Monarch reports record Q4 results

21 February 2007

RENO, Nevada – (PRESS RELEASE) -- Monarch Casino & Resort, Inc. (Nasdaq: MCRI), owner of the Atlantis Casino Resort in Reno, Nevada, today announced record fourth-quarter and full-year results for net revenue, income from operations, EBITDA(1) and diluted EPS for the periods ended December 31, 2006.

RESULTS FOR THE QUARTER ENDED DECEMBER 31, 2006

The Company reported record fourth-quarter net revenue of $37.0 million, a 6.0% increase over the comparative quarter in 2005, and announced that the revenue generated by each of its revenue centers was also the highest ever reported for a fourth quarter. Specifically, casino, food and beverage and hotel operations each drove revenue increases over the same quarter of the prior year of 6.3%, 3.0% and 11.3%, respectively.

The Company announced quarterly income from operations of $7.7 million, EBITDA(1) of $9.8 million and diluted EPS of 27 cents, each of which were also the highest ever reported for a fourth quarter even with the recognition of $525,000 of stock option expense as required by the new accounting rules of SFAS 123R. Beginning January 1, 2006, these new accounting rules required that companies record compensation expense related to employee stock option grants. No similar expense is reflected in the financial statements for periods prior to 2006. Excluding the effects of this stock option expense from the current quarter's results, the Company would have posted income from operations of $8.2 million, EBITDA(1) of $10.3 million and diluted EPS of 28 cents, and when compared to the same quarter of the prior year; these results represent increases of 9.1%, 7.1% and 7.7%, respectively.

The Company reported a $1.4 million, or 14.2%, increase in selling, general and administrative expenses over the same quarter of the prior year. The primary drivers of this increase were stock option expense of $487,000 related to the implementation of the new accounting rules as required by SFAS 123R, increased marketing and promotional expense, increased payroll costs, increased legal fees and higher energy costs.

RESULTS FOR THE YEAR ENDED DECEMBER 31, 2006

For the year, the Company reported record net revenue of $152.0 million, an 8.7% increase over its 2005 net revenue, and announced that revenue generated by each of its revenue centers was the highest reported for any year. Specifically, casino, food and beverage and hotel operations each drove revenue increases over the prior year of 9.3%, 6.4% and 10.5%, respectively.

The Company announced income from operations of $33.5 million, EBITDA(1) of $42.1 million and diluted EPS of $1.15; each of which were the highest ever reported even with the recognition of $3.3 million of stock option expense as required by the new accounting rules of SFAS 123R. Excluding the effects of this stock option expense from fiscal 2006 results, the Company would have posted income from operations of $36.8 million, EBITDA(1) of $45.3 million and diluted EPS of $1.26, and when compared to the prior year, these results represent increases of 11.2%, 9.4% and 14.6%, respectively.

The Company reported an $8.2 million, or 21.6%, increase in selling, general and administrative expenses over the prior year. The primary drivers of this increase were stock option expense of $3.1 million, $1.2 million of which related to a one-time, non-cash charge related to early vesting of stock options for the Company's former Co-Chairman and Chief Financial Officer who resigned in the second quarter of 2006; increased marketing and promotional expense; increased payroll costs; increased legal fees; higher bad debt expense and higher energy costs.

Monarch's CEO and Co-Chairman John Farahi commented on the Company's performance: "These results are the product of the dedication and quality work of our team. In addition to representing records for a fourth quarter and for a full year, they add to our team's history of delivering consistently strong results. We are looking forward to the upcoming year as we begin the next phase of our expansion. "

The Company commented that it plans to break ground on the next phase of its expansion in the second quarter of 2007 with completion expected in the second quarter of 2008. New space will be added to the first floor casino level, the second and third floors and the basement level totaling approximately 116,000 square feet. The existing casino floor will be expanded by over 10,000 square feet, or approximately 20%. The first floor casino plans include a redesigned, updated and expanded race and sports book of approximately 4,000 square feet and an enlarged poker room. The expansion will also include a New York-style deli restaurant. The second floor expansion will create additional ballroom and convention space of approximately 27,000 square feet, doubling the existing facilities. The spa and fitness center will be remodeled and expanded to create an ultra-modern spa and fitness center facility. The Company expects to fund the cost of the expansion entirely out of cash on-hand and operating cash flow.

The Company also announced today that its 2007 Annual Meeting of Stockholders will be held on Tuesday, May 22, 2007 at 10am local time, at the Company's Atlantis Casino Resort, 3800 South Virginia Street in Reno, Nevada. The record date for stockholders entitled to vote at the Annual Meeting is Thursday, April 5, 2007.