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.
_______ 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.)
200-220 E. Bennett Ave., Cripple Creek, Colorado 80813
---------------------------------------------------------
(Address of principal executive offices)
(719) 689-9100
---------------
(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 August 2, 2000:
14,128,101
1
<PAGE>
CENTURY CASINOS, INC.
FORM 10-QSB
INDEX
Page Number
-----------
PART I FINANCIAL INFORMATION
Item 1. Condensed Financial Statements (unaudited) 3
Condensed Consolidated Balance Sheet as of
June 30, 2000
Condensed Consolidated Statements of Income 4
for the Three Months Ended June 30,
2000 and 1999
Condensed Consolidated Statements of 5
Income for the Six Months Ended June 30,
2000 and 1999
Condensed Consolidated Statements of 6
Comprehensive Income for the Three and Six
Months Ended June 30, 2000 and 1999
Condensed Consolidated Statements of 7
Cash Flows for the Six Months Ended June 30,
2000 and 1999
Notes to Condensed Consolidated Financial 8
Statements
Item 2. Management's Discussion and Analysis 13
PART II OTHER INFORMATION 16
SIGNATURES 17
2
<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
----------------------------------------------------
<TABLE>
<CAPTION>
June 30, 2000
---------------
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,523,000
Accounts receivable 889,000
Prepaid expenses and other 687,000
---------------
Total current assets 5,099,000
PROPERTY AND EQUIPMENT, NET 26,132,000
GOODWILL, NET 9,245,000
OTHER ASSETS 3,038,000
---------------
TOTAL $ 43,514,000
===============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 775,000
Accounts payable and accrued expenses 2,593,000
---------------
Total current liabilities 3,368,000
---------------
LONG-TERM DEBT, LESS CURRENT PORTION 16,878,000
---------------
MINORITY INTEREST 1,503,000
---------------
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;
14,373,801 shares issued; 14,200,801 shares outstanding 144,000
Additional paid-in capital 21,764,000
Accumulated other comprehensive loss - foreign currency translation (352,000)
Retained earnings 514,000
---------------
22,070,000
Treasury stock; 173,000 shares (305,000)
---------------
Total shareholders' equity 21,765,000
---------------
TOTAL $ 43,514,000
===============
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-----------------------------------
2000 1999
---- ----
<S> <C> <C>
OPERATING REVENUE:
Casino $ 5,951,000 $ 5,413,000
Food and beverage 315,000 209,000
Hotel 56,000 40,000
Other 64,000 37,000
-------------- -------------
6,386,000 5,699,000
Less promotional allowances 174,000 147,000
-------------- -------------
Net operating revenue 6,212,000 5,552,000
-------------- -------------
OPERATING COSTS AND EXPENSES:
Casino 2,250,000 2,261,000
Food and beverage 144,000 124,000
Hotel 49,000 53,000
General and administrative 1,785,000 1,496,000
Depreciation and amortization 932,000 797,000
-------------- -------------
Total operating costs and expenses 5,160,000 4,731,000
-------------- -------------
INCOME FROM OPERATIONS 1,052,000 821,000
Other income (expense), net (288,000) (306,000)
-------------- -------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 764,000 515,000
Provision for income taxes 399,000 244,000
-------------- -------------
INCOME BEFORE MINORITY INTEREST 365,000 271,000
Minority interest in subsidiary 31,000
(earnings) losses -------------- -------------
NET INCOME $ 396,000 $ 271,000
============== =============
EARNINGS PER SHARE:
Basic $ 0.03 $ 0.02
============== =============
Diluted $ 0.03 $ 0.02
============== =============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
2000 1999
---- ----
<S> <C> <C>
OPERATING REVENUE:
Casino $ 11,609,000 $ 10,499,000
Food and beverage 543,000 420,000
Hotel 76,000 78,000
Other 158,000 55,000
------------ -------------
12,386,000 11,052,000
Less promotional allowances 340,000 307,000
------------ -------------
Net operating revenue 12,046,000 10,745,000
------------ -------------
OPERATING COSTS AND EXPENSES:
Casino 4,472,000 4,384,000
Food and beverage 243,000 238,000
Hotel 63,000 103,000
General and administrative 3,817,000 2,956,000
Depreciation and amortization 1,796,000 1,599,000
------------ -------------
Total operating costs and expenses 10,391,000 9,280,000
------------ -------------
INCOME FROM OPERATIONS 1,655,000 1,465,000
Other income (expense), net 861,000 (577,000)
------------ -------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 2,516,000 888,000
Provision for income taxes 1,172,000 427,000
------------ -------------
INCOME BEFORE MINORITY INTEREST 1,344,000 461,000
Minority interest in subsidiary 31,000
(earnings) losses ------------ -------------
NET INCOME $ 1,375,000 $ 461,000
============ =============
EARNINGS PER SHARE:
Basic $ 0.10 $ 0.03
============ =============
Diluted $ 0.09 $ 0.03
============ =============
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-----------------------------------
2000 1999
---- ----
<S> <C> <C>
NET INCOME $ 396,000 $ 271,000
Foreign currency translation adjustments (294,000) (19,000)
------------ ------------
COMPREHENSIVE INCOME $ 102,000 $ 252,000
============ ============
For the Six Months Ended June 30,
---------------------------------
2000 1999
---- ----
NET INCOME $ 1,375,000 $ 461,000
Foreign currency translation adjustments (320,000) (30,000)
------------ ------------
COMPREHENSIVE INCOME $ 1,055,000 $ 431,000
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
-----------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
---------------------------------
2000 1999
---- ----
<S> <C> <C>
Cash provided by operating activities $ 1,474,000 $ 1,364,000
Cash used in investing activities (4,496,000) (372,000)
Cash provided by (used in) financing activities 4,037,000 (1,156,000)
------------ -------------
Increase (Decrease) in cash and cash equivalents 1,015,000 (164,000)
Cash and cash equivalents at beginning of period. 2,508,000 2,175,000
------------ -------------
Cash and cash equivalents at end of period $ 3,523,000 $ 2,011,000
============ =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 432,000 $ 360,000
Cash paid for income taxes 910,000 492,000
</TABLE>
NON-CASH INVESTING AND FINANCING ACTIVITIES:
In connection with the Company's acquisition of CCBC (see Note 4), the minority
shareholder contributed fixed assets valued at $3,836,000 in exchange for a note
payable to the minority shareholder of $2,302,000 and an equity interest of
$1,534,000.
See notes to condensed consolidated financial statements.
7
<PAGE>
CENTURY CASINOS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
----------------------------------------------------------------------
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Century Casinos, Inc. and subsidiaries (the "Company") is an international
gaming company which owns and operates a limited-stakes gaming casino in
Cripple Creek, Colorado, manages a casino within a hotel located in
Prague, Czech Republic, owns 50% of, is developing, and plans to manage
a hotel and casino resort in Caledon, South Africa, and serves as
concessionaire of small casinos on luxury cruise vessels. The Company
regularly pursues additional gaming opportunities internationally and in
the United States.
The Company's operations in Cripple Creek, Colorado began with the
1994 acquisition of Legends Casino ("Legends"), followed by the 1996
acquisition of Womack's Saloon & Gaming Parlor ("Womacks"), which is
immediately adjacent to Legends. Following the 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/Legends Casino.
In July 1999, the Company began providing management services and leasing
gaming equipment to the Casino Millennium, located in the five-star
Marriott Hotel in Prague, Czech Republic. In January 2000, the Company
entered into a memorandum of agreement to acquire a 50% ownership
interest in Casino Millennium.
In April 2000, the Company's South African subsidiary acquired a 50%
equity interest in Caledon Casino Bid Company (Pty) Limited ("CCBC").
CCBC owns a 100-room resort hotel and spa and approximately 600 acres of
land in Caledon, South Africa and was recently awarded a casino license
for the project. The Company has a long-term agreement to manage the
operations of the casino, which are expected to begin in the fourth
quarter of 2000.
In May 2000, the Company entered into a five-year agreement to
serve as concessionaire of small casinos providing unlimited-stakes gaming
operations on four luxury cruise vessels. The Company will operate the
casinos for its own account and pay concession fees based on passenger
count and gross gaming revenue. Operations are expected to begin late
in the third quarter. As of June 30, 2000, the Company has not recognized
any earnings from this agreement.
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 condensed 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, 1999.
8
<PAGE>
2. INCOME TAXES
The income tax provisions are based on estimated full-year income for
financial reporting purposes adjusted for permanent differences, which
consist primarily of nondeductible goodwill amortization resulting
from the Legends acquisition.
3. EARNINGS PER SHARE
Basic and diluted earnings per share for the three months ended June 30,
2000 and 1999 were computed as follows:
For the Three Months Ended June 30,
-----------------------------------
2000 1999
---- ----
Basic Earnings Per Share:
Net income $ 396,000 $ 271,000
============ =============
Weighted average common shares 14,318,779 14,659,785
============ =============
Basic earnings per share $ 0.03 $ 0.02
============ =============
Diluted Earnings Per Share:
Net income, as reported $ 396,000 $ 271,000
Interest expense, net of income 8,000
taxes, on convertible debenture ------------ -------------
Net income available to common $ 404,000 $ 271,000
shareholders ============ =============
Weighted average common shares 14,318,779 14,659,785
Effect of dilutive securities:
Convertible debenture 271,739
Stock options and warrants 752,521 276,504
------------ -------------
Dilutive potential common shares 15,343,039 14,936,289
============ =============
Diluted earnings per share $ 0.03 $ 0.02
============ =============
Excluded from computation of diluted
earnings per share due to
antidilutive effect:
Options and warrants to purchase 535,000 3,977,400
common shares
Weighted average exercise price $ 2.43 $ 1.90
9
<PAGE>
Basic and diluted earnings per share for the six months ended June 30,
2000 and 1999 were computed as follows:
For the Six Months Ended June 30,
---------------------------------
2000 1999
---- ----
Basic Earnings Per Share:
Net income $ 1,375,000 $ 461,000
============ ==============
Weighted average common shares 14,399,342 14,663,535
============ ==============
Basic earnings per share $ 0.10 $ 0.03
============ ==============
Diluted Earnings Per Share:
Net income, as reported $ 1,375,000 $ 461,000
Interest expense, net of income 16,000
taxes, on convertible debenture ------------ --------------
Net income available to common $ 1,391,000 $ 461,000
shareholders ============ ==============
Weighted average common shares 14,399,342 14,663,535
Effect of dilutive securities:
Convertible debenture 271,739
Stock options and warrants 440,414 219,909
------------ --------------
Dilutive potential common shares 15,111,495 14,883,444
============ ==============
Diluted earnings per share $ 0.09 $ 0.03
============ ==============
Excluded from computation of diluted
earnings per share due to
antidilutive effect:
Options and warrants to purchase 565,000 4,048,828
common shares 565,000
Weighted average exercise price $ 2.39 $ 1.89
The convertible debenture would have had an antidilutive effect for the
three months and six months ended June 30, 1999 and, therefore, was
excluded from the diluted earnings per share calculation.
4. CALEDON, SOUTH AFRICA
On April 13, 2000, the Caledon Casino Bid Company (Pty) Limited ("CCBC")
was awarded a gaming license for a casino at a 100-room resort hotel and
spa in Caledon, province of the Western Cape, South Africa. On April
17, 2000, the Company's South African subsidiary, Century Casinos Africa
(Pty) Ltd ("CCA"), acquired a 50% equity interest in CCBC. In March
2000, in anticipation of the award of the final license, the
Company borrowed approximately $4.0 million under its revolving credit
facility and, in April 2000, the Company (through CCA) made its equity
investment of approximately $1,534,000 in and a loan of approximately
$2,302,000 to CCBC. In a concurrent transaction, another 50% investor
contributed and sold fixed assets to CCBC in exchange for a 50% equity
investment of approximately
10
<PAGE>
$1,534,000 and a loan payable of approximately $2,302,000. The
acquisition of CCBC by the Company and the other investor has been recorded
using the purchase method of accounting.
In April 2000, CCBC entered into a loan agreement with PSG Investment Bank
Limited ("PSGIB"), which agreement provides for a principal loan of
approximately $6,200,000 to fund development of the Caledon project
and a working capital facility of approximately $2,100,000. CCBC is
required to make principal payments beginning January 2002 and
continuing over a five-year period. Outstanding borrowings bear
interest at the bank's base rate plus 2.75-3.75%. The shareholders of
CCBC have pledged all of the ordinary shares held by them in CCBC to PSGIB
as collateral. As of June 30, 2000, no advances have been made against
the loan agreement.
In December 1999, the Company entered into a ten-year casino management
agreement with CCBC, which agreement may be extended at the Company's option
for multiple ten-year periods. The Company will earn management fees
based on percentages of annual gaming revenue and earnings before interest,
income taxes, depreciation, amortization and certain other costs.
The casino is expected to open in the fourth quarter of 2000 with
approximately 250 slot machines and fourteen gaming tables. In addition
to the casino license, hotel and spa, CCBC owns approximately 600 acres
of land, which is expected to be used for future expansion of the project.
The Company believes it has a controlling financial interest in CCBC and
has thus consolidated the financial statements of CCBC with CCA based
on its interpretation of the provisions of EITF 97-2, Application of FASB
Statement No. 94 and APB Opinion No. 16 to Physician Practice Management
Entities and Certain Other Entities with Contractual Management
Arrangements.
5. PRAGUE, CZECH REPUBLIC
In January 2000, the Company entered into a memorandum of agreement
with B.H. Centrum a.s., the Company's Czech Republic business
partner in Casino Millennium, located in Prague, Czech Republic.
The memorandum of agreement provides for the two parties to acquire the
casino from third parties by either a joint acquisition of Casino
Millennium a.s. or the formation of a new joint venture. The
transaction, if completed, would result in the Company having a 50%
equity interest in Casino Millennium. Any funding required by the
Company to consummate this transaction would be met through a
combination of existing liquidity and anticipated cash flow.
6. REVOLVING CREDIT FACILITY
On April 26, 2000, the Company and Wells Fargo Bank (the "Bank") entered
into an Amended and Restated Credit Agreement (the "Agreement") which
increased the Company's aggregate borrowing commitment from the Bank
to $26 million and extended the maturity date to April 2004. The aggregate
commitment available to the Company will be reduced quarterly by $722,000
beginning October 2000 through the maturity date. Interest on the
Agreement is variable based on the interest rate option selected by the
Company, plus an applicable margin based on the Company's leverage ratio.
The Agreement also requires a nonusage fee based on the Company's leverage
ratio on the unused portion of the commitment. The consolidated
weighted average interest rate on all borrowings was 8.77% for the
first six months of 2000.
11
<PAGE>
7. CASINO CONCESSION AGREEMENT
In May 2000, the Company entered into a five-year casino concession
Agreement with a cruise line for casino operations aboard four cruise
vessels. The Company is required to pay a fee to the owner of the
vessels based on a percentage of gross gaming revenue, as defined, in
excess of an established per passenger per day amount. The agreement
requires the Company to provide all necessary gaming equipment, which
management estimates will have a cost of approximately $500,000.
Operations are expected to begin late in the third quarter.
8. SHAREHOLDERS' EQUITY
In March 2000, the Company retired 1,385,000 shares of its common stock
held in treasury. During the second quarter of 2000, the Company
repurchased, on the open market, an additional 283,000 shares of its
common stock at an average price per share of $1.76, of which 110,000
shares were also retired during the second quarter of 2000. The Company
held 173,000 shares in treasury as of June 30, 2000. Subsequent to
June 30, 2000, the Company purchased, on the open market, 77,500 additional
shares of it common stock at an average per share price of $1.91.
In February and April 2000, the Company granted options on 40,000 and
20,000 shares, respectively, of the Company's common stock. The options
have exercise prices of $1.00 and $1.75 per share, respectively, and
exercise periods of five years.
12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
FORWARD-LOOKING STATEMENTS, BUSINESS ENVIRONMENT AND RISK FACTORS
Information contained in the following discussion of results of operations and
financial condition of the Company contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995, which can
be identified by the use of words such as "may," "will," "expect," "anticipate,"
"estimate," or "continue," or variations thereon or comparable terminology. In
addition, all statements other than statements of historical facts that address
activities, events or developments that the Company expects, believes or
anticipates, will or may occur in the future, and other such matters, are
forward-looking statements.
The following discussion should be read in conjunction with the Company's
consolidated financial statements and related notes included elsewhere herein.
The Company's future operating results may be affected by various trends and
factors, which are beyond the Company's control. These include, among other
factors, the competitive environment in which the Company operates, the
Company's present dependence upon the Cripple Creek, Colorado gaming market,
changes in the rates of gaming-specific taxes, shifting public attitudes toward
the socioeconomic costs and benefits of gaming, actions of regulatory bodies,
dependence upon key personnel, the speculative nature of gaming projects the
Company may pursue, risks associated with expansion, and other uncertain
business conditions that may affect the Company's business.
The Company cautions the reader that a number of important factors discussed
herein, and in other reports filed with the Securities and Exchange Commission,
could affect the Company's actual results and cause actual results to differ
materially from those discussed in forward-looking statements.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000 VS. 1999
----------------------------------------------
Net operating revenue for the first half of 2000 was $12.0 million compared with
$10.7 million for the same period in 1999, an increase of 12.1%. Casino revenue
for Womacks/Legends Casino increased from $10.5 million in 1999 to $11.6 million
in 2000, or 10.6%. The increase was due to continuing efforts to optimize all
operational aspects of the casino. The casino's share of the Cripple Creek
market was 18.1 % for the first half of 2000 compared with 18.5% a year earlier.
Womacks/Legends Casino operated 15.1% of the slot machines in the Cripple Creek
market and achieved an average daily win per machine of $104 versus the Cripple
Creek average of $84. Gross margin for the Company's casino activities
increased to 61.5% from 58.2% a year earlier, due principally to more favorable
gaming tax rates and continued improvement in casino operating efficiencies.
Food and beverage revenue increased by 29.3% to $543,000 in the first half of
2000 compared with $420,000 in 1999. The increase is principally due to
improvement in operations that started to take effect in the second quarter of
1999. The cost of food and beverage promotional allowances, which is included
in casino costs, decreased slightly to $408,000 compared with $421,000 in the
prior year. The decrease in hotel revenue and associated costs is a result of
the termination of a hotel marketing agreement in late 1999.
General and administrative expense as a percentage of net operating revenue was
31.7% for the first half of 2000 compared with 27.5% in 1999. The increase was
primarily due to the writeoff of a noncompete agreement with a former
officer/director in March 2000 and bonuses paid to certain officers/directors
relating to the final payment received in January 2000 from the sale of the
Company's interest in the Indiana riverboat gaming license.
13
<PAGE>
Depreciation expense increased to $1.1 million in the 2000 period from $928,000
in 1999, primarily due to the addition of new machines at Womacks/Legends Casino
and Casino Millennium, which opened in July 1999, and ongoing improvements to
Womacks/Legends Casino. Amortization of goodwill remained unchanged at $671,000
for both periods.
Other income, net, for the first half of 2000 consists of $1.4 million from the
final payment received in January by the Company from the sale of its interest
in a riverboat gaming license in Indiana, offset by net interest costs of
$514,000. Other expense, net, for the first half of 1999 primarily consisted of
net interest costs $574,000.
The income tax provisions for the six months ended June 30, 2000 and 1999, are
based on estimated full-year income for financial reporting purposes adjusted
for permanent book-tax differences, consisting primarily of nondeductible
goodwill amortization resulting from the Legends acquisition.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $3.5 million at June 30, 2000, and the Company
had net working capital of $1.7 million. Additional liquidity may be provided
by the Company's revolving credit facility ("RCF") with Wells Fargo Bank, under
which the Company had a total commitment of $26.0 million and unused borrowing
capacity of approximately $12.1 million at June 30, 2000. For the six months
ended June 30, 2000, cash provided by operating activities was $1.5 million
compared with $1.4 million in the prior-year period. Cash used by investing
activities of $4.5 million for the first half of 2000 included $1.9 million in
capitalized licensing cost related to the hotel and casino resort in Caledon,
South Africa, $2.0 million for the purchase of land for additional parking in
Cripple Creek, and $1.8 million towards the construction of the Womacks Event
Center and the purchase of other fixed assets, offset by $1.4 million from the
sale of the Company's interest in an Indiana riverboat gaming license. Cash
provided by financing activities for the first half of 2000 consisted of net
borrowings of $4.5 million under the RCF with Wells Fargo, offset by the
repurchase of company's stock, on the open market, with a cost of $499,000.
Effective April 26, 2000, the Company and Wells Fargo Bank entered into an
amended and restated credit agreement, which increased the borrowing commitment
as of that date from $17.2 million to $26.0 million and extended the maturity
date of the RCF until April 2004. The agreement provides for the availability
of funds, not to exceed a total of $10.5 million, for the Company's South Africa
and Casino Millennium investments and repurchase of the Company's common stock.
The Company has a 20-year agreement with Casino Millennium a.s., a Czech
company, to operate a casino in the five-star Marriott Hotel, in Prague, Czech
Republic. The hotel and casino opened in July 1999. The Company provides
casino management services in exchange for ten percent of the casino's gross
revenue and leases gaming equipment, with an original cost of approximately $1.3
million, to the casino for 45% of the casino's net profit. In January 2000, the
Company entered into a memorandum of agreement with B. H. Centrum, a Czech
company which owns the hotel and casino facility, to acquire the operations of
the casino by either a joint acquisition of Casino Millennium a.s. or the
formation of a new joint venture. The transaction, if completed, would
result in the Company having a 50% equity interest in Casino Millennium.
Any funding required by the Company to consummate this transaction would be
met through a combination of RCF borrowings, existing liquidity and
anticipated cash flow.
14
<PAGE>
On April 13, 2000, the Caledon Casino Bid Company (Pty) Limited ("CCBC") was
awarded a gaming license for a casino at a 100-room resort hotel and spa in
Caledon, province of the Western Cape, South Africa. On April 17, 2000, the
Company's subsidiary, Century Casinos Africa (Pty) Ltd ("CCA"), acquired a 50%
equity interest in CCBC by making an equity investment of approximately $1.5
million in and loans totaling approximately $2.3 million to CCBC with borrowings
obtained under the Company's RCF. The Company has a ten-year casino management
agreement with CCBC, which agreement may be extended at the Company's option for
multiple ten-year periods. The Company will earn management fees based on
percentages of annual gaming revenue and earnings before interest, income taxes,
depreciation, amortization and certain other costs. The casino is expected to
open in the fourth quarter of 2000 with approximately 250 slot machines and
fourteen gaming tables. In addition to the casino license, hotel and spa, CCBC
owns approximately 600 acres of land, which is expected to be used for future
expansion of the Caledon project. In April 2000, CCBC entered into a loan
agreement with PSG Investment Bank Limited, which agreement provides for a
principal loan of approximately $6.2 million to fund development of the Caledon
project and a working capital facility of approximately $2.1 million. As of
June 30, 2000, no advances have been made against the loan agreement.
The Company is the contracted casino management partner with and owns a minority
equity interest in Silverstar Development Ltd. ("Silverstar"). Silverstar has
submitted an application for a proposed $70 million, hotel/casino resort
development in the greater Johannesburg area of South Africa. In the event that
Silverstar is awarded a license, the Company would be required to make an
additional equity investment of approximately $1.5 million. This funding
requirement would be met through borrowings under the RCF. The Company has also
projected additional development costs of up to $500,000 which could be incurred
by the Company related to this project. At the present time, however, there can
be no certainty regarding an award of this gaming license or that this license
will ultimately be awarded to Silverstar.
In May 2000, the Company entered into a five-year casino concession agreement
with a cruise line for casino operations aboard four cruise vessels. The
Company is required to pay a fee to the owner of the vessels based on a
percentage of gross gaming revenue, as defined, in excess of an established per
passenger per day amount. The agreement requires the Company to provide all
necessary gaming equipment, which the Company expects to purchase during the
second half of 2000 at an estimated cost of approximately $500,000.
The Company's Board of Directors has approved a discretionary program to
repurchase up to $5 million of the Company's outstanding common stock. The
Board believes that the Company's stock is undervalued in the trading market in
relation to both its present operations and its future prospects. During the
first half of 2000, the Company purchased 283,000 additional shares at an
average cost per share of $1.76. Beginning in 1998 and through June 30, 2000,
the Company has repurchased a total of 1,668,000 shares at a total cost of
approximately $1,963,000. In July 2000, the Company repurchased an additional
77,500 shares at a total cost of approximately $148,000. Management plans to
retire all treasury shares on a periodic basis. Management expects to continue
to review the market price of the Company's stock and repurchase shares as
appropriate, with funds coming from existing liquidity or borrowings under the
RCF.
Management believes that the Company's cash and working capital at June 30,
2000, together with expected cash flows from operations and borrowing capacity
under the RCF, will be sufficient to fund its anticipated capital expenditures,
pursue additional business growth opportunities for the foreseeable future, and
satisfy its debt repayment obligations.
* * * * * * * * * * * * * * * *
15
<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 which, in management's opinion, could
have a material adverse effect on the Company's financial
position or results of operations.
Item 4. - Submission of Matters to a Vote of Security Holders
The 2000 annual meeting of the stockholders of the Company was
held on June 15, 2000. At the annual meeting, (i) the two
Class III directors to the Board, Erwin Haitzmann and Gottfried
Schellmann, were elected to the Board for a three-year term
and (ii) a proposal to ratify the First Supplement to Rights
Agreement to allow for additional accumulation of the
Company's shares by a non-adverse group, as defined, without an
automatic triggering or implementation of the rights plan, was
adopted by the stockholders of the Company. On the proposal
to elect the Class III directors, the votes were: Erwin
Haitzmann, 8,137,679 for, 38,196 against, and 4,384
abstained; Gottfried Schellmann, 8,137,679 for, 38,196
against, and 4,384 abstained. On the proposal with respect
to the ratification of the First Supplement to Rights Agreement:
8,138,778 for, 36,852 against, and 4,629 abstained.
Item 6. - Exhibits and Reports on Form 8-K
(a) Exhibits - The following exhibits are filed herewith:
10.96 Loan Agreement, dated April 13, 2000, between
PSG Investment Bank Limited and Caledon Casino
Bid Company (Proprietary) Limited
10.97 Subordination, Cession and Pledge Agreement,
dated April 13, 2000, between PSG Investment
Bank Limited, Century Casinos Africa
(Proprietary) Limited, Caledon Overberg
Investments (Proprietary) Limited, and Caledon
Casino Bid Company (Proprietary) Limited
27 Financial Data Schedule
(b) Reports on Form 8-K:
On April 6, 2000, the Registrant filed a Report
on Form 8-K, reporting that it had selected Grant
Thornton LLP as its principal independent
accountant, replacing Deloitte & Touche LLP. It
also reported the appointment of Dr. Dinah Corbaci
to the Registrant's Board of Directors as a
Class I director.
On April 28, 2000, the Registrant filed a Report
on Form 8-K, reporting that it had acquired a 50%
interest in Caledon Casino Bid Company (Pty)
Limited, a South African company which was
recently awarded a gaming license for a casino
in Caledon, province of Western Cape, South
Africa.
16
<PAGE>
On May 10, 2000, the Registrant filed a
Report on Form 8-K-A, amending and supplementing
the information reported in its Report on Form
8-K, dated April 28, 2000.
* * * * * * *
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/ Larry Hannappel
___________________________
Larry Hannappel
Chief Accounting Officer and duly authorized officer
Date: August 2, 2000
17
<PAGE>
