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MONARCH CASINO & RESORT INC - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(Edgar Glimpses Via Acquire Media NewsEdge) Monarch Casino & Resort, Inc., through its direct and indirect wholly-owned subsidiaries, Golden Road Motor Inn, Inc. ("Golden Road"), Monarch Growth Inc. ("Monarch Growth"), Monarch Black Hawk, Inc. ("Monarch Black Hawk"), High Desert Sunshine, Inc. ("High Desert"), Golden North, Inc. ("Golden North") and Golden East, Inc. ("Golden East") owns and operates the Atlantis Casino Resort Spa, a hotel/casino facility in Reno, Nevada (the "Atlantis"), the Monarch Black Hawk Casino in Black Hawk, Colorado ("Black Hawk") and real estate proximate to the Atlantis and Monarch Black Hawk. Monarch's wholly owned subsidiary Monarch Interactive, Inc. ("Monarch Interactive") received approval from the Nevada Gaming Commission on August 23, 2012, which approval was extended three times, each for an additional six month period, with the most recent approval received on February 20, 2014, pending commencement of operations, for a license as an operator of interactive gaming. Before the license can be issued, a number of conditions must be met and before operations can commence, the Company must enter into contracts with a licensed interactive gaming service provider with an approved system. None of these conditions have occurred, and Monarch Interactive is not currently engaged in any operating activities. The Company has decided to allow the current approval to lapse pending a change in market conditions that would support the Company's investment in this line of business. In Nevada, legal interactive gaming is currently limited to intrastate poker. 11 -------------------------------------------------------------------------------- Table of Contents Unless otherwise indicated, "Monarch," "Company," "we," "our" and "us" refer to Monarch Casino & Resort, Inc. and its subsidiaries. OPERATING RESULTS SUMMARY Our operating results may be affected by, among other things, competitive factors, gaming tax increases, the commencement of new gaming operations, construction at our facilities, general public sentiment regarding travel, overall economic conditions, governmental policies affecting the disposable income of our patrons and weather conditions affecting our properties. The following significant factors and trends should be considered in analyzing our operating performance: Atlantis: Aggressive marketing programs by our competitors have posed challenges to us. While statistics released by the Nevada Gaming Control Board showed growth in northern Nevada and in the Reno/Sparks gaming market for the year ended December 31, 2013 compared to the prior year, for the eight month period ended August 31, 2014, compared to the same period ended August 31, 2013 the market declined. We anticipate that the unstable macroeconomic climate nationally and in the northern Nevada, combined with the aggressive marketing programs of our competitors, will continue to apply pressure on Atlantis revenue. Monarch Black Hawk: Since the acquisition of Monarch Black Hawk, Inc. in April 2012, our focus has been to maximize casino and food and beverage revenues. There is currently no hotel on the property. In September 2013, we opened a new buffet, which was an important step in our ongoing process of redesigning and upgrading the existing Monarch Black Hawk facility. On April 10, 2013, we received zoning approval for our master expansion plan, subject to certain conditions, from the Black Hawk City Council. The approved master plan, once completed, would nearly double the existing casino space and would convert the facility into a full-scale, high end, resort through the addition of a 22-story hotel tower with 507 guest rooms and suites, an upscale spa and pool facility, four restaurants, additional bars, associated support facilities and a new ten story parking structure that, together with existing parking, would provide approximately 1,550 parking spaces. Once the detailed design and construction plans are completed, we intend to finalize the cost estimate and construction timeline for the expansion project and secure necessary financing. Our decision to proceed on the expansion project will be subject to many of the factors set forth under Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013. Construction disruption related to the redesign and upgrade of the Monarch Black Hawk casino impacted the property's operation throughout the first nine months of 2014. To minimize disruption, we have staged the work in three equal phases. The first phase was completed and opened in August 2014. Work on the second phase is currently underway and we estimate all phases of the redesign and upgrade work to be completed by the end of third quarter 2015. CAPITAL SPENDING AND DEVELOPMENT We seek to continuously upgrade and maintain our facilities in order to present a fresh, high quality product to our guests. Capital expenditures totaled approximately $13.0 million and $8.2 million for the nine month periods ended September 30, 2014 and 2013. During each of the nine month periods ended September 30, 2014 and 2013, our capital expenditures related primarily to the redesign and upgrade of the Black Hawk facility as well as acquisition of gaming equipment to upgrade and replace existing equipment. 12 -------------------------------------------------------------------------------- Table of Contents STATEMENT ON FORWARD-LOOKING INFORMATION When used in this report and elsewhere by management from time to time, the words "believes", "anticipates" and "expects" and similar expressions are intended to identify forward-looking statements with respect to our financial condition, results of operations and our business including our expansion, development activities, legal proceedings and employee matters. Certain important factors, including but not limited to, competition from other gaming operations, factors affecting our ability to compete, acquisitions of gaming properties, legalization of additional gaming operations in our markets, leverage, construction risks, the inherent uncertainty and costs associated with litigation and governmental and regulatory investigations, and licensing and other regulatory risks, could cause our actual results to differ materially from those expressed in our forward-looking statements. A proposed ballot initiative for vote on November 4, 2014 could legalize certain gaming operations in Denver, Colorado, the primary feeder market for Black Hawk. Any changes in the law that would permit the establishment of gaming operations in or near Denver could materially impact Black Hawk operations and could alter, delay or cause us to reconsider our master development plan to expand our Black Hawk property. Further information on potential factors which could affect our financial condition, results of operations and business including, without limitation, our expansion, development activities, legal proceedings and employee matters are included in our filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date thereof. We undertake no obligation to publicly release any revisions to such forward-looking statement to reflect events or circumstances after the date hereof. RESULTS OF OPERATIONS Comparison of Operating Results for the Three-Month Periods Ended September 30, 2014 and 2013 For the three months ended September 30, 2014, our net income totaled $4.1 million, or $0.24 per diluted share, compared to net income of $5.5 million, or $0.32 per diluted share, for the same prior year period, reflecting a 26.2% decline in net income and a 25.0% decline in diluted earnings per share. Net revenues totaled $48.6 million in the current quarter, a decrease of $0.4 million compared to the 2013 third quarter. Income from operations for the three months ended September 30, 2014 totaled $6.7 million, a 25.4% decline compared to $8.9 million for the same period in 2013. Casino revenues decreased 1.4% in the third quarter of 2014 compared to the third quarter of 2013 driven by lower casino revenues at Monarch Black Hawk and, to a lesser extent lower casino revenues at Atlantis. The decrease in Monarch Black Hawk casino revenues is primarily due to disruption from the ongoing upgrade, remodeling and construction work combined with the effect of the substitution of cash voucher promotions for free play credits at Monarch Black Hawk. During a portion of prior year's third quarter, we offered certain patrons cash voucher promotions which were recognized as promotional allowance while free play credits are recognized as a reduction of casino revenue. In August 2013, the Company discontinued the issuance of cash vouchers in favor of free play credits which were legalized in Colorado at that time. The decrease in casino revenues at Atlantis was driven primarily by lower business volume. Casino operating expenses as a percentage of casino revenue increased to 42.0% in the third quarter of 2014, compared to 40.0% in the third quarter of 2013 primarily due to the lower casino revenues combined with higher complimentaries expense, partially offset by lower gaming tax expense. Food and beverage revenues for the third quarter of 2014 increased 6.1% over the third quarter of 2013, due to a 5.7% increase in total covers served. Average food and beverage revenue per covers served was unchanged. Food and beverage operating expenses as a percentage of food and beverage revenues decreased in the third quarter of 2014 to 38.8% compared to 40.4% for the prior year same period primarily due to lower food costs per cover. 13 -------------------------------------------------------------------------------- Table of Contents Hotel revenues decreased 4.0% due to lower average daily room rate ("ADR") of $80.21 in the third quarter of 2014 compared to $85.16 in third quarter of 2013 and slightly lower hotel occupancy of 95.2% during third quarter of 2014 as compared to 95.4% during third quarter of 2013. Revenue per Available Room ("REVPAR"), calculated by dividing total room revenue (less service charges, if any) by total rooms available was $83.62 and $87.10 for the three months ended September 30, 2014 and 2013, respectively. We believe that the reduced demand of convention and meeting groups in the city of Reno during three month period ended September 30, 2014 compared to the same period of 2013, contributed to the lower ADR and REVPAR. Hotel operating expenses as a percentage of hotel revenues decreased to 25.1% in third quarter of 2014 as compared to 27.3% for the comparable prior year period due primarily to lower maintenance and supplies expense. Other revenues increased 4.4% in the third quarter of 2014 compared to the third quarter of 2013 driven primarily by increased revenues at the Atlantis spa and salon. Promotional allowances as a percentage of gross revenues increased to 19.0% during the third quarter of 2014 compared to 18.2% in the comparable 2013 quarter. This increase was driven by an increase of complimentaries offered to our patrons, partially offset by the effect of the substitution of cash voucher promotions for free play credits at Monarch Black Hawk as described above. Selling, General and Administrative ("SG&A") expense decreased slightly to $13.4 million in the third quarter of 2014 from $13.5 million in the third quarter of 2013 primarily due to lower sales and marketing expenses. As a percentage of net revenue, SG&A expense increased slightly to 27.7% in the third quarter of 2014 from 27.6% in the third quarter of 2013. Depreciation and amortization expense increased to $4.2 million for the three month period ended September 30, 2014 as compared to $3.6 million for the same period ended September 30, 2013 as a result of: i) accelerated depreciation on the parking structure at Monarch Black Hawk recognized in anticipation of its early removal from service as part of the expansion project, and ii) new assets related to the remodel and upgrade project at Monarch Black Hawk. Interest expense decreased to $0.3 million in the third quarter of 2014 from $0.4 million in the third quarter of 2013 as a result of a lower interest rate driven by our lower leverage ratio combined with lower average outstanding borrowings in the 2014 third quarter compared to the 2013 third quarter. The Company incurred $0.8 million of expense related to the campaign against the proposed 2014 ballot initiative to expand gaming in Colorado. Comparison of Operating Results for the Nine-Month Periods Ended September 30, 2014 and 2013 For the nine months ended September 30, 2014, our net income totaled $10.4 million, or $0.61 per diluted share, compared to net income of $15.9 million, or $0.95 per diluted share for the same period of the prior year, reflecting a 34.8% decline in net income and a 35.8% decline in diluted earnings per share. Net revenues totaled $141.9 million in the current nine months period, reflecting a $2.3 million, or 1.6% decline in net revenues compared to the same period in 2013. Income from operations for the nine months ended September 30, 2014 totaled $17.5 million compared to $26.3 million for the same period in 2013, representing 33.6% decline in income from operations. Casino revenues decreased 4.4% in the first nine months of 2014 compared to the first nine months of 2013 driven by lower casino revenues at both Monarch Black Hawk and Atlantis. The decrease in Monarch Black Hawk casino revenues is primarily due to disruption from the ongoing upgrade and remodel construction work combined with the effect of the substitution of cash voucher promotions for free play credits at Monarch Black Hawk. To accommodate construction at Black Hawk, we have had to reduce the number of slot machines on the gaming floor by approximately 13%. In prior year's third quarter, we offered certain patrons cash voucher promotions which were recognized as promotional allowance while free play credits are recognized as a reduction of casino revenues. In August 2013, the Company discontinued the issuance of cash vouchers in favor of free play credits which were legalized in Colorado at that time. The decrease in casino revenues at Atlantis was driven primarily by lower business volume. 14 -------------------------------------------------------------------------------- Table of Contents Casino operating expenses as a percentage of casino revenue increased to 41.8% in the first nine months of 2014, compared to 38.9% in the first nine months of 2013 due to lower casino revenues combined with higher complimentaries expense, partially offset by lower gaming tax expense. Food and beverage revenues for the first nine months of 2014 increased 5.0% over the first nine months of 2013, due to a 3.3% increase in average revenue per cover, combined with an increase in total covers served by 1.7%. Food and beverage operating expenses as a percentage of food and beverage revenues in the first nine months of 2014 were 40.4% and are in line the prior year same period. Hotel revenues decreased 6.9% due to lower ADR of $76.13 in the first nine months of 2014 compared to $82.56 in first nine months of 2013 and slightly lower hotel occupancy of 90.4% during first nine months of 2014 compared to 91.1% during first nine months of 2013. REVPAR was $75.64 and $81.27 for the nine months ended September 30, 2014 and 2013, respectively. We believe that less convention and meeting business in the first nine months of 2014 compared with the same prior year period in the city of Reno contributed to both the lower ADR and REVPAR. Hotel operating expenses as a percent of hotel revenues increased to 27.5% in first nine months of 2014 as compared to 27.0% for the comparable prior year period due to the lower hotel revenues combined with higher payroll and related expenses and higher repair and maintenance and uniform expenses. Other revenues increased 5.6% in the first nine months of 2014 compared to the first nine months of 2013 driven by in Atlantis spa and salon revenues and commission revenue. Promotional allowances as a percentage of gross revenues decreased to 18.1% during the first nine months of 2014 compared to 18.7% in the comparable 2013 same period. This decrease was driven primarily by the substitution of cash voucher promotions for free play credits at Monarch Black Hawk as discussed above partially offset by an increase in complimentary expense. Selling, General and Administrative ("SG&A") expense increased to $39.9 million in the first nine months of 2014 from $38.4 million in the first nine months of 2013 primarily due to i) the reversal of a $0.6 million accumulated sales tax expense accrual as a result of the Nevada Tax Commission ruling that complimentary and employee meals were no longer subject to sales taxation, ii) higher salaries, wages and related taxes expenses, and iii) higher utilities expenses, all partially offset by lower employee benefit expense and lower legal expenses. As a percentage of net revenue, SG&A expense increased to 28.1% in the first nine months of 2014 from 26.6% in the first nine months of 2013. Depreciation and amortization expense increased to $13.5 million for the nine months ended September 30, 2014 as compared to $12.6 million for the nine months ended September 30, 2013 as a result of: i) accelerated depreciation on the parking structure at Monarch Black Hawk recognized in anticipation of its early removal from service as part of the expansion project, and ii) new assets related to the remodel and upgrade project at Monarch Black Hawk all partially offset by lower depreciation expense at our Atlantis property due to assets from our 2008 expansion and remodel becoming fully depreciated in July 2013. Interest expense decreased to $0.8 million in the first nine months of 2014 from $1.5 million in the first nine months of 2013 as a result of a lower interest rate driven by our lower leverage ratio combined with lower average outstanding borrowings in the 2014 nine months period compared to the 2013 same period. The Company incurred an approximate $0.3 million loss on disposal of slot machines and $1.8 million of expense related to the campaign against the proposed 2014 ballot initiatives to expand gaming in Colorado. 15 -------------------------------------------------------------------------------- Table of Contents LIQUIDITY AND CAPITAL RESOURCES For the nine months ended September 30, 2014, net cash provided by operating activities totaled $22.8 million, a decrease of $5.6 million or 19.7% compared to the same period in the prior year. This decrease was primarily the result of a decrease in net income of $5.5 million combined with changes in ordinary working capital accounts, partially offset by the changes in income taxes, having a net effect of $1.1 million and an increase in depreciation expense of $0.9 million. Net cash used in investing activities totaled $12.2 million and $8.2 million for the nine months ended September 30, 2014 and September 30, 2013, respectively. Net cash used in investing activities during the first nine months of 2014 and 2013 consisted primarily of net cash used for redesigning and upgrading the Black Hawk property and for acquisition of gaming equipment and general upgrades at the Atlantis property. Net cash used in financing activities during first nine months of 2014 of $12.4 million represented $10.4 million of payments made on our Credit Facility (see below) and $0.7 million in proceeds from the exercise of stock options net of $3.1 million in income taxes paid to satisfy minimum tax withholdings. Net cash used in financing activities during the first nine months of 2013 of $21.7 million represented $24.8 million of payments made on our Credit Facility, partially offset by $3.1 million in proceeds from the exercise of stock options. As of September 30, 2014, our credit facility ("Credit Facility") had total availability of $91.0 million of which $43.4 million was outstanding. The proceeds from the Credit Facility were utilized to finance the acquisition of Monarch Black Hawk and availability under the Credit Facility may be used for working capital needs, general corporate purposes and for ongoing capital expenditure requirements. We had $47.6 million available on the Credit Facility as of September 30, 2014. The maximum principal available under the Credit Facility is being reduced by 1.5% per quarter beginning June 30, 2013. We may permanently reduce the maximum principal available at any time so long as the amount of such reduction is at least $0.5 million and in multiples of $50,000. Maturities of the borrowings for each of the next three years and thereafter as of September 30, 2014 are as follows: Amounts in millions Year Maturities 2014 $ - 2015 - 2016 43.4 Thereafter - $ 43.4 The maturity date of the Credit Facility is November 15, 2016. Borrowings are secured by liens on substantially all of our real and personal property. The Credit Facility contains customary covenants for a facility of this nature, including, but not limited to, covenants requiring the preservation and maintenance of the Company's assets and covenants restricting our ability to merge, transfer ownership of Monarch, incur additional indebtedness, encumber assets and make certain investments. Management does not consider the covenants to restrict normal functioning of day-to-day operations. We may prepay borrowings under the Credit Facility without penalty (subject to certain charges applicable to the prepayment of LIBOR borrowings prior to the end of the applicable interest period). Amounts prepaid may be reborrowed so long as the total borrowings outstanding do not exceed the maximum principal available. 16 -------------------------------------------------------------------------------- Table of Contents We believe that our existing cash balances, cash flow from operations and borrowings available under the Credit Facility will provide us with sufficient resources to fund our operations, meet our debt obligations, and fulfill our capital expenditure plans over the next twelve months; however, our operations are subject to financial, economic, competitive, regulatory, and other factors, many of which are beyond our control. If we are unable to generate sufficient cash flow, we could be required to adopt one or more alternatives, such as reducing, delaying or eliminating planned capital expenditures, selling assets, restructuring debt or obtaining additional equity capital. In addition, once the detailed design and construction plans are completed for the expansion project at Monarch Black Hawk, we intend to finalize the cost estimate and construction timeline for the expansion project and develop a financing plan which will require us to seek sources of debt financing from financial institutions. No assurance can be given that we will proceed with the expansion project or, if we decide to proceed, that such debt financing will be available to us on commercially reasonable terms or at all. If we are unable to obtain additional debt financing when we need it, our ability to meet our plans for expansion would be materially adversely affected. OFF BALANCE SHEET ARRANGEMENTS A driveway was completed and opened on September 30, 2004, that is being shared between the Atlantis and a shopping center (the "Shopping Center") directly adjacent to the Atlantis. The Shopping Center is controlled by an entity whose owners include our controlling stockholders. As part of this project, in January 2004, we leased a 37,368 square-foot corner section of the Shopping Center for a minimum lease term of 15 years at an annual rent of $300 thousand, subject to increase every year beginning in the 61st month based on the Consumer Price Index. We also use part of the common area of the Shopping Center and pay our proportional share of the common area expense of the Shopping Center. We have the option to renew the lease for three individual five-year terms, and at the end of the extension periods, we have the option to purchase the leased section of the Shopping Center at a price to be determined based on an MAI Appraisal. The leased space is being used by us for pedestrian and vehicle access to the Atlantis, and we may use a portion of the parking spaces at the Shopping Center. The total cost of the project was $2.0 million; we were responsible for two thirds of the total cost, or $1.35 million. The cost of the new driveway is being depreciated over the initial 15-year lease term; some components of the new driveway are being depreciated over a shorter period of time. We paid approximately $256 thousand in lease payments for the leased driveway space at the Shopping Center during the nine months ended September 30, 2014. CRITICAL ACCOUNTING POLICIES A description of our critical accounting policies and estimates can be found in Item 7 - "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Form 10-K for the year ended December 31, 2013 ("2013 Form 10-K"). For a more extensive discussion of our accounting policies, see Note 1, Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements in our 2013 Form 10-K filed on March 14, 2014. 17 -------------------------------------------------------------------------------- Table of Contents OTHER FACTORS AFFECTING CURRENT AND FUTURE RESULTS The economies in northern Nevada, the Denver metropolitan area, and our feeder markets, like many other areas around the country, are experiencing the effects of several negative macroeconomic trends, including higher than historically average unemployment. These negative trends could adversely impact discretionary incomes of our target customers, which, in turn has and is expected to continue to adversely impact our business. We believe that as these economic pressures increase or continue for an extended period of time, target customers may further curtail discretionary spending for leisure activities and businesses may reduce spending for conventions and meetings, both of which would adversely impact our business. Management continues to monitor these trends and intends, as appropriate, to adopt operating strategies to attempt to mitigate the effects of such adverse conditions. We can make no assurances that such strategies will be effective. The expansion of Native American casinos in California has had an impact on casino revenues in Nevada, in general, and many analysts have continued to predict the impact will be more significant on the Reno-Lake Tahoe market. If other Reno-area casinos continue to suffer business losses due to increased pressure from California Native American casinos, such casinos may intensify their marketing efforts to northern Nevada residents as well, greatly increasing competitive activities for our local customers. Higher fuel costs may deter California, Denver area, and other drive-in customers from coming to the Atlantis or the Monarch Black Hawk Casino. We also believe that unlimited land-based casino gaming in or near any major metropolitan area in the Atlantis' key feeder market areas, such as San Francisco or Sacramento, or in other areas near Denver, Colorado, the Black Hawk key feeder markets, could have a material adverse effect on our business. A proposed ballot initiative for vote on November 4, 2014 could legalize certain gaming operations in Denver, Colorado, the primary feeder market for Black Hawk. Any changes in the law that would permit the establishment of gaming operations in or near Denver could materially impact Black Hawk operations and could alter, delay or cause us to reconsider our master development plan to expand our Black Hawk property. We rely on information technology and other systems to maintain and transmit customer financial information, credit card settlements, credit card funds transmissions, mailing lists and reservations information. The systems and processes we have implemented to protect customers, employees and company information are subject to the ever-changing risk of compromised security. These risks include cyber and physical security breaches, system failure, computer viruses, and negligent or intentional misuse by customers, company employees, or employees of third party vendors. The steps we take to deter and mitigate these risks may not be successful and our insurance coverage for protecting against cybersecurity risks may not be sufficient. Any disruption, compromise or loss of data or systems that results from a cybersecurity attack or breach could materially adversely impact, operations or regulatory compliance and could result in remedial expenses, fines, litigation, and loss of reputation, potentially impacting our financial results. 18 -------------------------------------------------------------------------------- Table of Contents COMMITMENTS AND CONTINGENCIES Our contractual cash obligations as of September 30, 2014 and the next five years and thereafter are as follows: Amounts in millions Payments due by period (1) Less Greater than 1 1 to 3 3 to 5 than 5 Total year years years years Operating Leases (2) $ 1.8 $ 0.4 $ 0.7 $ 0.7 - Purchase Obligations (3) 7.3 7.3 - - - Construction Contracts (4) 9.3 7.1 2.2 - -Borrowings Under Credit Facility (5) 43.4 - 43.4 - - Total Contractual Cash Obligations $ 61.8 $ 14.8 $ 46.3 $ 0.7 - -------------------------------------------------------------------------------- (1) Because interest payments under our credit facility are subject to factors that in our judgment vary materially, the amount of future interest payments is not presently determinable. These factors include: i) future short-term interest rates; ii) our future leverage ratio which varies with EBITDA and our borrowing levels; and iii) the speed with which we deploy capital and other spending which in turn impacts the level of future borrowings. The interest rate under our credit facility is LIBOR, or a base rate (as defined in the credit facility agreement), plus an interest rate margin ranging from 1.25% to 2.50% depending on our leverage ratio. The interest rate is adjusted quarterly based on our leverage ratio which is calculated using operating results over the previous four quarters and borrowings at the end of the most recent quarter. Based on our leverage ratio, at September 30, 2014 pricing was LIBOR plus 1.5% and will be adjusted in subsequent quarters in accordance with our leverage ratio. At September 30, 2014, the one-month LIBOR rate was 0.16%. (2) Operating leases include leased driveway usage and executive housing in Colorado. (3) Purchase obligations represent approximately $2.1 million of commitments related to capital projects and approximately $5.2 million of materials and supplies used in the normal operation of our business. Of the total purchase order and construction commitments, approximately $7.3 million are cancelable by us upon providing a 30-day notice. (4) Construction contracts obligations represent commitments related to remodel and expansion projects in Monarch Casino Black Hawk. (5) The amount represents outstanding draws against the Credit Facility as of September 30, 2014. We anticipate commencement of a substantial expansion of our Monarch Black Hawk facility. The total estimated costs of such expansion have not yet been finalized. For this reason, we have included above only amounts for which we have contractual commitments. |