
The Company believes that it is important to maintain the Atlantis as a
first class resort facility in order to compete successfully and increase its
customer base in the face of competitive pressures, and intends to expend
funds on maintenance, refurbishment and renovation sufficient to maintain the
Atlantis as such. As of June 30, 1996, the Company had approximately $4.2
million available under its bank credit lines for purposes specified in the
loan agreement, including capital expenditures at the Atlantis.
For a more detailed discussion of the Company's liquidity and capital
resources, see the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, Item 7.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Choice Hotels International, Inc. v. Golden Road Motor Inn, Inc., Case
No. PJM 96-1091, instituted April 10, 1996, in the United States District
Court for the District of Maryland. Choice is seeking a declaratory judgment
regarding the Choice Agreement under which the Company, until April 28, 1996,
operated its Reno hotel casino as a Clarion(TM) hotel. Specifically Choice
seeks a declaratory judgment as to (i) the effectiveness of a proposed 1993
modification to the Choice Agreement, (ii) the term of the Choice Agreement,
(iii) the expansion fee provided under the Choice Agreement, and (iv) the date
on which the Choice Agreement was terminable. Management intends to defend
vigorously this action and believes that the Company was entitled to terminate
the Choice Agreement as of April 28, 1996.
William H. Ahern v. Caesars World, Inc., et al., Case No. 94-532-Civ-Orl-
22, instituted on May 10, 1994 (the "Ahern Complaint") and William Poulos v.
Caesars World, Inc., et al., Case No. 94-478-Civ-Orl-22, instituted on April
26, 1994 (the "Poulos Complaint") (collectively, the Ahern Complaint and the
Poulos Complaint are referred to as the "Complaints"). Two individuals, each
purportedly representing a class, filed the Complaints in the United States
District Court, Middle District of Florida, against various manufacturers,
distributors and casino operators of video poker and electronic slot machines,
including the Company. The Complaints allege that the defendants have engaged
in a course of conduct intended to induce persons to play such games based on
a false belief concerning how the gaming machines operate, as well as the
extent to which there is an opportunity to win on a given play. The
Complaints allege violations of the Racketeer Influenced and Corrupt
Organizations Act, as well as claims of common law fraud, unjust enrichment
and negligent misrepresentation, and seek damages in excess of $1 billion
without any substantiation of that amount. The Complaints were consolidated
and transferred to the United States District Court for the District of Nevada
(the "Nevada District Court"). The Company filed a motion to dismiss the
action based on jurisdiction, abstention and related doctrines. Various other
defendants filed similar motions and motions to dismiss based on defects in
the pleadings. The Nevada District Court entered an order granting the
motions to dismiss based on defects in the pleadings, and denying as moot all
other pending motions, including those of the Company. The Nevada District
Court granted the plaintiffs until May 31, 1996 within which to file an
amended complaint that complied with the applicable pleading requirements.
The Plaintiffs filed an amended complaint on or about May 31, 1996. The
Company renewed its motion to dismiss based on abstention and related
doctrines, and enjoined in the motion to dismiss filed by other defendants
which was based on defects in the pleadings. Management continues to believe
that the substantive allegations in the Complaints are without merit.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 12, 1996, the Company conducted its annual meeting of
stockholders in Reno, Nevada. The following activities were voted upon at the
meeting:
(a) Election of Directors
Votes Cast
--------------------
Against or
Name of Director Elected For Withheld
------------------------ --------------------
John Farahi 8,453,703 15,950
John P. Uphoff 8,453,793 15,860
(b) Ratification of Grant Thornton as the Company's independent
public accountants for the 1996 calendar year
Votes Cast
---------------------------------
For Against Abstain
---------------------------------
8,409,603 56,500 3,550
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
EX-27 Financial Data Schedule
(b) Reports on Form 8-K
None
<PAGE>
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)
<TABLE>
<S> <C>
Date: August 13, 1996 By: /s/ BEN FARAHI
------------------------------------
Ben Farahi, Co-Chairman of the Board,
Secretary, Treasurer and Chief
Financial Officer(Principal Financial
Officer and Duly Authorized Officer)
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C> <C>
Exhibit No. Description Page No.
- ----------- ----------- --------
EX-27 Financial Data Schedule
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM REGISTRANT'S
CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 1996 AND THE ACCOMPANYING NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,040,480
<SECURITIES> 0
<RECEIVABLES> 664,576
<ALLOWANCES> 0
<INVENTORY> 310,744
<CURRENT-ASSETS> 6,406,038
<PP&E> 74,483,259
<DEPRECIATION> 13,223,199
<TOTAL-ASSETS> 68,855,523
<CURRENT-LIABILITIES> 8,933,495
<BONDS> 38,956,689
0
0
<COMMON> 95,363
<OTHER-SE> 19,120,114
<TOTAL-LIABILITY-AND-EQUITY> 68,855,523
<SALES> 0
<TOTAL-REVENUES> 13,735,808
<CGS> 0
<TOTAL-COSTS> 6,994,626
<OTHER-EXPENSES> 1,012,656
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 924,527
<INCOME-PRETAX> 861,183
<INCOME-TAX> 301,412
<INCOME-CONTINUING> 559,771
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 559,771
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
</TABLE>
