Locals, conventions key for Atlantis owner

Investors liked the big gains in earnings at Reno's Monarch Casino & Resort Inc.

enough that they bid up the price of the company's stock by about 5 percent the day after the earnings were announced.

The company's earnings of $8.6 million for the year, after all, were up by 87 percent from 2001's figures.

And the fourth-quarter earnings of $1.3 million were 612 percent over the same period last year.

Now the company which owns the Atlantis Casino Resort needs to meet investors' expectations.

Here, executives told analysts, is how Monarch expects to keep its earnings growth strong:

* Continue to build on the locals market.

Reno-area residents currently account for about 50 percent of the gaming business at The Atlantis, Chief Financial Officer Ben Farahi told analysts.

The Reno area economy, he reminded them, is much more than the gaming jobs which account for only about 18 percent of the region's employment.

"We believe Reno has developed a much more diversified economy than Las Vegas," Farahi said.

That strength in the local economy Reno's unemployment rate is falling while the national jobless rate is rising along with the location of The Atlantis near the fast-growing and affluent suburbs on the south edge of town put Monarch in a good position for future growth, Farahi said.

Best of all, he said, Monarch doesn't know of plans by any competitor to make a bid for the locals market in south Reno.

* Exploit its location next to the Reno-Sparks Convention Center.

During the nine conventions at the center during the fourth quarter, Farahi told analysts, the 980 rooms at the The Atlantis were essentially booked solid.

During those conventions, he said the hotel's average daily room rate was $65.91.

That's significantly better than the $55.29 the hotel averaged during the full year.

The full-year figure, however, isn't anything to sneeze at.

It was up $1.80 from the previous year's figure.

Monarch officials expect conventionrelated business to pick up as more events are booked at the center, which reopened in August after a major renovation project.

Convention traffic, they said, is likely to pick up some of the slack left in the Reno market from the decline in traditional tourist business.

*Don't worry too much about Indian gaming in California.

Farahi noted that significant numbers of Indian casinos already are operating in northern California.

"Yet the Atlantis has continued to grow," he said.

Indian gaming doesn't threaten the company's hold on locals or its hold on convention-goers, Farahi added.

The threat from the much ballyhooed casino that will be operated near Auburn, Calif., by Stations Casinos for the United Auburn Indian Community may be overblown, Farahi said.

He noted the new casino will open in a competitive market with several well-established Indian casinos.

One thing that isn't on the agenda for Monarch is spending much on an acquisition or major expansion plan.

Farahi told analysts the company plans to spend $4 million to $6 million on capital improvements at The Atlantis this year a number that's in line with previous years.

Instead of spending money, he said the company hopes to continue paying down debt.

The company paid down more than $12 million of its long-term debt last year it had $52 million outstanding as 2002 came to a close.

The lighter debt load in combination with falling interest rates made big contribution to Monarch's income for the year.

Interest expense in 2002 totaled $3.9 million compared with $7.2 million a year earlier.

Even in a stock market where more investors are looking for dividend-paying stocks, Farahi said Monarch believes repayment of debt is a better use of funds than distributing cash to shareholders.