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,
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 October 23, 1996:
15,861,885
1
<PAGE>
CENTURY CASINOS, INC.
FORM 10-QSB
INDEX
Page Number
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheet as of September 30, 1996.................... 3
Consolidated Statements of Operations for the Three.............. 4
Months Ended September 30, 1996 and 1995
Consolidated Statements of Operations for the Nine..................... 5
Months Ended September 30, 1996 and 1995
Consolidated Condensed Statements of Cash Flows for.................... 6
the Nine Months Ended September 30, 1996 and 1995
Notes to Consolidated Financial Statements............................. 7
Item 2. Management's Discussion and Analysis................................ 11
PART II OTHER INFORMATION................................................... 15
SIGNATURES
2
<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (Unaudited)
September 30,
1996
----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ............................. $ 4,967,092
Prepaid expenses and other ............................ 965,704
------------
Total current assets .............................. 5,932,796
PROPERTY AND EQUIPMENT, net .............................. 12,243,800
GOODWILL, net ............................................ 14,224,714
OTHER ASSETS ............................................. 1,857,190
------------
TOTAL .................................................... $ 34,258,500
============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt ................... $ 1,702,978
Accounts payable and accrued expenses ................. 1,782,845
------------
Total current liabilities ........................ 3,485,823
LONG-TERM DEBT, less current portion ..................... 9,065,984
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; 15,861,885 shares issued and outstanding 158,619
Additional paid-in capital ............................ 24,816,220
Foreign currency translation adjustment ............... (11,799)
Accumulated deficit ................................... (3,256,347)
------------
Total shareholders' equity ........................ 21,706,693
------------
TOTAL .................................................... $ 34,258,500
============
See notes to consolidated financial statements
3
<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended September 30,
1996 1995
---- ----
OPERATING REVENUE:
Casino ............................... $ 4,919,753 $ 1,266,592
Food and beverage .................... 252,457 83,877
Hotel ................................ 16,101
Other ................................ 169,637 26,717
----------- -----------
5,357,948 1,377,186
Less promotional allowances .......... (180,643) (54,464)
----------- -----------
Net operating revenue ........ 5,177,305 1,322,722
----------- -----------
OPERATING COSTS AND EXPENSES:
Casino ............................... 1,716,166 586,234
Food and beverage .................... 207,133 47,111
Hotel ................................ 4,826
General and administrative ........... 1,269,070 774,037
Depreciation and amortization ........ 642,599 324,516
----------- -----------
Total operating costs and expenses 3,839,794 1,731,898
----------- -----------
INCOME (LOSS) FROM OPERATIONS ........... 1,337,511 (409,176)
OTHER EXPENSE, net ...................... (304,864) (118,719)
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES ....... 1,032,647 (527,895)
PROVISION FOR INCOME TAXES .............. 17,000
----------- -----------
NET INCOME (LOSS) ....................... $ 1,015,647 $ (527,895)
=========== ===========
INCOME (LOSS) PER SHARE ................. $ 0.06 $ (0.05)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING ......................... 16,921,885 10,789,652
=========== ===========
See notes to consolidated financial statements.
4
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CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Nine Months Ended
September 30,
1996 1995
---- ----
OPERATING REVENUE:
Casino ........................................ $ 7,229,952 $ 2,897,861
Food and beverage ............................. 362,262 247,112
Hotel ......................................... 16,101
Other ......................................... 209,078 67,691
----------- -----------
7,817,393 3,212,664
Less promotional allowances ................... (272,982) (136,623)
----------- -----------
Net operating revenue ................. 7,544,411 3,076,041
----------- -----------
OPERATING COSTS AND EXPENSES:
Casino ........................................ 2,643,762 1,546,728
Food and beverage ............................. 232,392 208,975
Hotel ......................................... 4,826
General and administrative .................... 2,685,151 2,505,944
Depreciation and amortization ................. 1,283,305 938,141
----------- -----------
Total operating costs and expenses ........ 6,849,436 5,199,788
----------- -----------
INCOME (LOSS) FROM OPERATIONS .................... 694,975 (2,123,747)
OTHER INCOME (EXPENSE), net ...................... (762,323) 3,723,438
----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES ................ (67,348) 1,599,691
PROVISION FOR INCOME TAXES ....................... 17,000 337,000
----------- -----------
NET INCOME (LOSS) ................................ $ (84,348) $ 1,262,691
=========== ===========
INCOME (LOSS) PER SHARE .......................... $ (0.01) $ 0.12
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING .................................. 13,248,905 10,364,852
=========== ===========
See notes to consolidated financial statements.
5
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CENTURY CASINOS, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
1996 1995
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATIONS ......... $ 2,115,793 $(1,175,039)
----------- -----------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES (4,950,454) 1,611,832
----------- -----------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES ......... 5,768,282 1,830,320
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS ............... 2,933,621 2,267,113
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD ....................................... 2,033,471 950,024
----------- -----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD ....................................... $ 4,967,092 $ 3,217,137
=========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Equipment acquired through long-term financing .... $ 355,615 $ 398,352
Acquisition of nonoperating casino for note payable $ 700,000
</TABLE>
Refer to Note 2 for details of noncash transactions related to the Gold
Creek acquisition.
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid by the Company was $194,621 and $105,937 for the nine months
ended September 30, 1996 and 1995.
Income taxes paid by the Company were $9,800 and $0 for the nine months
ended September 30, 1996 and 1995.
See notes to consolidated financial statements.
6
<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Century Casinos, Inc. and subsidiaries (the "Company") own and operate a
limited-stakes gaming casino in Cripple Creek, Colorado, act as
concessionaire of two small casinos on cruise ships, and are pursuing a
number of additional gaming opportunities throughout the United States and
internationally. Prior to July 1, 1996, the Company's operations in Cripple
Creek, Colorado, consisted of Legends Casino, which the Company acquired on
March 31, 1994, through a merger with Alpine Gaming, Inc. ("Alpine"). On
July 1, 1996, the Company acquired the net assets of Gold Creek Associates,
L.P. ("Gold Creek"), the owner of Womack's Saloon & Gaming Parlor
("Womacks"), which is immediately adjacent to Legends Casino (see Note 2).
Following the Company's acquisition of Womacks, interior renovations were
undertaken on both properties to facilitate the operation and marketing of
the combined properties as one casino under the name Womacks. The
accompanying financial statements include the results of operations of
Womacks only for the period subsequent to June 30, 1996.
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. ACQUISITION OF WOMACKS AND RELATED FINANCING
On July 1, 1996, the Company purchased substantially all of the assets, and
assumed substantially all of the liabilities, of Gold Creek, the owner of
Womacks in Cripple Creek, Colorado. The total purchase price was
approximately $13.5 million, consisting of a base cash payment of $5
million plus $320,000 for the amount of estimated working capital as of the
closing date, a promissory note of $5.2 million issued to Gold Creek and
the assumption of existing debt of Gold Creek of approximately $3 million.
The working capital portion of the purchase price is subject to final
determination, which is expected in the fourth quarter of 1996.
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 $1.8 million based on recent trading prices, to two
principals of the seller who entered into consulting contracts with the
Company at closing. The number of shares to be issued is subject to upward
adjustment, determined by a formula, to the extent that the trading price
of the Company's stock is less than $1.58 at the time of issuance, and
subject to downward adjustment to the extent that the trading price exceeds
$4.00.
The promissory note issued to Gold Creek bears interest at 9% and provides
for monthly payments of only interest for 18 months; thereafter, monthly
principal payments of $43,121, plus interest on the unpaid principal, are
required, with a final balloon principal payment of $2,328,000 due July
2003. The note is secured by substantially all of the tangible assets
purchased, subject to existing encumbrances, and the Company is required to
meet certain financial covenants. The Company is also restricted from
paying dividends until the note has been paid in full.
7
<PAGE>
In addition to the financing provided by Gold Creek, additional funds
required to complete the acquisition were raised through private sales of
4,072,233 shares of the Company's common stock at an average price of $1.43
per share, with proceeds, net of selling commissions, of approximately
$4,552,000. In connection with sales of common stock by a placement agent,
the Company issued warrants to the placement agent to purchase 150,000
shares of its common stock at $2.36 per share. The warrants have a term of
5 years.
The Company also issued on May 30, 1996, a convertible debenture in the
principal amount of $500,000 to a private investor. The debenture bears
interest at 10.5%, payable quarterly. The holder has the option to convert,
in one or more transactions, all or a portion of the outstanding principal
into the Company's common stock at $1.84 per share, subject to a minimum
per conversion transaction of $50,000. The Company has the option to prepay
the debenture, in whole or in part, after the first anniversary date at
132% of the outstanding principal. The prepayment amount declines to 127%
after the second anniversary date, 122% after the third anniversary date
and 116% after the fourth anniversary date. The entire unpaid principal is
due on May 30, 2001.
In anticipation of completing the Gold Creek acquisition and to facilitate
certain legal requirements, the Company purchased in May 1996, from an
unaffiliated third party, a 9% first mortgage note on the Womacks casino
property for $1,337,500. The principal amount of the note, the obligation
for which was assumed by the Company in the Gold Creek acquisition, was
$1,248,000 at the date of purchase by the Company. In September 1996 the
Company sold the note to a commercial bank for net proceeds of $1,231,000.
The premium of $89,500 previously paid by the Company to purchase the note
was charged to operations in the third quarter of 1996. The Company remains
obligated under the original terms of the note, which matures in July 1999.
The Company has accounted for the Gold Creek acquisition using the purchase
method of accounting, whereby the total purchase price, including direct
out-of-pocket costs of the acquisition, has been allocated to identifiable
assets acquired and liabilities assumed based on their estimated fair
market value. The excess of the purchase price over the fair value of
identifiable net assets ("goodwill") will be amortized to expense ratably
over 15 years.
The Company's preliminary allocation of purchase price and direct costs of
the acquisition is as follows:
Cash ................. $ 304,815
Other current assets . 214,154
Property and equipment 6,924,678
Goodwill ............. 8,810,389
Current liabilities .. (238,850)
Long-term debt ....... (2,969,622)
------------
$ 13,045,564
============
8
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3. INCOME TAXES
The provision for income taxes for the three-month and nine-month periods
ended September 30, 1996, and for the nine-month period ended September 30,
1995 consists principally of estimated alternative minimum tax ("AMT") due
to limitations on the utilization of net operating loss carryforwards
("NOLs") for AMT purposes and the anticipated utilization of a portion of
the NOLs acquired in the Alpine business combination. The provision for
income taxes is based on estimated full-year income or loss for financial
reporting purposes adjusted for permanent differences, which comprise
primarily nondeductible goodwill resulting from the Alpine business
combination.
4. INCOME (LOSS) PER SHARE
Income (loss) per share for the Company for the three-month and nine-month
periods ended September 30, 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 all periods. Shares which the Company is
obligated to issue on July 1, 1998, in connection with the Gold Creek
acquisition consummated on July 1, 1996 (see Note 2), are considered common
stock equivalents and are included in the calculation of weighted average
number of shares for the three-month period ended September 30, 1996; such
shares have not been included in the calculation of weighted average number
of shares for the nine-month period ended September 30, 1996 as their
effect would be antidilutive.
5. PRIVATE PLACEMENT
In addition to the sales of common stock in the second quarter of 1996 to
finance the Gold Creek acquisition, the Company, in the first quarter of
1996, 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.
9
<PAGE>
6. SUPPLEMENTAL FINANCIAL INFORMATION
Pro forma results of operations for the nine-month periods ended September
30, 1996 and 1995, as if the acquisition of Gold Creek (see Note 2) had
occurred at the beginning of such periods, are as follows:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Casino revenue ........................................... $ 13,401,000 $ 9,697,000
Other operating revenue .................................. 454,000 355,000
Operating costs and expenses ............................. (9,761,000) (9,615,000)
Depreciation and amortization ............................ (1,872,000) (1,769,000)
Other income (expense), net .............................. (1,230,000) 3,127,000
------------ ------------
Income before income taxes ............................... 992,000 1,795,000
Provision for income taxes ............................... (318,000) (312,000)
============ ============
Net income ............................................... $ 674,000 $ 1,483,000
============ ============
Income per share ......................................... $ 0.04 $ 0.10
============ ============
</TABLE>
The above pro forma financial information reflects the combined historical
financial information of the Company and Gold Creek, as adjusted for additional
interest expense resulting from certain financing transactions associated with
the acquisition, as well as additional depreciation and amortization charges
resulting from application of purchase accounting to the net assets acquired.
Other income, net, for 1995 includes a nonrecurring gain of $3,928,000 from the
termination of a riverboat management contract. Income (loss) per share assumes
that all common stock outstanding after the acquisition, including shares the
Company is obligated to issue to two principals of Gold Creek's general partner
two years following the acquisition, had been outstanding for each of the
nine-month periods. The increase in the pro forma effective tax rate from 17% in
1995 to 32% in 1996 results from the assumed use of available NOLs, which would
be completely utilized on a pro forma basis at the end of 1996. (For historical
financial reporting purposes, however, the Company expects to have NOLs
available for utilization beyond 1996.) The foregoing pro forma financial
information is not necessarily indicative of results that would have been
achieved had the acquisition occurred at the beginning of either period, nor is
the pro forma information indicative of future operating results of the Company
subsequent to July 1, 1996, the date of the acquisition.
10
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
As discussed more fully in Note 2 to the financial statements, on July 1, 1996,
the Company acquired the assets of Gold Creek Associates, L.P. ("Gold Creek"),
owner of Womack's Saloon & Gaming Parlor in Cripple Creek, Colorado. The
accompanying financial statements include the results of operations of Womacks
only for the period subsequent to June 30, 1996. Accordingly, results for the
three and nine months ended September 30, 1996, cannot be readily compared with
results for the respective periods for 1995.
Three Months Ended September 30, 1996 vs. 1995
Casino revenue was $4,920,000 in the third quarter of 1996, an increase of 288%
from the third quarter of 1995, principally due to the Gold Creek acquisition on
July 1, 1996. On a pro forma basis, casino revenue for Womacks (the combined
Cripple Creek properties) increased 17% despite the fact that extensive interior
renovations undertaken immediately following the acquisition reduced customer
traffic and necessitated closing a portion of the casino for four days during
the quarter. Management believes that revenue growth will be further enhanced as
a result of the full integration of Womacks' player tracking system throughout
the entire property, which will be completed in the fourth quarter of 1996.
Revenue from the cruise ship casinos also exhibited strong growth over the prior
year period, increasing to $152,000 in 1996 from $84,000 in 1995, as both the
Silver Cloud and the Silver Wind have become firmly established in the luxury
cruise market. The increase in the gross margin from casino activities to 65% in
1996 as compared with 54% in 1995 is illustrative of the synergies already being
realized in the Company's combined Cripple Creek operations.
Food and beverage revenue in the 1996 period consists of sales from Womacks'
five bars and a full-service restaurant, whereas in 1995 the Company's Legends
casino operated one bar and a limited-menu restaurant. Restaurant and bar
operations are considered to be primarily an accommodation to casino players and
are not expected to generate profits. Food and beverage costs exclude the
estimated cost of promotional allowances provided to customers; such costs are
included in casino costs. Hotel revenue is generated from nine rooms. Other
revenue consists primarily of parking revenue from parking lots operated by
Womacks. In the third quarter of 1996, the Company also received a one-time
payment of $66,000 from a consulting project in South Africa.
Although general and administrative expense increased from $774,000 to
$1,269,000 from the 1995 period to the 1996 period, it represents a decrease as
a percentage of operating revenue from 59% to 25%. Increased costs resulting
from the operation of the combined Cripple Creek properties in the current year,
including nonrecurring costs of integrating the two Cripple Creek properties,
were partially offset by a reduction in professional fees, as well as the
absence of costs associated with gaming development activities in Indiana and
the People's Republic of China, which were divested in the fourth quarter of
1995. The year over year increase in depreciation and amortization resulted
primarily from the acquisition of Gold Creek's assets and the associated
goodwill recognized in the transaction.
11
<PAGE>
Other expense, net, for the third quarter of 1996 included interest expense of
$244,000; interest income of $43,000; and the writeoff of costs of $98,000
associated with the sale to a third party of a mortgage note receivable. For the
comparable period in 1995, other expense, net, included interest expense of
$61,000; interest income of $56,000; loss on disposal of fixed assets of
$66,000; and equity in the loss of the China joint venture of $45,000. The
increase in interest expense from 1995 to 1996 is principally related to debt
assumed in the Gold Creek acquisition and a promissory note issued to Gold Creek
to finance the acquisition.
Nine Months Ended September 30, 1996 vs. 1995
Casino revenue increased by 149% to $7,230,000 in 1996 compared to the prior
year. In the Cripple Creek market alone, the Company's casino revenue, prior to
the Gold Creek acquisition, increased by 42% for the first six months of 1996
versus 1995, with the third quarter of 1996 reflecting the revenue of the
combined Cripple Creek properties. On a pro forma basis for the comparable
nine-month periods, casino revenue for these properties increased by 35.0% year
over year, far surpassing the Cripple Creek market growth of 12.1%. The Company,
on a pro forma basis, captured 16.1% of the Cripple Creek market for the first
nine months of 1996 versus 13.1% for the comparable period in 1995. Casino
revenue from cruise ship activities increased to $410,000 in the current year
from $263,000 in 1995, an improvement of 56%. Company-wide casino margin
improved from 47% to 63%, reflecting relatively lower marketing and promotion
expense through the first six months of 1996, partially offset by higher gaming
taxes and device fees associated with the revenue increase.
The increase in food and beverage revenue reflects the additional revenue
resulting from the Gold Creek acquisition, partially offset by the gradual
scaling back and discontinuation of the Company's Legends restaurant operation
during the first half of 1996 in anticipation of completing the Gold Creek
acquisition. Other revenue consists primarily of parking revenue from parking
lots operated by Womacks. In the third quarter of 1996, the Company also
received a one-time payment of $66,000 from a consulting project in South
Africa.
General and administrative expense was $2,685,000 in 1996 as compared with
$2,506,000 in 1995, which, as a percentage of operating revenue, represents a
decrease from 81% to 36%. The increased costs resulting from the operation of
the combined Cripple Creek properties in the third quarter of 1996, including
nonrecurring costs of integrating the two Cripple Creek properties, were
partially offset by a reduction in professional fees, as well as the absence of
costs associated with gaming development activities in Indiana, Louisiana and
the People's Republic of China. Depreciation and amortization increased
primarily due to the Gold Creek acquisition and, to a lesser extent, as a result
of the Company increasing the number of gaming devices at Legends during the
first six months of 1996.
Other expense, net, for the nine months ended September 30, 1996 included
interest expense of $341,000; interest income of $143,000; the writeoff of
previously deferred debt offering costs of $314,000; loss on disposal of fixed
assets of $154,000; and the writeoff of costs of $98,000 associated with the
sale to a third party of a mortgage note receivable. Other income, net, for the
year-earlier period included interest expense of $143,000; interest income of
$149,000; gain on the termination of a riverboat management contract of
$3,928,000; loss on disposal of fixed assets of $67,000; and equity in the loss
of the China joint venture of $123,000.
12
<PAGE>
Liquidity and Capital Resources
At September 30, 1996, the Company had cash and cash equivalents of $4,967,000,
an increase of $2,934,000 from the beginning of the year, and had net working
capital of $2,464,000. The net increase in cash for the nine-month period is
primarily attributable to cash generated from operations of $2,116,000 and
$5,857,000 received from private placements of common stock, less the cash
outlay for the Gold Creek acquisition of $5,309,000 (exclusive of escrow
deposits and out-of-pocket costs paid in 1995). The Company has made additional
cash capital expenditures of $926,000 so far in 1996, the majority of which
relate to remodeling and upgrading the combined Womacks' properties following
the Gold Creek acquisition. The acquisition of additional slot machines and the
expansion of Womacks' player tracking to the entire property, totaling $356,000,
were obtained through vendor financing over one to two years. Additional
expenditures are planned in the fourth quarter of 1996 to further expand and
enhance the gaming area on the second floor of Womacks and to provide expanded
banquet facilities. The Company received cash payments from a third party of
$638,000 for the nine months ended September 30, 1996, in connection with the
previous assignment of the Company's Soboba casino management contract.
The Company will continue to focus on further improving the profitability of
Womacks through development of new marketing programs and by expanding the
choice of gaming devices and table games available to its customers. In
addition, management is exploring a number of additional gaming projects. The
Company has executed a casino management consulting agreement with Rhodes
Casino, S.A., a consortium including Playboy Enterprises, under which the
Company, as an independent contractor, will supply services and assistance in
establishing a casino on the island of Rhodes, Greece. The consortium has been
awarded the exclusive license for casino gaming on Rhodes for a 12-year period.
The new casino is expected to open in mid-to-late 1997. The agreement provides
for fees to the Company of $200,000 for services to be rendered in the
pre-opening phase, $300,000 per year during the first three years of operation
and $50,000 per year thereafter. The Company is not required to commit any
capital in connection with the proposed activities under the agreement.
The Company has entered into agreements with various parties in South Africa for
the purpose of providing casino management services should the Company's
partners be awarded one or more gaming licenses. Certain of these arrangements
may provide the opportunity for, or may require, equity investments to be made
by the Company. Recently enacted gaming legislation provides for the award of up
to 40 gaming licenses throughout South Africa, which has a population in excess
of 40 million. The first application has been filed by the Company's partners
for a hotel/casino development project close to the world-famous Kruger National
Park, a popular tourist destination. This application has been placed on the
short list of finalists by the local gaming authority. The Company has not yet
received an indication of when a final decision is expected on this first
application, nor can the Company reasonably estimate the timetable for filing
applications in additional jurisdictions or whether licenses will ultimately be
awarded to the Company's partners.
The Company has entered into an agreement with a New York-based corporation for
the operation of cruise ship casinos in the event that the corporation is
successful in completing an acquisition of certain cruise ship operations. The
Company cannot predict the likelihood of the corporation completing its pending
acquisition.
The Company is awaiting a decision from the Louisiana gaming licensing
authorities on its pending license application for a casino development project
in Alexandria, Louisiana. The Company cannot predict when a decision will be
made. In the event that a license is awarded, and the project is successfully
financed and completed, the Company would manage the casino operation pursuant
to a previously executed contract.
13
<PAGE>
In December 1995 the Company sold its 80% interest in a riverboat gaming
development project in Indiana to an affiliate of Hilton Gaming Corporation and
Boomtown, Inc. The purchaser has a license application pending with the Indiana
Gaming Commission. Should this license be granted, the Company, pursuant to its
agreement with the purchaser, will be entitled to receive an immediate payment
of approximately $400,000, and additional payments aggregating approximately $3
million commencing with groundbreaking for the project. The Company cannot
predict whether a license will be awarded for this project or, if awarded, when
the Company would receive the remaining payments under its contract.
Management believes that its present cash position and anticipated cash flow
from Womacks will provide adequate liquidity to meet the Company's debt service
and financial covenant requirements, to fund contemplated capital expenditures
and to pursue near-term gaming development opportunities as summarized in the
foregoing discussion.
14
<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
On July 16, 1996, the Company filed a Form 8-K, including exhibits, dated July
1, 1996, pursuant to Item 2 of the Form 8-K requirements, with respect to the
Company's acquisition of the assets of Gold Creek Associates, L.P. The following
financial statements were filed with such Form 8-K: (i) Gold Creek Associates,
L.P. (a Limited Partnership) Financial Statements as of and for the Two Years in
the Period Ended December 31, 1995 and Independent Auditors' Report thereon;
(ii) Gold Creek Associates, L.P. (a Limited Partnership) Unaudited Balance Sheet
as of March 31, 1996, Unaudited Income Statements for the Three Months Ended
March 31, 1996 and 1995, and Unaudited Condensed Statements of Cash Flows for
the Three Months Ended March 31, 1996 and 1995; (iii) Century Casinos, Inc.
Unaudited Pro Forma Combined Balance Sheet as of March 31, 1996, Unaudited Pro
Forma Combined Income Statement for the Three Months Ended March 31, 1996, and
Unaudited Pro Forma Combined Income Statement for the Year Ended December 31,
1995.
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: October 28, 1996
15
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