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 MARCH 31, 1996.
_______ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO ______ .
Commission file number 0-22290
CENTURY CASINOS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-1271317
(State of incorporation) (IRS Employer ID No.)
50 South Steele Street, Suite 755, Denver, CO 80209
(Address of principal executive offices)
(303) 388-5848
(Phone Number)
Check whether the issuer (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
Number of shares of common stock, $.01 par value,
outstanding as of April 26, 1996:
11,789,657
<PAGE>
CENTURY CASINOS, INC.
FORM 10-QSB
INDEX
Page Number
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets as of March 31, 1996 3
Consolidated Statements of Operations for the Three Months Ended 4
March 31, 1996 and 1995
Consolidated Condensed Statements of Cash Flows for the Three 5
Months Ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis 8
PART II OTHER INFORMATION 10
SIGNATURES
<PAGE>
<TABLE>
<CAPTION>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Unaudited)
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
March 31, 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,021,187
Short-term investments 747,588
Prepaid expenses and other 624,264
-----------------
Total current assets 4,393,039
PROPERTY AND EQUIPMENT, net 4,779,771
GOODWILL, net 5,935,076
DEFERRED COSTS, terminated management agreement 1,558,703
OTHER ASSETS 1,608,727
-----------------
TOTAL $ 18,275,316
=================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $
505,025
Accounts payable and accrued expenses 917,191
-----------------
Total current liabilities 1,422,216
LONG-TERM DEBT, less current portion 1,690,474
SHAREHOLDERS' EQUITY:
Preferred stock; $.01 par value; 20,000,000 shares
authorized; no shares issued or outstanding
Common stock; $.01 par value; 50,000,000 shares
authorized; 11,789,657 shares issued and outstanding 117,897
Additional paid-in capital 18,606,072
Foreign currency translation adjustment (9,049)
Accumulated deficit (3,552,294)
-----------------
-----------------
Total shareholders' equity 15,162,626
-----------------
TOTAL $ 18,275,316
=================
See notes to consolidated financial statements.
<PAGE>
<CAPTION>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
For the Three Months Ended March 31,
1996 1995
-------- --------
OPERATING REVENUE:
Casino $ 1,100,812 $ 777,858
Food and beverage 57,181 73,132
Other 18,563 18,535
---------------- ----------------
1,176,556 869,525
Less promotional allowances (42,695) (36,542)
---------------- ----------------
Net operating revenue 1,133,861 832,983
---------------- ----------------
OPERATING COSTS AND EXPENSES:
Casino 425,131 409,842
Food and beverage 20,420 79,888
General and administrative 764,192 923,156
Depreciation and amortization 315,114 300,015
---------------- ----------------
Total operating costs and expenses 1,524,857 1,712,901
---------------- ----------------
LOSS FROM OPERATIONS (390,996) (879,918)
OTHER INCOME, net 10,701 3,886,682
---------------- ----------------
INCOME (LOSS) BEFORE INCOME TAXES (380,295) 3,006,764
PROVISION FOR INCOME TAXES 337,000
================ ================
NET INCOME (LOSS) $ (380,295) $ 2,669,764
================ ================
INCOME (LOSS) PER SHARE
$ (0.03) $ 0.28
================ ================
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 11,602,839 9,515,252
================ ================
See notes to consolidated financial statements.
<CAPTION>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
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<S> <C> <C>
For the Three Months Ended March 31,
1996 1995
--------- ---------
CASH FLOWS FROM OPERATIONS
$ (109,410) $ (944,180)
----------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES (123,850) 3,768,554
----------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES 1,220,976 1,962,149
----------------- ----------------
INCREASE IN CASH AND CASH EQUIVALENTS 987,716 4,786,523
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 2,033,471 950,024
----------------- ----------------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD
$ 3,021,187 $ 5,736,547
================= ================
</TABLE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid by the Company was $49,610 and $29,134 for the three months
ended March 31, 1996 and 1995. Income taxes paid by the Company were
$9,800 and $0 for the three months ended March 31, 1996 and 1995.
See notes to consolidated financial statements.
<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
- - -------------------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS
Century Casinos, Inc. and subsidiaries (the "Company") own and operate
a limited-stakes gaming casino in Cripple Creek, Colorado ("Legends
Casino"), act as concessionaire of three small casinos on cruise ships,
and are pursuing a number of additional gaming opportunities throughout
the United States and internationally. The accompanying consolidated
financial statements and related notes have been prepared in accordance
with generally accepted accounting principles for interim financial
reporting and the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. In the opinion of management, all adjustments
(consisting of only normal recurring accruals) considered necessary for
fair presentation of financial position, results of operations and cash
flows have been included. These consolidated financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-KSB for the
Year Ended December 31, 1995.
2. INCOME TAXES
The Company has not recorded an income tax benefit for the three months
ended March 31, 1996, because of limitations on recognizing the
benefits of available net operating loss ("NOL") carryforwards. The
provision for income taxes of $337,000 for the three months ended March
31, 1995, consists of estimated alternative minimum tax ("AMT") of
$70,000, due to limitations on the utilization of NOLs for AMT
purposes, a provision and corresponding reduction in the deferred tax
valuation allowance of $167,000 related to the anticipated utilization
of NOLs not acquired in the Alpine business combination, and a
provision of $267,000 for the anticipated utilization of a portion of
the NOLs acquired in the Alpine business combination. The reversal of
that portion of the valuation allowance corresponding to the acquired
NOLs is required to be recorded as a reduction to the carrying amount
of goodwill.
3. INCOME (LOSS) PER SHARE
Income (loss) per share for the Company for the three months ended
March 31, 1996 and 1995, is based upon the weighted average number of
common shares outstanding during the period. Outstanding warrants and
options have not been considered in the calculation as their effect
would be antidilutive for both periods.
<PAGE>
4. PRIVATE PLACEMENT
In the first quarter of 1996 the Company completed a private placement
of 1,000,000 shares of its common stock at $1.50 per share. Net
proceeds of the private placement to the Company, after commissions and
direct expenses, were $1,383,165.
5. PROPOSED ACQUISITION OF CASINO
In September 1995 the Company signed a definitive agreement to purchase
substantially all of the assets, and to assume substantially all of the
liabilities, of Gold Creek Associates, LP ("Gold Creek"), the operator
of Womack's Saloon & Gaming Parlor in Cripple Creek, Colorado. The
total purchase price is approximately $13.3 million, consisting of an
anticipated cash payment to Gold Creek of $5 million, a promissory note
of $5 million to be issued to Gold Creek, the assumption of existing
debt of Gold Creek of approximately $2 million, and the payoff of an
existing mortgage of approximately $1.3 million. The cash consideration
is subject to adjustment by the amount of Gold Creek's working capital,
as defined, at closing. Additionally, the agreement provides that two
years after the closing of the transaction, the Company will issue
1,060,000 shares of its common stock, valued at approximately $2
million based on recent trading prices, to two principals of the seller
who will be entering into employment contracts with the Company at
closing. If Womack's Saloon is combined with the Company's Legends
Casino, these adjoining properties would become one of the largest
casinos in the Cripple Creek market, with over 500 gaming devices.
Closing of the transaction is subject to the Company securing
acceptable financing and obtaining required regulatory approvals. As of
March 31, 1996, the Company has made escrow deposits, to be credited
against the purchase price, totaling $400,000, and has incurred
$429,514 of costs related to acquisition and associated financing
efforts. Both the escrow deposits and the deferred acquisition and
financing costs are included in other assets. On April 15, 1996, the
Company and Gold Creek signed an extension to the definitive purchase
agreement which provides for extension of the closing date to no later
than July 1, 1996, or to no later than September 1, 1996, if all
conditions necessary to closing have been satisfied other than receipt
of regulatory approval. The extension agreement also provides that
additional escrow deposits be made under certain circumstances. The
extension agreement further provides that, upon closing, the Company
reimburse Gold Creek for debt principal payments made by Gold Creek for
the period subsequent to May 1, 1996 and through the date of closing,
and provides for adjustment to the number of shares of the Company's
common stock to be issued to two principals of the seller, in certain
circumstances. Upon completion of the transaction, the deferred costs
related to the acquisition will be included in the purchase price
allocation to be amortized over future periods. In the event the
proposed transaction is not consummated, the deferred costs, including
those related to the financing, would be expensed. The definitive
agreement provides for the forfeiture of the deposit to Gold Creek in
certain circumstances. The Company is presently evaluating several
financing alternatives to complete the acquisition of Gold Creek,
including the private placement of debt securities, the issuance of
equity securities, the use of existing working capital, and
combinations thereof. There can be no assurance that the financing can
be completed on terms acceptable to the Company or that the acquisition
will be consummated.
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Three Months Ended March 31, 1996 vs. 1995
Casino revenue increased 42% for the first quarter of 1996 over the year-earlier
period. At the Company's Legends Casino in Cripple Creek, Colorado, casino
revenue increased by 45% as a result of an increase in the average number of
slot machines in service from 149 to 189 and an increase in the average daily
win per machine from $45 to $53. The month of March 1996, typically considered
to be part of the "slow" season, produced Legends' second highest revenue month
in the casino's history. Casino revenue generated from cruise ship operations
was up 21% in 1996 as compared with 1995. The increase is due to the operation
of three cruise ship casinos for the entire quarter in 1996 as compared with two
casinos for the entire quarter in 1995, as well as upgrades to the gaming
equipment. The overall margin from casino activities increased from 47% in 1995
to 61% in 1996 as total casino costs increased only 4%, from $409,842 to
$425,131. Increases in gaming taxes and device fees, resulting from the
additional slot machines and higher gross gaming revenue, were largely offset by
lower payroll, gaming supplies and promotional costs. The reduction of $15,951
in food and beverage revenue for the first quarter of 1996 as compared with the
same period for 1995 is due to management's decision in 1995 to deemphasize the
restaurant operation at Legends. The restaurant operation was scaled back to
offer a moderately-priced, limited menu. As a result, the loss from the
restaurant and bar activities, after promotional allowances, decreased from
$43,298 to $5,934. General and administrative expense decreased by $158,964, or
17%, from the 1995 period to the 1996 period, primarily due to lower payroll
costs associated with the corporate office and lower project development
expenditures. The increase in depreciation and amortization expense from
$300,015 in 1995 to $315,114 in 1996 resulted from the addition of new slot
machines and other capital improvements at Legends Casino subsequent to the
first quarter of 1995, and the depreciation on additional gaming equipment
placed in the cruise ship casinos. The increase was partially offset by the
absence of amortization of deferred costs related to the Company's Indian gaming
management agreement, which was terminated in August 1995. The remaining
deferred costs associated with this agreement are being recovered through
contractual payments from a third party. The decrease in other income, net, is
primarily due to the one-time gain recognized from the termination of the
Company's St. Charles, Louisiana riverboat gaming management agreement in 1995,
for which the Company received a $4 million cash payment.
<PAGE>
Liquidity and Capital Resources
At March 31, 1996, the Company had cash and cash equivalents of $3,021,187, and
an additional $747,588 invested in U.S. treasury notes maturing in May 1996.
Such amounts represent an increase of $987,716 from December 31, 1995. The
increase is primarily attributable to the private placement of 1,000,000 common
shares of the Company's stock at $1.50 per share in January 1996. In September
1995 the Company signed a definitive agreement to purchase substantially all of
the assets, and to assume substantially all of the liabilities, of Gold Creek
Associates, LP ("Gold Creek"), the operator of Womack's Saloon & Gaming Parlor
in Cripple Creek, Colorado. The total purchase price is approximately $13.3
million, consisting of an anticipated cash payment to Gold Creek of $5 million,
a promissory note of $5 million to be issued to Gold Creek, the assumption of
existing debt of Gold Creek of approximately $2 million, and the payoff of an
existing mortgage of approximately $1.3 million. The cash consideration is
subject to adjustment by the amount of Gold Creek's working capital, as defined,
at closing. Additionally, the agreement provides that two years after the
closing of the transaction, the Company will issue 1,060,000 shares of its
common stock, valued at approximately $2 million based on recent trading prices,
to two principals of the seller who will be entering into employment contracts
with the Company at closing. If combined with the Company's Legends Casino,
these adjoining properties would become one of the largest casinos in the
Cripple Creek market, with over 500 gaming devices. Closing of the transaction
is subject to the Company securing acceptable financing and obtaining required
regulatory approvals. On April 15, 1996 the Company and Gold Creek signed an
extension to the definitive purchase agreement which provides for extension of
the closing date to no later than July 1, 1996, or to no later than September 1,
1996, if all conditions necessary to closing have been satisfied other than
receipt of regulatory approval. The extension agreement also provides that
additional escrow deposits be made under certain circumstances. The extension
agreement further provides that, upon closing, the Company reimburse Gold Creek
for debt principal payments made by Gold Creek for the period subsequent to May
1, 1996 and through the date of closing, and provides for adjustment to the
number of shares of the Company's common stock to be issued to two principals of
the seller, in certain circumstances. The Company is presently evaluating
several financing alternatives to complete the acquisition of Gold Creek,
including the private placement of debt securities, the issuance of equity
securities, the use of existing working capital, and combinations thereof. There
can be no assurance that the financing can be completed on terms acceptable to
the Company or that the acquisition will be consummated. The nature, extent and
timing of the Company's pursuit of additional gaming opportunities will be
largely dependent on whether the Gold Creek acquisition is consummated and, if
so, the composition of the financing used to effect the acquisition. The
issuance of debt securities would likely restrict the Company's ability to pay
dividends and incur additional debt and would likely require the Company to
maintain certain financial ratios. Other than the proposed acquisition of Gold
Creek and any further expansion in the Cripple Creek market, both of which are
dependent on additional financing, most of the Company's near-term growth
opportunities are largely discretionary and are not expected to require
significant investment or commitment of the Company's financial resources.
* * * * * * * * * * * * * * * *
<PAGE>
PART II
OTHER INFORMATION
Item 1. - Legal Proceedings
The Company is not a party to, nor is it aware of, any pending or threatened
litigation.
Item 6. - Exhibits and Reports on Form 8-K
No exhibits or reports on Form 8-K were filed during the quarter ended March 31,
1996.
* * * * * * *
SIGNATURES:
Pursuant to the Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
CENTURY CASINOS, INC.
/s/ Brad Dobski
- - ---------------------------
Brad Dobski
Chief Accounting Officer and duly authorized officer
Date: April 26, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
FINANCIAL DATA SCHEDULE
I/A/W Article 5 of Regulation S-X
Three Months Ended MAR-31-1996
</LEGEND>
<CIK> 0000911147
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 3,021,187
<SECURITIES> 747,588
<RECEIVABLES> 340,588
<ALLOWANCES> 0
<INVENTORY> 13,292
<CURRENT-ASSETS> 4,393,039
<PP&E> 5,562,984
<DEPRECIATION> 783,213
<TOTAL-ASSETS> 18,275,316
<CURRENT-LIABILITIES> 1,422,216
<BONDS> 1,690,474
0
0
<COMMON> 117,897
<OTHER-SE> 15,044,729
<TOTAL-LIABILITY-AND-EQUITY> 18,275,316
<SALES> 1,133,861
<TOTAL-REVENUES> 1,133,861
<CGS> 0
<TOTAL-COSTS> 445,551
<OTHER-EXPENSES> 1,079,306
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43,530
<INCOME-PRETAX> (380,295)
<INCOME-TAX> 0
<INCOME-CONTINUING> (380,295)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (380,295)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
