XWBO:CNTY Century Casinos Inc Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

þ  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

 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 number                                                                           0-22900
 
 
 
CENTURY CASINOS, INC.
(Exact name of registrant as specified in its charter)

DELAWARE
84-1271317
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)

2860 South Circle Drive, Suite 350, Colorado Springs, Colorado 80906
(Address of principal executive offices, including zip code)

(719) 527-8300
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 þ  No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ  No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
             
Large accelerated filer ¨
 
Accelerated filer ¨
 
Non-accelerated filer ¨
 
Smaller reporting company þ
       
(Do not check if a smaller reporting company)
   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes ¨  No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date:
23,877,362 shares of common stock, $0.01 par value per share, were outstanding as of April 26, 2012.

 
1

 

 
CENTURY CASINOS, INC.
 
 
FORM 10-Q INDEX
 
       
     
Page
PART I
 
FINANCIAL INFORMATION
Number
       
Item 1.
 
Condensed Consolidated Financial Statements (unaudited)
 
   
 
3
   
 
4
   
 
5
   
 
6
 
   
 
8
 
 
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations
14
 
 
 
Quantitative and Qualitative Disclosures About Market Risk
 
27
 
 
 
Controls and Procedures
 
28
       
PART II
 
OTHER INFORMATION
 
       
 
Unregistered Sales of Equity Securities and Use of Proceeds
29
 
 
 
Exhibits
 
29
   
 
 
30


 
2

 
PART I – FINANCIAL INFORMATION
Item 1.   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
CENTURY CASINOS, INC. AND SUBSIDIARIES

 
   
March 31,
   
December 31,
 
Amounts in thousands, except for share and per share information
 
2012
   
2011
 
   
(unaudited)
       
ASSETS
           
Current Assets:
           
  Cash and cash equivalents
  $ 22,871     $ 25,192  
  Receivables, net
    1,046       1,108  
  Prepaid expenses
    686       510  
  Inventories
    311       273  
  Other current assets
    78       113  
  Deferred income taxes
    242       90  
Total Current Assets
    25,234       27,286  
                 
Property and equipment, net
    99,820       99,605  
Goodwill
    4,920       4,833  
Equity investment
    3,182       2,756  
Deferred income taxes
    1,875       2,054  
Other assets
    238       193  
Total Assets
  $ 135,269     $ 136,727  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Current Liabilities:
               
  Current portion of long-term debt
  $ 6,714     $ 9,100  
  Accounts payable and accrued liabilities
    5,560       6,666  
  Accrued payroll
    2,326       2,373  
  Taxes payable
    2,909       3,100  
  Deferred income taxes
    120       120  
Total Current Liabilities
    17,629       21,359  
                 
Taxes payable
    227       203  
Deferred income taxes
    2,669       2,625  
Total Liabilities
    20,525       24,187  
                 
Commitments and Contingencies
               
                 
Shareholders’ Equity:
               
  Preferred stock; $0.01 par value; 20,000,000 shares authorized;
               
      no shares issued or outstanding
    -       -  
Common stock; $0.01 par value; 50,000,000 shares authorized; 23,993,174 shares issued; 23,877,362 shares outstanding
    240       240  
  Additional paid-in capital
    75,148       75,144  
  Accumulated other comprehensive earnings
    4,358       3,291  
  Retained earnings
    35,280       34,147  
      115,026       112,822  
  Treasury stock – 115,812 shares at cost
    (282 )     (282 )
  Total Shareholders’ Equity
    114,744       112,540  
Total Liabilities and Shareholders’ Equity
  $ 135,269     $ 136,727  
                 
See notes to condensed consolidated financial statements.
               
 
3

 


CENTURY CASINOS, INC. AND SUBSIDIARIES

 

             
             
   
For the three months
ended March 31,
 
Amounts in thousands, except for per share information
 
 
2012
   
2011
 
Operating revenue:
           
  Gaming
  $ 15,259     $ 14,825  
  Hotel, bowling, food and beverage
    3,321       3,243  
  Other
    943       935  
           Gross revenue
    19,523       19,003  
Less: Promotional allowances
    (1,954 )     (1,888 )
Net operating revenue
    17,569       17,115  
Operating costs and expenses:
               
  Gaming
    7,233       6,931  
  Hotel, bowling, food and beverage
    2,437       2,511  
  General and administrative
    5,304       5,368  
  Depreciation
    1,178       1,641  
Total operating costs and expenses
    16,152       16,451  
Earnings from equity investment
    155       92  
Earnings from operations
    1,572       756  
Non-operating income (expense):
               
  Interest income
    6       2  
  Interest expense
    (148 )     (246 )
  (Losses) gains on foreign currency transactions and other
    (5 )     75  
Non-operating income (expense), net
    (147 )     (169 )
Earnings before income taxes
    1,425       587  
Income tax provision
    292       223  
Net earnings
  $ 1,133     $ 364  
                 
Earnings per share:
               
  Basic
  $ 0.05     $ 0.02  
  Diluted
  $ 0.05     $ 0.02  
                 
See notes to condensed consolidated financial statements.
               


 
 
4

 

CENTURY CASINOS, INC. AND SUBSIDIARIES

 

             
             
   
For the three months
 
   
ended March 31,
 
             
Amounts in thousands
 
2012
   
2011
 
             
Net earnings
  $ 1,133     $ 364  
Foreign currency translation adjustments
    1,067       1,294  
Comprehensive earnings
  $ 2,200     $ 1,658  
                 
See notes to condensed consolidated financial statements.
               

 
 
5

 

CENTURY CASINOS, INC. AND SUBSIDIARIES

 

             
             
   
For the three months 
ended March 31,
 
Amounts in thousands
 
2012
   
2011
 
             
Cash Flows from Operating Activities:
     
             
Net earnings
  $ 1,133     $ 364  
Adjustments to reconcile net earnings to net cash provided by operating activities:
               
Depreciation
    1,178       1,641  
Loss on disposition of fixed assets
    6       31  
Amortization of stock-based compensation
    4       96  
Amortization of deferred financing costs
    24       40  
Deferred tax expense
    72       144  
Earnings from equity investment
    (155 )     (92 )
                 
Changes in operating assets and liabilities:
               
Receivables
  $ 71     $ 374  
Prepaid expenses and other assets
    (162 )     (357 )
Accounts payable and accrued liabilities
    (696 )     619  
Inventories
    (33 )     (10 )
Other operating assets
    (42 )     23  
Accrued payroll
    (58 )     262  
Taxes payable
    (578 )     (792 )
Net cash provided by operating activities
    764       2,343  
                 
Cash Flows from Investing Activities:
               
Purchases of property and equipment
    (644 )     (970 )
Proceeds from disposition of assets
    1       9  
Net cash used in investing activities
    (643 )     (961 )
                 
Cash Flows from Financing Activities:
               
Principal repayments
    (2,511 )     (2,535 )
Proceeds from exercise of options
    -       13  
Net cash used in financing activities
  $ (2,511 )   $ (2,522 )

 
 
 
Continued -


 
6

 

CENTURY CASINOS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued)

 

             
             
   
For the three months 
ended March 31,
 
Amounts in thousands
 
2012
   
2011
 
             
Effect of Exchange Rate Changes on Cash
  $ 69     $ 340  
                 
Decrease in Cash and Cash Equivalents
    (2,321 )     (800 )
                 
Cash and Cash Equivalents at Beginning of Period
    25,192       21,461  
Cash and Cash Equivalents at End of Period
  $ 22,871     $ 20,661  
Supplemental Disclosure of Cash Flow Information:
               
Interest paid
  $ 137     $ 229  
Income taxes paid
  $ 27     $ 57  
                 
See notes to condensed consolidated financial statements.
 
 
 
 
 
7

 

CENTURY CASINOS, INC. AND SUBSIDIARIES

 
1.           DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
 
Century Casinos, Inc. (“CCI” or the “Company”) is an international casino entertainment company. As of March 31, 2012, the Company owned casino operations in North America; managed cruise ship-based casinos on international waters; and owned a management contract to manage the casino in the Radisson Aruba Resort, Casino & Spa. The Company also owns a 33.3% ownership interest in Casinos Poland Ltd (“CPL”), the owner and operator of seven casinos in Poland. The Company continues to pursue other projects in various stages of development.

The accompanying condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial reporting, the rules and regulations of the Securities and Exchange Commission which apply to interim financial statements and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated.
 
In the opinion of management, all adjustments considered necessary for fair presentation of financial position, results of operations and cash flows of the Company have been included. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K and 10-K/A for the year ended December 31, 2011. The results of operations for the period ended March 31, 2012 are not necessarily indicative of the operating results for the full year.
 
Presentation of Foreign Currency Amounts
 
Dollar amounts reported in this quarterly report are in U.S. dollars (“USD”) unless otherwise indicated. Transactions that are denominated in a foreign currency, which include the Canadian dollar (“CAD”), Euro (“€”) and Polish zloty (“PLN”) are translated and recorded at the exchange rate in effect on the date of the transaction. Commitments that are denominated in a foreign currency and all balance sheet accounts other than shareholders’ equity are translated and presented based on the exchange rate between such foreign currency and the U.S. dollar at the end of the reported periods.  Current period transactions affecting the profit and loss of operations conducted in foreign currencies are valued at the average exchange rate between such foreign currency and the U.S. dollar for the period in which they are incurred.
 
The exchange rates to the U.S. dollar used to translate balances at the end of the reported periods are as follows:

   
March 31
   
December 31
   
March 31
 
Ending Rates
 
2012
   
2011
   
2011
 
Canadian dollar (CAD)
    0.9991       1.0170       0.9718  
Euros (€)
    0.7500       0.7709       0.7051  
Polish zloty (PLN)
    3.1191       3.4174       2.8229  
Source: Pacific Exchange Rate Service
                 

 
 
8

 

The average exchange rates to the U.S. dollar used to translate balances during each reported period are as follows:
 
   
For the three months
ended March 31,
 
Average Rates
 
2012
   
2011
   
% Change
 
Canadian dollar (CAD)
    1.0015       0.9859       (1.6 %)
Euros (€)
    0.7627       0.7314       (4.3 %)
Polish zloty (PLN)
    3.2268       2.8865       (11.8 %)
Source: Pacific Exchange Rate Service
                 

 
2.           EQUITY INVESTMENT IN UNCONSOLIDATED SUBSIDIARY
 
Following is the summarized financial information of CPL as of March 31, 2012 and December 31, 2011 and for the three months ended March 31, 2012 and 2011:
 

Amounts in thousands (in USD):
 
March 31,
2012
   
December 31,
2011
 
Balance Sheet:
           
Current assets
  $ 3,726     $ 4,061  
Noncurrent assets
  $ 12,076     $ 9,523  
Current liabilities
  $ 6,425     $ 4,393  
Noncurrent liabilities
  $ 2,204     $ 3,230  
 

 
   
For the three months 
ended March 31,
 
   
2012
   
2011
 
Operating Results
           
Net operating revenue
  $ 10,445     $ 11,537  
Net earnings
  $ 464     $ 275  
 
The Company’s maximum exposure to losses at March 31, 2012 was $3.2 million, the value of its equity investment in CPL.
 
Changes in the carrying amount of the investment in CPL during the three months ended March 31, 2012 are as follows:

Amounts in thousands (in USD)
 
Total
 
Balance – January 1, 2012
  $ 2,756  
Equity earnings
    155  
Effect of foreign currency translation
    271  
Balance – March 31, 2012
  $ 3,182  
 
 
9

 

3.           GOODWILL
 
Changes in the carrying amount of goodwill related to our Edmonton property for the three months ended March 31, 2012 are as follows:
 
       
Amounts in thousands
     
Balance – January 1, 2012
  $ 4,833  
Effect of foreign currency translation
    87  
Balance – March 31, 2012
  $ 4,920  

 
4.           PROMOTIONAL ALLOWANCES
 
Hotel accommodations, bowling and food and beverage furnished without charge to customers are included in gross revenue at a value which approximates retail and are then deducted as complimentary services to arrive at net operating revenue.
 
The Company issues coupons for the purpose of generating future revenue. The cost of the coupons redeemed is applied against the revenue generated on the day of the redemption. In addition, members of the Company’s casinos’ player clubs earn points based on, among other things, their volume of play at the Company’s casinos. Players can accumulate points over time that they may redeem at their discretion under the terms of the program. Points can be redeemed for cash and/or various amenities at the casino, such as meals, hotel stays and gift shop items. The cost of the points is offset against the revenue in the period in which the points were earned. The value of unused or unredeemed points is included in accounts payable and accrued liabilities on the Company’s consolidated balance sheets. The expiration of unused points results in a reduction of the liability.
 
Promotional allowances presented in the condensed consolidated statement of earnings include the following:
 
   
For the three months 
ended March 31
 
   
2012
   
2011
 
Amounts in thousands
           
Hotel, bowling, food & beverage
  $ 914     $ 832  
Coupons
    454       445  
Player points
    586       611  
Total promotional allowances
  $ 1,954     $ 1,888  


5.           INCOME TAXES
 
The Company records deferred tax assets and liabilities based on the difference between the financial statement and income tax basis of assets and liabilities using the enacted statutory tax rate in effect for the year these differences are expected to be taxable or reversed. Deferred income tax expenses or credits are based on the changes in the asset or liability from period to period. The recorded deferred tax assets are reviewed for impairment on a quarterly basis by reviewing the Company’s internal estimates for future taxable income.
 
 
10

 
 
As of March 31, 2012, the Company has established a valuation allowance for its U.S. deferred tax assets of $5.1 million, a $0.9 million valuation allowance on its Calgary property and a $1.4 million valuation allowance on the Century Casinos Europe subsidiary deferred tax assets due to the uncertainty of future taxable income. The Company assesses the continuing need for a valuation allowance that results from uncertainty regarding its ability to realize the benefits of the Company’s deferred tax assets. The ultimate realization of deferred income tax assets depends on generation of future taxable income during the periods in which those temporary differences become deductible. If the Company concludes that its prospects for the realization of its deferred tax assets are more likely than not, the Company will then reduce its valuation allowance as appropriate and credit income tax expense after considering the following factors:
 
·  
The level of historical taxable income and projections for future taxable income over periods in which the deferred tax assets would be deductible;
 
·  
Accumulation of net income before tax utilizing a look-back period of three years, and
 
·  
Tax planning strategies.
 
The income tax provisions are based on estimated full-year earnings for financial reporting purposes adjusted for permanent differences. The Company’s provision for income taxes from operations consists of the following:
 
             
Amounts in thousands
 
As of March 31,
 
   
2012
   
2011
 
U.S. Federal - Current
  $ (19 )   $ 25  
U.S. Federal - Deferred
    0       0  
Provision for U.S. federal income taxes
    (19 )     25  
                 
Foreign - Current
  $ 239     $ 54  
Foreign - Deferred
    72       144  
Provision for foreign income taxes
    311       198  
Total provision for income taxes
  $ 292     $ 223  
 
 
The Company’s income tax expense by jurisdiction is summarized in the table below:

   
For the three months
   
For the three months
 
Amounts in thousands
 
ended March 31, 2012
   
ended March 31, 2011
 
   
Pre-tax income
   
Income tax
   
Effective
   
Pre-tax income (loss)
   
Income tax
   
Effective
 
 
tax rate
   
tax rate
 
Canada
  $ 955     $ 302       31.6 %   $ 455     $ 192       42.2 %
United States
    5       (19 )     (380.0 %)     (498 )     25       (5.0 %)
Mauritius
    103       9       8.7 %     484       5       1.0 %
Austria
    246       -       -       118       1       0.8 %
Poland
    116       -       -       28       -       -  
Total
  $ 1,425     $ 292       20.5 %   $ 587     $ 223       380. %

 
11

 

6.           EARNINGS PER SHARE

The calculation of basic earnings per share considers only weighted average outstanding common shares in the computation. The calculation of diluted earnings per share gives effect to all potentially dilutive securities. The calculation of diluted earnings per share is based upon the weighted average number of common shares outstanding during the period, plus, if dilutive, the assumed exercise of stock options using the treasury stock method and the assumed conversion of other convertible securities (using the “if converted” method) at the beginning of the year, or for the period outstanding during the year for current year issuances. Weighted average shares outstanding for the three months ended March 31, 2012 and 2011 were as follows:
 
   
For the three months
ended March 31
 
   
2012
   
2011
 
Weighted average common shares, basic
    23,877,362       23,711,176  
Dilutive effect of stock options
    133,431       290,112  
Weighted average common shares, diluted
    24,010,793       24,001,288  
 
The following shares of restricted stock and stock options are anti-dilutive and have not been included in the weighted average shares outstanding calculation:
 
 
   
For the three months 
ended March 31
 
   
2012
   
2011
 
Unvested restricted stock
    -       160,000  
Stock options
    886,710       886,710  

 
7.           SEGMENT INFORMATION
 
The following summary provides information concerning amounts attributable to the Company’s principal geographic areas:

   
Long Lived Assets
 
   
At
March 31,
   
At
December 31,
 
Amounts in thousands
 
2012
   
2011
 
             
United States
  $ 55,840     $ 56,294  
International:
               
   Canada
  $ 49,138     $ 48,423  
Europe
    3,659       3,228  
   International waters
    1,398       1,496  
Total international
    54,195       53,147  
Total
  $ 110,035     $ 109,441  


 
12

 
 
             
   
Net Operating Revenue
 
   
For the three months 
ended March 31,
 
Amounts in thousands
 
2012
   
2011
 
United States
  $ 7,389     $ 7,239  
International:
               
   Canada
  $ 8,542     $ 8,341  
   International waters
    1,560       1,422  
   Aruba
    78       113  
Total international
    10,180       9,876  
Total
  $ 17,569     $ 17,115  

 
 
 
13

 

 
Forward-Looking Statements, Business Environment and Risk Factors
 
This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. In addition, Century Casinos, Inc. (together with its subsidiaries, the “Company”) may make other written and oral communications from time to time that contain such statements. Forward-looking statements include statements as to industry trends and future expectations of the Company and other matters that do not relate strictly to historical facts and are based on certain assumptions by management at the time such statements are made.  These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. These statements are based on the beliefs and assumptions of the management of the Company based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, among others, the risks described in the section entitled “Risk Factors” under Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2011. We caution the reader to carefully consider such factors. Furthermore, such forward-looking statements speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
 
References in this item to “we,” “our,” or “us” are to the Company and its subsidiaries on a consolidated basis unless the context otherwise requires. The term “CAD” refers to Canadian dollars.

Amounts presented in this Item 2 are rounded. As such, rounding differences could occur in period over period changes and percentages reported throughout this Item 2.
 
OVERVIEW
 
Since our inception in 1992, we have been primarily engaged in developing and operating gaming establishments and related lodging, restaurant and entertainment facilities. Our primary source of revenue is from the net proceeds of our gaming machines and tables, with ancillary revenue generated from the hotel, restaurant, bowling and entertainment facilities that are a part of the casinos.
 
We currently own, operate and manage the following casinos through wholly-owned subsidiaries:
 
-  
The Century Casino & Hotel in Edmonton, Alberta, Canada;
-  
The Century Casino Calgary, Alberta, Canada;
- The Century Casino & Hotel in Central City, Colorado; and
- The Century Casino & Hotel in Cripple Creek, Colorado.
 
 
 
14

 

We also operate 12 ship-based casinos onboard four cruise lines; Oceania Cruises, TUI Cruises, Windstar Cruises and Regent Seven Seas Cruises. The most recent ship-based casino addition is the Riviera, which began operations on May 3, 2012. In addition, the contract for the Insignia ship-based casino expired on April 5, 2012 and was not renewed.
 
The following table summarizes the cruise lines for which we have entered into agreements and the associated ships on which we currently operate ship-based casinos.
 
   
 
Cruise Line
Ship
Oceania Cruises
Regatta
Oceania Cruises
Nautica
Oceania Cruises
Insignia*
Oceania Cruises
Marina
Oceania Cruises
Riviera**
TUI Cruises
Mein Schiff 1
TUI Cruises
Mein Schiff 2
Windstar Cruises
Wind Surf
Windstar Cruises
Wind Star
Windstar Cruises
Wind Spirit
Regent Seven Seas Cruises
Seven Seas Voyager
Regent Seven Seas Cruises
Seven Seas Mariner
Regent Seven Seas Cruises
Seven Seas Navigator
 
* The contract for the Insignia expired on April 5, 2012 and was not renewed.
** The Riviera ship-based casino began operations on May 3, 2012
 
 
We also hold a 33.3% ownership interest in and actively participate in the management of CPL, the owner and operator of seven casinos in Warsaw, Katowice, Gydnia, Wroclaw, Lodz (opened February 16, 2012) Krakow (opened March 29, 2012) and Sosnowiec (opened April 18, 2012) in Poland. We account for this investment under the equity method.
 
CPL has obtained two additional gaming licenses in the cities of Plock and Posnan, which are scheduled to open in 2012. In addition, CPL is participating in other license applications, including Warsaw. Decisions from the Polish Minister of Finance on these applications are pending.
 
We have a long-term management agreement to direct the operation of the casino at the Radisson Aruba Resort, Casino & Spa. We receive a management fee consisting of a fixed fee, plus a percentage of earnings before interest, taxes, depreciation and amortization. We were not required to invest any amounts under the management agreement.
 
 
15

 
 
Presentation of Foreign Currency Amounts - The average exchange rates to the U.S. dollar used to translate balances during each reported period are as follows:

                   
   
For the three months
ended March 31,
 
Average Rates
 
2012
   
2011
   
% Change
 
Canadian dollar (CAD)
    1.0015       0.9859       (1.6 %)
Euros (€)
    0.7627       0.7314       (4.3 %)
Polish zloty (PLN)
    3.2268       2.8865       (11.8 %)
Source: Pacific Exchange Rate Service
                 

 
RECENT DEVELOPMENTS
 
Developments that we believe have impacted or will impact our results of operations are discussed below.
 
Century Casino & Hotel (Edmonton, Alberta, Canada)
 
The Alberta Gaming and Liquor Commission approved the addition of 20 slot machines to the gaming floor during the three months ended March 31, 2012. The 20 additional machines bring the total slot machine count to 720 at our property in Edmonton.
 
Century Casino Calgary (Calgary, Alberta, Canada)
 
On March 2, 2012, our new 24-hour poker room was completed and became operational. The property began construction of this room during the fourth quarter of 2011 and spent $0.2 million to complete its construction.
 

 
16

 
 
DISCUSSION OF RESULTS
 
Century Casinos, Inc. and Subsidiaries
 
                         
   
For the three months 
ended March 31,
       
Amounts in thousands
 
2012
   
2011
   
$ Change
   
% Change
 
Gaming Revenue
  $ 15,259     $ 14,825     $ 434       2.9 %
Hotel, Bowling, Food and Beverage Revenue
    3,321       3,243       78       2.4 %
Other Revenue
    943       935       8       0.9 %
Gross Revenue
    19,523       19,003       520       2.7 %
Less Promotional Allowances
    (1,954 )     (1,888 )     66       3.5 %
Net Operating Revenue
    17,569       17,115       454       2.7 %
Gaming Expenses
    (7,233 )     (6,931 )     302       4.4 %
Hotel, Bowling, Food and Beverage Expenses
    (2,437 )     (2,511 )     (74 )     (2.9 %)
General and Administrative Expenses
    (5,304 )     (5,368 )     (64 )     (1.2 %)
Total Operating Costs and Expenses
    (16,152 )     (16,451 )     (299 )     (1.8 %)
Earnings from Equity Investment
    155       92       63       68.5 %
Earnings from Operations
    1,572       756       816       107.9 %
Net Earnings
  $ 1,133     $ 364     $ 769       211.3 %
                                 
Basic and Diluted, Earnings Per Share
                               
    Net Earnings
  $ 0.05     $ 0.02     $ 0.03       150.0 %
 
Net operating revenue increased by $0.5 million, or 2.7%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. Following is a breakout of net operating revenue by property or category for the three months ended March 31, 2012 compared to the three months ended March 31, 2011:
 
Net operating revenue at our property in Edmonton increased by $0.2 million, or 3.3%
 
Net operating revenue at our property in Calgary increased by less than $0.1 million, or 0.6%
 
Net operating revenue at our property in Central City increased by $0.1 million, or 2.5%
 
Net operating revenue at our property in Cripple Creek increased by less than $0.1 million, or 1.5%
 
● 
Net operating revenue from our ship-based casinos and other increased by $0.1 million, or 6.7%
 
Total operating costs and expenses decreased by $0.3 million, or 1.8%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. Following is a breakout of total operating costs and expenses by property or category for the three months ended March 31, 2012 compared to the three months ended March 31, 2011:
 
Total operating costs and expenses at our property in Edmonton increased by less than $0.1 million, or 0.4%
 
Total operating costs and expenses at our property in Calgary decreased by $0.1 million, or 4.7%
 
● 
Total operating costs and expenses at our property in Central City decreased by $0.2 million, or 4.9%
 
Total operating costs and expenses at our property in Cripple Creek increased by less than $0.1 million, or 1.6%
 
Total operating costs and expenses for our ship-based casinos and other increased by $0.1 million, or 5.9%
 
Total operating costs and expenses for corporate other decreased by $0.1 million, or 8.0%
 
17

 
As a result of the foregoing, net earnings increased by $0.8 million, or 211.3% for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. Following is a breakout of net earnings by property or category for the three months ended March 31, 2012 compared to the three months ended March 31, 2011:
 
 
● 
Net earnings at our property in Edmonton increased by $0.2 million
 
Net earnings at our property in Calgary increased by $0.2 million
 
 ● 
Net earnings at our property in Central City increased by $0.2 million
 
● 
Net earnings at our property in Cripple Creek increased by less than $0.1 million
 
Net earnings from our ship-based casinos and other increased by less than $0.1 million
 
Net loss for corporate other decreased by $0.2 million
 
Results by property are discussed in further detail in the following pages.
 
 
18

 

Casinos

Edmonton
                         
   
For the three months 
ended March 31,
       
Amounts in thousands
 
2012
   
2011
   
$ Change
   
% Change
 
Gaming
  $ 4,178     $ 4,084     $ 94       2.3 %
Hotel, Food and Beverage
    1,477       1,422       55       3.9 %
Other
    528       464       64       13.8 %
Gross Revenue
    6,183       5,970       213       3.6 %
Less Promotional Allowances
    (243 )     (217 )     26       12.0 %
Net Operating Revenue
    5,940       5,753       187       3.3 %
Gaming Expenses
    (1,709 )     (1,612 )     97       6.0 %
Hotel, Food and Beverage Expenses
    (992 )     (924 )     68       7.4 %
General & Administrative Expenses
    (1,351 )     (1,378 )     (27 )     (2.0 %)
Total Operating Costs and Expenses
    (4,294 )     (4,279 )     15       0.4 %
Earnings from Operations
    1,646       1,474       172       11.7 %
Net Earnings
  $ 1,076     $ 895     $ 181       20.2 %

 
Net operating revenue at our property in Edmonton increased by $0.2 million, or 3.3%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increase is due to increases in gaming, hotel, food, beverage and other revenue for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increase in gaming revenue is due to a total 36 additional slot machines added to the floor during the third quarter of 2011 and first quarter of 2012. The increase in hotel, food and beverage revenue is due to increased customer volumes on the gaming floor as well as increased showroom event attendance for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increase in other revenue is due to increased showroom and Comedy Club ticket sales for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. In CAD, net operating revenue increased $0.3 million, or 4.9%, for the three months ended March 31, 2012 as compared to the three months ended March 31, 2011.
 
Total operating costs and expenses increased by less than $0.1 million, or 0.4%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increase is due to higher advertising, promotional and payroll costs of $0.2 million offset by a decrease in depreciation expense of $0.1 million for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. In CAD, total operating costs and expenses increased by $0.1 million, or 1.9%, for the three months ended March 31, 2012 as compared to the three months ended March 31, 2011.
 
As a result of the foregoing, net earnings increased by $0.2 million, or 20.2%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. In CAD, net earnings increased by $0.3 million for the three months ended March 31, 2012 as compared to the three months ended March 31, 2011.
 

 
19

 

Calgary
                         
   
For the three months 
ended March 31,
       
Amounts in thousands
 
2012
   
2011
   
$ Change
   
% Change
 
Gaming
  $ 1,678     $ 1,517     $ 161       10.6 %
Bowling, Food and Beverage
    851       964       (113 )     (11.7 %)
Other
    175       225       (50 )     (22.2 %)
Gross Revenue
    2,704       2,706       (2 )     (0.1 %)
Less Promotional Allowances
    (101 )     (118 )     (17 )     (14.4 %)
Net Operating Revenue
    2,603       2,588       15       0.6 %
Gaming Expenses
    (963 )     (947 )     16       1.7 %
Bowling, Food and Beverage Expenses
    (590 )     (717 )     (127 )     (17.7 %)
General & Administrative Expenses
    (796 )     (826 )     (30 )     (3.6 %)
Total Operating Costs and Expenses
    (2,554 )     (2,679 )     (125 )     (4.7 %)
Earnings (Losses) from Operations
    49       (91 )     140       153.8 %
Net Earnings (Loss)
  $ 8     $ (163 )   $ 171       104.9 %

 
Net operating revenue at our property in Calgary increased by less than $0.1 million, or 0.6%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. Net operating revenue increased due to higher gaming revenue of $0.2 million, or 10.6%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increase in gaming revenue is due to an enhanced slot floor layout, improved slot machine mix and increased table games revenue from Baccarat play for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increased gaming revenue was offset by a $0.2 million, or 13.7% decrease in bowling, food, beverage and other revenue. The decrease in bowling, food, beverage and other revenue is due to a decrease in promotional events at the showrooms resulting in lower ticket sales and a decrease in the participation of bowling leagues for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. In CAD, net operating revenue increased by $0.1 million, or 2.1%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.
 
Total operating costs and expenses decreased by $0.1 million, or 4.7%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The decrease in operating costs and expenses is due to lower cost of goods sold expense due to the implementation of new purchasing and inventory procedures along with lower staffing costs due to a change in the property’s management structure and labor efficiencies achieved for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. In CAD, total operating costs and expenses in Calgary decreased by $0.1 million, or 3.2%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.
 
As a result of the foregoing, net earnings increased by $0.2 million, or 104.9%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. In CAD, the net earnings increased by $0.1 million for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.


 
20

 

Central City
                         
   
For the three months 
ended March 31,
       
Amounts in thousands
 
2012
   
2011
   
$ Change
   
% Change
 
Gaming
  $ 4,808     $ 4,763     $ 45       0.9 %
Hotel, Food and Beverage
    657       558       99       17.7 %
Other
    51       35       16       45.7 %
Gross Revenue
    5,516       5,356       160       3.0 %
Less Promotional Allowances
    (1,006 )     (956 )     50       5.2 %
Net Operating Revenue
    4,510       4,400       110       2.5 %
Gaming Expenses
    (2,067 )     (2,059 )     8       0.4 %
Hotel, Food and Beverage Expenses
    (532 )     (497 )     35       7.0 %
General & Administrative Expenses
    (943 )     (886 )     57       6.4 %
Total Operating Costs and Expenses
    (3,897 )     (4,097 )     (200 )     (4.9 %)
Earnings from Operations
    613       303       310       102.3 %
Net Earnings
  $ 380     $ 196     $ 184       93.9 %


Net operating revenue at our property in Central City increased by $0.1 million, or 2.5%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increase in net operating revenue for the three months ended March 31, 2012 is due to increases in gaming, hotel, food and beverage revenue for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increase in gaming revenue is due to an increase in tables games hold percentage for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increase in hotel, food and beverage revenue is due to a new menu introduced in both the grill and deli for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.
 
Promotional allowances increased by $0.1 million, or 5.2%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increase in promotional allowances is due to an increase in the number of coupons offered during the three months ended March 31, 2012. Total operating costs and expenses decreased by $0.2 million, or 4.9%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The decrease in total operating costs and expenses is due to a $0.3 million decrease in depreciation expense offset by a $0.1 million increase in staffing costs for the months ended March 31, 2012 compared to the three months ended March 31, 2011.
 
As a result of the foregoing, net earnings increased by $0.2 million, or 93.9%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.
 

 
21

 

Cripple Creek
                         
   
For the three months 
ended March 31,
       
Amounts in thousands
 
2012
   
2011
   
$ Change
   
% Change
 
Gaming
  $ 3,124     $ 3,114     $ 10       0.3 %
Hotel, Food and Beverage
    336       300       36       12.0 %
Other
    23       21       2       9.5 %
Gross Revenue
    3,483       3,435       48       1.4 %
Less Promotional Allowances
    (604 )     (598 )     6       1.0 %
Net Operating Revenue
    2,879       2,837       42       1.5 %
Gaming Expenses
    (1,251 )     (1,156 )     95       8.2 %
Hotel, Food and Beverage Expenses
    (324 )     (373 )     (49 )     (13.1 %)
General & Administrative Expenses
    (779 )     (778 )     1       0.1 %
Total Operating Costs and Expenses
    (2,606 )     (2,565 )     41       1.6 %
Earnings from Operations
    273       272       1       0.4 %
Net Earnings
  $ 169     $ 168     $ 1       0.6 %

 
Net operating revenue at our property in Cripple Creek increased by less than $0.1 million, or 1.5%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increase is due to an increase in hotel, food and beverage revenue of less than $0.1 million, or 12.0%, primarily due to an increase in retail prices for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.
 
Total operating costs and expenses increased by less than $0.1 million, or 1.6%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increase in total operating costs and expenses is due to an increase in gaming expenses of $0.1 million due to higher marketing and advertising expenses offset by a decrease of $0.1 million in staffing costs for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.
 
As a result of the foregoing, net earnings increased by less than $0.1 million, or 0.6%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.


 
22

 


Cruise Ships & and Other
                         
   
For the three months 
ended March 31,
       
Amounts in thousands
 
2012
   
2011
   
$ Change
   
% Change
 
Gaming
  $ 1,472     $ 1,346     $ 126       9.4 %
Other
    166       189       (23 )     12.2 %
Net Operating Revenue
    1,638       1,535       103       6.7 %
Gaming Expenses
    (1,243 )     (1,157 )     86       7.4 %
General & Administrative Expenses
    (158 )     (146 )     12       8.2 %
Total Operating Costs and Expenses
    (1,498 )     (1,415 )     83       5.9 %
Earnings from Operations
    140       120       20       16.7 %
Net Earnings
  $ 127     $ 118     $ 9       7.6 %


Net operating revenue from our ship based casinos and Aruba management agreement increased by $0.1 million, or 6.7%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increase is primarily due to the addition of the Aruba management agreement and increased revenue from the Marina, Mein Schiff 2 and Mariner ship-based casinos.

Total operating costs and expenses increased by $0.1 million, or 5.9%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increase in gaming expenses of $0.1 million, or 7.4%, is due to increased staffing and contract labor costs from the Aruba management agreement and an increase in concession and annual fees paid to cruise ship operators for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.

As a result of the foregoing, net earnings increased by less than $0.1 million, or 7.6%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.

Corporate Other

                         
   
For the three months 
ended March 31,
       
Amounts in thousands
 
2012
   
2011
   
$ Change
   
% Change
 
Other
  $ -     $ 2     $ (2 )     (100.0 %)
Net Operating Revenue
    -       2       (2 )     (100.0 %)
General & Administrative Expenses
    (1,277 )     (1,354 )     (77 )     (5.7 %)
Total Operating Costs and Expenses
    (1,303 )     (1,416 )     (113 )     (8.0 %)
Losses from Operations
    (1,149 )     (1,322 )     173       13.1 %
Net Loss
  $ (627 )   $ (850 )   $ 223       26.2 %
 
General & administrative expenses for Corporate Other consist primarily of legal and accounting fees, corporate travel expenses, corporate payroll, the amortization of stock based compensation and other expenses not directly related to any of the Company's individual properties. General & administrative expenses decreased by $0.1 million, or 5.7%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011 due to a reduction in payroll and stock compensation costs.
 
 
23

 
 
Earnings from Equity Investment
 
We own 33.3% of all shares issued by CPL. Our portion of CPL’s earnings is recorded as earnings from equity investment. We recorded an increase of $0.1 million in earnings from our investment in CPL for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. The increase is primarily a result of increased gaming revenue.
 
On July 29, 2011, our co-shareholders in CPL (LOT Polish Airlines and PPL Polish Airports) informed us of their intent to sell their shares in CPL (66.66% of the total shares) to Totalizator Sportowy Group, the state owned Polish national lottery firm. LOT Polish Airlines and PPL Polish Airports requested our consent to their respective conditional sales agreement, which is necessary for the legal effectiveness of any share transfers. We are evaluating their request.
 
Non-Operating Income (Expense)
 
Non-operating income (expense) for the three months ended March 31, 2012 and 2011 was as follows (in thousands):
                         
   
For the three months 
ended March 31,
             
   
2012
   
2011
   
 $ Change
   
% Change
 
Interest Income
  $ 6     $ 2     $ 4       200.00 %
Interest Expense
    (148 )     (246 )     (98 )     (39.8 %)
(Losses) gains on Foreign Currency Transactions & Other
    (5 )     75       (80 )     (106.7 %)
Non-Operating Expense, net
  $ (147 )   $ (169 )   $ (22 )     (13.0 %)
 
Interest expense
 
The decrease in interest expense of $0.1 million for the three months ended March 31, 2012 compared to the three months ended March 31, 2011 is due to lower principal balances on third party debt related to our Edmonton property (the “Edmonton Mortgage Loan”).
 
 
24

 
Taxes
 
Our foreign earnings significantly impact our tax rate. The Company’s income tax expense and effective tax rates by jurisdiction are summarized in the tables below:
 
   
For the three months
   
For the three months
 
Amounts in thousands
 
ended March 31, 2012
   
ended March 31, 2011
 
   
Pre-tax income
   
Income tax
   
Effective
   
Pre-tax income (loss)
   
Income tax
   
Effective
 
 
tax rate
   
tax rate
 
Canada
  $ 955     $ 302       31.6 %   $ 455     $ 192       42.2 %
United States
    5       (19 )     (380.0 %)     (498 )     25       (5.0 %)
Mauritius
    103       9       8.7 %     484       5       1.0 %
Austria
    246       -       -       118       1       0.8 %
Poland
    116       -       -       28       -       -  
Total
  $ 1,425     $ 292       20.5 %   $ 587     $ 223       38.0 %
 
The effective tax rates of our foreign properties are impacted by the movement of exchange rates primarily due to loans which are denominated in U.S. dollars. Therefore, foreign currency gains or losses recorded in each property’s local currency do not impact our earnings reported in U.S. dollars.
 
LIQUIDITY AND CAPITAL RESOURCES
 
Cash Flows
 
Our business is capital intensive, and we rely heavily on the ability of our casinos to generate operating cash flow. We use the cash flows that we generate to maintain operations, fund reinvestment in existing properties for both refurbishment and expansion projects, repay third party debt, and pursue additional growth via new development and acquisition opportunities. When necessary and available, we supplement the cash flows generated by our operations with either cash on hand or funds provided by bank borrowings or other debt or equity financing activities.
 
Cash and cash equivalents totaled $22.9 million at March 31, 2012, and we had working capital (current assets minus current liabilities) of $7.6 million compared to cash and cash equivalents of $25.2 million and working capital of $6.0 million at December 31, 2011. The decline in cash is primarily due to $2.5 million in repayment of the Edmonton Mortgage Loan. In addition, we invested $0.6 million in various capital expenditure projects. These declines were offset by $0.8 million in cash provided by operating activities and a $0.1 million impact on the cash balances due to changes in foreign exchange rates.
 
Net cash provided by operating activities was $0.8 million and $2.3 million for the three months ended March 31, 2012 and 2011, respectively. Our cash flows from operations have historically been positive and sufficient to fund ordinary operations. Trends in our operating cash flows tend to follow trends in earnings from operations, excluding non-cash charges. Please refer to the condensed consolidated statements of cash flows and management’s discussion of the results of operations above.
 
 
25

 
Net cash used in investing activities of $0.6 million for the three months ended March 31, 2012 consisted of $0.3 million used to purchase slot machines and a kiosk at our two Colorado properties, $0.2 million used to construct the new poker room in Calgary and $0.1 million used in cumulative additions at our remaining properties.
 
Net cash used in investing activities of $1.0 million for the three months ended March 31, 2011 consisted of $0.4 million used in building renovations and surveillance system upgrades in Calgary, $0.2 million used to replace surveillance cameras in Central City, $0.1 million used for gaming equipment additions on cruise ship-based casinos placed in service in 2010, $0.1 million used to purchase new slot machines at our Cripple Creek and Central City properties and $0.2 million used in cumulative additions at our remaining properties.
 
Net cash used in financing activities of $2.5 million for the three months ended March 31, 2012 consisted of $2.5 million in the repayment and prepayment of our Edmonton Mortgage Loan. As of March 31, 2012, the remaining balance on our Edmonton Mortgage Loan is $6.7 million. We were in compliance with all covenants of the Edmonton Mortgage Loan as of March 31, 2012.
 
Net cash used in financing activities of $2.5 million for the three months ended March 31, 2011 consisted of $2.5 million in the repayment and prepayment of our Edmonton Mortgage Loan.
 
 
 
26

 

Common Stock Repurchase Program
 
Since 2000, we have had a discretionary program to repurchase our outstanding common stock. In November 2009, we increased the amount available to be repurchased to $15.0 million. We did not repurchase any shares of our common stock during the three months ended March 31, 2012. The total amount remaining under the repurchase program was $14.7 million as of March 31, 2012. The repurchase program has no set expiration or termination date.
 
Potential Sources of Liquidity, Short-Term Liquidity
 
Historically, our primary sources of liquidity and capital resources have been cash flow from operations, bank borrowings, sales of existing casino operations and proceeds from the issuance of equity securities.
 
We expect that the primary source of cash will be from our gaming operations. In addition to the payment of operating costs, expected uses of cash within one year include capital expenditures for our existing properties, interest and principal payments on outstanding debt and potential repurchases of our outstanding common stock.
 
We believe that our cash at March 31, 2012 as supplemented by cash flows from operations will be sufficient to fund our anticipated operating costs, capital expenditures at existing properties and current debt repayment obligations for at least the next 12 months. We will continue to evaluate our planned capital expenditures at each of our existing locations in light of the operating performance of the facilities at such locations. From time to time we expect to have cash needs for the development or purchase of new properties that exceed our current borrowing capacity. If necessary, we may seek to obtain term loans, mortgages or lines of credit with commercial banks or other debt or equity financings to supplement our working capital and investing requirements.
 
In addition, we expect our U.S. domestic cash resources will be sufficient to fund our U.S. operating activities and cash commitments for investing and financing activities for at least the next 12 months and thereafter for the foreseeable future. While we currently do not have an intent nor foresee a need to repatriate funds, if we require more capital in the U.S. than is generated by our U.S. operations either for operations, capital expenditures or significant discretionary activities such as acquisitions of businesses and share repurchases, we could elect to repatriate earnings from foreign jurisdictions or raise capital in the U.S. through debt or equity issuances, which could have adverse tax consequences as we have not accrued taxes for un-repatriated earnings of our foreign subsidiaries. The determination of the additional deferred taxes that would be provided for undistributed earnings has not been determined because the hypothetical calculation is not practicable.
 

We had no significant changes in our exposure to market risks from that previously reported in our Annual Report on Form 10-K for the year ended December 31, 2011.

 
27

 

Evaluation of Disclosure Controls and Procedures – Our management, with the participation of our principal executive officers and principal financial/accounting officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act as of the end of the period covered by this report. Based on such evaluation, our Co Chief Executive Officers and Principal Financial Officer have concluded that as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting – As further discussed in our Annual Report on Form 10-K for the year ended December 31, 2011, during the quarter ended December 31, 2011, management identified a material weakness related to the absence of a process to substantiate and support tax positions taken related to our international operations and international legal entity structure. As a result of this material weakness, we identified errors in income tax expense totaling $502,000.  During the three months ended March 31, 2012, management implemented changes to address the identified control deficiencies by taking the following actions:  Management completed an assessment of its current domestic and international tax planning structure and strategy with the assistance of an outside professional tax firm. In the future, we will routinely evaluate the necessity for third party tax specialists’ advice or assistance and utilize such advice or assistance as deemed appropriate when dealing with material and complex tax accounting matters in connection with the preparation of our financial statements, including tax planning strategies.  Management believes these changes have remediated the identified material weakness.


 
28

 

PART II - OTHER INFORMATION


In March 2000, our board of directors approved a discretionary program to repurchase up to $5.0 million of our outstanding common stock. In November 2009, our board of directors approved an increase of the amount available to be repurchased under the program to $15.0 million. The repurchase program has no set expiration or termination date and had approximately $14.7 million remaining as of March 31, 2012. There were no repurchases of common stock during the three months ended March 31, 2012.
 
 
(a) Exhibits
 
   
3.1
Certificate of Incorporation of Century Casinos, Inc. is hereby incorporated by reference to the Company’s Proxy Statement for the 1994 Annual Meeting of Stockholders.
3.2
Amended and Restated Bylaws of Century Casinos, Inc. is hereby incorporated by reference from Exhibit 11.14 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002.
31.1
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
Co Chief Executive Officer.
31.2
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
Co Chief Executive Officer and President.
31.3
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
Principal Financial Officer.
32.1
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
Co Chief Executive Officer.
32.2
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
Co Chief Executive Officer and President.
32.3
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
Principal Financial Officer.
101.INS
XBRL Instance Document**
101.SCH
XBRL Taxonomy Extension Schema Document**
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document**
101.LAB
XBRL Taxonomy Extension Label Linkbase Document**
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document**
 
** Pursuant to Rule 406T of Regulation S-T, these Interactive Data Files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to the liability under these sections.


 
29

 
 
Pursuant to the requirements of 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/ Margaret Stapleton
 
Margaret Stapleton
 
Vice President and Principal Financial/Accounting Officer
 
Date: May 4, 2012


 
30

 

CENTURY CASINOS, INC.
INDEX TO EXHIBITS

   
Exhibit No.
Document
3.1
Certificate of Incorporation of Century Casinos, Inc. is hereby incorporated by reference to the Company’s Proxy Statement for the 1994 Annual Meeting of Stockholders.
3.2
Amended and Restated Bylaws of Century Casinos, Inc. is hereby incorporated by reference from Exhibit 11.14 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002.
31.1
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
Co Chief Executive Officer.
31.2
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
Co Chief Executive Officer and President.
31.3
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,
Principal Financial Officer.
32.1
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
Co Chief Executive Officer.
32.2
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
Co Chief Executive Officer and President.
32.3
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
Principal Financial Officer.
101.INS
XBRL Instance Document**
101.SCH
XBRL Taxonomy Extension Schema Document**
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document**
101.LAB
XBRL Taxonomy Extension Label Linkbase Document**
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document**
 
** Pursuant to Rule 406T of Regulation S-T, these Interactive Data Files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to the liability under these sections.
 
 

 
 
31

 

XWBO:CNTY Century Casinos Inc Quarterly Report 10-Q Filling

Century Casinos Inc XWBO:CNTY Stock - Get Quarterly Report SEC Filing of Century Casinos Inc XWBO:CNTY stocks, including company profile, shares outstanding, strategy, business segments, operations, officers, consolidated financial statements, financial notes and ownership information.

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