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What changed 10-Q

Item 1. Financial Statements

2023-05-08 compared with 2022-11-04 · 86 added, 114 removed, 270 unchanged (43% of the section changed)

5 unchanged sentences

Three months ended

Nine months ended

September 30,

September 30,

Food and beverage

7 unchanged sentences

Other expense

Interest expense, net of amounts capitalized

Interest expense, net

Income before income taxes

7 unchanged sentences

(In thousands, except shares)

September 30, 2022

March 31, 2023

December 31, 2022

13 unchanged sentences

Accrued expenses

Income taxes payable

Short-term lease liability

7 unchanged sentences

Common stock, $ .01 par value, 30,000,000 shares authorized;

19,096,300 shares issued;

18,894,736 outstanding at September 30, 2022;

18,764,540 outstanding at December 31, 2021

19,132,599 shares issued and 19,131,641 outstanding at March 31, 2023;

19,096,300 shares issued and 19,093,676 outstanding at December 31, 2022

Additional paid-in capital

Treasury stock, 201,564 shares at September 30, 2022;

Treasury stock, 958 shares at March 31, 2023;

2,624 shares at December 31, 2022

9 unchanged sentences

Exercise of stock options, net

Restricted stock granted

Purchase of company common stock

Stock-based compensation expense

Dividend payment

Balance, March 31, 2023

Exercise of stock options, net

Restricted stock granted

Stock-based compensation expense

Balance, June 30, 2022

Exercise of stock options, net

Stock-based compensation expense

Balance, September 30, 2022

Balance, January 1, 2022

Exercise of stock options, net

Restricted stock granted

Purchase of company common stock

Stock-based compensation expense

Balance, March 31, 2022

Exercise of stock options, net

Stock-based compensation expense

Balance, June 30, 2021

Exercise of stock options, net

Stock-based compensation expense

Balance, September 30, 2021

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

3 unchanged sentences

(In thousands, Unaudited)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

5 unchanged sentences

Provision for bad debts

Loss on disposition of assets

(Gain) loss on disposition of assets

Non-cash operating lease expense

Deferred income taxes

Changes in operating assets and liabilities:

Income taxes receivable

Income taxes receivable/payable

Prepaid expenses

Right of use asset, net

Accounts payable

11 unchanged sentences

Line-of-credit payments

Long-term debt borrowings

Principal payments on long-term debt

Payment of dividend

Purchase of company common stock

5 unchanged sentences

Cash paid for interest, net of amounts capitalized

Cash paid for income taxes

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

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

QUARTERLY PERIOD ENDED MARCH 31, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

17 unchanged sentences

In the opinion of the management of the Company, all adjustments considered necessary for a fair presentation, consisting of normal recurring accruals, are reflected in the interim financial statements.

Operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

The balance sheet at December 31, 2022, has been derived from the audited consolidated financial statements of the Company at that date, but does not include all of the information and footnotes required by U.S.

7 unchanged sentences

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 a 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 accounts for credit losses in accordance with ASU 2016-13 using a forward-looking expected loss model.

The Company extends short-term credit to its gaming customers.

9 unchanged sentences

Historically, the Company has not incurred any significant credit-related losses.

As of September 30, 2022, the Company has recorded a reserve of $ 0.2 million for gaming and non-gaming receivables.

As of March 31, 2023, the Company has recorded a reserve of $ 0.1 million for gaming and non-gaming receivables.

The Company believes it is not exposed to any significant credit risk on cash and accounts receivable.

4 unchanged sentences

Property and equipment, net consists of the following (in thousands):

September 30, 2022

March 31, 2023

December 31, 2022

Land improvements

Buildings improvements

Building improvements

Furniture and equipment

13 unchanged sentences

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 whenever indicators of impairment exist.

For assets to be held and used, the Company reviews fixed assets for impairment indicators at the end of the fiscal year and whenever indicators of impairment exist.

If an indicator of impairment exists, we compare the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset.

If the undiscounted cash flows exceed the carrying value, no impairment is indicated.

If the undiscounted cash flows do not exceed the carrying value, the impairment is measured based on fair value compared to carrying value, with fair value typically based on a discounted cash flow model or market comparables, when available.

For the three- and nine- months periods ended September 30, 2022 and 2021, respectively, there were no impairment charges.

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 three-month periods ended March 31, 2023 and 2022, respectively, there were no impairment charges.

The Company accounts for goodwill in accordance with ASC Topic 350, Intangibles-Goodwill and Other (“ASC Topic 350”).

2 unchanged sentences

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.

As of September 30, 2022, we had goodwill totaling $ 25.1 million related to the purchase of Monarch Black Hawk, Inc.

As of March 31, 2023, we had goodwill totaling $ 25.1 million related to the purchase of Monarch Black Hawk, Inc.

ASC Topic 350 requires that goodwill be tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

1 unchanged sentence

therefore, an interim impairment test was not performed.

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.

As of September 30, 2022, debt issuance costs, net of amortization, were $ 0.8 million and included in “Current maturities of long-term debt, net”.

Revenue Recognition:

15 unchanged sentences

The points estimated SSP is computed as the cash redemption value of the points expected to be redeemed, which is determined through an analysis of all redemption activity over the preceding twelve -month period.

As of September 30, 2022, the Company had estimated the obligations related to the players’ club program at $ 9.5 million, which is included in Accrued Expenses in the Liabilities and Stockholders’ Equity section in the Consolidated Balance Sheet.

As of March 31, 2023, the Company had estimated the obligations related to the players’ club program at $ 8.3 million, which is included in Accrued Expenses in the Liabilities and Stockholders’ Equity section in the Consolidated Balance Sheet.

Food and Beverage, Hotel and Other (retail) Revenues:

11 unchanged sentences

Other operating items, net, in general consist of miscellaneous operating charges or proceeds.

For the three months ended September 30, 2022, Other operating items, net, was $ 2.9 million and represented professional service fees relating to our construction litigation of $ 2.8 million, and loss on disposal of assets of $ 0.1 million.

For the three months ended September 30, 2021, Other operating items, net, was $ 1.2 million and included:

$ 1.5 million of professional services relating to our construction litigation 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 nine months ended September 30, 2022, Other operating items, net, was $ 6.4 million and primarily represented professional service fees relating to our construction litigation.

For the nine months ended September 30, 2021, Other operating items, net, was $ 2.8 million and primarily included:

$ 3.0 million of professional services 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 three months ended March 31, 2023 and 2022, Other operating items, net, of $ 0.5 million and $ 1.3 million, respectively, represented professional service fees relating to our construction litigation.

Impact of Recently Adopted Accounting Standards:

4 unchanged sentences

As permitted by ASC 842, the Company elected not to separate non-lease components from their related lease components.

As of September 30, 2022, the Company’s right of use assets consisted of the Parking Lot Lease, the Driveway Lease (each as defined and discussed in NOTE 5.

As of March 31, 2023, the Company’s right of use assets consisted of the Parking Lot Lease, the Driveway Lease (each as defined and discussed in NOTE 5.

RELATED PARTY TRANSACTIONS) , as well as certain billboard leases.

Upon adoption of the new lease standard, incremental borrowing rates used for existing leases were established using the rates in effect as of the lease inception or modification date.

The weighted-average incremental borrowing rate of the leases presented in the lease liability as of September 30, 2022, was 4.34 %.

There were no new leases entered into in the third quarter of 2022.

The weighted-average remaining lease term of the leases presented in the lease liability as of September 30, 2022, was 20 years.

Cash paid related to the operating leases presented in the lease liability for each of the nine months ended September 30, 2022 and 2021, was $ 1.0 million and $ 1.1 million respectively.

The weighted-average incremental borrowing rate of the leases presented in the lease liability as of March 31, 2023, was 4.33 %.

There were no new leases entered into in the first quarter of 2023.

The weighted-average remaining lease term of the leases presented in the lease liability as of March 31, 2023, was 19 years.

Cash paid related to the operating leases presented in the lease liability for each of the three months ended March 31, 2023 and 2022, was $ 0.3 million.

STOCK-BASED COMPENSATION

3 unchanged sentences

Three months ended

Nine months ended

September 30,

September 30,

Food and beverage

6 unchanged sentences

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,

Effect of dilutive stock options

Nine months ended September 30,

Three months ended March 31,

Effect of dilutive stock options

Excluded from the computation of diluted earnings per share are options where the exercise prices are greater than the weighted assumed proceeds per share as their effects would be anti-dilutive in the computation of diluted earnings per share.

For the three months ended September 30, 2022 and 2021, options for approximately 592 thousand and 316 thousand shares, respectively, were excluded from the computation.

For the nine months ended September 30, 2022 and 2021, options for approximately 538 thousand and 239 thousand shares, respectively, were excluded from the computation.

For the three months ended March 31, 2023 and 2022, options for approximately 576 thousand and 506 thousand shares, respectively, were excluded from the computation.

RELATED PARTY TRANSACTIONS

12 unchanged sentences

If the Company elects not to exercise its renewal option, the Company will be obligated to pay BLI $ 1.6 million.

For the three-month periods ended September 30, 2022 and 2021, the Company paid $ 187 thousand and $ 174 thousand in rent, respectively, plus $ 14 thousand and $ 13 thousand, respectively, in operating expenses relating to this lease.

For the nine-month periods ended September 30, 2022 and 2021, the Company paid $ 561 and $ 522 thousand in rent, respectively, plus $ 22 thousand and $ 21 thousand, respectively, in operating expenses relating to this lease.

The right of use asset and lease liability balances as of September 30, 2022, recognized in the Consolidated Balance Sheet, was $ 10.1 million.

For each of the three-month periods ended March 31, 2023 and 2022, the Company paid $ 187 thousand in rent, plus $ 8 thousand and $ 7 thousand, respectively, in operating expenses relating to this lease.

The right of use asset and lease liability balances as of March 31, 2023, recognized in the Consolidated Balance Sheet, was $ 9.9 million.

In addition, the Atlantis shares a driveway with the Shopping Center and leases approximately 37,400 square feet from BLI (the “Driveway Lease”) for an initial lease term of 15 years , which commenced on September 30, 2004, at an original annual rent of $ 300 thousand plus common area expenses.

5 unchanged sentences

At the end of the renewal terms, the Company has the option to purchase the leased driveway section of the Shopping Center.

For each of the three-month periods ended September 30, 2022 and 2021, the Company paid $ 101 thousand in rent plus $ 12 thousand in operating expenses relating to this lease.

For each of the nine-month periods ended September 30, 2022 and 2021, the Company paid $ 303 thousand in rent plus $ 28 thousand and $ 25 thousand, respectively, in operating expenses relating to this lease.

The right of use asset and lease liability balances as of September 30 , 2022, recognized in the Consolidated Balance Sheet, was $ 3.5 million.

The Company occasionally leases billboard advertising, storage space and parking lot space from affiliates controlled by the Farahi Family Stockholders, and paid $ 121 thousand and $ 57 thousand, respectively, for the three-month periods and $ 325 thousand and $ 151 thousand, respectively, for the nine-month periods ended September 30, 2022 and 2021, for such leases.

For each of the three-month periods ended March 31, 2023 and 2022, the Company paid $ 101 thousand in rent plus $ 12 thousand and $ 10 thousand, respectively, in operating expenses relating to this lease.

The right of use asset and lease liability balances as of March 31 , 2023, recognized in the Consolidated Balance Sheet, was $ 3.4 million.

The Company occasionally leases billboard advertising, storage space and parking lot space from affiliates controlled by the Farahi Family Stockholders, and paid $ 132 thousand and $ 81 thousand, respectively, for the three-month periods ended March 31, 2023 and 2022, for such leases.

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 increased the aggregate principal amount of the credit facilities 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”), with an option to increase the Revolving Credit Facility by up to an additional $ 75 million.

As of September 30, 2022, the Company had an outstanding principal balance of $ 27 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.

The entire outstanding principal balance is due in the next twelve months.

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.

Commencing with the delivery of the compliance certificate for fiscal year 2022, 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.

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 September 30, 2022, the Company is required to maintain a Total Leverage Ratio (as defined in the Amended Credit Facility) of no more than 4.0 :1 and Fixed Charge Coverage Ratio (as defined in the Amended Credit Facility) of at least 1.15 :1.

As of September 30, 2022, the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.2 :1 and 3.8 :1, respectively.

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 the 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.

As of September 30, 2022, the interest rate on the Term Loan Facility was 4.12 %, or LIBOR plus a 1.00 % margin.

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 2022, the Company made $ 48 million in optional prepayments on its Term Loan Facility in addition to $ 15 million in mandatory payments.

As of September 30, 2022, $ 26.2 million, representing $ 27.0 million outstanding loan amount under the Amended Credit Facility, net of $ 0.8 million unamortized debt issuance costs, is presented in the Current liabilities section of the Company’s consolidated balance sheet as “Current maturities of long-term debt”.

For the nine months ended September 30, 2022 and 2021, the Company’s effective tax rate was 19.8 % and 19.4 %, respectively.

The effective tax rate for the nine months ended September 30, 2022 and 2021 was impacted by excess tax benefit on stock option exercises.

As of September 30, 2022, the $ 24.6 million “Income taxes receivable” in the Company’s consolidated balance sheet includes $ 26.9 million expected federal and state tax refunds for 2020 and 2021 tax years.

On February 1, 2023, the Company entered into the Fifth Amended and Restated Credit Agreement with Wells Fargo Bank, N.A., as administrative agent.

The Fifth Amended Credit Facility (the “Amended Credit Facility”) amends and restates the Company’s Fourth Amended and Restated Credit Agreement, which consisted of:

a $ 200 million term loan and a $ 70 million revolving line of credit.

On February 1, 2023, there was no outstanding balance under the term loan of the Fourth Amended and Restated Credit Agreement.

The Amended Credit Facility does not contain a term loan.

The Amended Credit Facility increases the aggregate principal amount of the revolving line of credit from $ 70 million to $ 100 million, with an option to increase it by another $ 100 million within the first six months.

The maturity date of the Amended Credit Facility is January 1, 2025.

As of March 31, 2023, the Company had an outstanding principal balance of $ 51 million under the Amended Credit Facility.

In addition to other customary covenants for a facility of this nature, as of March 31, 2023, the Company is required to maintain a Total Leverage Ratio (as defined in the Amended Credit Facility) of no more than 2.5 :1 and Fixed Charge Coverage Ratio (as defined in the Amended Credit Facility) of at least 1.1 :1.

As of March 31, 2023, the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.3 :1 and 6.7 :1, respectively.

The interest rate under the Amended Credit Facility is SOFR (the Secured Overnight Financing Rate) plus a margin ranging from 1.00 % to 1.50 %, or a base rate (as defined in the Amended Credit Facility) plus a margin ranging from 0.00 % to 0.50 %.

The applicable margins will vary depending on the Company’s leverage ratio.

In addition, SOFR-based loans will incur a 0.10 % credit adjustment spread due to the conversion from LIBOR to SOFR as the new benchmark rate.

As of March 31, 2023, the interest rate was 5.91 %, or SOFR plus a 1.00 % margin.

The Company’s obligations under the Amended Credit Facility are secured by substantially all of the Company’s assets.

For the three months ended March 31, 2023 and 2022, the Company’s effective tax rate was 21.7 % and 12.5 %, respectively.

The effective tax rate for the three months ended March 31, 2023 and 2022 was impacted by excess tax benefit on stock option exercises.

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

No uncertain tax positions were recorded as of September 30, 2022 and 2021.

No uncertain tax positions were recorded as of March 31, 2023 and 2022.

No change in uncertain tax positions is anticipated over the next twelve months.

4 unchanged sentences

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.

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.

As of September 30, 2022, we have an authorization to purchase up to 2,900,000 shares under the Repurchase Plan.

As of March 31, 2023, we have an authorization to purchase up to 2,900,000 shares under the Repurchase Plan.

LEGAL MATTERS

On August 30, 2019, PCL Construction Services, Inc.

(“PCL”) filed a complaint in District Court, City and County of Denver, Colorado (the “Denver Action”), against the Company and its Colorado subsidiaries, in connection with certain disputes regarding construction of the Company’s expansion of Monarch Black Hawk.

The complaint alleges, among other things, the defendants breached the construction contract with PCL and certain implied warranties.

On December 5, 2019, the Company and its Colorado subsidiaries filed an answer and counterclaim, which alleges, among other items, that PCL breached the construction contract, duties of good faith and fair dealing, and implied and express warranties, made fraudulent or negligent misrepresentations on which the Company and its Colorado subsidiaries relied, and included claims for monetary damages as well as equitable and declaratory relief.

(“PCL”) filed a complaint in District Court, City and County of Denver, Colorado, against the Company and its Colorado subsidiaries, in connection with the Company’s now completed expansion of the Monarch Casino Resort Spa Black Hawk.

The complaint alleges, among other things, that the defendants breached the construction contract with PCL and certain implied warranties.

On December 5, 2019, the Company filed its answer and counterclaim, which alleges, among other items, that PCL breached the construction contract, duties of good faith and fair dealing, and implied and express warranties, made fraudulent or negligent misrepresentations on which the Company and its Colorado subsidiaries relied, and included claims for monetary damages as well as equitable and declaratory relief.

On September 1, 2022, the judge previously assigned to the Denver Action recused herself, resulting in a continuance of the trial then set for September 6, 2022, and reassignment to another courtroom.

3 unchanged sentences

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.

On March 26, 2021, PCL filed a mechanics’ lien foreclosure action in District Court, County of Gilpin, Colorado, against the Company and its Colorado subsidiaries, in connection with the Company’s now completed expansion of the Monarch Casino Resort Spa Black Hawk.

The complaint essentially mirrors the claims and allegations made by PCL in the lawsuit it previously filed in the City and County of Denver, Colorado, Case No.

2019CV33368, as described above.

The lawsuit filed on March 26, 2021 includes an additional claim, however, for foreclosure of PCL’s purported mechanics’ lien against the property on which the Monarch Casino Resort Spa Black Hawk is situated (the “Property”).

PCL also joined additional parties who may claim a purported lien against the Property, as defendants.

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 remains stayed pending the outcome of the Denver Action.

The Company recognized $ 6.5 million and $ 3.0 million in construction litigation expense relating to these lawsuits for the nine months ended September 30, 2022 and 2021, respectively, which is included in Other operating items, net on the Consolidated Statements of Income.

Many of the Company’s co-defendants have filed cross claims against Monarch for foreclosure of mechanics’ liens and related claims, including unjust enrichment.

Monarch filed its answer and counterclaims to PCL’s second amended complaint on July 15, 2021, but a trial of the matter has not been set.

Monarch has also filed answers to all cross claims due to date, denying the claimants’ rights to relief.

Monarch anticipates filing further answers to additional cross claims, also denying the claimants’ rights to relief.

The case remains stayed pending the outcome of Case No.

We are currently unable to determine the probability of the outcome or reasonably estimate the loss or gain, if any.

On February 9, 2023, Monarch Growth, Inc., Monarch Casino & Resort, Inc.

and Monarch Black Hawk, Inc.

filed a complaint in District Court, City and County of Denver, Colorado, against PCL, in connection with the Company’s now completed expansion of the Monarch Casino Resort Spa Black Hawk.

The complaint alleges, among other things, that PCL breached the construction contract, duties of good faith and fair dealing, and implied and express warranties, and includes claims for monetary damages as well as equitable and declaratory relief.

The lawsuit was served on PCL, but PCL has not yet filed an answer or other response to Monarch’s complaint.

On April 18, 2023, at the parties’ joint request, the Court ordered the matter stayed for ninety days from date of the stay order until July 17, 2023.

We are currently unable to determine the probability of the outcome or reasonably estimate the loss or gain, if any.

The Company recognized $ 0.5 million and $ 1.3 million in construction litigation expense relating to these lawsuits for the three months ended March 31, 2023 and 2022, respectively, which is included in Other operating items, net on the Consolidated Statements of Income.

From time to time, we may be subject to other legal proceedings and claims in the ordinary course of business.

1 unchanged sentence

however, the outcome of these actions is inherently difficult to predict.

On February 7, 2023, the Company announced that the Company’s Board of Directors has declared a one-time cash dividend (the “One-time Dividend”) of $ 5.00 per share of its outstanding common stock, par value $ 0.01 per share (“Common Stock”), to be paid to the stockholders of record of the Company on March 1, 2023 (the “Record Date”), payable on March 15, 2023 (the “Payment Date”).

In addition to the One-time Dividend, the Board of Directors has approved, commencing in the second quarter of 2023, payment of cash dividends of $ 1.20 per share annually, with such dividends to be paid in quarterly amounts.

These dividends will be paid quarterly on the 15th day of the third month of the applicable calendar quarter (or, if such date is not a trading day, then the first trading day immediately thereafter such date) to those stockholders of record on the 1st day of the third month of the applicable calendar quarter (or, if such date is not a trading day, then the first trading day immediately thereafter such date).

On April 19, 2023, the Company announced a cash dividend of $ 0.30 per share of its outstanding common stock, payable on June 15, 2023, to stockholders of record on June 1, 2023.

This cash dividend is part of the previously announced annual cash dividend of $ 1.20 per share payable in quarterly payments.

The Company’s declaration of each dividend amount shall be subject to the Board’s review of the then-current financial statements of the Company, available acquisition opportunities and other prudent uses of the Company’s cash resources.

As such, the Board of Directors may suspend the dividend program at any time and no assurances can be given that a quarterly dividend will be paid.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.