Company Quick10K Filing
Quick10K
Century Casinos
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$8.96 29 $264
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-06-17 Regulation FD, Exhibits
8-K 2019-06-17 Enter Agreement, Exhibits
8-K 2019-06-11 Shareholder Vote
8-K 2019-05-08 Earnings, Regulation FD, Exhibits
8-K 2019-03-08 Earnings, Regulation FD, Exhibits
8-K 2019-02-28 Regulation FD, Exhibits
8-K 2018-11-06 Earnings, Regulation FD, Exhibits
8-K 2018-08-28 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-08-13 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-08-07 Earnings, Regulation FD, Exhibits
8-K 2018-06-11 Shareholder Vote
8-K 2018-04-27 Regulation FD, Exhibits
8-K 2018-02-26 Officers
8-K 2018-02-06
MFG Mizuho Financial Group 38,930
NMR Nomura Holdings 11,620
RPD Rapid7 2,550
BITA Bitauto Holdings 790
DSS Document Security Systems 20
LYL Dragon Victory 15
BEGI Blackstar Enterprise Group 0
PRHR Petroshare 0
SPIN Spine Injury Solutions 0
MEC Mayville Engineering 0
CNTY 2019-03-31
Part I – Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited)
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 6. Exhibits
EX-31.1 cnty-20190331xex31_1.htm
EX-31.2 cnty-20190331xex31_2.htm
EX-31.3 cnty-20190331xex31_3.htm
EX-32.1 cnty-20190331xex32_1.htm
EX-32.2 cnty-20190331xex32_2.htm
EX-32.3 cnty-20190331xex32_3.htm

Century Casinos Earnings 2019-03-31

CNTY 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 cnty-20190331x10q.htm 10-Q 20190331 10Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarterly period ended March 31, 2019



OR



   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from ____________ to ___________



Commission file number          0-22900



CENTURY CASINOS, INC.

(Exact name of registrant as specified in its charter) 





 

DELAWARE

84-1271317

(State or other jurisdiction of

(I.R.S. Employer Identification No.)

incorporation or organization)

 



455 E. Pikes Peak Ave., Suite 210, Colorado Springs, Colorado 80903

(Address of principal executive offices, including zip code)



(719) 527-8300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



 

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 Per Share Par Value

CNTY

Nasdaq Capital Market, Inc.



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  No    

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a  smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

Accelerated filer

Non-accelerated filer  

 

Smaller reporting company



 

Emerging growth company



 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

29,439,179  shares of common stock, $0.01 par value per share, were outstanding as of May 3, 2019.

 

1


 

 

INDEX



 

 

Part I

FINANCIAL INFORMATION

Page

Item 1.

Condensed Consolidated Financial Statements (Unaudited)



Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018



Condensed Consolidated Statements of Earnings for the Three Months Ended March 31, 2019 and 2018



Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2019 and 2018



Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2019 and 2018



Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018 



Notes to Condensed Consolidated Financial Statements

10 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

31 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

46 

Item 4.

Controls and Procedures

46 

Part II

OTHER INFORMATION

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

46 

Item 6.

Exhibits

47 

Signatures

48 



 

2


 

 

PART I – FINANCIAL INFORMATION

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)



 

 

 

 

 

 



 

March 31,

 

 

December 31,

Amounts in thousands, except for share and per share information

 

2019

 

 

2018

ASSETS

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 Cash and cash equivalents

 

$

49,533 

 

$

45,575 

 Receivables, net

 

 

7,158 

 

 

6,035 

 Prepaid expenses

 

 

2,145 

 

 

1,650 

 Inventories

 

 

874 

 

 

898 

 Other current assets

 

 

1,075 

 

 

816 

Total Current Assets

 

 

60,785 

 

 

54,974 



 

 

 

 

 

 

Property and equipment, net

 

 

197,221 

 

 

187,017 

Leased right-of-use assets, net

 

 

38,042 

 

 

Goodwill

 

 

14,018 

 

 

13,993 

Deferred income taxes

 

 

1,703 

 

 

1,545 

Casino licenses

 

 

14,714 

 

 

14,628 

Trademarks

 

 

1,700 

 

 

1,730 

Cost investment

 

 

1,000 

 

 

1,000 

Equity investment

 

 

637 

 

 

659 

Deposits and other

 

 

3,259 

 

 

3,279 

Total Assets

 

$

333,079 

 

$

278,825 



 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 Current portion of long-term debt

 

$

17,992 

 

$

17,482 

 Current portion of operating lease liabilities

 

 

3,270 

 

 

 Current portion of finance lease liabilities

 

 

83 

 

 

 Accounts payable

 

 

6,476 

 

 

3,304 

 Accrued liabilities

 

 

14,847 

 

 

15,664 

 Accrued payroll

 

 

6,595 

 

 

7,171 

 Taxes payable

 

 

6,127 

 

 

5,570 

Contingent liability (Note 6)

 

 

838 

 

 

829 

Total Current Liabilities

 

 

56,228 

 

 

50,020 



 

 

 

 

 

 

Long-term debt, net of current portion and deferred financing costs (Note 5)

 

 

49,780 

 

 

42,041 

Operating lease liabilities, net of current portion

 

 

37,045 

 

 

Finance lease liabilities, net of current portion

 

 

48 

 

 

Taxes payable and other

 

 

3,561 

 

 

3,381 

Total Liabilities

 

 

146,662 

 

 

95,442 

Commitments and Contingencies (Note 6)

 

 

 

 

 

 



See notes to unaudited condensed consolidated financial statements.



-  Continued -

 

3


 

 

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)





 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

 

December 31,

Amounts in thousands, except for share and per share information

 

2019

 

 

2018

Equity:

 

 

 

 

 

 

Preferred stock; $0.01 par value; 20,000,000 shares authorized; no shares issued or outstanding

 

 

 

 

Common stock; $0.01 par value; 50,000,000 shares authorized; 29,439,179 and 29,439,179 shares issued and outstanding

 

 

294 

 

 

294 

Additional paid-in capital

 

 

114,475 

 

 

114,214 

Retained earnings

 

 

76,892 

 

 

76,056 

Accumulated other comprehensive loss

 

 

(12,814)

 

 

(14,243)

Total Century Casinos, Inc. shareholders' equity

 

 

178,847 

 

 

176,321 

Non-controlling interests

 

 

7,570 

 

 

7,062 

Total Equity

 

 

186,417 

 

 

183,383 

Total Liabilities and Equity

 

$

333,079 

 

$

278,825 



See notes to unaudited condensed consolidated financial statements.

 

4


 

 

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)



 

 

 

 

 

 



 

 

 

 

 

 

   

 

For the three months

   

 

ended March 31,

Amounts in thousands, except for per share information

 

2019

 

2018

Operating revenue:

 

 

 

 

 

 

Gaming

 

$

37,340 

 

$

34,007 

Hotel

 

 

446 

 

 

454 

Food and beverage

 

 

3,752 

 

 

3,559 

Other

 

 

4,075 

 

 

2,600 

Net operating revenue

 

 

45,613 

 

 

40,620 

Operating costs and expenses:

 

 

 

 

 

 

Gaming

 

 

19,566 

 

 

17,741 

Hotel

 

 

178 

 

 

174 

Food and beverage

 

 

3,929 

 

 

3,636 

General and administrative

 

 

16,055 

 

 

13,665 

Depreciation and amortization

 

 

2,425 

 

 

2,153 

Total operating costs and expenses

 

 

42,153 

 

 

37,369 

Loss from equity investment

 

 

(14)

 

 

Earnings from operations

 

 

3,446 

 

 

3,251 

Non-operating income (expense):

 

 

 

 

 

 

Interest income

 

 

 

 

19 

Interest expense

 

 

(1,258)

 

 

(1,030)

Gain on foreign currency transactions, cost recovery income and other

 

 

247 

 

 

59 

Non-operating (expense) income, net

 

 

(1,007)

 

 

(952)

Earnings before income taxes

 

 

2,439 

 

 

2,299 

Income tax expense

 

 

(716)

 

 

(980)

Net earnings

 

 

1,723 

 

 

1,319 

Net earnings attributable to non-controlling interests

 

 

(655)

 

 

(393)

Net earnings attributable to Century Casinos, Inc. shareholders

 

$

1,068 

 

$

926 



 

 

 

 

 

 

Earnings per share attributable to Century Casinos, Inc. shareholders:

 

 

 

 

 

 

Basic

 

$

0.04 

 

$

0.03 

Diluted

 

$

0.04 

 

$

0.03 

Weighted average shares outstanding - basic

 

 

29,439 

 

 

29,363 

Weighted average shares outstanding - diluted

 

 

30,052 

 

 

29,994 



 

 

 

 

 

 

See notes to unaudited condensed consolidated financial statements.





 

5


 

 

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)





 

 

 

 

 

 



 

 

 

 

 

 

   

 

For the three months



 

ended March 31,

Amounts in thousands

 

2019

 

2018

   

 

 

 

 

 

 

Net earnings

 

$

1,723 

 

$

1,319 



 

 

 

 

 

 

Other comprehensive income (loss)

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

1,368 

 

 

(1,342)

Other comprehensive income (loss)

 

 

1,368 

 

 

(1,342)

Comprehensive income (loss)

 

$

3,091 

 

$

(23)



 

 

 

 

 

 

Comprehensive income (loss) attributable to non-controlling interests

 

 

 

 

 

 

Net earnings attributable to non-controlling interests

 

 

(655)

 

 

(393)

Foreign currency translation adjustments

 

 

61 

 

 

(3)

Comprehensive income (loss) attributable to Century Casinos, Inc. shareholders

 

$

2,497 

 

$

(419)



 

 

 

 

 

 

See notes to unaudited condensed consolidated financial statements.





 

 

6


 

 

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)











 

 

 

 

 

 



 

For the three months



 

ended March 31,

Amounts in thousands, except for share information

 

2019

 

2018

Common Stock

 

 

 

 

 

 

Balance, beginning of period

 

$

294 

 

$

294 

Balance, end of period

 

 

294 

 

 

294 



 

 

 

 

 

 

Additional Paid-in Capital

 

 

 

 

 

 

Balance, beginning of period

 

$

114,214 

 

$

113,068 

Amortization of stock-based compensation

 

 

261 

 

 

115 

Incremental costs of common stock issuance

 

 

 

 

(5)

Balance, end of period

 

 

114,475 

 

 

113,178 



 

 

 

 

 

 

Accumulated Other Comprehensive Income (Loss)

 

 

 

 

 

 

Balance, beginning of period

 

$

(14,243)

 

$

(6,127)

Foreign currency translation adjustment

 

 

1,429 

 

 

(1,345)

Balance, end of period

 

 

(12,814)

 

 

(7,472)



 

 

 

 

 

 

Retained Earnings

 

 

 

 

 

 

Balance, beginning of period

 

$

76,056 

 

$

72,662 

Net earnings

 

 

1,068 

 

 

926 

Cumulative effect of accounting change (1)

 

 

(232)

 

 

Balance, end of period

 

 

76,892 

 

 

73,588 



 

 

 

 

 

 

Total Century Casinos' Shareholders Equity

 

$

178,847 

 

$

179,588 



 

 

 

 

 

 

Noncontrolling Interests

 

 

 

 

 

 

Balance, beginning of period

 

$

7,062 

 

$

7,421 

Net earnings

 

 

655 

 

 

393 

Foreign currency translation adjustment

 

 

(61)

 

 

Distribution to non-controlling interest

 

 

(37)

 

 

(30)

Cumulative effect of accounting change (1)

 

 

(49)

 

 

Balance, end of period

 

 

7,570 

 

 

7,787 



 

 

 

 

 

 

Total Equity

 

$

186,417 

 

$

187,375 



 

 

 

 

 

 

Common shares issued

 

 

 

 

2,948 





See notes to unaudited condensed consolidated financial statements.



(1)

Cumulative effect of accounting change relates to the adoption of Accounting Standards Update 2016-02 (“ASU 2016-02”). See Note 2 to the unaudited condensed consolidated financial statements for further details on the adoption of this accounting standard. 



 

7


 

 

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)



 

 

 

 

 

 

   

 

For the three months



 

ended March 31,

Amounts in thousands

 

2019

 

2018



 

 

 

 

 

 

Cash Flows from Operating Activities:

 

 

 

Net earnings

 

$

1,723 

 

$

1,319 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

2,425 

 

 

2,153 

Loss on disposition of fixed assets

 

 

59 

 

 

253 

Adjustment of contingent liability (Note 6)

 

 

25 

 

 

39 

Unrealized loss (gain) on interest rate swaps

 

 

103 

 

 

(13)

Amortization of stock-based compensation expense

 

 

261 

 

 

115 

Amortization of deferred financing costs

 

 

30 

 

 

32 

Deferred (benefit) taxes

 

 

(158)

 

 

261 

Loss from unconsolidated subsidiary

 

 

14 

 

 

Changes in Operating Assets and Liabilities:

 

 

 

 

 

 

Receivables, net

 

 

(881)

 

 

687 

Prepaid expenses and other assets

 

 

(1,440)

 

 

(381)

Accounts payable

 

 

(385)

 

 

(65)

Accrued liabilities

 

 

1,855 

 

 

1,326 

Inventories

 

 

20 

 

 

(13)

Other operating liabilities

 

 

(252)

 

 

348 

Accrued payroll

 

 

(651)

 

 

(611)

Taxes payable

 

 

1,478 

 

 

345 

Net cash provided by operating activities

 

 

4,226 

 

 

5,795 



 

 

 

 

 

 

Cash Flows used in Investing Activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(7,631)

 

 

(12,200)

Proceeds from disposition of assets

 

 

 

 

Net cash used in investing activities

 

 

(7,631)

 

 

(12,198)

 Continued –

See notes to unaudited condensed consolidated financial statements.





8


 

 

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued)



 

 

 

 

 

 

   

 

For the three months



 

ended March 31,

Amounts in thousands

 

2019

 

2018



 

 

 

 

 

 

Cash Flows provided by (used in) Financing Activities:

 

 

 

 

 

 

Proceeds from borrowings

 

 

9,173 

 

 

Principal payments

 

 

(1,909)

 

 

(1,449)

Distribution to non-controlling interest

 

 

(37)

 

 

(642)

Net cash provided by (used in) financing activities

 

 

7,227 

 

 

(2,091)



Effect of Exchange Rate Changes on Cash

 

$

163 

 

$

(220)



 

 

 

 

 

 

Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash

 

$

3,985 

 

$

(8,714)



 

 

 

 

 

 

Cash, Cash Equivalents and Restricted Cash at Beginning of Period

 

$

46,284 

 

$

76,444 

Cash, Cash Equivalents and Restricted Cash at End of Period

 

$

50,269 

 

$

67,730 



 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

 

Interest paid

 

$

1,053 

 

$

1,064 

Income taxes paid

 

$

502 

 

$

619 



 

 

 

 

 

 

Non-Cash Investing Activities:

 

 

 

 

 

 

Purchase of property and equipment on account

 

$

5,499 

 

$

3,647 



See notes to unaudited condensed consolidated financial statements.



9


 

 

CENTURY CASINOS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)



1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION



Century Casinos, Inc. (the “Company”) is an international casino entertainment company. The Company’s operations as of March 31, 2019 are detailed below.



The Company owns, operates and manages the following casinos through wholly-owned subsidiaries in North America and England:



·

The Century Casino & Hotel in Edmonton, Alberta, Canada (“Century Resorts Alberta” or “CRA”)

·

The Century Casino St. Albert in Edmonton, Alberta, Canada (“CSA”)

·

Century Mile Racetrack and Casino in Edmonton, Alberta, Canada (“CMR” or “Century Mile”)

·

The Century Casino Calgary, Alberta, Canada (“CAL”)

·

The Century Casino & Hotel in Central City, Colorado (“CTL”)

·

The Century Casino & Hotel in Cripple Creek, Colorado (“CRC”); and

·

The Century Casino Bath in Bath, England (“CCB”)



Century Mile is a multi-level REC in the Edmonton market area that the Company opened on April 1, 2019. Century Mile includes a one-mile horse racetrack. The Company held the first horse race on April 28, 2019. In addition, Century Mile operates the pari-mutuel off-track betting network in Northern Alberta, Canada. The project cost CAD 61.5 million ($46.0 million based on the exchange rate in effect on March 31, 2019) and was financed with cash from the Company’s equity offering in November 2017 and additional financing from the Company’s credit agreement with the Bank of Montreal (“BMO”). See Note 5 for additional information on the Company’s credit agreement with BMO.



The Company has a controlling financial interest through its wholly-owned subsidiary Century Resorts Management GmbH (“CRM”) in the following majority-owned subsidiaries:



·

The Company owns 66.6% of Casinos Poland Ltd (“CPL” or “Casinos Poland”). As of March 31, 2019, CPL owned licenses for seven casinos operating throughout Poland. CPL is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. Polish Airports Company (“Polish Airports”) owns the remaining 33.3% of CPL, which is reported as a non-controlling financial interest.



·

The Company owns 75% of United Horsemen of Alberta Inc. dba Century Downs Racetrack and Casino (“CDR” or “Century Downs”). CDR operates Century Downs Racetrack and Casino, a REC in Balzac, a north metropolitan area of Calgary, Alberta, Canada. CDR is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. The remaining 25% of CDR is owned by unaffiliated shareholders and is reported as a non-controlling financial interest.



·

The Company owns 75% of Century Bets! Inc. (“CBS” or “Century Bets”). CBS operates the pari-mutuel off-track betting network in Southern Alberta, Canada. CBS is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. Rocky Mountain Turf Club (“RMTC”) owns the remaining 25% of CBS, which is reported as a non-controlling financial interest.



The Company has the following concession, management and consulting service agreements:



·

As of March 31, 2019, the Company operated nine ship-based casinos through concession agreements with three cruise ship owners. The concession agreements to operate the ship-based casinos onboard the Wind Spirit and Star Pride ended in January 2019 and March 2019, respectively. The concession agreements to operate the ship-based casinos onboard the Wind Surf and Star Breeze ended in April 2019, and the concession agreement to operate the ship-based casino onboard the Star Legend will end in May 2019.



10


 

 

·

The Company, through its subsidiary CRM, has a 7.5% ownership interest in Mendoza Central Entretenimientos S.A., an Argentinian company (“MCE”). In addition, CRM provides advice to MCE on casino matters pursuant to a consulting agreement in exchange for a fixed fee plus a percentage of MCE’s earnings before interest, taxes, depreciation and amortization (“EBITDA”). See Note 3 for additional information related to MCE.



·

The Company, through its subsidiary CRM, has a 51% ownership interest in Golden Hospitality Ltd. (“GHL”). GHL is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. Unaffiliated shareholders own the remaining 49% of GHL, which is reported as a non-controlling financial interest. GHL has entered into a purchase agreement with Minh Chau Ltd. (“MCL”) and MCL’s owners to purchase up to 51% of MCL over a three-year period, with an 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 near the Vietnamese – Chinese border station. In addition to the purchase agreement, GHL and MCL have entered into a management agreement which provides that GHL will manage the operations at MCL in exchange for receiving a portion of MCL’s net profit. See Note 3 for additional information related to GHL and MCL.



Additional Projects and Other Developments



In August 2017, the Company announced that, together with the owner of the Hamilton Princess Hotel & Beach Club in Hamilton, Bermuda, it 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.  The Company’s subsidiary, 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 a license is awarded. CRM will also provide a $5.0 million loan for the purchase of casino equipment if the license is awarded.



Preparation of Financial Statements



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. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted. The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated.



In the opinion of management, all adjustments considered necessary for the 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, 2018. The results of operations for the quarter ended March 31, 2019 are not necessarily indicative of the operating results for the full year.



Cash, Cash Equivalents and Restricted Cash



A reconciliation of cash, cash equivalents and restricted cash as stated in the Company’s statement of cash flows is presented in the following table:





 

 

 

 

 

 



 

March 31,

 

March 31,

Amounts in thousands

 

2019

 

2018

Cash and cash equivalents

 

$

49,533 

 

$

65,939 

Restricted cash

 

 

 

 

1,062 

Restricted cash included in deposits and other

 

 

736 

 

 

729 

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows

 

$

50,269 

 

$

67,730 



For the three months ended March 31, 2019, restricted cash included $0.6 million in deposits and other related to a cash guarantee for the Company’s CCB loan agreement and $0.1 million in deposits and other related to payments of prizes and giveaways for Casinos Poland.



11


 

 

Presentation of Foreign Currency Amounts



The Company’s functional currency is the US dollar (“USD” or “$”).  Foreign subsidiaries with a functional currency other than the US 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”), Polish zloty (“PLN”) and British pound (“GBP”).  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 US dollar used to translate balances at the end of the reported periods are as follows:











 

 

 

 



 

March 31,

 

December 31,

Ending Rates

 

2019

 

2018

Canadian dollar (CAD)

 

1.3363 

 

1.3642 

Euros (EUR)

 

0.8908 

 

0.8738 

Polish zloty (PLN)

 

3.8313 

 

3.7606 

British pound (GBP)

 

0.7672 

 

0.7823 



The average exchange rates to the US dollar used to translate balances during each reported period are as follows:







 

 

 

 

 

 



 

 

 

 

 

 



 

For the three months

 

 



 

ended March 31,

 

 

Average Rates

 

2019

 

2018

 

% Change

Canadian dollar (CAD)

 

1.3294 

 

1.2643 

 

(5.1%)

Euros (EUR)

 

0.8808 

 

0.8136 

 

(8.3%)

Polish zloty (PLN)

 

3.7869 

 

3.3992 

 

(11.4%)

British pound (GBP)

 

0.7683 

 

0.7186 

 

(6.9%)

Source: Pacific Exchange Rate Service

 

 

 

 

 

 



 

 

 

 

 

 







2. SIGNIFICANT ACCOUNTING POLICIES



Recently Issued Accounting Pronouncements - In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). The objective of ASU 2017-04 is to simplify the subsequent measurement of goodwill by entities performing their annual goodwill impairment tests by comparing the fair value of a reporting unit, including income tax effects from any tax-deductible goodwill, with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount exceeds fair value. ASU 2017-04 is effective for fiscal years beginning after December 31, 2021, and interim periods within those fiscal years. Early adoption of ASU 2017-04 is permitted on goodwill impairment tests performed after January 1, 2017. ASU 2017-04 should be applied on a prospective basis. The Company is currently evaluating the impact of adopting ASU 2017-04; however, the standard is not expected to have a material impact on its consolidated financial statements.



In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) (“ASU 2018-13”). The objective of ASU 2018-13 is to modify disclosure requirements on fair value measurements. The guidance is effective for fiscal years beginning after December 31, 2019, and interim periods within those fiscal years. Early adoption is permitted. The amendments should be adopted using the prospective method for certain disclosures within the guidance and retrospectively upon the effective date. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.



In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) (“ASU 2018-15”). The objective of ASU 2018-15 is to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with those incurred to develop or obtain internal-use software. The guidance is effective for fiscal years beginning after December 31, 2019, and interim periods within those fiscal years. Early adoption is permitted. The amendments can be applied either retrospectively or prospectively. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.



12


 

 

In October 2018, the FASB issued ASU 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities (“ASU 2018-17”). The objective of ASU 2018-17 is to improve (i) the application of variable interest entity guidance to private companies under common control and (ii) consideration of indirect interests held through related parties under common control for determining whether fees paid to decision makers and service providers are variable interests. The guidance is effective for fiscal years beginning after December 31, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.



Changes Related to Adoption of ASU 2016-02

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). The objective of ASU 2016-02 and subsequent amendments is to recognize lease assets and lease liabilities by lessees for those leases classified as operating leases under previous US GAAP. The Company adopted ASU 2016-02 and the subsequent amendments retrospectively on January 1, 2019 in its condensed consolidated financial statements for the three months ended March 31, 2019.  The Company used the alternative modified retrospective method, also known as the transition relief method permitted under ASU 2018-11, Leases (Topic 842) Targeted Improvements, which did not require the restatement of prior periods and instead recognized a $0.3 million cumulative-effect adjustment to retained earnings upon transition. See Note 11 for additional information related to the Company’s lease obligations.



When adopting the leasing standard, the Company made the following policy elections:

·

The Company elected the practical expedient to account for lease and non-lease components as a single lease component for all asset classes;

·

The Company elected the short-term lease measurement and recognition exemption and did not establish ROU assets or lease liabilities for operating leases with terms of 12 months or less;

·

The Company used its original assumptions for operating leases entered into prior to adoption, electing not to use the hind sight practical expedient;

·

The Company elected to use the package of practical expedients for transition and did not reassess (i) whether expired or existing contracts were leases or contained leases, (ii) the classification of its existing leases, or (iii) initial direct costs for existing leases; and

·

The Company elected not to evaluate existing or expired land easements under the leasing standard prior to the date of adoption.



The impact of adopting the leasing standard on the Company’s condensed consolidated balance sheet as of January 1, 2019 was as follows:





 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

Amounts in thousands

 

Prior to Adoption

 

Changes Related to Adoption of ASU 2016-02

 

Post Adoption

Operating Leases

 

 

 

 

 

 

 

 

 

Leased right-of-use assets, net

 

$

 

$

38,276 

 

$

38,276 

Prepaid expenses

 

 

1,650 

 

 

(136)

 

 

1,514 

Accrued liabilities

 

 

15,664 

 

 

(639)

 

 

15,025 

Operating lease liabilities, net of current portion

 

 

 

 

40,410 

 

 

40,410 

Taxes payable and other

 

 

3,381 

 

 

(1,350)

 

 

2,031 

Retained earnings

 

 

76,056 

 

 

(232)

 

 

75,824 

Non-controlling interests

 

 

7,062 

 

 

(49)

 

 

7,013 



 

 

 

 

 

 

 

 

 

Finance Leases

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

187,017 

 

 

(362)

 

 

186,655 

Leased right-of-use assets, net

 

 

 

 

362 

 

 

362 

Current portion of long-term debt

 

 

17,482 

 

 

(123)

 

 

17,359 

Current portion of finance lease liabilities

 

 

 

 

123 

 

 

123 

Long-term debt, net of current portion and deferred financing costs

 

 

42,041 

 

 

(310)

 

 

41,731 

Finance lease liabilities, net of current portion

 

$

 

$

310 

 

$

310 



13


 

 

As of December 31, 2018, maturities related to operating leases were reported as follows:





 

 

 

Amounts in thousands

 

 

 

2019

 

$

4,079 

2020

 

 

2,783 

2021

 

 

2,748 

2022

 

 

2,700 

2023

 

 

2,646 

Total

 

$

14,956 















3.INVESTMENTS



Cost Investment

Mendoza Central Entretenimientos S.A.

In October 2014, CRM entered into an agreement (the “MCE Agreement”) with Gambling and Entertainment LLC and its affiliates, pursuant to which CRM purchased 7.5% of the shares of MCE for $1.0 million. Pursuant to the MCE Agreement, CRM is working with MCE to utilize MCE’s 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 that is owned by the Province of Mendoza. MCE may also pursue other gaming opportunities. Under the MCE Agreement, 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 the Company did not exercise. The Company accounts for the $1.0 million investment in MCE using the cost method.



Equity Investment

Minh Chau Ltd.

In April 2018, CRM acquired a 51% ownership interest in GHL for $0.6 million. GHL entered into an agreement with MCL and its owners, pursuant to which GHL agreed to purchase up to a total of 51% of MCL over a three-year period for approximately $3.6 million. GHL has the option to purchase an additional 19% ownership interest in MCL for a total of 70% of MCL under certain conditions. As of March 31, 2019, GHL has paid $0.6 million for a total ownership interest in MCL of 9.21%. GHL and MCL also entered into a management agreement, which provides that GHL will manage the operations at MCL’s 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. The Company excluded the presentation of MCL’s stand-alone financial information after it determined that it is not significant compared to the Company’s consolidated results. At March 31, 2019, the Company’s maximum exposure to losses based on the value of the Company’s equity investment in GHL and GHL’s 51% purchase commitment in MCL was $3.6 million.







14


 

 

4.GOODWILL AND INTANGIBLE ASSETS



Goodwill

The Company tests goodwill for impairment as of October 1 each year, or more frequently as circumstances indicate it is necessary. Testing compares the estimated fair values of our reporting units to the reporting units’ carrying values. The reporting units with goodwill balances as of March 31, 2019 include the operations at CRA, CDR, CSA and CPL. The Company considers a variety of factors when estimating the fair value of its reporting units, including estimates about the future operating results of each reporting unit, multiples of earnings, various market analyses, and recent sales of comparable businesses, if such information is available. The Company makes a variety of estimates and judgments about the relevance and comparability of these factors to the reporting units in estimating their fair values. If the carrying value of a reporting unit exceeds its estimated fair value, the fair value of each reporting unit is allocated to the reporting unit’s assets and liabilities to determine the implied fair value of the reporting unit’s goodwill and whether impairment is necessary. There have been no indications of impairment at CRA, CDR, CSA or CPL since the Company’s last annual analysis that would necessitate additional impairment testing by the Company.

Changes in the carrying amount of goodwill related to CRA, CDR, CSA and CPL are as follows:





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Canada

 

Poland

 

 

 

Amounts in thousands

 

Century Resorts Alberta

 

Century Downs

 

Century Casino St. Albert

 

Casinos Poland

 

Total

Balance – December 31, 2018

 

$

3,603 

 

$

139 

 

$

3,446 

 

$

6,805 

 

$

13,993 

Effect of foreign currency translation

 

 

76 

 

 

 

 

72 

 

 

(126)

 

 

25 

Balance -- March 31, 2019

 

$

3,679 

 

$

142 

 

$

3,518 

 

$

6,679 

 

$

14,018 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Intangible Assets

Trademarks

The Company currently owns two trademarks, the Century Casinos trademark and the Casinos Poland trademark, which are reported as intangible assets on the Company’s condensed consolidated balance sheets. Changes in the carrying amount of the trademarks are as follows:



 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

Amounts in thousands

 

Century Casinos

 

Casinos Poland

 

Total

Balance – December 31, 2018

 

$

108 

 

$

1,622 

 

$

1,730 

Effect of foreign currency translation

 

 

 

 

(30)

 

 

(30)

Balance -- March 31, 2019

 

$

108 

 

$

1,592 

 

$

1,700 



 

 

 

 

 

 

 

 

 

The Company has determined both trademarks have indefinite useful lives and therefore the Company does not amortize the trademarks. Rather, the Company tests its trademarks for impairment as of October 1 each year, or more frequently as circumstances indicate it is necessary. The Company tests trademarks for impairment using the relief-from-royalty method. If the fair value of an indefinite-lived intangible asset is less than its carrying amount, the Company would recognize an impairment charge equal to the difference. There have been no indications of impairment related to the Century Casinos and Casinos Poland trademarks since the Company’s last annual analysis that would necessitate additional impairment testing by the Company.



Casino Licenses

Casino licenses consist of the following:



 

 

 

 

 

 



 

 

 

 

 

 



 

March 31,

 

December 31,

Amounts in thousands

 

2019

 

2018

Finite-lived

 

 

 

 

 

 

Casino licenses

 

$

2,830 

 

$

2,883 

Less: accumulated amortization

 

 

(828)

 

 

(708)

Total finite-lived casino licenses, net

 

 

2,002 

 

 

2,175 

Infinite-lived

 

 

 

 

 

 

Casino licenses

 

 

12,712 

 

 

12,453 

Total infinite-lived casino licenses

 

 

12,712 

 

 

12,453 

Casino licenses, net

 

$

14,714 

 

$

14,628 



 

 

 

 

 

 



15


 

 

Poland

As of March 31, 2019, Casinos Poland had eight casino licenses, each with an original term of six years, which are finite-lived intangible assets and are amortized over their respective useful lives. Changes in the carrying amount of the Casinos Poland licenses are as follows:



 

 

 



 

 

 

Amounts in thousands

 

 

Casinos Poland

Balance – December 31, 2018

 

$

2,175 

Amortization

 

 

(135)

Effect of foreign currency translation

 

 

(38)

Balance -- March 31, 2019

 

$

2,002 



 

 

 

As of March 31, 2019, estimated amortization expense for the CPL casino licenses over the next five years was as follows:







 

 

 



 

 

 

Amounts in thousands

 

 

 

2019

 

$

316 

2020

 

 

421 

2021

 

 

421 

2022

 

 

407 

2023

 

 

339 

Thereafter

 

 

98 



 

$

2,002 



 

 

 

These estimates do not reflect the impact of future foreign exchange rate changes or the continuation of the licenses following their expiration. The weighted average period before the current CPL casino licenses expire is 4.4 years. In Poland, gaming licenses are not renewable. Once a gaming license has expired, any gaming company can apply for the license. In April 2019, CPL combined the two licenses used to operate casinos in the Warsaw Marriott Hotel into one license and transferred the remaining license to the Hilton Hotel in Warsaw. This transfer extends the Hilton Hotel’s license to September 2022 and the Marriott Hotel’s license to July 2024. 



Canada and Corporate and Other

The licenses at CDR, CSA and CCB are infinite-lived intangible assets that are not amortized. CDR holds licenses from the Alberta Gaming, Liquor and Cannabis Commission (“AGLC”) and Horse Racing Alberta (“HRA”). CSA holds a license from the AGLC. CCB holds licenses from the Great Britain Gambling Commission. No impairment charges related to the licenses have been recorded. Changes in the carrying amount of the licenses are as follows:





 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

Canada

 

Corporate and Other

Amounts in thousands

 

Century Downs

 

Century Casino St. Albert

 

Century Casino Bath

Balance – December 31, 2018

 

$

2,332 

 

$

8,960 

 

$

1,161 

Effect of foreign currency translation

 

 

49 

 

 

187 

 

 

23 

Balance -- March 31, 2019

 

$

2,381 

 

$

9,147 

 

$

1,184 



 

 

 

 

 

 

 

 

 









16


 

 



5.  LONG-TERM DEBT



Long-term debt and the weighted average interest rates as of March 31, 2019 and December 31, 2018 consisted of the following:



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

Amounts in thousands

 

March 31, 2019

 

December 31, 2018

Credit agreement - Bank of Montreal

 

$

48,036 

 

 

4.42% 

 

$

40,515 

 

 

4.43% 

Credit agreements - CPL

 

 

2,216 

 

 

3.21% 

 

 

1,949 

 

 

1.77% 

Credit facilities - CPL

 

 

1,061 

 

 

5.17% 

 

 

647 

 

 

3.57% 

Credit agreement - CCB

 

 

2,346 

 

 

2.52% 

 

 

2,429 

 

 

2.34% 

Financing obligation - CDR land lease

 

 

14,590 

 

 

14.62% 

 

 

14,291 

 

 

13.79% 

Capital leases (1)

 

 

 —

 

 

 —

 

 

188 

 

 

7.06% 

Total principal

 

$

68,249 

 

 

6.58% 

 

$

60,019 

 

 

6.74% 

Deferred financing costs

 

 

(477)

 

 

 

 

 

(496)

 

 

 

Total long-term debt

 

$

67,772 

 

 

 

 

$

59,523 

 

 

 

Less current portion

 

 

(17,992)

 

 

 

 

 

(17,482)

 

 

 

Long-term portion

 

$

49,780 

 

 

 

 

$

42,041 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

(1)

See Note 2 and Note 11 for information related to the treatment of the Company’s lease agreements after the adoption of ASU 2016-02 and related amendments.



Credit Agreement - Bank of Montreal

In May 2012, the Company, through its Canadian subsidiaries, entered into the CAD 28.0 million credit agreement with BMO. In August 2014, the Company, through its Canadian subsidiaries, entered into an amended and restated credit agreement with BMO that increased the Company’s borrowing capacity to CAD 39.1 million. In September 2016, the Company, through its Canadian subsidiaries, entered into a second amended and restated credit agreement with BMO that increased the Company’s borrowing capacity to CAD 69.2 million. In August 2018, the Company, through its Canadian subsidiaries, entered into a third amended and restated credit agreement with BMO (the “BMO Credit Agreement”) to provide additional financing for the Century Mile project and a leasing credit facility. Under the BMO Credit Agreement, the Company’s borrowing capacity was increased to CAD 102.2 million with an interest rate of BMO’s floating rate plus a margin, except for the rates for Credit Facility H, which will be determined upon execution of a lease agreement. As discussed further below, the Company has entered into interest rate swap agreements to fix the interest rate paid related to a portion of the outstanding balance on the BMO Credit Agreement. As of March 31, 2019, the Company had borrowed CAD 88.1 million, of which the outstanding balance was CAD 64.2 million ($48.0 million based on the exchange rate in effect on March 31, 2019) and the Company had approximately CAD 16.0 million ($12.0 million based on the exchange rate in effect on March 31, 2019) available under the BMO Credit Agreement. In addition, the Company is using CAD 3.0 million ($2.2 million based on the exchange rate in effect on March 31, 2019) from Credit Facility E for the interest rate swap agreements discussed below.



The BMO Credit Agreement consists of the following credit facilities:



1.

Credit Facility A is a CAD 1.1 million revolving credit facility with a term of five years that expires in August 2019. Credit Facility A may be used for general corporate purposes, including for the payment of costs related to the BMO Credit Agreement, ongoing working capital requirements and operating regulatory requirements. As of March 31, 2019, the Company had CAD 1.1 million ($0.8 million based on the exchange rate in effect on March 31, 2019) available for borrowing under Credit Facility A.



2.

Credit Facility B is an approximately CAD 24.1 million committed, non-revolving, reducing standby facility with a term of five years that expires in August 2019. The Company used borrowings under Credit Facility B primarily to repay the Company’s mortgage loan related to CRA, pay for the additional 33.3% investment in CPL, pay for development costs related to CDR and for working capital and general corporate purposes. Once the principal amount of an advance has been repaid, it cannot be re-borrowed. As of March 31, 2019, the Company had no additional available borrowings under Credit Facility B.



3.

Credit Facility C is a CAD 11.0 million revolving credit facility with a term of five years that expires in August 2019. Credit Facility C may be used as additional financing for the development of CDR. The Company may re-borrow the principal amount within the limits described in the BMO Credit Agreement. As of March 31, 2019, the Company had CAD 6.1 million ($4.6 million based on the exchange rate in effect on March 31, 2019) available for borrowing under Credit Facility C.



17


 

 

4.

Credit Facility D is an approximately CAD 30.0 million committed, reducing term credit facility with a term of five years that expires in September 2021. The Company used the entire amount of the facility to pay for the Company’s acquisition of CSA in September 2016. Once the principal amount of an advance has been repaid, it cannot be re-borrowed. As of March 31, 2019, the Company had no additional available borrowings under Credit Facility D.



5.

Credit Facility E is a CAD 3.0 million treasury risk management facility. The Company may use this facility to hedge interest rate risk or currency exchange rate risk. Credit Facility E has a term of five years mirroring the interest rate swap agreements discussed below.  The Company is currently utilizing Credit Facility E to hedge interest rate risk as discussed below.



6.

Credit Facility F is a CAD 33.0 million demand, non-revolving, construction credit facility for use for the construction and development of the Century Mile project. Upon the maturity of Credit Facility F on the facility termination date (which is the earliest of (i) the date on which demand for the payment is made by BMO; (ii) August 24, 2019; (iii) the Project Construction Completion Date, as defined in the BMO Credit Agreement; or (iv) the occurrence of an event of default), the principal balance will be converted to Credit Facility G. Once funds are advanced from Credit Facility F, they cannot be re-borrowed. As of March 31, 2019, the Company had CAD 8.8 million ($6.6 million based on the exchange rate in effect on March 31, 2019) available for borrowing under Credit Facility F.



7.

Credit Facility G is a committed, non-revolving, term credit facility that the Company will utilize at the maturity of Credit Facility F. Credit Facility G has a term of five years from the date of conversion of Credit Facility F. The Company cannot re-borrow funds that have been repaid under Credit Facility G.



8.

Credit Facility H is a CAD 2.0 million equipment leasing credit facility for use for the Century Mile project pursuant to the Interim Funding Agreement and Master Lease Agreement described in the BMO Credit Agreement. The Company may re-borrow the principal amount within the limits described in the BMO Credit Agreement pursuant to the Interim Funding Agreement and Master Lease Agreement. Maturity dates will be set once the facility is utilized. As of March 31, 2019, the Company had CAD 2.0 million ($1.5 million based on the exchange rate in effect on March 31, 2019) available for borrowing under Credit Facility H. The Company expects to enter into CAD 1.3 million ($1.0 million based on the exchange rate in effect on March 31, 2019) of equipment leases under this agreement in the second quarter of 2019.



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Any funds not drawn down under specified facilities in the BMO Credit Agreement are subject to standby fees ranging from 0.50% to 0.75% payable quarterly in arrears. Standby fees of less than CAD 0.1 million (less than $0.1 million based on the exchange rates in effect on March 31, 2019 and 2018) were recorded as interest expense in the condensed consolidated statements of earnings for each of the three months ended March 31, 2019 and 2018. The shares of the Company’s Canadian subsidiaries that own CRA, CAL, CSA and Century Mile and the Company's 75% interest in CDR are pledged as collateral for the BMO Credit Agreement. The BMO Credit Agreement contains a number of covenants applicable to the Canadian subsidiaries, including covenants restricting their incurrence of additional debt, a debt to EBITDA ratio less than 4:1, a fixed charge coverage ratio greater than 1:1, maintenance of a CAD 50.0 million equity balance and a capital expenditure limit of CAD 5.5 million for 2019. The