John Farahi expects that the publicly held parent company of Atlantis Casino Resort Spa will continue to struggle for a while.
Monarch Casino & Resort Inc., the Reno-based company that owns Atlantis, reported last week that it earned $2.3 million on revenues of $34.3 million in the quarter ended March 31. That compares with income of $5.5 million on revenues of $37.8 million in the comparable quarter a year ago.
Farahi, the chief executive officer and co-chairman of Monarch, said the challenges faced by the company include:
* The economic slowdown, which is cutting into customer traffic. Casino revenues were down by about $1.6 million year-over-year, and food and beverage sales at the Atlantis fell by about $800,000 from a year ago. Farahi said the downturn appears to have accelerated during the first quarter of this year.
* Aggressive competition among casinos in Reno, which required the Atlantis to boost its spending on marketing.
* Disruption from a $50 million expansion project along with construction of a $12.5 million skybridge across Peckham Lane that will link the Atlantis to the neighboring Reno-Sparks Convention Center. Through March, Farahi said, the company has spent $32 million on the two projects.
* The legal expenses involved with a lawsuit filed by Kerzner International Limited, owner of a casino in the Bahamas known as the Atlantis. Kerzner seeks to forbid Monarch from using the Atlantis name anywhere but Reno and especially not in Las Vegas.
All those headaches are likely to linger for a while, Farahi said, although he noted the expansion project is scheduled for completion in the third quarter and the skybridge will be done late this year.
The company's board last week authorized repurchase of an additional 1 million shares of its common stock. The stock was trading at about $14 after last week's earnings announcement, setting a new 52-week low.
Monarch said it expanded an existing line of credit with Wells Fargo Bank to $50 million from the previous $5 million. The credit line will finance stock repurchases and other capital needs, the company said.
