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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______
COMMISSION FILE NO: 0-17529
EUROPA CRUISES CORPORATION
--------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 59-2935476
------------------------ ------------
(State of Incorporation) (I.R.S. EIN)
150-153RD AVENUE EAST, SUITE 200, MADEIRA BEACH, FLORIDA 33708
--------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: 727/393-2885
------------
Indicate by check mark whether the Registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the Issuer's classes of
common equity as of the latest practicable date: Number of Shares Outstanding at
August 11, 2000: 28,789,815.
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TABLE OF CONTENTS
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Consolidated Statements of Operations for the Three
Months Ended June 30, 2000 and June 30, 1999.....................4
Consolidated Statements of Operations for the Six
Months Ended June 30, 2000 and June 30, 1999.....................5
Consolidated Balance Sheet as of June 30, 2000...................6-7
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2000 and June 30, 1999 ...... ..........................8-9
Notes to Consolidated Financial Statements.......................10-12
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations for the Three Months
ended June 30, 2000... ..........................................12-14
Results of Operations for the Six Months
ended June 30, 2000..............................................14-17
PART II: OTHER INFORMATION
ITEM 1 Legal Proceedings ...............................................17
ITEM 2 Submission of Matters to a Vote of Security Holders .............17
ITEM 3 Exhibits and Reports on Form 8-K.................................17
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PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
The results of operations for the interim periods shown in this report
are not necessarily indicative of results to be expected for the fiscal year. In
the opinion of Management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim periods
a fair statement of such operations. All such adjustments are of a normal
recurring nature.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form-10QSB and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. These
statements should be read in conjunction with the consolidated financial
statements and related notes contained in the Company's Annual Report on
Form-10KSB for the year ended December 31, 1999.
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30*
-------------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Revenues:
Gaming Revenue $ 563,911 $ 1,198,354
Passenger Fares 60,392 304,983
Food and Beverage 31,991 119,174
Charter Revenue -- 635,661
Other 168,482 33,949
------------ ------------
$ 824,776 $ 2,292,121
------------ ------------
Costs and Expenses:
Vessel Operating 694,016 1,611,881
Administrative and General 265,323 292,170
Advertising and Promotion 7,211 54,621
Depreciation and Amortization 175,288 464,821
Sales Tax Settlement -- 200,000
Interest, Net 81,796 187,979
Other Operating (Note 1(c)) 94,806 207,038
------------ ------------
1,318,440 3,018,510
------------ ------------
Net (Loss) (493,664) (726,389)
Preferred Stock Dividends (27,240) (45,005)
------------ ------------
Net (Loss) Applicable to
Common Stock $ (520,904) $ (771,394)
------------ ------------
(Loss) Per Share,
Basic and Diluted $ (.02) $ (.03)
------------ ------------
Weighted Average Number of
Common Shares Outstanding 28,499,685 24,962,654
------------ ------------
</TABLE>
*Note: The M/V Europa Sun was chartered as of March 1, 1999 until its sale in
December 1999. The M/V Europa Star ceased operating July 25, 1999.
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30*
------------------------------------
2000 1999
----------- ------------
<S> <C> <C>
Revenues:
Gaming Revenue $ 1,142,771 $ 3,565,099
Passenger Fares 146,956 820,015
Food and Beverage 72,741 281,034
Charter Revenue -- 1,032,548
Other 171,256 46,437
----------- ------------
$ 1,533,724 $ 5,745,133
----------- ------------
Costs and Expenses:
Vessel Operating 1,474,390 3,902,829
Administrative and General 511,119 756,223
Advertising and Promotion 19,608 97,219
Depreciation and Amortization 432,955 941,435
Sales Tax Settlement -- 200,000
Interest, Net 174,742 369,226
Other Operating (Note 1(c)) 170,675 268,467
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2,783,489 6,535,399
----------- ------------
Net (Loss) (1,249,765) (790,266)
Preferred Stock Dividends (70,480) (90,010)
----------- ------------
Net (Loss) Applicable to
Common Stock $(1,320,245) $ (880,276)
----------- ------------
(Loss) Per Share,
Basic and Diluted $ (.05) $ (.04)
----------- ------------
Weighted Average Number of
Common Shares Outstanding 28,279,899 24,586,154
----------- ------------
</TABLE>
*Note: The M/V Europa Sun was chartered as of March 1, 1999 until its sale in
December 1999. The M/V Europa Star ceased operating July 25, 1999.
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
JUNE 30, 2000
-------------
<S> <C>
Current Assets:
Cash and Cash Equivalents $ 692,190
Accounts Receivable 187,426
Current Maturity of Note Receivable 195,506
Prepaid Insurance and Other 56,616
-----------
Total Current Assets 1,131,738
Vessels, Equipment and Fixtures,
Less Accumulated Depreciation 4,447,075
Assets Held for Sale 1,479,890
Land Under Development for
Dockside Gaming 5,063,645
Deferred Drydock Costs, Less
Accumulated Amortization 200,287
Long-Term Note Receivable 1,500,201
Other Assets 3,439
-----------
$13,826,275
-----------
</TABLE>
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30, 2000
-------------
<S> <C>
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 599,788
Current Maturities of Long-Term Debt 2,947,031
Unearned Revenue 23,790
------------
Total Current Liabilities 3,570,609
------------
Long-Term Debt Less Current Maturities 3,448,932
Other Liabilities 453,943
------------
Total Liabilities 7,473,484
------------
Stockholders' Equity:
Preferred Stock, $.01 par value;
Shares Authorized: 5,000,000
Shares Outstanding: 2,132,000
Aggregate Liquidation Preference ($2,611,080) 21,320
Common Stock, $.001 par value;
Shares Authorized: 50,000,000
Shares Issued: 33,576,352 33,576
Shares Outstanding: 28,701,352
Additional Paid-In-Capital: 26,630,223
Unearned ESOP Shares (5,400,314)
Deficit (14,741,858)
Treasury Stock, at Cost,
1,250,000 Shares (190,156)
------------
Total Stockholders' Equity 6,352,791
------------
$ 13,826,275
------------
</TABLE>
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
---------------------------------
2000 1999
----------- ---------
<S> <C> <C>
Operating Activities:
Net (Loss) $(1,249,765) $(790,266)
Adjustments to reconcile net (loss)
to net cash provided by (used) in
operating activities:
Depreciation and Amortization 432,955 941,435
Release of ESOP Shares 57,500 52,500
Expenses Paid in Shares of Common Stock -- 75,614
Decrease (increase) in:
Accounts Receivable 11,116 (150,287)
Prepaid and Other Assets 98,340 228,310
Increase (decrease) in:
Accounts Payable and Accrued Liabilities (962,014) (45,682)
Unearned Revenues 23,790 205,874
Other Liabilities (90,340) (450,000)
----------- ---------
Cash provided by (used) in
Operating Activities: (1,678,418) 67,498
----------- ---------
Investing Activities
Collection of Account Receivable 2,954,293 --
Purchases of Property and Equipment (9,927) (251,765)
Deferred Costs and Other (200,287) (3,441)
----------- ---------
Cash Provided by (Used) in
Investing Activities 2,744,079 (255,206)
----------- ---------
</TABLE>
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------------
2000 1999
--------- ---------
<S> <C> <C>
Financing Activities:
Proceeds from issuance of common stock $ 18,000 $ 300,000
Payment of Notes and long-term debt, net (795,516) (455,237)
of refinance costs)
Preferred stock dividends (14,000) (30,000)
--------- ---------
Cash Provided by (Used) in
financing activities: (791,516) (185,237)
--------- ---------
Net increase (decrease) in cash
and cash equivalents 274,145 (372,945)
Cash and cash equivalents,
beginning of period 418,045 625,926
--------- ---------
Cash and cash equivalents,
end of period $ 692,190 $ 252,981
--------- ---------
</TABLE>
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
(a) CASINO REVENUE
Casino revenue is the net win from gaming activities, which is the difference
between gaming wins and losses. Revenue does not include the retail amount of
fares, food and beverage provided gratuitously to customers, which was $126,076
and $ 380,747 for the three months ended June 30, 2000 and 1999 respectively and
$297,136 and $967,858 for the six months ended June 30, 2000 and 1999
respectively.
(b) OTHER REVENUE
In the second quarter of 2000, the Company negotiated a reduction of it's
liability arising from a 1999 Department of Labor assessment for back wages,
resulting in other income in the amount of $90,057. In addition, the Company
settled it's long standing equipment lease obligation with Casinos Austria for
$31,492 less than the liability previously accrued.
(c) OTHER OPERATING COSTS
Other operating costs consist of the following:
THREE MONTHS ENDED JUNE 30 2000 1999
------- -------
ESOP Provision 27,500 33,125
Provision for Wage and Hour Audit -- 120,000
Other 67,306 53,913
------- -------
94,806 207,038
------- -------
SIX MONTHS ENDED JUNE 30
ESOP Provision 57,500 52,500
Provision for Wage and Hour Audit -- 120,000
Other 113,175 95,967
------- -------
170,675 268,467
------- -------
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NOTE 2. EARNINGS (LOSS) PER SHARE
Net earnings /(loss) per common share is based on the net income/(loss) after
preferred stock dividends divided by the weighted average number of common
shares outstanding during each period. Common shares outstanding includes issued
shares less shares held in treasury, and un- allocated and uncommitted shares
held by the ESOP trust.
The Company's potentially issuable shares of common stock pursuant to
outstanding stock purchase options and warrants and convertible preferred stock
are excluded from the Company's computation as their effect would be
antidilutive to the Company's net (loss).
Common Shares outstanding includes:
Issued Shares 33,576,352
Less: Treasury Shares (1,250,000)
Unallocated, uncommitted ESOP Shares (3,625,000)
----------
Outstanding Shares 28,701,352
----------
NOTE 3. MATERIAL CONTINGENCIES
No new material contingencies have arisen during the six months ended June 30,
2000 that were not reported in the Company's annual report on Form-10KSB for the
year ended December 31, 1999. Except as noted below, no change of a material
nature, has occurred with respect to any contingency which was reported therein.
FRIENDS OF THE EARTH, INC. AND GULF ISLANDS CONSERVANCY, INC. V.
UNITED STATES ARMY CORPS OF ENGINEERS (In the United States District Court for
the District of Columbia)(Case No. 1:98CV00801)
CASE PENDING
On March 27, 1998, Friends of the Earth, Inc. and Gulf Islands Conservancy, Inc.
filed a Complaint for Declaratory and Injunctive Relief against the United
States Army Corps of Engineers to, inter alia, declare the Corps' approval of
the Casino World, Inc. Permit without prior preparation of an environmental
impact statement, to be arbitrary, capricious, an abuse of discretion and in
violation of the National Environmental Policy Act, applicable Council on
Environmental Quality regulations and applicable U.S. Army Corps of Engineers
regulations and to enjoin the U.S. Army Corps of Engineers from permitting
Casino World, Inc. or its successors-in-interest and all other casino developers
from proceeding with future development of any dockside gambling facilities or
related infrastructure in certain areas, including the Company's site on the Bay
of St. Louis, in Mississippi, until the U.S. Army Corps of Engineers prepared an
environmental impact statement. The Company was not named as a party in the
action. On or about August 31, 1998, the Company filed a motion for leave to
intervene as a party defendant in the action. On November 4, 1998, the Court
granted the Company's motion. Various
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motions and cross-motions in the case were filed and briefed, including motions
and cross-motions for summary judgment. Argument was heard on May 19, 2000.
On August 10, 2000, the Court issued an Order and Judgment declaring the actions
of the United States Army Corps of Engineers in granting Permits under Section
404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act for the
development of the Casino World, Mandalay Resort Group (formerly Circus Circus)
and Royal D'Iberville casinos, without the preparation of environmental impact
statements, to have violated the National Environmental Policy Act and its
implementing regulations and to have been arbitrary, capricious and not in
accordance with law. The Court found that the Army Corps failed to adequately
consider a number of the potential impacts of the three projects. The Court
ordered the Army Corps to "immediately" comply with the National Environmental
Policy Act by preparing environmental impact statements.
This decision had a material adverse impact on the development of the
Diamondhead, Mississippi project. The Company does not know how long it will
take the United States Army Corps of Engineers to complete an environmental
impact statement. In addition, the Company does not know if it will be required
to pay any or all of the cost of conducting an environmental impact statement.
The Company is considering its options based on the recent decision of the
Court.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2000
The Company, under the current Board of Directors and current management, is
united in a single, common goal. Its first and foremost priority is the
development of the Diamondhead, Mississippi, casino resort. In the opinion of
the current Board, this project holds the greatest potential for increasing
shareholder value. The Company's management, financial resources, and assets
will be devoted towards the development of this goal.
In the opinion of the current Board of Directors, while the Company's cruise
ship operations in Florida may have constituted the original and core business
of the Company in the past, the return on investment has simply not justified
the required significant expenditures of time and money or the enormous risks
involved. Given the highly competitive nature of the cruise-to-nowhere business
in Florida today and the Company's lack of financial resources with which to
expand and compete with the expensive, new, and more luxurious vessels entering
the market and with better capitalized competitors, the Company's best prospect
for increasing shareholder value lies with the development of the Company's
Mississippi casino resort. Moreover, in the opinion of the Board, any return on
investment the shareholders might realize from the operation of cruise ships,
even if operated profitably, would pale in comparison to the return on
investment the shareholders might realize from the development of the
Diamondhead project. In 1999 and 2000, due to the state of the cruise-to-nowhere
industry in Florida and the political climate and competition, management made
significant changes in the core business of the Company.
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The operations of the Company have changed dramatically. The M/V Stardancer was
chartered as of January 1, 1999 and the M/V Europa Sun was chartered as of March
1, 1999. The two vessels, therefore, produced only charter revenue less residual
expenses beginning January 1, 1999 and March 1, 1999 respectively. In December
1999, both vessels were sold, and, therefore, were not operated by the Company
during the first or second quarter of 2000.
The M/V Europa Star ceased operations in Ft. Myers Beach on July 25, 1999, due
to poor business conditions and to ready the vessel for a required dry dock. The
vessel did not operate in the first or second quarter of 2000, and, therefore,
the only financial activity associated with the vessel related to the fixed
carrying costs consisting of berthing, insurance, and depreciation.
As of June 1, 2000, the Company sublet the port in Ft. Myers Beach to an
unrelated operator. Terms of the sublease call for this operator to assume all
costs associated with the lease, including a balloon payment due in October, in
the approximate amount of $105,600 for improvements made to the dock. In
addition, the Agreement calls for Europa to receive payments of approximately
$22,400 per month. The Company believes that the Agreement will improve
operating results by approximately $50,000 per month through the remaining term
of the lease.
REVENUES
The Company reported total revenues of $824,776 for the three months ended June
30, 2000 as compared to total revenues of $ 2,292,121 for the same period one
year ago. The decrease of $1,467,345 is attributable to the non-operation by the
Company of the M/V Europa Star which had accumulated operating revenues of
$806,225 for the same period one year ago. In addition, the decrease in revenues
for the three months ended June 30, 2000, is attributable to the absence of
charter revenues which totaled $635,661 for the three months ended June 30,
1999.
The only operating vessel in 2000 was the Europa Sky, which reported total
revenues of $656,874 in the second quarter, as compared $835,664 in the second
quarter of 1999, a decrease of $178,790 or 21.4%. The decrease is directly
proportional to the continued decrease in passenger counts. The Sky carried
10,588 passengers on 129 cruises in the second quarter of 2000 as compared to
15,575 passengers on 162 cruises for the same period one year ago. This amounts
to a 32.0% decrease in total passengers which the Company attributes to
competition, both locally and in Mississippi, and the intense marketing and
promotional efforts being carried out by these competitors. In addition, the
Company's ability to provide cruises on a regular basis was seriously affected
in the second quarter by shoaling conditions in Johns' Pass, Madeira Beach,
which required dredging.
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COSTS AND EXPENSES
VESSEL OPERATING EXPENSES
Vessel operating costs and expenses decreased from $1,611,881 in 1999 to
$694,016 for the three months ended June 30, 2000. The decrease of $917,865 or
56.9% was entirely associated with the non operations of the Sun and Star, which
had vessel operating expenses of $930,425 for the three months ended June 30,
1999.
ADMINISTRATIVE AND GENERAL AND OTHER OPERATING EXPENSES
Administrative and general costs and expenses decreased from $ 292,170 in 1999
to $ 265,323 in 2000, a decrease of $26,847, or 9.2%. Of that decrease, $11,631
was attributable to the non-operation of the Sun and Star. The remaining
decrease was realized principally through elimination of administrative
positions and other salary reductions.
Other operating expenses decreased from $207,038 in 1999 to $94,806 for the
three months ended June 30, 2000.(See Note 1(c)).
ADVERTISING AND PROMOTION
Advertising and promotion expenses totaled $7,211 for the quarter ended June 30,
2000 as compared to $54,621 for the same period one year ago, a decrease of
$47,410. The majority of the Company's expendable cash has been diverted to the
payment of old taxes due to the Florida Department of Revenue.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization decreased from $ 464,821 in 1999 to $ 175,288 for
the three months ended June 30, 2000, a decrease of $ 289,533 or 62.3%. The
decrease is associated with the sale of the M/V Europa Sun and the M/V Europa
Stardancer in December 1999. In addition, in light of the Company's assignment
of its lease rights to the Ft. Myers Beach, Florida port, the Company has
reclassed the assets associated with the M/V Europa Star as "assets held for
sale" and discontinued depreciation of those assets as of May 31, 2000.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2000
REVENUES
The Company reported total revenues of $1,533,724 for the six months ended June
30, 2000 as compared to total revenues of $5,745,133 for the same period one
year ago. The decrease of $4,211,409 is attributable to the non-operation by the
Company of the M/V Europa Star and M/V
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Europa Sun which had accumulated operating revenues of $2,772,090 for the same
period one year ago. In addition, the decrease in revenues for the three months
ended June 30, 2000, is attributable to the absence of charter revenues which
totaled $1,032,548 for the six months ended June 30, 1999.
The only operating vessel in 2000 was the Europa Sky, which reported total
revenues of $1,363,447 for the first six months of 2000, as compared to
$1,920,261 for the first six months of 1999, a decrease of $556,814 or 29.0%.
The decrease is directly proportional to the continued decrease in passenger
counts. The Sky carried 25,766 passengers on 284 cruises in the first six months
of 2000 as compared to 38,110 passengers on 329 cruises for the same period one
year ago. Even though per passenger revenues increased from $50.39 for the first
six months of 1999, to $52.92 for the first six months of 2000, a decrease in
the number of passengers by 32.4% has negatively impacted revenues. The
continuing decrease in total passengers is attributable to competition, both
locally and in Mississippi, and the intense marketing and promotional efforts
being carried out by these competitors.
COSTS AND EXPENSES
VESSEL OPERATING EXPENSES
Vessel operating costs and expenses decreased from $3,902,829 in 1999 to
$1,474,390 for the six months ended June 30, 2000. The decrease of $2,428,439 or
62.2%, was primarily associated with the non operations of the Sun, Star, and
Stardancer which accounted for $2,025,431 of the decrease. The remaining
decrease is a function of management's continued focus on reducing compensation
costs and other operating costs associated with the M/V Europa Sky.
ADMINISTRATIVE AND GENERAL AND OTHER OPERATING EXPENSES
Administrative and general costs and expenses decreased from $756,223 in 1999 to
$511,119 in 2000, a decrease of $245,104, or 32.4%. Of that decrease, $49,609
was attributable to the non-operation of the Sun and Star. The remaining
decrease was realized principally through elimination of administrative
positions and other cost reductions.
Other operating expenses decreased from $268,467 in 1999 to $170,675 for the six
months ended June 30, 2000.(See Note 1(c))
ADVERTISING AND PROMOTION
Advertising and promotion expenses totaled $19,608 for the six months ended June
30, 2000 as compared to $97,219 for the same period one year ago, a decrease of
$77,611. The majority of the Company's expendable cash has been diverted to the
payment of old taxes due to the Florida Department of Revenue.
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DEPRECIATION AND AMORTIZATION
Depreciation and amortization decreased from $941,435 in 1999 to $432,955 for
the six months ended June 30, 2000, a decrease of $508,480 or 54.0%. The
decrease is associated with the sale of the M/V Europa Sun and the M/V Europa
Stardancer in December 1999. In addition, in light of the Company's assignment
of its lease rights to its Ft. Myers Beach, Florida port, the Company has
reclassed the assets associated with the M/V Europa Star as "assets held for
sale" and discontinued depreciation of those assets as of May 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
In the first six months of 2000, the Company was able to meet its normal
operating costs and expenses from its cash flow. Earnings before interest,
taxes, depreciation and amortization, and preferred dividends, however, were a
negative $642,068. Additionally, the Company had a working capital deficiency at
June 30, 2000 in the amount of $ 2,438,871, representative of the note due First
Union National Bank, all of which is a current liability on the Company's
Balance Sheet. The Company has reduced it's total debt structure by $795,516,
and, additionally, reduced current accounts payable by $1,154,593 during the
first six months of 2000.
On August 7, 2000, the Company announced that it had entered into an agreement
for the purchase and sale of a vessel and certain assets for a total purchase
price of $5,200,000. The Company agreed to sublease its Madeira Beach, Florida
port and to sell the M/V Europa Sky and certain assets and equipment to
Stardancer Casino, Inc., a South Carolina corporation. As of August 7, 2000, the
Company is in receipt of a non-refundable down payment in the amount of
$800,000. The remaining $4,400,000 is payable in monthly installments and will
be secured by a Letter of Credit. The agreement calls for the full purchase
price to be paid on or before May 1, 2001. The payment terms vary depending on
whether the purchaser also purchases a second vessel, the M/V Europa Star. The
Company will retain title to the vessel as security until the full purchase
price has been paid. The Company intends to transfer operations in Madeira
Beach, Florida to Stardancer on or before August 30, 2000. The Company does not
anticipate incurring a loss on the sale.
The Company also entered into another, separate agreement to sell the M/V Europa
Star to Stardancer Casino, Inc. for a total purchase price of $2,100,000. The
purchaser has the right to terminate this agreement on or before September 1,
2000 only if the total estimated cost of drydocking the vessel following an
out-of-water inspection of the hull of the ship, exceeds $750,000. As of August
8, 2000, the Company is in receipt of a down payment in the amount of $300,000.
The remaining $1,800,000 is payable in monthly installments and will be secured
by a letter of credit. The agreement calls for the full purchase price to be
paid on or before March 1, 2001. The Company will retain title to the vessel as
security until the full purchase price has been paid. In the event the purchaser
exercises its option to terminate this agreement, any amounts paid
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towards the purchase price of the M/V Europa Star or towards the cost of
drydocking the Star, will be applied to the final payment due on the purchase of
the M/V Europa Sky.
In the event the Company is successful in selling the remaining operating
assets, the Company would focus its small, remaining staff and resources on
development of its Diamondhead, Mississippi site.
BANK FINANCING
On or about September, 1999, in an effort to maintain adequate cash for
operations, the Company agreed to certain new repayment terms with First Union
National Bank which, at the time, held a note with an outstanding balance of
$3,400,364. The former terms called for installments of principal and interest
at a rate of 11.35%, or approximately $103,000 per month and was primarily
secured by first mortgages on the Europa Sky, Europa Star, and Europa
Stardancer. Under the new terms, the Company pays interest only on the
outstanding balance, at a rate of 10.75%. The new agreement required the Company
to pay unwind and restructuring fees of $183,900. The cash flow and tangible net
worth covenants required under the original terms of its bank loan agreement
continue.
As of June 30, 2000, the note expired and is callable by First Union. However,
no such action has been taken by First Union as of the date of this report. On
or about August 8, 2000, the Company paid First Union $800,000 towards the
then-approximate $2,500,000 due First Union, thereby reducing the total amount
due First Union to $1,701,188. The funds used to pay First Union came from the
sale of the Sky and the down payment from the potential sale of the Star. The
Company will use the future receipt of proceeds from these sales to fully
extinguish the debt.
CAPITAL EXPENDITURE REQUIREMENTS
The Europa Star is required to go to drydock at an estimated cost of
approximately $650,000. The Company has sold the vessel contingent on the
estimated cost of the drydock not exceeding $750,000. The Purchaser is required
to pay all costs of drydock. In the event the Purchaser does not purchase the
Star, any amounts paid for drydock will be credited to the purchase price of the
Sky. The Europa Sky completed its scheduled dry dock in June 2000 at an
approximate cost of $209,000. No additional major capital expenditures are
planned for now or the forseeable future.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
See Note 3. Material Contingencies.
Item 2. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
Item 3. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit
No. Description
------- -----------
27.1 Financial Data Schedule (for SEC use only)
No reports on Form 8-K have been filed during the quarter ended June 30, 2000.
17
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by the undersigned,
hereunto duly authorized.
EUROPA CRUISES CORPORATION
DATE: August 17, 2000 /s/ DEBORAH A. VITALE
--------------------------
By: Deborah A. Vitale
President
/s/ ROBERT ZIMMERMAN
--------------------------
By: Robert Zimmerman
Chief Financial Officer
18
