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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 SEPTEMBER 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
November 14, 2000: 28,894,523.
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TABLE OF CONTENTS
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Consolidated Statements of Operations for the Three
Months Ended September 30, 2000 and September 30, 1999...............4
Consolidated Statements of Operations for the Nine
Months Ended September 30, 2000 and September 30, 1999...............5
Consolidated Balance Sheet as of September 30, 2000... ............6-7
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 2000 and September 30, 1999 .........................8-9
Notes to Consolidated Financial Statements.......................10-13
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations for the Three Months
ended September 30, 2000... .....................................13-15
Results of Operations for the Nine Months
ended September 30, 2000.........................................16-18
PART II: OTHER INFORMATION
ITEM 1 Legal Proceedings ..................................................18
ITEM 2 Submission of Matters to a Vote of Security Holders ................18
ITEM 3 Options Granted.....................................................18
ITEM 4 Exhibits and Reports on Form 8-K....................................18
2
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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)
THREE MONTHS ENDED SEPTEMBER 30*
--------------------------------
2000 1999
------------ -------------
Revenues:
Gaming Revenue $ 227,571 $ 512,146
Passenger Fares 27,508 57,787
Food and Beverage 11,794 135,150
Charter Revenue -- 635,661
Other 230,303 24,748
------------ ------------
$ 497,176 $ 1,365,492
------------ ------------
Costs and Expenses:
Vessel Operating 398,288 1,142,461
Administrative and General 298,846 338,683
Advertising and Promotion 5,134 16,962
Depreciation and Amortization 328,247 531,236
Interest 61,384 178,158
Other Operating (Note 1(c)) 40,293 93,577
------------ ------------
1,132,192 2,301,077
------------ ------------
Net gain on sale of vessels 1,394,823 --
------------ ------------
Net income (loss) 759,807 (935,585)
Preferred Stock Dividends (27,240) (39,710)
------------ ------------
Net Income (Loss) Applicable to
Common Stock $ 732,567 $ (975,295)
------------ ------------
Earnings (Loss) Per Share,
Basic and Diluted $ .03 $ (.04)
------------ ------------
Weighted Average Number of
Common Shares Outstanding 28,781,160 26,356,478
------------ ------------
*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 and the
Company entered into an agreement to sell the vessel on August 2, 2000. The M/V
Europa Sky ceased operations on August 27,2000 after the Company entered into an
agreement to sell the vessel on August 2,2000.
4
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30*
-------------------------------
2000 1999
----------- -------------
Revenues:
Gaming Revenue $ 1,370,342 $ 4,077,245
Passenger Fares 174,464 955,165
Food and Beverage 84,535 338,821
Charter Revenue -- 1,663,209
Other 401,559 76,185
----------- ------------
$ 2,030,900 $ 7,110,625
----------- ------------
Costs and Expenses:
Vessel Operating 1,872,678 5,045,288
Administrative and General 809,964 1,094,906
Advertising and Promotion 24,742 114,181
Depreciation and Amortization 761,202 1,472,671
Sales Tax Settlement -- 200,000
Interest 236,125 547,384
Other Operating (Note 1(c)) 210,970 362,046
----------- ------------
3,915,681 8,836,476
----------- ------------
Net gain on sale of vessels 1,394,823 --
----------- ------------
Net (Loss) (489,958) (1,725,851)
Preferred Stock Dividends (97,720) (129,720)
----------- ------------
Net (Loss) Applicable to
Common Stock $ (587,678) $ (1,855,571)
----------- ------------
(Loss) Per Share,
Basic and Diluted $ (.02) $ (.07)
----------- ------------
Weighted Average Number of
Common Shares Outstanding 28,446,979 25,176,262
----------- ------------
*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 and the
Company entered into an agreement to sell the vessel on August 2, 2000. The M/V
Europa Sky ceased operations on August 27,2000 after the Company entered into an
agreement to sell the vessel on August 2,2000.
5
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
SEPTEMBER 30, 2000
------------------
Current Assets:
Cash and Cash Equivalents $ 361,187
Accounts Receivable ($5,400,000
from the sale of vessels) 5,562,926
Current Maturity of Note Receivable 200,683
Prepaid Insurance and Other 50,131
-----------
Total Current Assets 6,174,927
Equipment and Fixtures,
Less Accumulated Depreciation 106,065
Land Held for Development --
Dockside Gaming 5,063,645
Long-Term Note Receivable 1,448,046
Other Assets 3,439
-----------
$12,796,122
===========
6
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
SEPTEMBER 30, 2000
------------------
Current Liabilities:
Accounts Payable and Accrued Liabilities $ 654,400
Current Maturities of Long-Term Debt 2,026,864
Unearned Revenue 23,790
------------
Total Current Liabilities 2,705,054
Long-Term Debt Less Current Maturities 2,538,629
Other Liabilities 400,000
------------
Total Liabilities 5,643,683
------------
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: 33,707,023 33,707
Shares Outstanding: 28,894,523
Additional Paid-In-Capital: 26,604,048
Unearned ESOP Shares (5,307,189)
Deficit (14,009,291)
Treasury Stock, at Cost,
1,250,000 Shares (190,156)
------------
Total Stockholders' Equity 7,152,439
------------
$ 12,796,122
------------
7
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
2000 1999
----------- -------------
Operating Activities:
Net (Loss) $ (489,958) $(1,725,851)
Adjustments to reconcile net (loss)
to net cash (used) in
operating activities:
Depreciation and Amortization 761,202 1,472,671
Release of ESOP Shares 72,500 96,875
Expenses Paid in Shares of Common Stock 27,600 133,239
Net gain on sale of vessels (1,394,823) --
Commission accrued on sale of vessels (162,000) --
Decrease (increase) in:
Accounts Receivable 35,615 (58,454)
Prepaid and Other Assets 112,491 275,856
Increase (decrease) in:
Accounts Payable and Accrued Liabilities (907,402) 227,902
Unearned Revenues 23,790 137,155
Other Liabilities (144,283) (600,000)
----------- -----------
Cash (used) in
Operating Activities: (2,065,268) (40,607)
----------- -----------
Investing Activities
Proceeds from sale of vessel 1,843,000 --
Collection of Account Receivable 3,001,271 --
8
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EUROPA CRUISES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
2000 1999
------------ ------------
Purchase of Property and Equipment (10,828) (251,767)
Deferred Costs and Other (200,287) (187,342)
----------- ---------
Cash provided by (used) in
Investing Activities 4,633,156 (439,109)
Financing Activities:
Proceeds from issuance of common stock $ 18,000 $ 575,063
Payment of Notes and long-term debt, net (2,625,986) (391,632)
of refinance costs
Preferred stock dividends (16,760) (13,230)
----------- ---------
Cash (Used) in
financing activities: (2,624,746) 170,201
----------- ---------
Net increase (decrease) in cash
and cash equivalents (56,858) (309,515)
Cash and cash equivalents,
beginning of period 418,045 625,926
----------- ---------
Cash and cash equivalents,
end of period $ 361,187 $ 316,411
----------- ---------
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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 $65,241
and $260,450 for the three months ended September 30, 2000 and 1999 respectively
and $362,377 and $1,228,308 for the nine months ended September 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 a long standing equipment lease obligation with Casinos Austria for
$31,492 less than the liability previously accrued.
In the third quarter of 2000, in accordance with an agreement entered into
between Europa Cruises of Florida 1, Inc. and Big "M" Casino, Inc. assigning the
lease for the Ft.. Myers dock, a note payable to Kiric Investments, Inc., the
Company's previous landlord in Ft. Myers, was paid in full by Big "M" Casino,
Inc., giving rise to other income in the amount of $121,492.
(C) OTHER OPERATING COSTS
Other operating costs consist of the following:
THREE MONTHS ENDED SEPTEMBER 30 2000 1999
------- -------
ESOP Provision 15,000 44,375
Provision for Wage and Hour Audit -- 24,000
Other 25,293 25,202
------- -------
40,293 93,577
------- -------
NINE MONTHS ENDED SEPTEMBER 30
ESOP Provision 72,500 96,875
Provision for Wage and Hour Audit -- 144,000
Other 138,470 121,171
------- -------
210,970 362,046
------- -------
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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 33,707,023
Less: Treasury Shares (1,250,000)
Unallocated, uncommitted ESOP Shares (3,562,500)
----------
Outstanding Shares 28,894,523
----------
NOTE 3. MATERIAL CONTINGENCIES
No new material contingencies have arisen during the nine months ended September
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
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defendant in the action. On November 4, 1998, the Court granted the Company's
motion. Various 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 or how much it will cost to complete an environmental impact statement. The
Company filed a notice of appeal in the case, but is considering its options
based on the decision of the Court.
BAY ST. LOUIS COMMUNITY ASSOCIATION, PRESERVE DIAMONDHEAD QUALITY, INC., GULF
ISLANDS CONSERVANCY, INC. AND CONCERNED CITIZENS TO PROTECT THE ISLES AND POINT,
INC. V. THE COMMISSION ON MARINE RESOURCES, HANCOCK COUNTY PORT AND HARBOR
COMMISSION, AND CASINO WORLD, INC. ( Chancery Court of Hancock County,
Mississippi) (Case No. 960707)
CASE PENDING
On September 18, 1996, Bay St. Louis Community Association, Preserve Diamondhead
Quality, Inc., Gulf Islands Conservancy, Inc. and Concerned Citizens to Protect
the Isles and Point, Inc. filed a Notice of Appeal and Complaint against the
Commission on Marine Resources, Hancock County Port and Harbor Commission and
Casino World, Inc., in the Chancery Court of Hancock County, Mississippi (Case
No. 960707), appealing the administrative decision of the Commission on Marine
Resources in granting Permit No. DMR-M 9612281-W and COE No. MS96-01566-U. On
October 17, 1996, the Mississippi Commission on Marine Resources filed a
Response to Notice of Appeal and Answer in which it maintained, in pertinent
part, that it had complied with all procedural requirements relevant to grants
of permits and use adjustments at issue, that its decision to grant the permit
and use adjustment was grounded upon legally sufficient evidentiary grounds and
that there was no proper ground at law warranting reversal of its decision. On
October 16, 1996, Casino World, Inc. and the Hancock County Port and Harbor
Commission filed a Joint Motion to Dismiss for Untimely Appeal in which they
alleged that the appellants had failed to file their Notice of Appeal and
Complaint within the proper time period. The Joint Motion to Dismiss was granted
on December 31, 1996.
On January 15, 1997, the Bay St. Louis Community Association, Preserve
Diamondhead Quality,
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Inc., Gulf Islands Conservancy, Inc. and Concerned Citizens to Protect the Isles
and Point, Inc. filed a Notice of Appeal appealing the decision of the Chancery
Court to the Supreme Court of Mississippi. On July 23, 1998, the Supreme Court
of Mississippi reversed the lower court's decision and remanded the case to the
lower court for a hearing on the merits. On or about August 6, 1998, Casino
World, Inc. filed a Motion for Rehearing which was denied on October 15, 1998.
On or about October 26, 1998, the case was remanded to the lower court for a
hearing on the merits. A hearing on the merits of the case was held on June 22,
2000.
On September 12, 2000, the trial court filed a Memorandum Opinion & Judgement
affirming the decision of the Commission on Marine Resources to grant a variance
and permit to Casino World, Inc. The trial court found that the Commission's
decision to issue the variance and permit was not arbitrary or capricious, that
it was supported by substantial evidence, that it was consistent with the public
policy set forth in the Coastal Wetlands Protection Act and that the decision
did not violate any statutory or Constitutional rights of the plaintiffs. On
October 11, 2000, the plaintiffs filed a Notice of Appeal with the Supreme Court
of Mississippi.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 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.
The operations of the Company have changed dramatically. The M/V Stardancer was
chartered
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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 nine months 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 any 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 assigned its lease in Ft. Myers Beach to an
unrelated operator. The terms of the agreement require this operator to assume
all costs associated with the Company's original lease, including a balloon
payment which was made in September 2000 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.
On August 7, 2000, the Company announced that it had 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 for
$5,200,000. As of September 30, 2000, the Company is in receipt of funds in the
amount of $1,600,000 and on or about October 1, 2000 and again on November 1,
2000, the Company received two installment payments of $500,000 each. The
remaining $2,600,000 is payable in monthly installments and is secured by a
Letter of Credit. The agreement calls for the full purchase price to be paid on
or before May 1, 2001. The Company will retain title to the vessel as security
until the full purchase price has been paid. The Company transferred operations
in Madeira Beach, Florida to the purchaser on or about August 28, 2000. The
Company realized a gain on the sale in the amount of $787,899.
On August 2, 2000, 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. As of September 30, 2000, the Company is in receipt of a down
payment in the amount of $300,000. Of the remaining $1,800,000, $300,000 was
received on October 24, 2000, and the residual is payable in monthly
installments and is 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. The Company realized a gain on the sale in the amount of $606,924.
REVENUES
The Company reported total revenues of $497,176 for the three months ended
September 30, 2000 as compared to total revenues of $1,365,492 for the same
period one year ago. The decrease of $868,316 is attributable to the absence of
charter revenues which totaled $635,661 for the same period one year ago. In
addition, the decrease in revenues for the period is attributable to the fact
that the Company operated the Sky for only two months in the third quarter of
2000, as
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compared to three months in the same quarter of 1999. Revenues for the Sky
totaled $270,479 for the three months ended September 30, 2000 as compared to
$695,036 for the same period one year ago, a decrease of $424,557. During the
quarter, the Sky carried 5,475 passengers for the slightly less than two months
of operation as compared to 12,213 passengers for the same quarter one year ago.
The decrease in total revenues for the quarter was somewhat offset by the items
of other operating revenues as described in Note 1 (b) above.
COSTS AND EXPENSES
VESSEL OPERATING EXPENSES
Vessel operating costs and expenses decreased from $1,142,461 in 1999 to
$398,288 for the three months ended September 30, 2000. The decrease of $744,173
or 65.1% was partly associated with the non operations of the Sun and Star,
which had vessel operating expenses of $374,679 for the three months ended
September 30, 1999. In addition, since the Sky only operated two months during
the third quarter of 2000, vessel operating expenses associated with that
operation decreased $390,094 from the third quarter of 1999.
ADMINISTRATIVE AND GENERAL AND OTHER OPERATING EXPENSES
Administrative and general costs and expenses decreased from $338,683 in 1999 to
$ 298,846 in 2000, a decrease of $39,837, or 11.8%. Of that decrease, $20,406
was attributable to the non-operation of the Sun and Star. The remaining
decrease was realized principally through the termination of the Sky operations
in late August.
Other operating expenses decreased from $93,577 in 1999 to $40,293 for the three
months ended September 30, 2000.(See Note 1(c)).
ADVERTISING AND PROMOTION
Advertising and promotion expenses totaled $5,134 for the quarter ended
September 30, 2000 as compared to $16,962 for the same period one year ago, a
decrease of $11,828. The Company curtailed marketing activities when it became
apparent that the remaining operating vessels would be sold.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization decreased from $531,236 in 1999 to $328,247 for
the three months ended September 30, 2000, a decrease of $202,989 or 38.2%. The
decrease is associated with the sale of the M/V Europa Sun and the M/V Europa
Stardancer in December 1999.
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RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
REVENUES
The Company reported total revenues of $2,030,900 for the nine months ended
September 30, 2000 as compared to total revenues of $7,110,625 for the same
period one year ago. The decrease of $5,079,725 is attributable to the
non-operation of the M/V Europa Star and M/V Europa Sun which had accumulated
operating revenues of $2,820,389 for the same period one year ago. In addition,
the decrease in revenues for the nine months ended September 30, 2000, is
attributable to the absence of charter revenues which totaled $1,663,209 for the
nine months ended September 30, 1999.
The only operating vessel in 2000 was the Europa Sky, which reported total
revenues of $1,633,926 for the first nine months of 2000, as compared to
$2,612,297 for the first nine months of 1999, a decrease of $978,371 or 37.5%.
The decrease is directly proportional to the decrease in passenger counts. The
Sky carried 31,241 passengers on 363 cruises in the first nine months of 2000 as
compared to 50,323 passengers on 429 cruises for the same period one year ago.
The decrease in total revenues was offset in part by increases in other
operating revenues as discussed in Note 1(b) above.
COSTS AND EXPENSES
VESSEL OPERATING EXPENSES
Vessel operating costs and expenses decreased from $5,045,288 in 1999 to
$1,872,678 for the nine months ended September 30, 2000. The decrease of
$3,172,610 or 62.9%, was primarily associated with the non operations of the
Sun, Star, and Stardancer which accounted for $2,394,150 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 $1,094,906 in 1999
to $809,964 in 2000, a decrease of $284,942, or 26.0%. Of that decrease, $85,385
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 $362,046 in 1999 to $210,970 for the
nine months ended September 30, 2000.(See Note 1(c))
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ADVERTISING AND PROMOTION
Advertising and promotion expenses totaled $24,742 for the nine months ended
September 30, 2000 as compared to $114,181 for the same period one year ago, a
decrease of $89,439. The Company curtailed most of its marketing activity in
2000 as it became apparent that the remaining vessels would be sold.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization decreased from $1,472,671 in 1999 to $761,202 for
the nine months ended September 30, 2000, a decrease of $711,469 or 48.3%. The
decrease is associated with the sale of the M/V Europa Sun and the M/V Europa
Stardancer in December 1999.
LIQUIDITY AND CAPITAL RESOURCES
In the first nine 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 totaled $507,369.
Additionally, the Company was in a positive working capital position at
September 30, 2000 in the amount of $3,469,873, representative of the dollars
receivable on the sales of the M/V Europa Sky and M/V Europa Star effective
September 1, 2000. As of September 30, 2000, the Company has received a total of
$1,900,000 of the combined sales price of $7,300,000 and has applied most of
those funds, less related commissions, toward reducing its debt structure. In
addition, subsequent to the quarter's end, the Company received additional
payments towards the purchase price of the two vessels totaling $1,300,000
through November 1, 2000. These proceeds were sufficient to totally retire the
note payable to First Union National Bank, satisfying the Bank's requirement
that the Company sell vessels to satisfy the note, since the Company had
defaulted on the original terms of the loan.
For the nine months ended September 30, 2000, the Company has reduced its total
debt structure $2,625,896. The Company plans to use the future receipt of funds
from the sale of the M/V Europa Sky and the M/V Europa Star to fully extinguish
its liability to the Florida Department of Revenue for the audit period July
1994 through March 1998. The Company entered into a settlement agreement
relating to this audit period in 1999 for $1,600,000. As of September 30, 2000,
the Company had paid $850,000 towards this settlement agreement. The Company
will remain liable to the Florida Department of Revenue for sums due pursuant
to a settlement agreement reached in 1997. The remaining amount due to the
Florida Department of Revenue pursuant to the 1997 settlement is $1,120,418,
which is being paid pursuant to a long term installment agreement with the
State.
The Company's only other remaining debt consists of a note payable to DeBis
Financial Services in the amount of $1,648,729, which is being paid on the
Company's behalf by Stardancer Casinos, Inc. pursuant to the terms of the sales
agreement relating to the M/V Europa Sun.
In the opinion of management, the Company will be able to support its ongoing
operating expenses through the use of revenues generated by the Ft. Myers dock
lease assignment, passive income earned on invested cash, and from cash reserves
currently on hand.
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CAPITAL EXPENDITURE REQUIREMENTS
No capital expenditures are anticipated in the foreseeable future other than
costs associated with the preparation of an Environmental Impact Statement
concerning development of the Diamondhead, Mississippi property. These costs are
presently not estimable.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
See Note 3. Material Contingencies.
Item 2. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
ELECTION OF BOARD OF DIRECTORS
The Annual Meeting of Europa Cruises Corporation was held on October 6, 2000 at
the Beau Rivage Hotel and Casino in Biloxi, Mississippi. The election of a Board
of Directors was submitted to a vote of the securities holders. The Company
reported that a total of approximately 28,333,859 shares voted. Of those,
27,887,566, or approximately 98.4%, voted for the incumbent Board of directors,
Deborah A. Vitale, James Illius, Paul J. DeMattia, John R. Duber, and Gregory A.
Harrison. A total of 446,293 shares, or approximately 1.6%, were withheld.
Item 3. OPTIONS GRANTED
At a meeting of the Board of Directors, held on October 24, 2000, 1,475,000
options to purchase shares of the Company's common stock were awarded to
Directors and Officers of the Company. In addition, the Board awarded 25,000
options to an honorary director and 50,000 options to a key employee of the
Company.
Item 4. EXHIBITS AND REPORTS ON FORM 8-K
No reports on Form 8-K have been filed during the quarter ended September 30,
2000.
Exhibit 27- Financial Data Schedule
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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: November 17, 2000 /s/ DEBORAH A. VITALE
--------------------------
By: Deborah A. Vitale
President
/s/ ROBERT ZIMMERMAN
--------------------------
By: Robert Zimmerman
Chief Financial Officer
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