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CENTURY CASINOS, INC. (CNTY)
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CENTURY CASINOS // Management Discussion and Analysis of Financial Condition and Results of Operations (form 10 Q : CENTURY CASINOS INC /CO/ Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

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11/07/2018 | 06:10am EST

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, 2017. 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 "USD" refers to US dollars, the term "CAD" refers to Canadian dollars, the
term "PLN" refers to Polish zloty and the term "GBP" refers to British pounds.
Certain terms used in this Item 2 without definition are defined in Item 1.



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.




EXECUTIVE OVERVIEW



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 hotel,
restaurant, horse racing (including off-track betting), bowling and
entertainment facilities that are in most instances a part of the casinos.



We view each property as a separate operating segment and aggregate all such
properties into three reportable segments based on the geographical locations in
which our casinos operate: Canada, United States and Poland. We have additional
business activities including our casino in Bath, England; concession,
management and consulting agreements; and certain other corporate and management
operations that we report as Corporate and Other.



                                       35

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The table below provides information about the aggregation of the Company's operating segments into reportable segments:





Reportable Segment  Operating Segment
Canada              Century Casino & Hotel - Edmonton
CanadaCentury Casino Calgary
Canada              Century Downs Racetrack and Casino
Canada              Century Bets!
Canada              Century Casino St. Albert
Canada              Century Mile Racetrack and Casino
United StatesCentury Casino & Hotel - Central CityUnited StatesCentury Casino & Hotel - Cripple CreekPoland              Casinos Poland
Corporate and Other Cruise Ships & Other
Corporate and Other Century Casino Bath
Corporate and Other Corporate Other




The following operating segments are owned, operated and managed by us through wholly-owned subsidiaries:

· The Century Casino & Hotel in Edmonton, Alberta, Canada;

· The Century Casino St. Albert in Edmonton, Alberta, Canada;

· The Century Casino Calgary, Alberta, Canada;

· The Century Casino & Hotel in Central City, Colorado;

· The Century Casino & Hotel in Cripple Creek, Colorado; and

· The Century Casino Bath in Bath, England

The casino at CCB opened in May 2018 with 56 slot and electronic roulette machines and 13 table games.

We have controlling financial interests through our subsidiary CRM in the following operating segments:

· We have a 66.6% ownership interest in CPL and we consolidate CPL as a

majority-owned subsidiary for which we have a controlling financial interest.

Polish Airports owns the remaining 33.3% of CPL. We account for and report the

33.3% Polish Airports ownership interest as a non-controlling financial

interest. CPL has been in operation since 1989 and, as of September 30, 2018,

owned licenses for eight casinos throughout Poland, seven of which were

operating. CPL was awarded a license for an eighth casino in July 2018. As of

September 30, 2018, CPL operated a total of 419 slot machines and 103 tables.

    The following table summarizes the Polish cities in which CPL operated casinos
    as of September 30, 2018.





City          Location                  License Expiration Number of Slots Number of Tables
Warsaw        Marriott Hotel            September 2022           70               27
Warsaw        Hilton Hotel              April 2019               70               24
Bielsko-Biala Hotel President           October 2023             35               5
Katowice      Park Inn by Radisson      October 2023             65               14
Wroclaw       Double Tree Hilton Hotel  November 2023            70               17
Krakow        Dwor Kosciuszko Hotel     May 2024                 60               6
Lodz          Manufaktura Entertainment June 2024                49               10
              Complex




Casino licenses are granted for six years. When a casino license expires, the
Polish Minister of Finance notifies the public of its availability, and
interested parties can submit an application for the casino license. Following
approval of a casino license by the Minister of Finance, there is a period in
which applicants can appeal the decision. In July 2018, we were awarded a third
casino license in Warsaw (our second license at the Marriott Hotel). We expect
to open this casino in the first quarter of 2019.

                                       36

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· We have a 75% ownership interest in CDR and we consolidate CDR as a

majority-owned subsidiary for which we have a controlling financial interest.

We account for and report the remaining 25% ownership interest in CDR as a

non-controlling financial interest. CDR operates Century Downs Racetrack and

Casino, a REC in Balzac, a north metropolitan area of Calgary, Alberta, Canada.

CDR is the only horse race track in the Calgary area and is located less than

one-mile north of the city limits of Calgary and 4.5 miles from the Calgary

    International Airport.



· We have a 75% ownership interest in CBS and we consolidate CBS as a

majority-owned subsidiary for which we have a controlling financial interest.

RMTC owns the remaining 25% of CBS. We account for and report the 25% ownership

interest of RMTC in CBS as a non-controlling financial interest. CBS operates

the pari-mutuel network, consisting of the sourcing of common pool pari-mutuel

    wagering content and live video to off-track betting parlors throughout
    southern Alberta.



The following agreements make up the operating segment Cruise Ships & Other in the Corporate and Other reportable segment:

· As of September 30, 2018, we operated 13 ship-based casinos through concession

agreements with four cruise ship owners. The following table summarizes the

cruise lines and the associated ships on which we operated ship-based casinos

    as of September 30, 2018.




        Cruise Line      Ship              Number of Slots Number of Tables
        TUI Cruises      Mein Schiff 2           17               -
        TUI Cruises      Mein Schiff 3           20               1
        TUI Cruises      Mein Schiff 4           17               1
        TUI Cruises      Mein Schiff 5           17               1
        TUI Cruises      Mein Schiff 6           17               1
        Windstar Cruises Wind Surf               27               4
        Windstar Cruises Wind Star               11               2
        Windstar Cruises Wind Spirit             12               2
        Windstar Cruises Star Pride              11               2
        Windstar Cruises Star Breeze             11               2
        Windstar Cruises Star Legend             12               2
        Marella Cruises  Marella Discovery       17               3
        Diamond Cruise   Glory Sea               28               17




The concession agreement to operate the ship-based casino onboard the Mein
Schiff 1 ended in April 2018 when the vessel was transferred to another cruise
line. The concession agreements to operate the ship-based casinos onboard the
Wind Star and Marella Discovery will end in the fourth quarter of 2018.



In March 2015, in connection with an agreement with Norwegian to terminate our
concession agreements with Oceania and Regent, we entered into a two-year
consulting agreement with Norwegian that became effective on June 1, 2015. Under
the consulting agreement, we provided limited consulting services for the
ship-based casinos of Oceania and Regent in exchange for receiving a consulting
fee of $2.0 million payable $250,000 per quarter through May 2017.



· Through our subsidiary CRM, we have a 7.5% ownership interest in MCE and we

report our ownership interest using the cost method of accounting. MCE has an

exclusive concession agreement with Instituto Provincial de Juegos y Casinos to

lease slot machines and provide related services to Casino de Mendoza, a casino

located in Mendoza, Argentina and owned by the Province of Mendoza. MCE may

also pursue other gaming opportunities. CRM has appointed one director to MCE's

board of directors and had a three-year option through October 2017 to purchase

up to 50% of the shares of MCE, which we did not exercise. In addition, CRM and

MCE have entered into a consulting services agreement pursuant to which CRM

provides advice on casino matters and receives a service fee consisting of a

fixed fee plus a percentage of MCE's EBITDA.

                                          37


--------------------------------------------------------------------------------

· On April 25, 2018, our subsidiary, CRM, purchased a 51% ownership interest in

GHL. We consolidate GHL as a majority-owned subsidiary for which we have a

controlling financial interest. The remaining 49% of GHL is owned by

unaffiliated shareholders and is reported as a non-controlling financial

interest. GHL entered into an agreement with MCL and its owners, pursuant to

which GHL purchased an initial 6.36% ownership interest in MCL for a total

consideration of $0.4 million and agreed to purchase an additional ownership

interest in MCL up to a total of 51% of MCL over a three-year period for

approximately $3.6 million. GHL purchased an additional 2.85% ownership

interest in MCL on October 4, 2018, for $0.2 million. GHL has the option to

purchase an additional 19% ownership interest in MCL for a total of 70% of MCL

    under certain conditions.




MCL is the owner of a small hotel and international entertainment and gaming
club in the Cao Bang province of Vietnam that is 300 feet from the Vietnamese -
Chinese border station. The hotel offers 30 rooms, and the international
entertainment and gaming club currently offers seven electronic table games for
non-Vietnamese passport holders under a provincial investment certificate that
allows for up to 26 electronic games. Under the agreement, the parties agreed to
use certain funds for the renovation and expansion of the facility. GHL and MCL
also entered into a management agreement, which provides that GHL will manage
the operations at the hotel and international entertainment and gaming club in
exchange for receiving a portion of MCL's net profit. The Company accounts for
GHL's interest in MCL as an equity investment. GHL is included in the Corporate
and Other reportable segment. See Notes 1 and 3 for additional information
related to GHL and MCL.




Additional Projects Under Development




In September 2016, we were selected by HRA as the successful applicant to own,
build and operate a horse racing facility in the Edmonton market area, which we
are planning to operate as Century Mile Racetrack and Casino. In March 2017, we
received approval for the Century Mile project from the AGLC. Century Mile will
be a one-mile horse racetrack and a multi-level REC. The project is located on
Edmonton International Airport land close to the city of Leduc, south of
Edmonton. We began construction on the Century Mile project in July 2017. We
estimate this project will cost approximately CAD 60.0 million ($46.4 million
based on the exchange rate in effect as of September 30, 2018) and that the
casino will open in April 2019. We are financing the project with $25.0 million
of the $34.4 million received from the common stock offering we completed in
November 2017, of which $24.2 million has been used as of September 30, 2018.
The balance of the Century Mile project will be financed through the increased
borrowing capacity under the BMO Credit Agreement or with available cash.



In August 2017, we announced that, together with the owner of the Hamilton
Princess Hotel & Beach Club in Hamilton, Bermuda, we had submitted a license
application to the Bermudan government for a casino at the Hamilton Princess
Hotel & Beach Club. The casino will feature approximately 200 slot machines, 17
live table games, one or more electronic table games and a high limit area and
salon privé. In September 2017, the Bermuda Casino Gaming Commission granted a
provisional casino gaming license, which is subject to certain conditions and
approvals including the adoption of certain rules and regulations by the
Parliament of Bermuda. CRM entered into a long-term management agreement with
the owner of the hotel to manage the operations of the casino and receive a
management fee if the license is awarded. CRM will also provide a $5.0 million
loan for the purchase of casino equipment if the license is awarded.



We are exploring an expansion at Century Casino & Hotel Cripple Creek to provide additional hotel rooms for our existing casino and hotel. We estimate this project, if undertaken, will cost approximately $6.5 million.

                                       38

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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                  For the nine months
                    ended September 30,                   ended September 30,
Average Rates        2018          2017      % Change      2018         2017      % Change
Canadian dollar      1.3068        1.2531                  1.2874       1.3072
(CAD)                                           (4.3%)                                1.5%
Euros (EUR)          0.8601        0.8512       (1.1%)     0.8377       0.8997        6.9%
Polish zloty         3.6981        3.6219                  3.5581       3.8379
(PLN)                                           (2.1%)                                7.3%
British pound        0.7676        0.7641                  0.7405       0.7845
(GBP)                                           (0.5%)                                5.6%
Source: Pacific
Exchange Rate
Service



We recognize in our statement of earnings foreign currency transaction gains or
losses resulting from the translation of casino operations and other
transactions that are denominated in a currency other than U.S. dollars. Our
casinos in Canada and Poland represent a significant portion of our business,
and the revenue generated and expenses incurred by these operations are
generally denominated in Canadian dollars and Polish zloty. A decrease in the
value of these currencies in relation to the value of the U.S. dollar would
decrease the earnings from our foreign operations when translated into U.S.
dollars. An increase in the value of these currencies in relation to the value
of the U.S. dollar would increase the earnings from our foreign operations when
translated into U.S. dollars.



                                       39
--------------------------------------------------------------------------------



DISCUSSION OF RESULTS

Century Casinos, Inc. and Subsidiaries




                              For the three months                               For the nine months
                               ended September 30,                   %           ended September 30,                    %
Amounts in thousands            2018         2017       Change     Change        2018          2017        Change     Change
Gaming Revenue              $  35,983$  36,914$   (931)     (2.5%)   $  102,595$  102,814$   (219)     (0.2%)
Hotel Revenue                     575          560          15       2.7%         1,534         1,491          43       2.9%
Food and Beverage Revenue       4,290        3,868         422      10.9%        11,630        10,622       1,008       9.5%
Other Revenue                   2,716        2,449         267      10.9%         8,075         7,604         471       6.2%
Total Operating Revenue        43,564       43,791        (227)     (0.5%)      123,834       122,531       1,303       1.1%
Less Promotional
Allowances (1)                       -      (2,743)     (2,743)   (100.0%)             -       (7,756)     (7,756)   (100.0%)

Net Operating Revenue 43,564 41,048 2,516 6.1%

     123,834       114,775       9,059       7.9%
Gaming Expenses (2)           (18,490)     (17,094)      1,396       8.2%       (52,666)      (48,796)      3,870       7.9%
Hotel Expenses (2)               (197)        (171)         26      15.2%          (551)         (468)         83      17.7%
Food and Beverage
Expenses (2)                   (4,148)      (3,388)        760      22.4%       (11,708)       (9,452)      2,256      23.9%
General and
Administrative Expenses       (15,174)     (13,392)      1,782      13.3%       (44,781)      (36,819)      7,962      21.6%
Total Operating Costs and
Expenses                      (40,332)     (36,271)      4,061      11.2%      (116,351)     (101,865)     14,486      14.2%
Earnings from Equity
Investment                          2             -          2     100.0%             1              -          1     100.0%

Earnings from Operations 3,234 4,777 (1,543) (32.3%)

       7,484        12,910      (5,426)    (42.0%)
Non-Controlling Interest         (155)        (322)       (167)    (51.9%)         (328)       (1,329)     (1,001)    (75.3%)
Net Earnings Attributable
to Century Casinos, Inc.
Shareholders                    1,640        7,630      (5,990)    (78.5%)        2,887        11,592      (8,705)    (75.1%)
Adjusted EBITDA (3)         $   6,350$   7,547$ (1,197)    (15.9%)  

$ 17,576$ 20,680$ (3,104) (15.0%)


Earnings Per Share
Attributable to Century
Casinos, Inc.
Shareholders
Basic Earnings Per Share    $    0.06$    0.31$  (0.25)    (80.6%)   $     0.10$     0.47$  (0.37)    (78.7%)
Diluted Earnings Per
Share                       $    0.05$    0.31$  (0.26)    (83.9%)   $     0.10$     0.47$  (0.37)    (78.7%)



(1) With the adoption of ASU 2014-09, promotional allowances are presented as a

reduction in gaming revenue for the three and nine months ended September 30,

2018. See Note 2, "Significant Accounting Policies," to our condensed

consolidated financial statements included in Part I, Item 1 of this report

      for a discussion of the impact of the adoption of ASU 2014-09 on the
      presentation of promotional allowances.

(2) The adoption of ASU 2014-09 resulted in the elimination of a reclassification

between expense line items that reduced gaming expense and increased hotel

and food and beverage expenses by $0.3 million and $0.9 million for the three

and nine months ended September 30, 2018, respectively. See Note 2,

"Significant Accounting Policies," and Note 5, "Promotional Allowances," to

our condensed consolidated financial statements included in Part I, Item 1 of

this report.

(3) For a discussion of Adjusted EBITDA and reconciliation of Adjusted EBITDA to

      net earnings attributable to Century Casinos, Inc. shareholders, see
      "Non-GAAP Measures - Adjusted EBITDA" below.




In addition to the impact of the adoption of ASU 2014-09 on operating revenue
and certain expenses, items impacting comparability of the results include the
following:


· The casino at CCB began operating in May 2018. CCB contributed a total of $1.1

million in net operating revenue and ($0.7) million in net losses for the three

months ended September 30, 2018 and $1.6 million in net operating revenue and

($1.5) million in net losses for the nine months ended September 30, 2018. CCB

    is reported in the Corporate and Other reportable segment.



· The impact from casino closures due to license expirations and delays in

license tender awards in Poland impacted quarter over quarter and year over

    year comparability of results for CPL. See the Poland discussion below for
    additional information.




                                       40
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Net operating revenue increased by $2.5 million, or 6.1%, and by $9.1 million,
or 7.9%, for the three and nine months ended September 30, 2018 compared to the
three and nine months ended September 30, 2017. Following is a breakout of net
operating revenue by segment for the three and nine months ended September 30,
2018 compared to the three and nine months ended September 30, 2017:



· Canada increased by $0.4 million, or 2.6%, and by $3.2 million, or 7.5%.

· United States increased by $0.3 million, or 3.6%, and by $1.1 million, or 4.3%.

· Poland increased by $1.2 million, or 7.7%, and by $4.3 million, or 9.7%.

· Corporate and Other increased by $0.6 million, or 51.1%, and by $0.5 million,

    or 14.0%.




Operating costs and expenses increased by $4.1 million, or 11.2%, and by $14.5
million, or 14.2%, for the three and nine months ended September 30, 2018
compared to the three and nine months ended September 30, 2017. Following is a
breakout of operating costs and expenses by segment for the three and nine
months ended September 30, 2018 compared to the three and nine months ended
September 30, 2017:



· Canada increased by $0.7 million, or 6.0%, and by $2.8 million, or 8.9%.

· United States increased by $0.3 million, or 3.7%, and by $0.8 million, or 3.9%.

· Poland increased by $2.0 million, or 13.4%, and by $7.9 million, or 19.1%.

· Corporate and Other increased by $1.1 million, or 36.4%, and by $3.0 million,

    or 33.8%.




Earnings from operations decreased by ($1.5) million, or (32.3%), and by ($5.4)
million, or (42.0%), for the three and nine months ended September 30, 2018
compared to the three and nine months ended September 30, 2017. Following is a
breakout of earnings from operations by segment for the three and nine months
ended September 30, 2018 compared to the three and nine months ended September
30, 2017:


· Canada decreased by ($0.3) million, or (7.3%), and increased by $0.4 million,

or 3.5%.

· United States increased by $0.1 million, or 3.2%, and by $0.3 million, or 6.3%.

· Poland decreased by ($0.8) million, or (98.0%), and by ($3.5) million, or

(109.7%).

· Corporate and Other decreased by ($0.5) million, or (27.6%), and by ($2.5)

    million, or (46.2%).




Net earnings decreased by ($6.0) million, or (78.5%), and by ($8.7) million, or
(75.1%), for the three and nine months ended September 30, 2018 compared to the
three and nine months ended September 30, 2017. Items deducted from or added to
earnings from operations to arrive at net earnings include interest income,
interest expense, gains (losses) on foreign currency transactions and other,
income tax expense and non-controlling interest.



Non-GAAP Measures - Adjusted EBITDA


We define Adjusted EBITDA as net earnings (loss) before interest expense
(income), net, income taxes (benefit), depreciation, amortization,
non-controlling interest (earnings) losses and transactions, pre-opening
expenses, acquisition costs, non-cash stock-based compensation charges, asset
impairment costs, (gain) loss on disposition of fixed assets, discontinued
operations, (gain) loss on foreign currency transactions and other, gain on
business combination and certain other one-time items. Intercompany transactions
consisting primarily of management and royalty fees and interest, along with
their related tax effects, are excluded from the presentation of net earnings
(loss) and Adjusted EBITDA reported for each segment. Not all of the
aforementioned items occur in each reporting period, but have been included in
the definition based on historical activity. These adjustments have no effect on
the consolidated results as reported under US GAAP. Adjusted EBITDA is not
considered a measure of performance recognized under US GAAP.



                                       41

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Management believes that Adjusted EBITDA is a valuable measure of the relative
performance of the Company and its properties. The gaming industry commonly uses
Adjusted EBITDA as a method of arriving at the economic value of a casino
operation. Management uses Adjusted EBITDA to evaluate and forecast the
operating performance of the Company and its properties as well as to compare
results of current periods to prior periods. Management believes that presenting
Adjusted EBITDA to investors provides them with information used by management
for financial and operational decision-making in order to understand the
Company's operating performance and evaluate the methodology used by management
to evaluate and measure such performance. Management believes that using
Adjusted EBITDA is a useful way to compare the relative operating performance of
separate reporting segments by eliminating the above mentioned items associated
with the varying levels of capital expenditures for infrastructure required to
generate revenue, and the often high cost of acquiring existing operations. Our
computation of Adjusted EBITDA may be different from, and therefore may not be
comparable to, similar measures used by other companies within the gaming
industry.



The reconciliation of Adjusted EBITDA to net earnings (loss) attributable to Century Casinos, Inc. shareholders is presented below.










                                         For the three months ended September 30, 2018
                                                                             Corporate
Amounts in thousands              Canada       United States     Poland      and Other      Total
Net earnings (loss)
attributable to Century
Casinos, Inc. shareholders      $   1,668$        1,578$    (81)$   (1,525)$  1,640
Interest expense (income),
net                                   854                   -         42           (66)        830
Income taxes (benefit)                880                543         204          (836)        791
Depreciation and
amortization                          762                545         717           299       2,323
Net earnings (loss)
attributable to
non-controlling interests             218                   -        (40)          (23)        155
Non-cash stock-based
compensation                             -                  -           -          266         266
Gain on foreign currency
transactions and cost
recovery income                        (1)                  -       (109)          (72)       (182)
Loss on disposition of fixed
assets                                  3                   -        169              -        172
Pre-opening expenses                  446                   -           -             -        446
Other one-time income                    -                  -           -          (91)        (91)
Adjusted EBITDA                 $   4,830$        2,666$    902$   (2,048)$  6,350









                                         For the three months ended September 30, 2017
                                                                            Corporate
Amounts in thousands              Canada      United States     Poland      and Other      Total
Net earnings attributable to
Century Casinos, Inc.
shareholders                    $   2,611$        1,276$    464$    3,279$  7,630
Interest expense (income),
net                                   759                  -         56            (7)        808
Income taxes (benefit)                392               780         266        (5,351)     (3,913)
Depreciation and
amortization                          877               596         657            96       2,226
Net earnings attributable to
non-controlling interests              93                  -        229              -        322
Non-cash stock-based
compensation                             -                 -           -          183         183
Loss (gain) on foreign
currency transactions and
cost recovery income                   50                  -       (222)          102         (70)
Loss on disposition of fixed
assets                                 68                 1          16              -         85
Acquisition costs                        -                 -           -          169         169
Pre-opening expenses                   10                  -           -           97         107
Adjusted EBITDA                 $   4,860$        2,653$  1,466$   (1,432)$  7,547




                                       42
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                                         For the nine months ended September 30, 2018
                                                                           Corporate
Amounts in thousands             Canada      United States     Poland      and Other      Total
Net earnings (loss)
attributable to Century
Casinos, Inc. shareholders      $  5,641$        3,602$   (329)$   (6,027)$  2,887
Interest expense (income),
net                                2,812                 1         153           (50)      2,916
Income taxes (benefit)             2,101             1,242         316        (1,875)      1,784
Depreciation and
amortization                       2,433             1,631       2,040           541       6,645
Net earnings (loss)
attributable to
non-controlling interests            546                  -       (164)          (54)        328
Non-cash stock-based
compensation                            -                 -           -          613         613
(Gain) loss on foreign
currency transactions and
cost recovery income                (140)                 -       (290)           (1)       (431)
Loss on disposition of fixed
assets                                 6                 1       1,027             1       1,035
Pre-opening expenses               1,135                  -        405           350       1,890
Other one-time income                   -                 -           -          (91)        (91)
Adjusted EBITDA                 $ 14,534$        6,477$  3,158$   (6,593)$ 17,576







                                         For the nine months ended September 30, 2017
                                                                           Corporate
Amounts in thousands             Canada      United States     Poland      and Other      Total
Net earnings attributable to
Century Casinos, Inc.
shareholders                    $  5,923$       2,827$  1,982$    860$ 11,592
Interest expense (income),
net                                2,544                 1          72           (19)      2,598
Income taxes (benefit)             1,707             1,732         878        (6,371)     (2,054)
Depreciation and
amortization                       2,529             1,824       1,702           275       6,330
Net earnings attributable to
non-controlling interests            341                  -        988              -      1,329
Non-cash stock-based
compensation                            -                 -           -          419         419
Loss (gain) on foreign
currency transactions and
cost recovery income                  78                  -       (685)           52        (555)
Loss on disposition of fixed
assets                                78                 1         258             3         340
Acquisition costs                     28                  -           -          321         349
Pre-opening expenses                  10                  -        225            97         332
Adjusted EBITDA                 $ 13,238$        6,385$  5,420$   (4,363)$ 20,680




                                       43
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Non-GAAP Measures - Constant Currency




The impact of foreign exchange rates is highly variable and difficult to
predict. We use a Constant Currency basis to show the impact from foreign
exchange rates on the current period results compared to the prior period
results using the prior period's foreign exchange rates. In order to properly
understand the underlying business trends and performance of the Company's
ongoing operations, management believes that investors may find it useful to
consider the impact of excluding changes in foreign exchange rates from our
operating revenue, earnings from operations, net earnings (loss) attributable to
Century Casinos, Inc. shareholders and Adjusted EBITDA. Constant Currency
results are calculated by dividing the current quarter or year to date local
currency segment results, excluding the local currency impact of foreign
currency gains and losses, by the prior year's average exchange rate for the
quarter or year to date and comparing them to actual U.S. dollar results for the
prior quarter or year to date. The current and prior year's average exchange
rates for the three and nine month periods are presented above. The Constant
Currency results are presented below.






                                For the three months                  For the nine months
                                ended September 30,                   ended September 30,
Amounts in thousands               2018         2017     % Change       2018         2017     % Change
Net operating revenue as
reported (GAAP)               $    43,564$ 41,048         6%    $ 123,834$ 114,775         8%
Foreign currency impact vs.
2017                                1,023                              (4,284)
Net operating revenue
constant currency
(non-GAAP)                    $    44,587$ 41,048         9%    $ 119,550$ 114,775         4%

Earnings from operations
(GAAP)                        $     3,234$  4,777       (32%)   $   7,484$  12,910       (42%)
Foreign currency impact vs.
2017                                  148                                (102)
Earnings from operations
constant currency
(non-GAAP)                    $     3,382$  4,777       (29%)   $  

7,382 $ 12,910 (43%)


Net earnings attributable
to Century Casinos, Inc.
shareholders as reported
(GAAP)                        $     1,640$  7,630       (79%)   $   2,887$  11,592       (75%)
Foreign currency impact vs.
2017                                   83                                  40
Net earnings attributable
to Century Casinos, Inc.
shareholders constant
currency (non-GAAP)           $     1,723$  7,630       (77%)   $   2,927$  11,592       (75%)



Gains and losses on foreign currency transactions are added back to net earnings in our Adjusted EBITDA calculations. As such, there is no foreign currency impact to Adjusted EBITDA when calculating Constant Currency results.



Non-GAAP Measures - Net Debt



We define Net Debt as total long-term debt (including current portion) plus
deferred financing costs minus cash and cash equivalents. Net Debt is not
considered a liquidity measure recognized under US GAAP. Management believes
that Net Debt is a valuable measure of our overall financial situation. Net Debt
provides investors with an indication of our ability to pay off all of our
long-term debt if it became due simultaneously. The reconciliation of Net Debt
is presented below.





Amounts in thousands                       September 30, 2018      September 30, 2017
Total long-term debt, including current
portion                                   $             53,285    $             58,299
Deferred financing costs                                   250                     291
Total principal                           $             53,535    $             58,590
Less: cash and cash equivalents           $             46,818    $             44,254
Net Debt                                  $              6,717    $             14,336





                                       44
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Reportable Segments

The following discussion provides further detail of consolidated results by
reportable segment.




Canada
                              For the three months                             For the nine months
                               ended September 30,                  %          ended September 30,                  %
Amounts in thousands            2018         2017       Change    Change   
    2018         2017       Change    Change
Gaming                      $  10,337$  10,764$  (427)     (4.0%)   $  30,190$  29,535$   655       2.2%
Hotel                             129          139        (10)     (7.2%)         396          409        (13)     (3.2%)
Food and Beverage               2,691        2,557        134       5.2%        7,713        7,232        481       6.7%
Other                           2,526        2,146        380      17.7%        7,391        6,182      1,209      19.6%
Total Operating Revenue        15,683       15,606         77       0.5%       45,690       43,358      2,332       5.4%
Less Promotional
Allowances (1)                       -        (321)      (321)   (100.0%)            -        (874)      (874)   (100.0%)
Net Operating Revenue          15,683       15,285        398       2.6%       45,690       42,484      3,206       7.5%
Gaming Expenses                (3,040)      (3,138)       (98)     (3.1%)      (9,004)      (9,080)       (76)     (0.8%)
Hotel Expenses                    (53)         (51)         2       3.9%         (151)        (150)         1       0.7%
Food and Beverage
Expenses                       (2,182)      (2,049)       133       6.5%       (6,349)      (5,851)       498       8.5%
General and
Administrative Expenses        (6,027)      (5,265)       762      14.5%      (16,793)     (14,281)     2,512      17.6%
Total Operating Costs and
Expenses                      (12,064)     (11,380)       684       6.0%      (34,730)     (31,891)     2,839       8.9%
Earnings from Operations        3,619        3,905       (286)     (7.3%)      10,960       10,593        367       3.5%
Non-Controlling Interest         (218)         (93)       125     134.4%         (546)        (341)       205      60.1%
Net Earnings Attributable
to Century Casinos, Inc.
Shareholders                    1,668        2,611       (943)    (36.1%)       5,641        5,923       (282)     (4.8%)
Adjusted EBITDA             $   4,830$   4,860$   (30)     (0.6%)   $  14,534$  13,238$ 1,296       9.8%



(1) See Note 2, "Significant Accounting Policies," to our condensed consolidated

financial statements included in Part I, Item 1 of this report for a

discussion of the impact of the adoption of ASU 2014-09 on the presentation

      of promotional allowances.




In November 2017, CAL opened an 18-hole miniature golf course. We are marketing
the miniature golf course and bowling alley as an entertainment center in order
to attract a new customer demographic to visit the casino.



Construction on the Century Mile project began in July 2017, and we estimate the casino will open in April 2019.

Three Months Ended September 30, 2018 and 2017

The following discussion highlights results for the three months ended September 30, 2018 compared to the three months ended September 30, 2017.




Results in U.S. dollars were impacted by a 4.3% exchange rate decrease in the
average rate between the U.S. dollar and the Canadian dollar for the three
months ended September 30, 2018 compared to the three months ended September 30,
2017.



Revenue Highlights


   In CAD                                   In U.S. dollars
?  At CRA, net operating revenue         ?  At CRA, net operating revenue
   increased by CAD 0.1 million, or         decreased by ($0.1) million, or
   1.6%, due to increased gaming and        (2.5%).
   other revenue.
?  At CSA, net operating revenue         ?  At CSA, net operating revenue
   remained constant.                       decreased by ($0.1) million, or
                                            (4.3%).
?  At CAL, net operating revenue         ?  At CAL, net operating revenue
   decreased by (CAD 0.1) million, or       decreased by ($0.2) million, or
   (4.5%), due to decreased gaming          (8.5%).
   revenue, offset by increased revenue
   from the entertainment center.
?  At CDR, net operating revenue         ?  At CDR, net operating revenue

increased by CAD 1.4 million, or increased by $0.9 million, or 17.5%.

   22.6%, due to increased gaming, food
   and beverage, and pari-mutuel
   revenue.



                                       45
--------------------------------------------------------------------------------

Operating Expense Highlights



   In CAD                                   In U.S. dollars

? At CRA, operating expenses increased ? At CRA, operating expenses decreased

by CAD 0.1 million, or 2.6%, due to by ($0.1) million, or (1.7%).

increased payroll costs. ? At CSA, operating expenses increased ? At CSA, operating expenses remained

   by CAD 0.1 million, or 6.6%,             constant.

primarily due to increased payroll

costs.

? At CAL, operating expenses increased ? At CAL, operating expenses remained

   by CAD 0.1 million, or 2.2%,             constant.

primarily due to increased payroll

costs.

? At CDR, operating expenses increased ? At CDR, operating expenses increased

   by CAD 0.7 million, or 16.5%, due to     by $0.4 million, or 11.8%.
   increased payroll costs and
   racing-related operating expenses.




Operating expenses related to the Century Mile project were $0.5 million for the
three months ended September 30, 2018 related to the land that we are leasing
from the Edmonton Airport.


Earnings from operations at CBS, which operates the Southern Alberta pari-mutuel off-track betting network, remained constant for the three months ended September 30, 2018 compared to the three months ended September 30, 2017.

A reconciliation of net earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.

Nine Months Ended September 30, 2018 and 2017

The following discussion highlights results for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017.




Results in U.S. dollars were impacted by a 1.5% exchange rate increase in the
average rate between the U.S. dollar and the Canadian dollar for the nine months
ended September 30, 2018 compared to the nine months ended September 30, 2017.



Revenue Highlights


   In CAD                                   In U.S. dollars

? At CRA, net operating revenue ? At CRA, net operating revenue

increased by CAD 0.1 million, or increased by $0.3 million, or 1.8%.

0.4%, due to increased gaming

revenue.

? At CSA, net operating revenue ? At CSA, net operating revenue

increased by CAD 0.1 million, or increased by $0.2 million, or 2.7%.

1.3%, due to increased food and

   beverage revenue.
?  At CAL, net operating revenue         ?  At CAL, net operating revenue

increased by CAD 0.5 million, or increased by $0.5 million, or 8.3%.

   6.7%, due to increased food and
   beverage revenue and revenue from the
   entertainment center.
?  At CDR, net operating revenue         ?  At CDR, net operating revenue

increased by CAD 2.8 million, or increased by $2.3 million, or 18.1%.

   16.9%, due to increased gaming,
   pari-mutuel and food and beverage
   revenue.



                                       46
--------------------------------------------------------------------------------

Operating Expense Highlights



   In CAD                                   In U.S. dollars

? At CRA, operating expenses remained ? At CRA, operating expenses increased

   constant.                                by $0.1 million, or 1.2%.

? At CSA, operating expenses increased ? At CSA, operating expenses increased

   by CAD 0.3 million, or 4.1%,             by $0.3 million, or 5.7%.
   primarily due to increased payroll
   costs and increased general and

administrative expenses. ? At CAL, operating expenses increased ? At CAL, operating expenses increased

   by CAD 0.2 million, or 2.3%,             by $0.2 million, or 3.8%.
   primarily due to increased payroll,
   marketing and general and

administrative expenses. ? At CDR, operating expenses increased ? At CDR, operating expenses increased

   by CAD 1.4 million, or 12.5%,            by $1.2 million, or 13.7%.
   primarily due to increased payroll
   costs and racing-related operating
   expenses.




Operating expenses related to the Century Mile project were $1.1 million for the
nine months ended September 30, 2018 related to the land that we are leasing
from the Edmonton Airport.



Earnings from operations at CBS, which operates the Southern Alberta pari-mutuel
off-track betting network, remained constant for the nine months ended September
30, 2018 compared to the nine months ended September 30, 2017.



A reconciliation of net earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.

                                       47

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United States
                              For the three months                              For the nine months
                               ended September 30,                   %          ended September 30,                   %
Amounts in thousands             2018        2017       Change     Change        2018         2017       Change     Change
Gaming                      $    7,615$  9,507$ (1,892)    (19.9%)   $  21,056$  26,294$ (5,238)    (19.9%)
Hotel                              446         421          25       5.9%        1,138        1,082          56       5.2%
Food and Beverage                1,194       1,139          55       4.8%        3,063        2,877         186       6.5%
Other                              105          79          26      32.9%          285          252          33      13.1%
Total Operating Revenue          9,360      11,146      (1,786)    (16.0%)      25,542       30,505      (4,963)    (16.3%)
Less Promotional
Allowances (1)                        -     (2,107)     (2,107)   (100.0%)            -      (6,023)     (6,023)   (100.0%)
Net Operating Revenue            9,360       9,039         321       3.6%       25,542       24,482       1,060       4.3%
Gaming Expenses                 (3,465)     (3,545)        (80)     (2.3%)      (9,746)     (10,026)       (280)     (2.8%)
Hotel Expenses                    (144)       (120)         24      20.0%         (400)        (318)         82      25.8%
Food and Beverage
Expenses                        (1,087)       (793)        294      37.1%       (3,008)      (2,105)        903      42.9%
General and
Administrative Expenses         (1,998)     (1,929)         69       3.6%       (5,912)      (5,649)        263       4.7%
Total Operating Costs and
Expenses                        (7,239)     (6,983)        256       3.7%      (20,697)     (19,922)        775       3.9%
Earnings from Operations         2,121       2,056          65       3.2%        4,845        4,560         285       6.3%
Net Earnings Attributable
to Century Casinos, Inc.
Shareholders                     1,578       1,276         302      23.7%        3,602        2,827         775      27.4%
Adjusted EBITDA             $    2,666$  2,653$     13       0.5%    $   6,477$   6,385$     92       1.4%



(1) See Note 2, "Significant Accounting Policies," to our condensed consolidated

financial statements included in Part I, Item 1 of this report for a

discussion of the impact of the adoption of ASU 2014-09 on the presentation

      of promotional allowances.



Three Months Ended September 30, 2018 and 2017

The following discussion highlights results for the three months ended September 30, 2018 compared to the three months ended September 30, 2017.

Market Share Highlights

· The Central City market increased by 12.2% and CTL's share of the Central City

market was 26.3% compared to 30.0% for the three months ended September 30,

2017. We attribute the increase in the Central City market and the decrease in

our market share to additional marketing promotions done by one of our

competitors that recently renovated a casino in Central City.

· The Cripple Creek market increased by 4.4% and CRC's share of the Cripple Creek

market was 11.1% compared to 10.6% for the three months ended September 30,

2017. We attribute the increase in our market share to successful marketing

promotions that we have done to increase new visitors and to increase repeat

    business by our current customer base.




Revenue Highlights

· At CTL, net operating revenue remained constant.

· At CRC, net operating revenue increased by $0.3 million, or 8.6%, due to

    increased gaming revenue.




Operating Expense Highlights

· At CTL, operating expenses increased by $0.2 million, or 4.2%, due to increased

general and administrative expenses and payroll costs.

· At CRC, operating expenses increased by $0.1 million, or 2.8%, due to increased

    gaming-related and marketing expenses.



A reconciliation of net earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.

                                       48

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Nine Months Ended September 30, 2018 and 2017

The following discussion highlights results for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017.

Market Share Highlights

· The Central City market increased by 10.5% and CTL's share of the Central City

market was 26.6% compared to 29.6% for the nine months ended September 30,

2017. We attribute the increase in the Central City market and the decrease in

our market share to additional marketing promotions done by one of our

competitors that recently renovated a casino in Central City.

· The Cripple Creek market increased by 2.8% and CRC's share of the Cripple Creek

market was 10.5% compared to 10.0% for the nine months ended September 30,

2017. We attribute the increase in our market share to successful marketing

promotions that we have done to increase new visitors and to increase repeat

    business by our current customer base.




Revenue Highlights

· At CTL, net operating revenue increased by $0.2 million, or 1.6%, due to

increased gaming and food and beverage revenue.

· At CRC, net operating revenue increased by $0.8 million, or 8.4%, due to

    increased gaming revenue.




Operating Expense Highlights

· At CTL, operating expenses increased by $0.6 million, or 4.9%, due to increased

gaming-related expenses and payroll costs.

· At CRC, operating expenses increased by $0.2 million, or 2.3%, due to increased

    gaming-related and marketing expenses and payroll costs.



A reconciliation of net earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.

                                       49

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Poland
                               For the three months                             For the nine months
                                ended September 30,                  %          ended September 30,                   %
Amounts in thousands             2018         2017       Change    Change        2018         2017       Change     Change
Gaming                       $  16,569$  15,659$   910       5.8%    $  48,010$  44,566$  3,444       7.7%
Food and Beverage                  205          172         33      19.2%          551          513          38       7.4%
Other                              (27)          25        (52)   (208.0%)         134          126           8       6.3%
Total Operating Revenue         16,747       15,856        891       5.6%       48,695       45,205       3,490       7.7%
Less Promotional
Allowances (1)                        -        (306)      (306)   (100.0%)            -        (822)       (822)   (100.0%)
Net Operating Revenue           16,747       15,550      1,197       7.7%       48,695       44,383       4,312       9.7%
Gaming Expenses                (11,000)      (9,714)     1,286      13.2%      (31,455)     (27,795)      3,660      13.2%
Food and Beverage Expenses        (687)        (546)       141      25.8%       (1,964)      (1,496)        468      31.3%
General and Administrative
Expenses                        (4,327)      (3,840)       487      12.7%      (13,550)     (10,155)      3,395      33.4%
Total Operating Costs and
Expenses                       (16,731)     (14,757)     1,974      13.4%      (49,009)     (41,148)      7,861      19.1%
Earnings from Operations            16          793       (777)    (98.0%)        (314)       3,235      (3,549)   (109.7%)
Non-Controlling Interest            40         (229)      (269)   (117.5%)         164         (988)     (1,152)   (116.6%)
Net (Loss)
Earnings Attributable to
Century Casinos, Inc.
Shareholders                       (81)         464       (545)   (117.5%)        (329)       1,982      (2,311)   (116.6%)
Adjusted EBITDA              $     902$   1,466$  (564)    (38.5%)   $   3,158$   5,420$ (2,262)    (41.7%)



(1) See Note 2, "Significant Accounting Policies," to our condensed consolidated

financial statements included in Part I, Item 1 of this report for a

discussion of the impact of the adoption of ASU 2014-09 on the presentation

      of promotional allowances.




In Poland, casino gaming licenses are granted for a term of six years. These
licenses are not renewable. Once a gaming license has expired, any gaming
company can apply for a new license for that city. Delays by the Polish
government in awarding licenses following their expiration resulted in several
casinos closing throughout Poland, lost gaming tax revenue for the government
and additional costs and expenses for the casino operators, including CPL. CPL's
results were significantly impacted by the additional costs and expenses
associated with the temporary closure of several of CPL's casinos in Poland for
the three and nine months ended September 30, 2018 compared to the three and
nine months ended September 30, 2017. The following is a summary of changes in
and comparability of the casinos operated by CPL in 2017 and 2018.



· The casino at the Marriott Hotel in Warsaw, Poland was operational for the full

three and nine months ended September 30, 2018 and 2017.

· The casino at the LIM Center in Warsaw, Poland closed in May 2017. The license

was transferred to the Hilton Warsaw Hotel and Convention Centre in Warsaw,

Poland, which has been operating since June 2017.

· The casino at the Dwor Kosciuszko Hotel in Krakow, Poland closed in March 2018.

CPL was awarded a new license for this city and the casino opened in July 2018.

· The casino at the Manufaktura Entertainment Complex in Lodz, Poland closed in

February 2018. CPL was awarded a new license for this city and the casino

opened in August 2018.

· The casino at the Hotel Andersia in Poznan, Poland closed in April 2018. CPL

was not awarded a new license for this city and is currently determining the

costs of terminating employees who will not relocate.

· The casino at the Hotel Plock in Plock, Poland closed in February 2018. CPL was

not awarded a new license for this city and is currently determining the costs

of terminating employees who will not relocate.

· The casino at the HP Park Plaza Hotel in Wroclaw, Poland closed in June 2017.

CPL was awarded a new license for this city and the casino opened in April

2018.

· The casino at the Altus Building in Katowice, Poland closed in July 2016. CPL

was awarded a new license for this city and the casino opened in May 2018.

· The casino at the Hotel President in Bielsko-Biala, Poland opened in January

    2018.




CPL also was awarded a license for a third casino in Warsaw, Poland in July 2018
that it plans to open in the Marriott Hotel in the first quarter of 2019. This
casino will be located on a floor directly above the casino that CPL currently
operates in the Marriott Hotel.



Effective April 2017, the Polish gaming laws permit online gaming and slot
arcades operated through a state run company. We are unable to estimate when
online gaming will begin operating. The first slot arcades opened in Poland in
June 2018. We have not experienced a negative impact to our results of
operations in Poland from slot arcades; however,  increased competition could
occur and adversely affect our results of operations in the future.



                                       50

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In late 2017, the Polish Parliament enacted a new Polish income tax law
requiring casino patron winnings over PLN 2,280 ($619 based on the exchange rate
in effect on September 30, 2018) in a single casino visit to be subject to
personal income tax on those winnings. This law was repealed effective July 19,
2018.


Three Months Ended September 30, 2018 and 2017

Results in U.S. dollars were impacted by a 2.1% decrease in the average exchange rate between the U.S. dollar and Polish zloty for the three months ended September 30, 2018 compared to the three months ended September 30, 2017.



Revenue Highlights


   In PLN                                   In U.S. dollars

? Net operating revenue increased by ? Net operating revenue increased by

   PLN 5.6 million, or 10.0%, due to the    $1.2 million, or 7.7%.
   additional gaming revenue from the
   casinos that opened in 2018 as
   described above.




Operating Expense Highlights


   In PLN                                   In U.S. dollars

? Operating expenses increased by PLN ? Operating expenses increased by $2.0

8.4 million, or 15.8%, primarily due million, or 13.4%.

to increased general and

administrative expenses from the

casinos that began operating in 2018,

increased payroll costs of PLN 1.7

million and increased gaming tax

expense of PLN 3.5 million due to the

increase in gaming revenue.

A reconciliation of net (loss) earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.

Nine Months Ended September 30, 2018 and 2017

Results in U.S. dollars were impacted by a 7.3% increase in the average exchange rate between the U.S. dollar and Polish zloty for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017.



Revenue Highlights


   In PLN                                   In U.S. dollars

? Net operating revenue increased by ? Net operating revenue increased by

   PLN 3.1 million, or 1.8%, due to         $4.3 million, or 9.7%.
   additional gaming revenue from the
   casinos that opened in 2018 as
   described above.




Operating Expense Highlights


   In PLN                                   In U.S. dollars

? Operating expenses increased by PLN ? Operating expenses increased by $7.9

17.1 million, or 10.9%, primarily due million, or 19.1%.

to increased general and

administrative expenses at the

Hilton, Bielsko-Biala, Wroclaw and

Katowice casinos, all of which were

not operating for a full year in

2017. In addition, payroll costs

increased by PLN 7.5 million and

gaming tax expense increased by PLN

1.9 million due to increased gaming

   revenue.



A reconciliation of net (loss) earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.

                                       51

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Corporate and Other
                              For the three months                             For the nine months
                               ended September 30,                   %         ended September 30,                   %
Amounts in thousands             2018        2017       Change     Change        2018        2017       Change     Change
Gaming                      $    1,462$    984$    478      48.6%    $   3,339$  2,419$    920      38.0%
Food and Beverage                  200            -        200     100.0%          303            -        303     100.0%
Other                              112         199         (87)    (43.7%)         265       1,044        (779)    (74.6%)
Total Operating Revenue          1,774       1,183         591      50.0%        3,907       3,463         444      12.8%
Less Promotional
Allowances                            -         (9)         (9)   (100.0%)            -        (37)        (37)   (100.0%)
Net Operating Revenue            1,774       1,174         600      51.1%        3,907       3,426         481      14.0%
Gaming Expenses                   (985)       (697)        288      41.3%       (2,461)     (1,895)        566      29.9%
Food and Beverage
Expenses                          (192)           -        192     100.0%         (387)           -        387     100.0%
General and
Administrative Expenses         (2,822)     (2,358)        464      19.7%       (8,526)     (6,734)      1,792      26.6%
Total Operating Costs and
Expenses                        (4,298)     (3,151)      1,147      36.4%      (11,915)     (8,904)      3,011      33.8%
Losses from Equity
Investment                           2            -          2     100.0%            1            -          1     100.0%

Losses from Operations (2,522) (1,977) (545) (27.6%)

     (8,007)     (5,478)     (2,529)    (46.2%)
Non-Controlling Interest            23            -        (23)   (100.0%)          54            -        (54)   (100.0%)
Net (Loss)
Earnings Attributable to
Century Casinos, Inc.
Shareholders                    (1,525)      3,279      (4,804)   (146.5%)      (6,027)        860      (6,887)   (800.8%)
Adjusted EBITDA             $   (2,048)$ (1,432)$   (616)    (43.0%)   $  (6,593)$ (4,363)$ (2,230)    (51.1%)




We began operating the ship-based casinos onboard the Mein Schiff 6 in May 2017.
The concession agreement to operate the ship-based casino onboard the Mein
Schiff 1 ended in April 2018 when the vessel was transferred to another cruise
line. The Mein Schiff 1 contributed a total of $0.2 million in revenue and less
than $0.1 million in net losses attributable to Century Casinos, Inc.
shareholders for the year ended December 31, 2017. The concession agreements to
operate the ship-based casinos onboard the Wind Star and Marella Discovery will
end in the fourth quarter of 2018. The Wind Star contributed less than $0.1
million in net operating revenue and less than ($0.1) million in net losses for
the nine months ended September 30, 2018 and the Marella Discovery contributed
$0.3 million in net operating revenue and less than ($0.1) million in net losses
for the nine months ended September 30, 2018.



The casino at CCB opened in May 2018.




In April 2018, CRM purchased a 51% ownership interest in GHL. GHL entered into
agreements with MCL, the owner of a small hotel and international entertainment
and gaming club in the Cao Bang province of Vietnam, under which GHL manages MCL
and owns 6.36% of its outstanding shares. We consolidate GHL as a majority-owned
subsidiary for which we have a controlling financial interest and account for
GHL's interest in MCL as an equity investment. GHL is included in the Corporate
Other operating segment.




Three Months Ended September 30, 2018 and 2017

The following discussion highlights results for the three months ended September 30, 2018 compared to the three months ended September 30, 2017.

Revenue Highlights

· Net operating revenue for Cruise Ships & Other decreased by ($0.5) million, or

(39.2%), due to decreased gaming revenue from our ship operations and

termination of the management agreement we had to direct the operation of the

casino at the Hilton Aruba Caribbean Resort & Casino (the "Aruba Management

Agreement") in November 2017.

· Net operating revenue for CCB for the three months ended September 30, 2018 was

GBP 0.8 million. In U.S. dollars, net operating revenue was $1.1 million.





Operating Expense Highlights

· Operating expenses for Cruise Ships & Other decreased by ($0.3) million, or

(34.4%), due to decreased concession fees paid to the cruise lines as a result

of decreased gaming revenue as well as decreased payroll costs.

· Operating expenses for CCB were GBP 1.3 million for the three months ended

September 30, 2018. In U.S. dollars, operating expenses were $1.7 million.

Prior to the opening of the casino, during the third quarter of 2017, CCB had

operating expenses of GBP 0.1 million, which were $0.1 million in U.S. dollars.




                                       52
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Losses from operations attributable to our Corporate Other operating segment,
which includes certain other corporate and management operations, decreased by
($0.1) million, or (3.9%), for the three months ended September 30, 2018
compared to the three months ended September 30, 2017 primarily due to
additional expenses in 2017 related to the acquisition of CCB.



A reconciliation of net (loss) earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.

Nine Months Ended September 30, 2018 and 2017

The following discussion highlights results for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017.

Revenue Highlights

· Net operating revenue for Cruise Ships & Other decreased by ($1.1) million, or

(32.5%), due to the completion of the consulting agreement with Norwegian in

May 2017, the termination of the Aruba Management Agreement in November 2017

and decreased gaming revenue from the cruise ships during 2018.

· Net operating revenue for CCB was GBP 1.2 million for the nine months ended

September 30, 2018. In U.S. dollars, net operating revenue was $1.6 million.





Operating Expense Highlights

· Operating expenses for Cruise Ships & Other decreased by ($0.5) million, or

(19.6%), due to decreased payroll costs and decreased concession fees paid to

the cruise lines as a result of decreased gaming revenue.

· Operating expenses for CCB were GBP 2.6 million for the nine months ended

September 30, 2018. In U.S. dollars, operating expenses were $3.4 million.

Prior to the opening of the casino, from January through mid-May 2018, CCB had

operating expenses of GBP 0.5 million, which were $0.7 million in U.S.

dollars. For the nine months ended September 30, 2017, CCB had operating

    expenses of GBP 0.1 million, which were $0.1 million in U.S. dollars.




Losses from operations attributable to our Corporate Other operating segment,
which includes certain other corporate and management operations, increased by
$0.2 million, or 3.4%, for the nine months ended September 30, 2018 compared to
the nine months ended September 30, 2017 primarily due to increased payroll
costs, increased stock compensation expense and additional expenses of $0.1
million from GHL, offset by additional expenses in 2017 related to the CCB
acquisition.



A reconciliation of net (loss) earnings attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the "Non-GAAP Measures - Adjusted EBITDA" discussion above.

                                       53

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Non-Operating Income (Expense)

Non-operating income (expense) was as follows:






                        For the three months                            

For the nine months

                        ended September 30,                     %        ended September 30,                  %
Amounts in
thousands               2018           2017        Change    Change       2018         2017      Change    Change
Interest Income      $       74$       21$    53    252.4%    $      107$     69$   38     55.1%
Interest Expense           (904)          (829)        75      9.0%        (3,023)     (2,667)      356     13.3%
Gain on Foreign
Currency
Transactions                182             70        112    160.0%           431         555      (124)   (22.3%)
Non-Operating
(Expense) Income     $     (648)$     (738)$   (90)   (12.2%)   $   (2,485)$ (2,043)$  442     21.6%



Interest income

Interest income is directly related to interest earned on our cash reserves.
During the third quarter of 2018, we also recorded interest income related to
the payment from LOT Polish Airlines. See Note 7, "Commitments and
Contingencies," to our condensed consolidated financial statements included in
Part I, Item 1 of this report.



Interest expense


Interest expense is directly related to interest owed on the BMO Credit
Agreement, the fair value adjustments for our interest rate swap agreements, our
CPL and CCB borrowings, interest expense related to the CDR land lease and our
capital lease agreements.  The increased interest expense for the nine months
ended September 30, 2018 compared to the nine months ended September 30, 2017 is
due primarily to increased interest expense related to the BMO Credit Agreement
and the CDR land lease.



Taxes

Income tax expense is recorded relative to the jurisdictions that recognize book
earnings. During the nine months ended September 30, 2018, we recognized an
income tax expense of $1.8 million on pre-tax income of $5.0 million,
representing an effective income tax rate of 35.7%, compared to an income tax
benefit of $2.1 million on pre-tax income of $10.9 million, representing an
effective income tax rate of (18.9%) for the same period in 2017. For an
analysis of our effective income tax rate compared to the U.S. federal statutory
income tax rate, the release of the U.S. valuation allowance in the third
quarter of 2017, the change in the effective tax rate period over period and the
impact of the Tax Act, see Note 8, "Income Taxes," to our condensed consolidated
financial statements included in Part I, Item 1 of this report.



                                       54

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LIQUIDITY AND CAPITAL RESOURCES


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.



As of September 30, 2018, our total debt under bank borrowings and other
agreements net of $0.3 million related to deferred financing costs was $53.3
million, of which $33.2 million was long-term debt and  $20.1 million was the
current portion of long-term debt. The current portion relates to payments due
within one year under our BMO Credit Agreement, the CPL credit facilities, the
CCB loan agreement and capital lease agreements. A principal amount of
approximately CAD 16.1 million ($12.4 million based on the exchange rate in
effect on September 30, 2018) under our BMO Credit Agreement is due in August
2019 and is presented in the current portion of long-term debt. We intend to
seek to refinance this portion of our BMO Credit Agreement and anticipate that
the refinancing will be completed in the third quarter of 2019. We intend to
repay the remaining current portion of our debt obligations with available cash.
For a description of our debt agreements, see Note 6, "Long-Term Debt," to our
condensed consolidated financial statements included in Part I, Item 1 of this
report. Net Debt was $6.7 million as of September 30, 2018 compared to $14.3
million as of September 30, 2017, due to the increase in cash to $46.8 million
at September 30, 2018 from $44.3 million at September 30, 2017 and principal
repayments. For the definition and reconciliation of Net Debt to the most
directly comparable US GAAP measure, see "Non-GAAP Measures - Net Debt" above.



The following table lists the amount of 2018 maturities of our debt:





Amounts in
thousands
                  Casinos Poland      Century Casino
                      Credit           Bath Credit          Century Downs
    Bank of
   Montreal          Facility           Agreement            Land Lease         Capital Leases      Total
$        1,382$        2,291    $             130    $                 -   $            56    $   3,859

There is no set repayment schedule for the CPL credit facilities, and we classify them as short-term debt due to the nature of the agreements. The UniCredit Agreement is not included in the table above because no amounts were borrowed as of September 30, 2018.

Cash Flows


At September 30, 2018, cash, cash equivalents and restricted cash totaled $47.5
million, and we had working capital (current assets minus current liabilities)
of less than ($0.1) million compared to cash, cash equivalents and restricted
cash of $76.4 million and working capital of $49.9 million at December 31, 2017.
The decrease in cash, cash equivalents and restricted cash from December 31,
2017 is due to $24.5 million for construction costs related to the Century Mile
project, $15.5 million used to purchase property and equipment, $0.6 million
used for a distribution to non-controlling interest, $0.3 million for CRM's
purchase of its ownership interest in GHL, net of cash acquired, $0.4 million
for GHL's purchase of its ownership interest in MCL, $1.6 million in principal
payments net of borrowings, $0.1 million in payments of deferred financing
costs and $0.7 million in exchange rate changes, offset by $14.6 million of net
cash provided by operating activities and $0.3 million in proceeds from the
exercise of stock options.



Net cash provided by operating activities was $14.6 million for the nine months
ended September 30, 2018 and $16.0 million for the nine months ended September
30, 2017. The decrease in cash provided by operating activities was primarily
due to increased taxes payable due to the impact of the Tax Act (see Note 8).
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 in Part I, Item 1 of this
Form 10-Q and to management's discussion of the results of operations above in
this Item 2 for a discussion of earnings from operations.



Net cash used in investing activities of $40.8 million for the nine months ended
September 30, 2018 consisted of $24.5 million for construction costs related to
the Century Mile project; $8.4 million for the Century Casino Bath project; $5.3
million in leasehold improvements at the new casinos in Poland and additional
assets for the casinos in Poland; $0.4 million in slot machines for CTL and CRC;
$0.8 million in racetrack improvements and a barn at CDR;  $0.7 million in other
fixed asset additions at our properties; $0.3 million for CRM's purchase of its
ownership interest in GHL, net of cash acquired; and $0.4 million for GHL's
purchase of its ownership interest in MCL,  offset by less than $0.1 million in
proceeds from the disposition of assets.



                                       55

--------------------------------------------------------------------------------




Net cash used in investing activities of $6.8 million for the nine months ended
September 30, 2017 consisted of $0.1 million for the Palace Hotel renovation
project at CRC, which was placed on hold during the first quarter of 2017; $0.2
million to purchase slot machines for CTL and CRC; $0.1 million for the CRA
casino renovation; $0.3 million for bowling lane renovations and a miniature
golf course at CAL; $0.6 million for a parking lot and thoroughbred
infrastructure at CDR; $0.5 million in leasehold improvements at the Hilton
Hotel Warsaw and new CPL locations in Katowice and Wroclaw; $0.5 million in
gaming equipment upgrades at various CPL casinos; $0.1 million for the CCB
leasehold renovations; $0.8 million for the Century Mile project; $0.1 million
for equipment for the Mein Schiff 6; $1.9 million in other fixed asset additions
at our properties; a $1.5 million payment related to a working capital
adjustment for the acquisition of CSA and  a $0.1 million payment related to the
acquisition of CCB, offset by less than $0.1 million in proceeds from the
disposition of fixed assets.



Net cash used in financing activities of $2.0 million for the nine months ended
September 30, 2018 consisted of $1.6 million of principal repayments net of
proceeds from borrowings on our long-term debt, $0.6 million in distributions to
non-controlling interest and $0.1 million in deferred financing cost payments,
offset by $0.3 million in proceeds from the exercise of stock options.



Net cash used in financing activities of $3.6 million for the nine months ended
September 30, 2017 consisted of $1.6 million of principal repayments on our
long-term debt net of borrowings from the SCCL loan agreement and $2.0 million
in distributions to non-controlling interest, offset by less than $0.1 million
in cash from the exercise of stock options.



Tax Act


The Tax Act, which was enacted on December 22, 2017, made significant changes to
the Internal Revenue Code effective for 2018, although certain provisions
affected our 2017 financial results. The changes impacting our 2018 results
include, but are not limited to, the reduction in the U.S. federal corporate
income tax rate from 35% to 21% and the tax on Global Intangible Low-Taxed
Income ("GILTI").  We have not completed our accounting for the income tax
effects of the Tax Act and the provisional amounts will be refined as needed
during the measurement period allowed by SAB 118 and ASU 2018-05. While we
believe that we have made reasonable estimates of the impact of the U.S.
corporate income tax rate reduction and GILTI, these estimates could change as
we continue to analyze IRS guidance related to the Tax Act as it is released. In
addition to the Tax Act changes impacting our 2018 results, further changes
could result as we refine our calculations surrounding the changes that impacted
our 2017 results including the remeasurement of our deferred tax balances, as
well as our calculations of earnings and profits as used in the computation of
the transition tax. For further discussion of the Tax Act, see Note 8, "Income
Taxes," to our condensed consolidated financial statements included in Part I,
Item 1 of this report.


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 common stock during the
nine months ended September 30, 2018. The total amount remaining under the
repurchase program was $14.7 million as of September 30, 2018. 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 upon the exercise of stock
options. In November 2017, we closed a public offering of 4,887,500 shares of
our common stock. The net proceeds from the offering were approximately $34.4
million. As discussed below, we have used  $24.2 million of the net proceeds for
construction of the Century Mile project. We intend to use the remaining net
proceeds to invest in additional gaming projects and for working capital and
other general corporate purposes.



We believe that our cash at September 30, 2018, 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. As discussed above, we will need to
refinance the CAD 16.1 million ($12.4 million based on the exchange rate in
effect on September 30, 2018) current portion of our BMO Credit Agreement prior
to maturity in August 2019. We have been successful in refinancing and expanding
our available borrowing capacity under the BMO Credit Agreement since its
inception in 2012, and we anticipate being able to refinance this debt. We
expect that the primary source of cash will be from our gaming operations and
additional borrowings under the BMO Credit Agreement and other credit
arrangements. 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, the construction of Century
Mile, an expansion at CRC to provide additional hotel rooms for our existing
casino and hotel, and other potential new projects. 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.



                                       56

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We estimate that the Century Mile project will cost approximately CAD 60.0
million ($46.4 million based on the exchange rate in effect on September 30,
2018). We have used  $24.2 million of the net proceeds from the common stock
offering for construction of the Century Mile project. The balance of the
Century Mile project will be financed with the BMO Credit Agreement, which was
amended in August 2018 to add an additional borrowing capacity of CAD 33.0
million ($25.5 million based on the exchange rate in effect on September 30,
2018) and with available cash.



We have a shelf registration statement with the SEC that became effective in
July 2017 under which we may issue, from time to time, up to $100 million of
common stock, preferred stock, debt securities and other securities and under
which we undertook the common stock offering in November 2017. If necessary, we
may seek to obtain further term loans, mortgages or lines of credit with
commercial banks or other debt or equity financings to supplement our working
capital and investing requirements. A financing transaction may not be available
on terms acceptable to us, or at all, and a financing transaction may be
dilutive to our current stockholders.



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. While we currently do not have an intent nor foresee a
need to repatriate funds, we could require more capital in the U.S. than is
generated by our U.S. operations for operations, capital expenditures or
significant discretionary activities such as acquisitions of businesses and
share repurchases. If so, we could elect to repatriate earnings from foreign
jurisdictions in the form of a cash dividend, which would generally be exempt
from taxation with the exception of the adverse impact of withholding taxes. We
also could elect to raise capital in the U.S. through debt or equity issuances.
 We estimate that approximately $27.8 million of our total $46.8 million in cash
and cash equivalents at September 30, 2018 is held by our foreign subsidiaries
and is not available to fund U.S. operations unless repatriated.

© Edgar Online, source Glimpses

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