What changed in this filing

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Item 1. Financial Statements

2023-08-07 compared with 2023-05-08 · 63 added, 49 removed, 307 unchanged (27% of the section changed)

5 unchanged sentences

Three months ended

Six months ended

Food and beverage

17 unchanged sentences

(In thousands, except shares)

March 31, 2023

June 30, 2023

December 31, 2022

23 unchanged sentences

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

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

19,143,344 shares issued and outstanding at June 30, 2023;

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

Additional paid-in capital

Treasury stock, 958 shares at March 31, 2023;

2,624 shares at December 31, 2022

Treasury stock, 2,624 shares at December 31, 2022

Retained earnings

11 unchanged sentences

Balance, March 31, 2023

Exercise of stock options, net

Stock-based compensation expense

Dividend payment

Balance, June 30, 2023

Balance, January 1, 2022

4 unchanged sentences

Balance, March 31, 2022

Exercise of stock options, net

Restricted stock granted

Stock-based compensation expense

Balance, June 30, 2022

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

3 unchanged sentences

(In thousands, Unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

5 unchanged sentences

Provision for bad debts

(Gain) loss on disposition of assets

Loss (gain) on disposition of assets

Non-cash operating lease expense

15 unchanged sentences

Line-of-credit payments

Long-term debt borrowings

Principal payments on long-term debt

7 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 MARCH 31, 2023

QUARTERLY PERIOD ENDED JUNE 30, 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 months ended March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023.

Operating results for the three and six months ended June 30, 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.

21 unchanged sentences

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

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

As of June 30, 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):

March 31, 2023

June 30, 2023

December 31, 2022

20 unchanged sentences

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.

For the six-month periods ended June 30, 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 March 31, 2023, we had goodwill totaling $ 25.1 million related to the purchase of Monarch Black Hawk, Inc.

As of June 30, 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.

18 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 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.

As of June 30, 2023, the Company had estimated the obligations related to the players’ club program at $ 8.6 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 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.

For the three months ended June 30, 2023, Other operating items, net, was $ 0.5 million and primarily consisted of $ 1.2 million net proceeds from a sale of a COVID closure related insurance claim, offset by $ 0.6 million of professional service fees relating to our construction litigation and $ 0.1 million loss on disposal of assets.

For the three months ended June 30, 2022, Other operating items, net, was $ 2.2 million and primarily consisted of $ 2.4 million professional service fees relating to our construction litigation, offset by $ 0.2 million gain on disposal of assets and litigation proceeds.

For the six months ended June 30, 2023, Other operating items, net, was $0.1 million and primarily consisted of $ 1.2 million of professional service fees relating to our construction litigation and $ 0.1 million loss on disposal of assets, offset by $ 1.2 million net proceeds from a sale of a COVID closure related insurance claim.

For the six months ended June 30, 2022, Other operating items, net, was $ 3.5 million and primarily consisted of professional service fees relating to our construction litigation of $ 3.7 million, offset by gain on disposal of assets and litigation proceeds of $ 0.2 million.

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 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.

As of June 30, 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.

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.

The weighted-average incremental borrowing rate of the leases presented in the lease liability as of June 30, 2023, was 4.33 %.

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

The weighted-average remaining lease term of the leases presented in the lease liability as of June 30, 2023, was 19 years .

Cash paid related to the operating leases presented in the lease liability for each of the six months ended June 30, 2023 and 2022, was $ 0.6 million and $ 0.7 million, respectively.

STOCK-BASED COMPENSATION

3 unchanged sentences

Three months ended

Six months ended

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 March 31,

Three months ended June 30,

Effect of dilutive stock options

Six months ended June 30,

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

For the three months ended June 30, 2023 and 2022, options for approximately 647 thousand and 527 thousand shares, respectively, were excluded from the computation.

For the six months ended June 30, 2023 and 2022, options for approximately 578 thousand and 521 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 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.

For each of the three-month periods ended June 30, 2023 and 2022, the Company paid $ 187 thousand in rent, plus $ 1 thousand and $ 1 thousand, respectively, in operating expenses relating to this lease.

For each of the six-month periods ended June 30, 2023 and 2022, the Company paid $ 374 thousand in rent, plus $ 9 thousand and $ 8 thousand, respectively, in operating expenses relating to this lease.

The right of use asset and lease liability balances as of June 30, 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.

3 unchanged sentences

(ii) eliminate the Company’s obligation to reimburse the Shopping Center for its proportionate share of common area expenses;

and (iii) exercise the three successive five-year renewal terms beyond the initial 15-year term in the existing Driveway Lease agreement.

and (iii) exercise the three successive five-year renewal terms beyond the initial 15-year term in the existing Driveway Lease.

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 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.

For each of the three-month periods ended June 30, 2023 and 2022, the Company paid $ 101 thousand in rent plus $ 9 thousand and $ 7 thousand, respectively, in operating expenses relating to this lease.

For each of the six-month periods ended June 30, 2023 and 2022, the Company paid $ 202 thousand in rent plus $ 21 thousand and $ 16 thousand, respectively, in operating expenses relating to this lease.

The right of use asset and lease liability balances as of June 30, 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 $ 137 thousand and $ 123 thousand, respectively, for the three-month periods and $ 269 thousand and $ 204 thousand, respectively, for the six-month periods ended June 30, 2023 and 2022, for such leases.

LONG-TERM DEBT

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.

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

Amended Credit Facility provides for a $ 100 million line of credit and matures on January 1, 2025.

As of June 30, 2023, the Company had an outstanding principal balance of $ 41 million under the Amended Credit Facility.

In addition to other customary covenants for a facility of this nature, as of June 30, 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 June 30, 2023, the Company’s Total Leverage Ratio and Fixed Charge Coverage Ratio were 0.2:1 and 9.3:1, 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 %.

1 unchanged sentence

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.

As of June 30, 2023, the interest rate was 6.20 %, 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.

For the six months ended June 30, 2023 and 2022, the Company’s effective tax rate was 22.2 % and 17.8 %, respectively.

The effective tax rate for the six months ended June 30, 2023 and 2022 was impacted by excess tax benefit on stock option exercises, which were $ 0.4 million and $ 2.3 million for the six months ended June 30, 2023 and 2022, respectively.

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 March 31, 2023 and 2022.

No uncertain tax positions were recorded as of June 30, 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.

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

As of June 30, 2023, we have an authorization to purchase up to 2,900,000 shares under the Repurchase Plan.

LEGAL MATTERS

24 unchanged sentences

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.

On July 17, 2023, PCL filed a motion to dismiss Monarch’s complaint.

Monarch has not yet filed its response to PCL’s motion to dismiss but intends to oppose the motion.

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.

The Company recognized $ 1.2 million and $ 3.7 million in construction litigation expense relating to these lawsuits for the six months ended June 30, 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.

On February 7, 2023, the Company announced that the Company’s Board of Directors 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”), 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 approved the initiation of an Annual Dividend policy for the payment of an annual dividend in the amount of $ 1.20 per outstanding share of Common Stock, commencing in the second quarter of 2023.

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.

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

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

The Company’s declaration of each cash 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.

What changed 10-Q

Item 1. Financial Statements