Document and Entity Information
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Document and Entity Information
9 Months Ended
Sep. 30, 2013
Oct. 25, 2013
Document and Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 30, 2013  
Document Fiscal Year Focus 2013  
Document Fiscal Period Focus Q3  
Entity Registrant Name CENTURY CASINOS INC /CO/  
Entity Central Index Key 0000911147  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   24,377,761

Condensed Consolidated Balance Sheets
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Condensed Consolidated Balance Sheets (USD $)
In Thousands, unless otherwise specified
Sep. 30, 2013
Dec. 31, 2012
ASSETS    
Cash and cash equivalents $ 30,447 $ 24,747
Receivables, net 847 700
Prepaid expenses 765 608
Inventories 490 311
Other current assets 96 86
Deferred income taxes 420 83
Restricted cash 268 0
Total current assets 33,333 26,535
Property and equipment, net 113,726 99,526
Goodwill 13,133 4,941
Equity investment 0 3,346
Deferred income taxes 3,197 2,145
Casino licenses 2,309 0
Trademark 2,059 104
Notes receivable 500 0
Security deposits 712 77
Other assets 373 401
Restricted cash 0 261
Total assets 169,342 137,336
LIABILITIES AND SHAREHOLDERS' EQUITY    
Current portion of long-term debt 6,234 372
Accounts payable and accrued liabilities 6,628 6,379
Accrued payroll 4,291 2,806
Taxes payable 4,083 3,413
Contingent liability (Note 3) 5,868 0
Deferred income taxes 101 101
Total current liabilities 27,205 13,071
Long-term debt, less current portion 9,783 3,192
Taxes payable 237 237
Deferred income taxes 3,571 2,680
Total liabilities 40,796 19,180
Commitments and Contingencies      
Shareholders' Equity:    
Preferred stock; $0.01 par value; 20,000,000 shares authorized; no shares issued or outstanding 0 0
Common stock; $0.01 par value; 50,000,000 shares authorized; 24,377,761 and 24,243,926 shares issued; 24,377,761 and 24,128,114 outstanding 244 243
Additional paid-in capital 75,116 75,388
Retained earnings 44,630 38,238
Accumulated other comprehensive earnings 2,859 4,569
Treasury stock - 0 and 115,812 shares at cost 0 (282)
Total Century Casinos shareholders' equity 122,849 118,156
Noncontrolling interest 5,697 0
Total equity 128,546 118,156
Total liabilities and shareholders' equity $ 169,342 $ 137,336

Condensed Consolidated Balance Sheets (Parenthetical)
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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
Sep. 30, 2013
Dec. 31, 2012
Condensed Consolidated Balance Sheets [Abstract]    
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares authorized 20,000,000 20,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 50,000,000 50,000,000
Common stock, shares issued 24,377,761 24,243,926
Common stock, shares outstanding 24,377,761 24,128,114
Treasury stock, shares 0 115,812

Condensed Consolidated Statements of Earnings
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Condensed Consolidated Statements of Earnings (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Operating revenue:        
Gaming $ 26,758 $ 16,778 $ 68,603 $ 47,746
Hotel, bowling, food and beverage 3,141 3,189 9,554 9,645
Other 923 1,041 2,802 3,086
Gross revenue 30,822 21,008 80,959 60,477
Less: Promotional allowances (1,996) (2,285) (5,795) (6,395)
Net operating revenue 28,826 18,723 75,164 54,082
Operating costs and expenses:        
Gaming 13,959 7,954 34,401 22,645
Hotel, bowling, food and beverage 2,691 2,534 7,787 7,391
General and administrative 9,121 5,385 22,678 16,010
Depreciation and amortization 1,685 1,178 4,671 3,535
Total operating costs and expenses 27,456 17,051 69,537 49,581
(Losses) earnings from equity investment 0 (57) (128) 381
Earnings from operations 1,370 1,615 5,499 4,882
Non-operating income (expense):        
Gain on business combination 0 0 2,074 0
Interest income 7 7 18 36
Interest expense (206) (57) (550) (600)
Gain (loss) on foreign currency transactions and other 66 (36) 234 (19)
Non-operating (expense) income, net (133) (86) 1,776 (583)
Earnings before income taxes and non-controlling interest 1,237 1,529 7,275 4,299
Income tax provision 132 343 685 832
Net earnings 1,105 1,186 6,590 3,467
Less: Net earnings attributable to noncontrolling interest 32 0 198 0
Net earnings attributable to Century Casinos, Inc. shareholders $ 1,073 $ 1,186 $ 6,392 $ 3,467
Earnings per share attributable to Century Casinos, Inc. shareholders - basic and diluted:        
Basic $ 0.04 $ 0.05 $ 0.26 $ 0.14
Diluted $ 0.04 $ 0.05 $ 0.26 $ 0.14
Weighted average shares outstanding - basic 24,249 24,117 24,334 24,117
Weighted average shares outstanding - diluted 24,413 24,140 24,464 24,318

Condensed Consolidated Statements of Comprehensive Earnings (Loss)
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Condensed Consolidated Statements of Comprehensive Earnings (Loss) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Condensed Consolidated Statements of Comprehensive Earnings (Loss) [Abstract]        
Net earnings $ 1,105 $ 1,186 $ 6,590 $ 3,467
Other comprehensive earnings (loss), net of tax:        
Foreign currency translation adjustments 2,025 2,041 (1,425) 1,751
Other comprehensive earnings (loss) 2,025 2,041 (1,425) 1,751
Comprehensive earnings 3,130 3,227 5,165 5,218
Less: Comprehensive earnings attributable to non-controlling interest 394 0 285 0
Comprehensive earnings attributable to Century Casinos shareholders $ 2,736 $ 3,227 $ 4,880 $ 5,218

Condensed Consolidated Statements Of Shareholders' Equity
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Condensed Consolidated Statements Of Shareholders' Equity (USD $)
In Thousands, except Share data
Common Stock [Member]
Additional Paid-in Capital [Member]
Accumulated Other Comprehensive Income [Member]
Retained Earnings [Member]
Treasury Stock [Member]
Total Century Casinos Shareholders' Equity [Member]
Noncontrolling Interest [Member]
Total
BALANCE at Dec. 31, 2011 $ 240 $ 75,144 $ 3,291 $ 34,147 $ (282) $ 112,540 $ 0 $ 112,540
Shares, BALANCE at Dec. 31, 2011 23,877,362              
Net earnings 0 0 0 3,467 0 3,467 0 3,467
Foreign currency translation adjustments 0 0 1,751 0 0 1,751 0 1,751
Amortization of stock based compensation 0 0 0 0 0   0 0
Exercise of stock options 2 238 0 0 0 240 0 240
Exercise of stock options, shares 240,000              
BALANCE at Sep. 30, 2012 242 75,382 5,042 37,614 (282) 117,998 0 117,998
Shares, BALANCE at Sep. 30, 2012 24,117,362              
BALANCE at Dec. 31, 2012 243 75,388 4,569 38,238 (282) 118,156 0 118,156
Shares, BALANCE at Dec. 31, 2012 24,128,114             24,128,114
Net earnings 0 0 0 6,392 0 6,392 198 6,590
Foreign currency translation adjustments 0 0 (1,512) 0 0 (1,512) 87 (1,425)
Amortization of stock based compensation 0 8 0 0 0 8 0 8
Noncontrolling interest 0 0 0 0 0 0 5,214 5,214
Exercise of stock options 1 (280) 0 0 282 3 0 3
Exercise of stock options, shares 249,647              
BALANCE at Sep. 30, 2013 $ 244 $ 75,116 $ 3,057 $ 44,630 $ 0 $ 123,047 $ 5,499 $ 128,546
Shares, BALANCE at Sep. 30, 2013 24,377,761             24,377,761

Condensed Consolidated Statements of Cash Flows
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Condensed Consolidated Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Cash Flows from Operating Activities:    
Net earnings $ 6,590 $ 3,467
Adjustments to reconcile net earnings to net cash provided by operating activities:    
Depreciation and amortization 4,671 3,535
Gain on business combination (2,074) 0
Loss on disposition of fixed assets 266 22
Amortization of stock-based compensation 11 0
Amortization of deferred financing costs 62 131
Deferred taxes (498) 386
Earnings (losses) from unconsolidated subsidiary 128 (381)
Changes in Operating Assets and Liabilities, net of assets/liabilities acquired in business combination:    
Receivables 488 151
Prepaid expenses and other assets 54 (13)
Accounts payable and accrued liabilities (1,193) (685)
Inventories (38) (25)
Other operating assets (128) (46)
Other operating liabilities (223) 0
Accrued payroll (237) 131
Taxes payable (1,398) (769)
Net cash provided by operating activities 6,481 5,904
Cash Flows from Investing Activities:    
Purchases of property and equipment (2,144) (2,578)
Acquisition of Casinos Poland, net of cash acquired (4,580) 0
Proceeds from disposition of assets 53 6
Funds advanced for projects (500) 0
Net cash used in investing activities (7,171) (2,572)
Cash Flows from Financing Activities:    
Proceeds from borrowings 9,322 3,626
Payment of deferred financing costs 0 (396)
Principal repayments (2,806) (9,124)
Proceeds from exercise of options 0 240
Net cash provided by (used in) financing activities 6,516 (5,654)
Effect of Exchange Rate Changes on Cash (126) 37
Increase (Decrease) in Cash and Cash Equivalents 5,700 (2,285)
Cash and Cash Equivalents at Beginning of Period 24,747 25,192
Cash and Cash Equivalents at End of Period 30,447 22,907
Supplemental Disclosure of Cash Flow Information:    
Interest paid 494 535
Income taxes paid $ 1,662 $ 366

Description Of Business And Basis Of Presentation
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Description Of Business And Basis Of Presentation
9 Months Ended
Sep. 30, 2013
Description Of Business And Basis Of Presentation [Abstract]  
Description Of Business And Basis Of Presentation

1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

 

Century Casinos, Inc. (“CCI” or the “Company”) is an international casino entertainment company. As of September 30, 2013, the Company owned casino operations in North America, managed cruise ship-based casinos on international waters, and had a management contract to manage the casino in the Radisson Aruba Resort, Casino & Spa. In addition, on April 8, 2013, the Company’s subsidiary Century Casinos Europe GmbH (“CCE”) acquired from LOT Polish Airlines an additional 33.3% ownership interest in Casinos Poland Ltd (“CPL”).  The Company currently owns 66.6% of CPL, and on April 8, 2013 began consolidating CPL as a majority-owned subsidiary for which the Company has a controlling financial interest (Note 3).

 

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. Certain reclassifications have been made to the prior year financial statements to conform to the current presentation. These reclassifications had no effect on previously reported results of operations or retained earnings. 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 for the year ended December 31, 2012. The results of operations for the period ended September 30, 2013 are not necessarily indicative of the operating results for the full year.

 

Presentation of Foreign Currency Amounts

 

The Company’s functional currency is the U.S. dollar (“USD” or “$”).  Foreign subsidiaries with a functional currency other than the U.S. dollar translate assets and liabilities at current exchange rates at the end of the reporting periods, while income and expense accounts are translated at average exchange rates for the respective periods.  The Company and its subsidiaries enter into various transactions made in currencies different from their functional currencies.  These transactions are typically denominated in the Canadian dollar (“CAD”), Euro (“EUR”) and Polish zloty (“PLN”).  Gains and losses resulting from changes in foreign currency exchange rates related to these transactions are included in income from operations as they occur. 

 

The exchange rates to the U.S. dollar used to translate balances at the end of the reported periods are as follows:

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

September 30,

Ending Rates

 

2013

 

2012

 

2012

Canadian dollar (CAD)

 

1.0285 

 

0.9949 

 

0.9837 

Euros (EUR)

 

0.7389 

 

0.7584 

 

0.7779 

Polish zloty (PLN)

 

3.1214 

 

3.0996 

 

3.1780 

Source: Pacific Exchange Rate Service

 

 

 

 

 

 

 

 

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 September 30,

 

 

 

For the nine months

ended September 30,

 

 

Average Rates

 

2013

 

2012

 

% Change

 

2013

 

2012

 

% Change

Canadian dollar (CAD)

 

1.0389 

 

0.9951 

 

(4.4%)

 

1.0237 

 

1.0023 

 

(2.1%)

Euros (EUR)

 

0.7549 

 

0.7990 

 

5.5% 

 

0.7594 

 

0.7805 

 

2.7% 

Polish zloty (PLN)

 

3.2054 

 

3.3019 

 

2.9% 

 

3.1884 

 

3.2822 

 

2.9% 

Source: Pacific Exchange Rate Service

 

 

 

 

 

 

 

 

 

 

 

 

 


Description Of Business And Basis Of Presentation (Tables)
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Description Of Business And Basis Of Presentation (Tables)
9 Months Ended
Sep. 30, 2013
Description Of Business And Basis Of Presentation [Abstract]  
Exchange Rates

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

September 30,

Ending Rates

 

2013

 

2012

 

2012

Canadian dollar (CAD)

 

1.0285 

 

0.9949 

 

0.9837 

Euros (EUR)

 

0.7389 

 

0.7584 

 

0.7779 

Polish zloty (PLN)

 

3.1214 

 

3.0996 

 

3.1780 

Source: Pacific Exchange Rate Service

 

 

 

 

 

 

 

Average Exchange Rates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months

ended September 30,

 

 

 

For the nine months

ended September 30,

 

 

Average Rates

 

2013

 

2012

 

% Change

 

2013

 

2012

 

% Change

Canadian dollar (CAD)

 

1.0389 

 

0.9951 

 

(4.4%)

 

1.0237 

 

1.0023 

 

(2.1%)

Euros (EUR)

 

0.7549 

 

0.7990 

 

5.5% 

 

0.7594 

 

0.7805 

 

2.7% 

Polish zloty (PLN)

 

3.2054 

 

3.3019 

 

2.9% 

 

3.1884 

 

3.2822 

 

2.9% 

Source: Pacific Exchange Rate Service

 

 

 

 

 

 

 

 

 

 

 

 

 


Description Of Business And Basis Of Presentation (Narative) (Details)
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Description Of Business And Basis Of Presentation (Narative) (Details)
9 Months Ended 0 Months Ended
Sep. 30, 2013
Apr. 08, 2013
Casinos Poland Ltd [Member]
Sep. 30, 2013
Casinos Poland Ltd [Member]
Description Of Business And Basis Of Presentation [Line Items]      
Noncontrolling Interest, Ownership Percentage by Parent 66.60%   66.60%
Additional CPL percentage to acquire - agreement between CCE and LOT Polish Airlines 33.30% 33.30%  

Description Of Business And Basis Of Presentation (Exchange Rates) (Details)
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Description Of Business And Basis Of Presentation (Exchange Rates) (Details)
Sep. 30, 2013
Dec. 31, 2012
Sep. 30, 2012
Canadian Dollar [Member]
     
Description Of Business And Basis Of Presentation [Line Items]      
Exchange rate 1.0285 0.9949 0.9837
Euros [Member]
     
Description Of Business And Basis Of Presentation [Line Items]      
Exchange rate 0.7389 0.7584 0.7779
Polish Zloty [Member]
     
Description Of Business And Basis Of Presentation [Line Items]      
Exchange rate 3.1214 3.0996 3.1780

Description Of Business And Basis Of Presentation (Average Exchange Rates) (Details)
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Description Of Business And Basis Of Presentation (Average Exchange Rates) (Details)
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Canadian Dollar [Member]
       
Description Of Business And Basis Of Presentation [Line Items]        
Average Rates 1.0389 0.9951 1.0237 1.0023
Average Rates % Change (4.40%)   (2.10%)  
Euros [Member]
       
Description Of Business And Basis Of Presentation [Line Items]        
Average Rates 0.7549 0.7990 0.7594 0.7805
Average Rates % Change 5.50%   2.70%  
Polish Zloty [Member]
       
Description Of Business And Basis Of Presentation [Line Items]        
Average Rates 3.2054 3.3019 3.1884 3.2822
Average Rates % Change 2.90%   2.90%  

Recently Issued Accounting Pronouncement
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Recently Issued Accounting Pronouncement
9 Months Ended
Sep. 30, 2013
Recently Issued Accounting Pronouncement [Abstract]  
Recently Issued Accounting Pronouncement

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT

 

In July 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-11, Income Taxes. This update applies to the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The Company is currently assessing the impact of this FASB update and is considering applying the update for the year ended December 31, 2013.

 


Acquisition
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Acquisition
9 Months Ended
Sep. 30, 2013
Acquisition [Abstract]  
Acquisition

3.ACQUISITION

 

Casinos Poland

On April 8, 2013, the Company’s subsidiary CCE acquired from LOT Polish Airlines an additional 33.3% ownership interest in CPL for cash consideration of $6.8 million. The acquisition of CPL furthers the Company’s mission to grow and develop mid-size casinos and increase company value. CPL is the owner and operator of nine casinos throughout Poland with a total of 354 slot machines and 69 gaming tables.  The Company paid for the purchase through borrowings under its credit agreement with the Bank of Montreal (“BMO Credit Agreement”) (Note 6). There was no contingent consideration for the transaction.

 

Prior to April 8, 2013, the Company owned 33.3% of CPL and accounted for the ownership interest as an equity investment. The Company currently owns a 66.6%  interest in CPL and on April 8, 2013 began consolidating CPL financial information as a majority-owned subsidiary for which the Company has a controlling financial interest. As a result, the Company changed its accounting for CPL from an equity method investment to a consolidated subsidiary. CPL contributed a total of $22.0 million in net operating revenue and $0.4 million in earnings from the date of acquisition through September 30, 2013. Polish Airports Company (“Polish Airports”) owns the remaining 33.3% ownership interest in CPL and the Company accounts for and reports the Polish Airports ownership interest as a non-controlling financial interest.

 

Upon consolidation, the fair value of the Company’s initial 33.3% equity investment was determined to be $5.2 million as of the acquisition date. The $5.2 million was greater than the carrying value of the equity investment, resulting in a gain of $2.1 million, net of foreign currency translation. The Company recorded the gain in “Gain on business combination” in the second quarter 2013 consolidated statement of earnings. The fair value was determined based on the controlling interest obtained through the additional 33.3% interest acquired and on the Company’s internal valuation of CPL using the following methods, which the Company believes provide the most appropriate indicators of fair value: 

·

relief from royalty method; 

·

replacement cost method; 

·

direct market value approach and direct and indirect cost approach; and

·

sales comparison approach, income approach and cost approach.

 

 

 

 

Amounts in thousands (in USD)

Total

Investment fair value - April 8, 2013

$
5,214 

Investment book value at April 8, 2013

(3,027)

Gain on business combination including foreign currency translation

2,187 

Less: foreign currency translation

(113)

Gain on business combination

$
2,074 

 

 

 

Details of the purchase in the table below are based on estimated fair values of assets and liabilities as of April 8, 2013, the date of acquisition. Allocation of the purchase consideration is preliminary and subject to adjustment as the Company obtains additional information during the measurement period (a period up to one year from the date of acquisition) that could change the fair value allocation as of the acquisition date.

 

 

 

Acquisition Date

April 8, 2013

 

 

Amounts in thousands

 

Purchase consideration:

 

Cash paid

$
6,780 

Acquisition-date fair value of the previously held equity interest

5,214 

Total purchase consideration, including fair value of previously held equity interest

$
11,994 

The assets and liabilities recognized as a result of the acquisition are as follows:

 

 

 

 

Cash

$
2,200 

Accounts receivable

638 

Deferred tax assets - current

201 

Prepaid expenses

222 

Inventory

155 

Other current assets

Property and equipment

17,922 

Licenses

2,533 

Trademark

1,924 

Deferred tax assets, non-current

1,034 

Other long-term assets

448 

Current portion of long-term debt

(4,033)

Accounts payable and accrued liabilities

(2,236)

Contingent liability

(5,500)

Accrued payroll

(1,272)

Taxes payable

(2,073)

Long-term debt, less current portion

(1,921)

Deferred income taxes, non-current

(1,258)

Net identifiable assets acquired

8,987 

 

 

Less: Non-controlling interest

(5,214)

Add: Goodwill

8,221 

Net assets acquired

$
11,994 

 

The Company accounted for the transaction as a step acquisition, and accordingly, CPL's assets of $27.3 million (including $2.2 million in cash) and liabilities of $18.3 million were included in the Company's consolidated balance sheet at April 8, 2013. The goodwill is attributable to the expected synergies and economies of scale of incorporating CPL with the Company.  The acquisition also combines the specialties of the Company’s management expertise in the gaming industry with the brand awareness of Casinos Poland. Goodwill is not a tax deductible item for the Company.    

 

 

Non-controlling interest

The Company recognized the Polish Airports non-controlling interest in CPL at its fair value as of the acquisition. The Company estimated the fair value of the non-controlling interest by determining the value of a controlling interest in the entity. Having control over a company gives additional rights to the holder of the controlling interest as opposed to the holder of the non-controlling interest. The Company then applied a 22.5% discount for lack of control to determine the value of the non-controlling interest.

 

The discount for lack of control was estimated based on an analysis of the transactions in the casinos and gaming industry in the past five years. The resulting value of the non-controlling interest was PLN 16.5 million ($5.2 million).

 

Purchase Consideration – cash outflow

 

 

 

 

Outflow of cash to acquire subsidiary, net of cash acquired

 

Cash consideration

$
6,780 

Less: balances acquired

(2,200)

Outflow of cash - investing activities

$
4,580 

 

Acquisition-related costs

The Company incurred acquisition costs of approximately $0.2 million during the second and third quarters of 2013. These costs include legal, accounting and valuation fees and have been recorded as general and administrative expenses.

 

Contingent liability

 

In March 2011, the Polish Internal Revenue Service (“Polish IRS”) conducted a tax audit of CPL to review the calculation and payment of personal income tax by CPL employees covering January 2011. Based on this audit, the Polish IRS concluded that CPL should calculate, collect and remit to the Polish IRS personal income tax on tips received by CPL employees from casino customers. After proceedings between CPL and the Polish IRS, the Director of the Tax Chamber in Warsaw confirmed the opinion of the Polish IRS on November 19, 2012, and on November 30, 2012 CPL paid PLN 125,269 (less than $0.1 million) to the Polish IRS resulting from the decision. CPL appealed the decision to the Regional Administrative Court in Warsaw on December 21, 2012. On September 16, 2013, the Regional Administrative Court in Warsaw denied CPL’s appeal. CPL plans to appeal the decision to the Supreme Administration Court. If the Supreme Administration Court ultimately decides against CPL, the Company believes that the Polish IRS may seek to assess a liability for all periods from January 2007 to present. A final decision is not expected in 2013. Similar litigation involving competitors concerning the treatment of tips is ongoing.

 

Management has determined that it is reasonably possible that the litigation will be unfavorable for CPL. Accounting guidance requires pre-acquisition contingent liabilities to be recognized at fair value at the acquisition date if the liability can be determined. Based on management’s assessment using a probability weighted cash flow analysis, the fair value of the potential liability for all open periods is estimated at PLN 18.3 million ($5.9 million). As a result, PLN 18.3 million ($5.9 million) has been recorded as a contingent liability as of September 30, 2013 on the condensed consolidated balance sheets.

 

Pro Forma Results

The following table provides unaudited pro forma information of the Company as if the acquisition of CPL had occurred at the beginning of the periods presented. This pro forma information is not necessarily indicative of the combined results of operations that actually would have been realized had the acquisition been consummated during the periods for which the pro forma information is presented, or of future results.

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months

ended September 30,

 

For the nine months

ended September 30,

 

 

2013

 

2012

 

2013

 

2012

Net operating revenue

 

$
28,826 

 

$
28,676 

 

$
80,595 

 

$
85,392 

Net earnings

 

$
974 

 

$
910 

 

$
6,245 

 

$
3,459 

Basic and diluted earnings per share

 

$
0.04 

 

$
0.04 

 

$
0.25 

 

$
0.14 

 


Acquisition (Tables)
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Acquisition (Tables)
9 Months Ended
Sep. 30, 2013
Acquisition [Abstract]  
Gain On Business Combination

 

 

Amounts in thousands (in USD)

Total

Investment fair value - April 8, 2013

$
5,214 

Investment book value at April 8, 2013

(3,027)

Gain on business combination including foreign currency translation

2,187 

Less: foreign currency translation

(113)

Gain on business combination

$
2,074 

 

Total Purchase Consideration

 

 

Acquisition Date

April 8, 2013

 

 

Amounts in thousands

 

Purchase consideration:

 

Cash paid

$
6,780 

Acquisition-date fair value of the previously held equity interest

5,214 

Total purchase consideration, including fair value of previously held equity interest

$
11,994 

 

Assets And Liabilities Recognized As A Result Of The Acquisition

 

 

Cash

$
2,200 

Accounts receivable

638 

Deferred tax assets - current

201 

Prepaid expenses

222 

Inventory

155 

Other current assets

Property and equipment

17,922 

Licenses

2,533 

Trademark

1,924 

Deferred tax assets, non-current

1,034 

Other long-term assets

448 

Current portion of long-term debt

(4,033)

Accounts payable and accrued liabilities

(2,236)

Contingent liability

(5,500)

Accrued payroll

(1,272)

Taxes payable

(2,073)

Long-term debt, less current portion

(1,921)

Deferred income taxes, non-current

(1,258)

Net identifiable assets acquired

8,987 

 

 

Less: Non-controlling interest

(5,214)

Add: Goodwill

8,221 

Net assets acquired

$
11,994 

 

Purchase Consideration - Cash Outflow

 

 

Outflow of cash to acquire subsidiary, net of cash acquired

 

Cash consideration

$
6,780 

Less: balances acquired

(2,200)

Outflow of cash - investing activities

$
4,580 

 

Pro Forma Results

 

 

 

 

 

 

 

 

 

 

 

For the three months

ended September 30,

 

For the nine months

ended September 30,

 

 

2013

 

2012

 

2013

 

2012

Net operating revenue

 

$
28,826 

 

$
28,676 

 

$
80,595 

 

$
85,392 

Net earnings

 

$
974 

 

$
910 

 

$
6,245 

 

$
3,459 

Basic and diluted earnings per share

 

$
0.04 

 

$
0.04 

 

$
0.25 

 

$
0.14 

 


Acquisition (Narrative) (Details)
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Acquisition (Narrative) (Details)
0 Months Ended 3 Months Ended 9 Months Ended 0 Months Ended 9 Months Ended 0 Months Ended 3 Months Ended 9 Months Ended
Apr. 08, 2013
USD ($)
Sep. 30, 2013
USD ($)
Sep. 30, 2012
USD ($)
Sep. 30, 2013
USD ($)
Sep. 30, 2012
USD ($)
Apr. 07, 2013
USD ($)
Dec. 31, 2012
USD ($)
Apr. 08, 2013
Polish Airports [Member]
USD ($)
Apr. 08, 2013
Polish Airports [Member]
PLN
Sep. 30, 2013
Polish Airports [Member]
Apr. 08, 2013
Casinos Poland Ltd [Member]
USD ($)
Sep. 30, 2013
Casinos Poland Ltd [Member]
USD ($)
Sep. 30, 2013
Casinos Poland Ltd [Member]
USD ($)
item
Sep. 30, 2013
Casinos Poland Ltd [Member]
PLN
item
Apr. 07, 2013
Casinos Poland Ltd [Member]
Additional ownership acquired       33.30%             33.30%        
Cash paid           $ 6,780,000         $ 6,800,000        
Number of casinos                         9 9  
Number of slot machines                         354 354  
Number of gaming tables                         69 69  
Ownership percentage prior to acquisition                             33.30%
Ownership interest in CPL   66.60%   66.60%           33.30%     66.60% 66.60%  
Net operating revenue contributed by CPL                       22,000,000      
Earnings contributed by CPL                       400,000      
Remaining ownership interest in CPL   0   0     3,346,000                
Fair value of initial equity investment 5,214,000           (3,027,000)       5,200,000        
Gain on business combination 2,074,000 0 0 2,074,000 0               2,100,000    
Assets carried in balance sheet                     27,300,000        
Cash included in assets carried in balance sheet                     2,200,000        
Liabilities carried in balance sheet                     18,300,000        
Percentage of discount or reverse control premium to determine the value of the non-controlling interest               22.50% 22.50%            
Number of years of transactions analyzed                   5 years          
Resulting value of noncontrolling interest               5,200,000 16,500,000            
Acquisition costs       200,000                      
Paid to the Polish IRS resulting from the decision                         100,000 125,269  
Contingent liability   $ 5,868,000   $ 5,868,000     $ 0             18,300,000  

Acquisition (Gain On Business Combination) (Details)
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Acquisition (Gain On Business Combination) (Details) (USD $)
In Thousands, unless otherwise specified
0 Months Ended 3 Months Ended 9 Months Ended
Apr. 08, 2013
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Dec. 31, 2012
Acquisition [Abstract]            
Investment fair value $ 5,214         $ (3,027)
Gain on business combination including foreign currency translation 2,187          
Less: foreign currency translation (113)          
Gain on business combination $ 2,074 $ 0 $ 0 $ 2,074 $ 0  

Acquisition (Purchase Consideration) (Details)
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Acquisition (Purchase Consideration) (Details) (USD $)
In Thousands, unless otherwise specified
Apr. 07, 2013
Acquisition [Abstract]  
Cash paid $ 6,780
Acquisition-date fair value of the previously held equity interest 5,214
Total purchase consideration $ 11,994

Acquisition (Assets And Liabilities Recognized As A Result Of The Acquisition) (Details)
v0.0.0.0
Acquisition (Assets And Liabilities Recognized As A Result Of The Acquisition) (Details) (USD $)
In Thousands, unless otherwise specified
Apr. 07, 2013
Business Acquisition [Line Items]  
Assets recognized $ 2,200
Net identifiable assets acquired 8,987
Less: Non-controlling interest (5,214)
Add: Goodwill 8,221
Net assets acquired 11,994
Accounts Receivable [Member]
 
Business Acquisition [Line Items]  
Assets recognized 638
Deferred Tax Assets Current [Member]
 
Business Acquisition [Line Items]  
Assets recognized 201
Prepaid Expenses [Member]
 
Business Acquisition [Line Items]  
Assets recognized 222
Inventory [Member]
 
Business Acquisition [Line Items]  
Assets recognized 155
Other Current Assets [Member]
 
Business Acquisition [Line Items]  
Assets recognized 3
Property And Equipment [Member]
 
Business Acquisition [Line Items]  
Assets recognized 17,922
Licenses [Member]
 
Business Acquisition [Line Items]  
Assets recognized 2,533
Trademark [Member]
 
Business Acquisition [Line Items]  
Assets recognized 1,924
Deferred Tax Assets, Noncurrent [Member]
 
Business Acquisition [Line Items]  
Assets recognized 1,034
Other Long-Term Assets [Member]
 
Business Acquisition [Line Items]  
Assets recognized 448
Current Portion Of Long-Term Debt [Member]
 
Business Acquisition [Line Items]  
Liabilities recognized (4,033)
Accounts Payable And Accrued Liabilities [Member]
 
Business Acquisition [Line Items]  
Liabilities recognized (2,236)
Contingent Liability [Member]
 
Business Acquisition [Line Items]  
Liabilities recognized (5,500)
Accrued Payroll [Member]
 
Business Acquisition [Line Items]  
Liabilities recognized (1,272)
Taxes Payable [Member]
 
Business Acquisition [Line Items]  
Liabilities recognized (2,073)
Long-Term Debt, Less Current Portion [Member]
 
Business Acquisition [Line Items]  
Liabilities recognized (1,921)
Deferred Income Taxes, Noncurrent [Member]
 
Business Acquisition [Line Items]  
Liabilities recognized $ (1,258)

Acquisition (Purchase Consideration - Cash Outflow) (Details)
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Acquisition (Purchase Consideration - Cash Outflow) (Details) (USD $)
In Thousands, unless otherwise specified
0 Months Ended 9 Months Ended
Apr. 07, 2013
Sep. 30, 2013
Sep. 30, 2012
Acquisition [Abstract]      
Cash consideration $ 6,780    
Less: cash balances acquired (2,200)    
Outflow of cash - investing activities $ 4,580 $ 4,580 $ 0

Acquisition (Pro Forma Information) (Details)
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Acquisition (Pro Forma Information) (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
Sep. 30, 2013
Sep. 30, 2012
Acquisition [Abstract]        
Net operating revenue $ 28,826 $ 28,676 $ 80,595 $ 85,392
Net earnings $ 974 $ 910 $ 6,245 $ 3,459
Basic and diluted earnings per share $ 0.04 $ 0.04 $ 0.25 $ 0.14

Goodwill And Intangible Assets
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Goodwill And Intangible Assets
9 Months Ended
Sep. 30, 2013
Goodwill And Intangible Assets [Abstract]