UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☑þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2019~~2020

☐¨ 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, Colorado80903

(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 ☑þ 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 ☑þ 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 ☑þ
	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 ☑þ

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

~~29,470,327~~29,575,962 shares of common stock, $0.01 par value per share, were outstanding as of ~~October 29, 2019.~~August 3, 2020.

INDEX


Part I	FINANCIAL INFORMATION	Page
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019	3
	Condensed Consolidated Statements of (Loss) Earnings for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	5
	Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	6
	Condensed Consolidated Statements of Equity for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	7
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34 38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	55 58
Item 4.	Controls and Procedures	55
~~Part II~~	~~OTHER INFORMATION~~58
Part II	OTHER INFORMATION
Item 2.1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55 59
Item 5.	Other Information	55 59
Item 6.	Exhibits	56 60
Signatures		57 61

‎

PART I – FINANCIAL INFORMATION

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


	September 30,			December 31,	June 30,			December 31,
Amounts in thousands, except for share and per share information	2019			2018	2020			2019
ASSETS
Current Assets:
Cash and cash equivalents	$	44,029	$	45,575	$	51,641	$	54,754
Receivables, net		9,174		6,035		8,837		11,371
Prepaid expenses		2,692		1,650		6,296		10,379
Inventories		1,003		898		1,773		2,046
Other current assets		541		816		3,415		816
Assets held for sale						539		—
Total Current Assets		57,439		54,974		72,501		79,366

Property and equipment, net		198,909		187,017		491,904		503,933
Leased right-of-use assets, net		47,242		—		33,891		37,040
Goodwill		13,786		13,993		10,203		32,936
Intangible assets, net						53,567		67,061
Deferred income taxes		2,010		1,545		499		2,447
Casino licenses		14,828		14,628
Trademarks		1,629		1,730
Cost investment		1,000		1,000		—		1,000
Equity investment		—		659
Note receivable, net of current portion and unamortized discount (Note 1)		423		—
Note receivable, net of current portion and unamortized discount						438		423
Deposits and other		2,584		3,279		2,414		2,694
Total Assets	$	339,850	$	278,825	$	665,417	$	726,900

LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt	$	17,363	$	17,482	$	20,354	$	3,157
Current portion of operating lease liabilities		4,229		—		4,003		4,235
Current portion of finance lease liabilities		351		—		135		161
Accounts payable		3,376		3,304		7,983		5,200
Accrued liabilities		12,290		15,664		17,982		21,707
Accrued payroll		7,540		7,171		9,950		13,201
Taxes payable		5,681		5,570		8,143		8,575
Contingent liability (Note 6)		848		829
Contingent liability (Note 8)						1,112		334
Liabilities held for sale						248		—
Total Current Liabilities		51,678		50,020		69,910		56,570

Long-term debt, net of current portion and deferred financing costs (Note 5)		53,706		42,041
Long-term debt, net of current portion and deferred financing costs (Note 6)						173,795		175,806
Long-term financing obligation to VICI Properties, Inc. subsidiaries (Note 7)						277,133		275,605
Operating lease liabilities, net of current portion		44,550		—		32,152		42,942
Finance lease liabilities, net of current portion		979		—		137		217
Taxes payable and other		2,297		3,381		3,936		2,672
Deferred income taxes						2,758		1,013
Total Liabilities		153,210		95,442		559,821		554,825
Commitments and Contingencies (Note 6)
Commitments and Contingencies (Note 8)

See notes to unaudited condensed consolidated financial statements.

- Continued -

‎

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)



	September 30,			December 31,	June 30,			December 31,
Amounts in thousands, except for share and per share information	2019			2018	2020			2019
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; 29,470,327 and 29,439,179 shares issued and outstanding		295		294
Preferred stock; $0.01 par value; 20,000,000 shares authorized; 0 shares issued or outstanding						—		—
Common stock; $0.01 par value; 50,000,000 shares authorized; 29,575,962 and 29,500,327 shares issued and outstanding						296		295
Additional paid-in capital		115,350		114,214		116,019		115,784
Retained earnings		76,809		76,056
(Accumulated deficit) retained earnings						(1,794)		56,669
Accumulated other comprehensive loss		(13,084)		(14,243)		(16,639)		(9,442)
Total Century Casinos, Inc. Shareholders' Equity		179,370		176,321		97,882		163,306
Non-controlling interests		7,270		7,062		7,714		8,769
Total Equity		186,640		183,383		105,596		172,075
Total Liabilities and Equity	$	339,850	$	278,825	$	665,417	$	726,900

See notes to unaudited condensed consolidated financial statements.

‎

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS (Unaudited)



	For the three months				For the nine months				For the three months				For the six months
	ended September 30,				ended September 30,				ended June 30,				ended June 30,
Amounts in thousands, except for per share information	2019		2018		2019		2018		2020		2019		2020		2019
Operating revenue:
Gaming	$	42,019	$	35,983	$	121,345	$	102,595	$	29,922	$	41,986	$	104,215	$	79,326
Hotel		562		575		1,502		1,534		476		494		2,292		940
Food and beverage		5,425		4,290		14,230		11,630		1,151		5,054		7,703		8,805
Other		4,929		2,716		13,913		8,075		4,554		4,911		9,550		8,986
Net operating revenue		52,935		43,564		150,990		123,834		36,103		52,445		123,760		98,057
Operating costs and expenses:
Gaming		21,589		18,490		62,873		52,666		16,482		21,718		58,525		41,284
Hotel		200		197		565		551		254		187		978		365
Food and beverage		5,411		4,148		13,891		11,708		1,468		4,550		8,138		8,480
General and administrative		19,426		15,174		56,438		44,781		12,451		20,963		41,986		37,015
Depreciation and amortization		2,829		2,323		7,698		6,645		6,405		2,443		12,899		4,868
Impairment - goodwill and intangible assets										1,157		—		35,121		—
Total operating costs and expenses		49,455		40,332		141,465		116,351		38,217		49,861		157,647		92,012
Earnings (loss) from equity investment		—		2		(1)		1
Earnings from operations		3,480		3,234		9,524		7,484
Earnings (Loss) from equity investment										—		14		—		(1)
(Loss) earnings from operations										(2,114)		2,598		(33,887)		6,044
Non-operating income (expense):
Interest income		11		74		20		107		5		5		6		9
Interest expense		(1,427)		(904)		(4,083)		(3,023)		(10,584)		(1,398)		(21,950)		(2,656)
Gain on foreign currency transactions, cost recovery income and other		116		182		886		431		78		523		79		770
Non-operating (expense) income, net		(1,300)		(648)		(3,177)		(2,485)		(10,501)		(870)		(21,865)		(1,877)
Earnings before income taxes		2,180		2,586		6,347		4,999
(Loss) earnings before income taxes										(12,615)		1,728		(55,752)		4,167
Income tax expense		(1,133)		(791)		(3,219)		(1,784)		(582)		(1,370)		(3,106)		(2,086)
Net earnings		1,047		1,795		3,128		3,215
Net earnings attributable to non-controlling interests		(565)		(155)		(2,143)		(328)
Net earnings attributable to Century Casinos, Inc. shareholders	$	482	$	1,640	$	985	$	2,887
Net (loss) earnings										(13,197)		358		(58,858)		2,081
Net loss (earnings) attributable to non-controlling interests										590		(923)		395		(1,578)
Net (loss) earnings attributable to Century Casinos, Inc. shareholders									$	(12,607)	$	(565)	$	(58,463)	$	503

Earnings per share attributable to Century Casinos, Inc. shareholders:
(Loss) earnings per share attributable to Century Casinos, Inc. shareholders:
Basic	$	0.02	$	0.06	$	0.03	$	0.10	$	(0.43)	$	(0.02)	$	(1.98)	$	0.02
Diluted	$	0.02	$	0.05	$	0.03	$	0.10	$	(0.43)	$	(0.02)	$	(1.98)	$	0.02
Weighted average shares outstanding - basic		29,453		29,425		29,444		29,388		29,576		29,440		29,541		29,440
Weighted average shares outstanding - diluted		30,179		29,987		30,134		29,986		29,576		29,440		29,541		30,114

See notes to unaudited condensed consolidated financial statements.

‎

CENTURY CASINOS, INC. AND SUBSIDIARIES

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



	For the three months				For the nine months				For the three months				For the six months
	ended September 30,				ended September 30,				ended June 30,				ended June 30,
Amounts in thousands	2019		2018		2019		2018		2020		2019		2020		2019

Net earnings	$	1,047	$	1,795	$	3,128	$	3,215
Net (loss) earnings									$	(13,197)	$	358	$	(58,858)	$	2,081

Other comprehensive (loss) income
Foreign currency translation adjustments		(2,738)		1,810		869		(3,535)		6,028		2,239		(7,699)		3,607
Other comprehensive (loss) income		(2,738)		1,810		869		(3,535)
Other comprehensive income (loss)										6,028		2,239		(7,699)		3,607
Comprehensive (loss) income	$	(1,691)	$	3,605	$	3,997	$	(320)	$	(7,169)	$	2,597	$	(66,557)	$	5,688

Comprehensive (loss) income attributable to non-controlling interests
Net earnings attributable to non-controlling interests		(565)		(155)		(2,143)		(328)
Net loss (earnings) attributable to non-controlling interests										590		(923)		395		(1,578)
Foreign currency translation adjustments		480		(216)		290		430		(387)		(251)		502		(190)
Comprehensive (loss) income attributable to Century Casinos, Inc. shareholders	$	(1,776)	$	3,234	$	2,144	$	(218)	$	(6,966)	$	1,423	$	(65,660)	$	3,920

See notes to unaudited condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)


	For the three months				For the nine months				For the three months				For the six months
	ended September 30,				ended September 30,				ended June 30,				ended June 30,
Amounts in thousands, except for share information	2019		2018		2019		2018		2020		2019		2020		2019
Common Stock
Balance, beginning of period	$	294	$	294	$	294	$	294	$	296	$	294	$	295	$	294
Exercise of options		1		—		1		—
Performance stock unit issuance										—		—		1		—
Balance, end of period		295		294		295		294		296		294		296		294

Additional Paid-in Capital
Balance, beginning of period	$	114,880	$	113,511	$	114,214	$	113,068	$	115,770	$	114,475	$	115,784	$	114,214
Amortization of stock-based compensation(1)		358		266		979		613		249		360		235		621
Incremental costs of common stock issuance		—		—		—		(59)
Exercise of options		112		178		157		333		—		45		—		45
Balance, end of period		115,350		113,955		115,350		113,955		116,019		114,880		116,019		114,880

Accumulated Other Comprehensive Income (Loss)
Balance, beginning of period	$	(10,826)	$	(10,827)	$	(14,243)	$	(6,127)	$	(22,280)	$	(12,814)	$	(9,442)	$	(14,243)
Foreign currency translation adjustment		(2,258)		1,595		1,159		(3,105)		5,641		1,988		(7,197)		3,417
Balance, end of period		(13,084)		(9,232)		(13,084)		(9,232)		(16,639)		(10,826)		(16,639)		(10,826)

Retained Earnings
Balance, beginning of period	$	76,327	$	73,906	$	76,056	$	72,662	$	10,813	$	76,892	$	56,669	$	76,056
Net earnings		482		1,643		985		2,887
Cumulative effect of accounting change (1)		—		—		(232)		—
Net (loss) earnings										(12,607)		(565)		(58,463)		503
Cumulative effect of accounting change ⁽²⁾										—		—		—		(232)
Balance, end of period		76,809		75,549		76,809		75,549		(1,794)		76,327		(1,794)		76,327

Total Century Casinos, Inc. Shareholders Equity	$	179,370	$	180,566	$	179,370	$	180,566
Total Century Casinos, Inc. Shareholders' Equity									$	97,882	$	180,675	$	97,882	$	180,675

Noncontrolling Interests
Balance, beginning of period	$	7,393	$	7,365	$	7,062	$	7,421	$	8,075	$	7,570	$	8,769	$	7,062
Net earnings		565		154		2,143		328
Net (loss) earnings										(590)		923		(395)		1,578
Foreign currency translation adjustment		(480)		215		(290)		(430)		387		251		(502)		190
Distribution to non-controlling interest		—		(542)		(989)		(572)		(158)		(952)		(158)		(989)
Cumulative effect of accounting change (1)		—		—		(49)		—
Non-controlling interest (2)		(208)		—		(607)		445
Cumulative effect of accounting change ⁽²⁾										—		—		—		(49)
Changes in non-controlling interest ⁽²⁾										—		(399)		—		(399)
Balance, end of period		7,270		7,192		7,270		7,192		7,714		7,393		7,714		7,393

Total Equity	$	186,640	$	187,758	$	186,640	$	187,758	$	105,596	$	188,068	$	105,596	$	188,068

Common shares issued		22,148		35,000		31,148		74,198		—		9,000		75,635		9,000

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.

~~(2)~~

In May 2019, the Company sold its interest in Golden Hospitality Limited (“GHL”) to the unaffiliated shareholders of GHL resulting in a $0.4 million decrease to non-controlling interests on the Company’s condensed consolidated balance sheet as of September 30, 2019. In July 2019, the Company purchased the 25% non-controlling interest in Century Bets!, Inc. resulting in a $0.2 million decrease to non-controlling interests on the Company’s condensed consolidated balance sheet as of September 30, 2019.

(1)Includes forfeiture credit for cancelled shares.

(2)Cumulative effect of accounting change relates to the adoption of Accounting Standards Update 2016-02. See Note 13 to the unaudited condensed consolidated financial statements for further details on the adoption of this accounting standard.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	For the nine months				For the six months
	ended September 30,				ended June 30,
Amounts in thousands	2019		2018		2020		2019

Cash Flows provided by Operating Activities:
Net earnings	$	3,128	$	3,215
Adjustments to reconcile net earnings to net cash provided by operating activities:
Cash Flows (used in) provided by Operating Activities:
Net (loss) earnings					$	(58,858)	$	2,081
Adjustments to reconcile net (loss) earnings to net cash (used in) provided by operating activities:
Depreciation and amortization		7,698		6,645		12,899		4,868
Loss on disposition of fixed assets		793		1,229
Adjustment of contingent liability (Note 6)		74		99
Unrealized loss (gain) on interest rate swaps		136		(51)
Lease amortization						2,269		—
(Gain) loss on disposition of fixed assets						(13)		655
Adjustment of contingent liability (Note 8)						766		50
Unrealized loss on interest rate swaps						—		143
Amortization of stock-based compensation expense		979		613		235		621
Amortization of deferred financing costs and discount on note receivable		80		92		813		56
Impairment (Note 4 and Note 5)						35,121		—
Deferred taxes		(383)		1,629		3,694		25
Loss (income) from unconsolidated subsidiary		1		(1)
Loss on sale of Golden Hospitality Ltd. (Note 1 and Note 3)		16		—
Loss from unconsolidated subsidiary						—		1
Loss on sale of Golden Hospitality Ltd. (Note 1 and Note 4)						—		16
Cashless stock issuance						1		—
Changes in Operating Assets and Liabilities:
Receivables, net		(2,814)		70		2,306		(2,012)
Prepaid expenses and other assets		(1)		(1,929)		1,926		(68)
Accounts payable		875		295		(7,309)		1,014
Accrued liabilities		1,595		3,919		9,400		1,964
Inventories		(120)		(86)		148		(103)
Other operating liabilities		(1,272)		1,348		—		(1,271)
Accrued payroll		306		162		(3,044)		(279)
Taxes payable		(198)		(1,647)		(722)		(272)
Contingent liability payment		—		(999)
Net cash provided by operating activities		10,893		14,603
Net cash (used in) provided by operating activities						(368)		7,489

Cash Flows used in Investing Activities:
Purchases of property and equipment		(18,509)		(40,001)		(5,967)		(15,870)
Acquisition of non-controlling interest of Century Bets!, Inc. (Note 1)		(208)		—
Acquisition of Golden Hospitality Ltd., net of $0.2 million cash acquired (Note 1 and Note 3)		—		(337)
Investment in Minh Chau Ltd. (Note 1 and Note 3)		—		(445)
Proceeds from disposition of assets		—		6
Acquisition of Mountaineer Casino, Racetrack & Resort, Century Casino Cape Girardeau and Century Casino Caruthersville (Note 3)						(1,157)		—
Note receivable proceeds		25		—		—		25
Net cash used in investing activities		(18,692)		(40,777)		(7,124)		(15,845)

– Continued –

See notes to unaudited condensed consolidated financial statements.

‎

CENTURY CASINOS, INC. AND SUBSIDIARIES

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


	For the nine months				For the six months
	ended September 30,				ended June 30,
Amounts in thousands	2019		2018		2020		2019

Cash Flows provided by (used in) Financing Activities:
Cash Flows provided by Financing Activities:
Proceeds from borrowings		15,752		2,707		17,351		13,680
Principal payments		(5,840)		(4,326)		(11,524)		(3,669)
Payment of deferred financing costs		—		(92)		(661)		—
Distribution to non-controlling interest		(989)		(642)		(158)		(458)
Proceeds from exercise of stock options		157		333		—		45
Net cash provided by (used in) financing activities		9,080		(2,020)
Net cash provided by financing activities						5,008		9,598

Effect of Exchange Rate Changes on Cash	$	(2,662)	$	(711)	$	(688)	$	214

Decrease in Cash, Cash Equivalents and Restricted Cash	$	(1,381)	$	(28,905)
(Decrease) Increase in Cash, Cash Equivalents and Restricted Cash					$	(3,172)	$	1,456

Cash, Cash Equivalents and Restricted Cash at Beginning of Period	$	46,284	$	76,444	$	55,640	$	46,284
Cash, Cash Equivalents and Restricted Cash at End of Period	$	44,903	$	47,539	$	52,468	$	47,740

Supplemental Disclosure of Cash Flow Information:
Interest paid	$	3,799	$	3,336	$	19,635	$	2,271
Income taxes paid	$	2,375	$	2,605	$	896	$	1,346
Income tax refunds					$	827	$	—

Non-Cash Investing Activities:
Purchase of property and equipment on account	$	1,753	$	8,395	$	1,706	$	1,100

Non-Cash Financing Activities:
Right of use assets obtained in exchange for new finance lease liabilities	$	1,367	$	—
Right of use assets obtained in exchange for new capitalized operating lease liabilities	$	10,358	$	—
Distributions payable to non-controlling shareholders					$	—	$	531

See notes to unaudited condensed consolidated financial statements.

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~~a casino entertainment ~~company.~~company with operations primarily in North America. The Company’s operations as of ~~September~~June 30, ~~2019~~2020 are detailed below.

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

~~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”)~~

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

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

Mountaineer Casino, Racetrack & Resort in New Cumberland, West Virginia (“Mountaineer” or “MTR”)

The Century Casino Cape Girardeau, Missouri (“Cape Girardeau” or “CCG”)

The Century Casino Caruthersville, Missouri (“Caruthersville” or “CCV”)

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 ~~is a multi-level racing~~Racetrack and ~~entertainment center~~Casino in Edmonton, Alberta, Canada (“~~REC”~~CMR” or “Century Mile”) ~~in the Edmonton market area that~~; and

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

On March 17, 2020, the Company ~~opened on April 1, 2019.~~announced that it had permanently closed Century ~~Mile includes a one-mile horse racetrack. Century Mile held~~Casino Bath (“CCB”). CCB voluntarily surrendered its ~~first horse race~~casino gaming license 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 ($46.4 million based~~2020 and entered into a creditors voluntary liquidation (“CVL”) on ~~the exchange rate in effect~~May 6, 2020. See below for additional information about CCB.

Mountaineer, Cape Girardeau and Caruthersville (the “Acquired Casinos”) were acquired on ~~September 30, 2019) and was financed with cash~~December 6, 2019 from ~~the Company’s equity offering in November 2017 and additional financing from the Company’s credit agreement with the Bank of Montreal~~Eldorado Resorts, Inc. (“~~BMO”~~Eldorado Resorts”) (the “Acquisition”). See Note 53 for additional information onabout the ~~Company’s credit agreement with BMO.~~Acquired Casinos and the Acquisition.

Century Bets!, Inc. (“CBS” or “Century Bets”) operates the pari-mutuel off-track betting network in ~~Southern~~southern Alberta, Canada. Prior to August 2019, the Company had a 75% controlling financial interest in CBS through its wholly-owned subsidiary Century Resorts Management GmbH (“CRM”). In August 2019, the Company purchased the remaining 25% non-controlling financial interest from Rocky Mountain Turf Club for CAD 0.2 million ($0.2 million based on the exchange rate in effect on August 5, 2019), resulting in CBS becoming a wholly-owned subsidiary.

The Company has a controlling financial interest through its wholly-owned subsidiary CRM in the following majority-owned subsidiaries:

The Company owns 66.6% of Casinos Poland Ltd (“CPL” or “Casinos Poland”). As of September 30, 2019, CPL owned and operated eight casinos 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. CPL began operating a third casino in Warsaw in August 2019 in the LIM Center, where it previously operated a casino.

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 66.6% of Casinos Poland Ltd (“CPL” or “Casinos Poland”). As of June 30, 2020, CPL owned and operated 8 casinos 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 racing and entertainment center (“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 has the following concession, management and consulting service agreements:

As of September 30, 2019, the Company operated five ship-based casinos through concession agreements with TUI Cruises. The Company’s 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 ended in May 2019.

InAs of June ~~2019,~~30, 2020, the Company ~~evaluated its~~had a concession agreement with ~~Diamond~~TUI Cruises for 1 ship-based casino. The ship has not sailed since March 2020 due to the coronavirus (“COVID-19”) pandemic. The Company’s concession agreements for 4 of the ship-based casinos that the Company operated prior to their COVID-19 related closures in March 2020 ended on May 12, 2020. The Company is negotiating a concession agreement with TUI Cruises to operate 3 ship-based casinos through May 2021.

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”). In March 2020, the Company impaired the $1.0 million MCE investment and wrote-down a $0.3 million receivable related to MCE due to assessments made related to the ~~operation~~impact of COVID-19 on MCE. See Note 4 for additional information related to MCE.

The Company, through its subsidiary CRM, had a 51% ownership interest in Golden Hospitality Ltd. (“GHL”). The Company sold its interest in GHL to the unaffiliated shareholders of GHL in May 2019 for a $0.7 million non-interest bearing promissory note. The Company recognized a loss on the sale of its investment of less than $0.1 million in general and administrative expenses on its condensed consolidated statement of (loss) earnings for the year ended December 31, 2019. The sale of the ~~ship-based casino onboard~~Company’s equity interest in GHL also ended its equity interest in Minh Chau Ltd. (“MCL”). See Note 4 for additional information related to GHL and MCL.

Recent Developments Related to COVID-19

The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the ~~Glory Sea.~~realization of assets and the satisfaction of liabilities in the normal course of business.

In late 2019, an outbreak of COVID-19 was identified in China and has since spread throughout much of the world. The ~~Company determined that it was more likely than not that~~COVID-19 pandemic has had an adverse effect on the ~~agreement was impaired~~Company’s first and ~~wrote-down $1.0 million in property~~second quarter 2020 results of operations and ~~equipment and net receivables in June 2019. The Glory Sea is currently not sailing,~~financial condition, and the Company ~~has not determined whether it~~expects this situation will continue to have an adverse impact on its results for the remainder of 2020. The duration and impact of the COVID-19 pandemic otherwise remains uncertain. Between March 13, 2020 and March 17, 2020, the Company closed all of its casinos, hotels and other facilities to comply with quarantines issued by governments to contain the spread of COVID-19. The Company’s Polish locations reopened on May 18, 2020 and its North American operations reopened between June 1, 2020 and June 17, 2020. The reopening approaches varied, with casinos in some jurisdictions reopening fully and others permitted to operate ~~this ship-based casino~~with reduced levels of gaming space or without table games. In addition, some locations are operating with limited restaurant operating hours or continued closure of restaurants, requirements to wear face masks, including the requirement of guests to wear face masks, increased frequency of disinfecting surfaces and other measures to account for varying levels of demand.

During the temporary closures of its casinos, hotels and other facilities, the Company took actions to reduce operating costs, including furloughing most of its personnel, implementing reduced work weeks for other personnel until operations resumed, and temporarily reducing salaries to senior management on a voluntary basis. During the closures, the Company continued to pay benefits to its United States and Canadian employees, including part time employees. In Poland, all employees were paid reduced salaries based on local employment laws.

The Company cannot predict the negative impacts that the failure to suppress the spread of COVID-19 will have on its consumer demand, workforce, suppliers, contractors and other partners and, although all locations have reopened, whether future closures will be required. Such closures have had and will continue to have a material impact on the Company. While the severity and duration of such business impacts cannot currently be estimated, the effects of COVID-19 and the requirements of health and safety protocols are expected to continue to have a material impact on the Company.

In March 2020, as a proactive measure to increase its cash position and preserve financial flexibility in light of the uncertainty resulting from the COVID-19 pandemic, the Company borrowed an additional $9.95 million on its revolving credit facility (the “Revolving Facility”) under its credit facility with Macquarie Capital (the “Macquarie Credit Agreement”) and $7.4 million on its credit agreement with UniCredit Bank Austria AG (“UniCredit”). See Note 6 for further discussion of the Macquarie Credit Agreement and the UniCredit credit agreement. The Company did not use any portion of the $9.95 million borrowed under the Revolving Facility to fund operations, and maintained such borrowings in cash and cash equivalents until repaid as described below.

‎

The Revolving Facility includes a springing leverage ratio (the “Financial Covenant”) tested as of the last day of each fiscal quarter in which borrowings under the Revolving Facility as of such day equal or exceed $3.5 million. In March 2020, based on the anticipated timing of reopening the Company’s casinos, hotels and other operations that had been closed due to the COVID-19 pandemic, and based on the anticipated use of all or a portion of the $9.95 million borrowed under the Revolving Facility to fund operations prior to such reopening, the Company projected that, if it was unable to repay the ~~ship begins sailing again.~~Revolving Facility below $3.5 million on or before the last day of a fiscal quarter, a potential future violation of the Financial Covenant could occur. Prior to June 30, 2020, the Company projected that it would be in compliance with the Financial Covenant as of June 30, 2020 and therefore elected not to pay the Revolving Facility below $3.5 million on or before such date.

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, had a 51% ownership interest in Golden Hospitality Ltd. (“GHL”). The Company sold its interest in GHL to the unaffiliated shareholders of GHL in May 2019 for a $0.7 million non-interest bearing promissory note. The Company recognized a loss on the sale of its investment of less than $0.1 million in general and administrative expenses on its condensed consolidated statement of earnings for the nine months ended September 30, 2019. The sale of the Company’s equity interest in GHL also ended its equity interest in Minh Chau Ltd. (“MCL”). See the discussion in “Note Receivable, Net of Current Portion and Unamortized Discount” below and Note 3 for additional information related to GHL and MCL.

The Company and the lender are currently reviewing the Financial Covenant calculation as of June 30, 2020 to determine whether the Company was in compliance with the covenant or was in default as of such date. If a default exists under the Financial Covenant as of June 30, 2020, the Company will not be able to borrow under the Revolving Facility or take certain actions that would otherwise be permitted under the Revolving Facility, and the lender may exercise other remedies, until such default is waived by the lender or the Macquarie Credit Agreement is amended. The Company repaid the Revolving Facility down to $0 as of July 30, 2020, except for a $50,000 letter of credit that it is in the process of cash collateralizing. The Company does not project a need for borrowing under the Revolving Facility in the future. As a result, compliance with the Financial Covenant under the Revolving Facility would not be required in future periods. If a default under the Financial Covenant has occurred, management intends to discuss a waiver of the default or amendment to the Macquarie Credit Agreement. The Company was in compliance with all financial covenants under its other credit agreements as of June 30, 2020.

Additional Projects and Other Developments

~~United States~~Bermuda

On June 17, 2019, the Company entered into a definitive agreement to acquire the operations of Isle Casino Cape Girardeau (“Cape Girardeau”), Lady Luck Caruthersville (“Caruthersville”) and Mountaineer Casino, Racetrack and Resort (“Mountaineer”) from Eldorado Resorts, Inc. (“Eldorado Resorts”) for approximately $107.0 million (the “Acquisition”), which it expects to finance through a new credit facility. Simultaneous with the closing of the Acquisition, VICI Properties Inc. (“VICI”) will acquire the real estate assets of the three properties for approximately $278.0 million and the Company will enter into a triple net lease agreement with VICI for the three casino properties. The lease will have an initial annual rent of approximately $25.0 million and an initial term of 15 years, with four five-year renewal options. The transaction, which is expected to close by year end, is subject to approvals of the Missouri Gaming Commission as well as other customary closing conditions.

~~Bermuda~~

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~~would feature approximately 200 slot machines, 17 live table games, ~~one~~1 or more electronic table games and a high limit area and salon privé. 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 would also provide a $5.0 million loan for the purchase of casino equipment if the license is awarded. 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~~Parliament of Bermuda has not yet adopted these rules and regulations, and the Company does not currently expect this project to go forward.

Century Casino Bath

In March 2020, Century Casino Bath was closed due to COVID-19. Due to challenging conditions that included historical and forecast losses due to changes in the regulatory environment for casinos in England requiring enhanced due diligence of customers, CCB’s board of directors determined that it would enter into the CVL and control of CCB was relinquished. Under Accounting Standards Codification (“ASC”) 810, Consolidation, specifically ASC 810-10-15, consolidation of a majority-owned subsidiary ~~CRM, entered into a long-term management agreement~~is precluded where control does not rest with the ~~owner of the hotel to manage the operations of the casino and receive~~majority owners. Accordingly, when a ~~management fee if a license~~subsidiary is ~~awarded. CRM will also provide a $5.0 million loan~~in legal reorganization or files for bankruptcy, it is appropriate for the ~~purchase~~parent to deconsolidate the subsidiary. The Company will not regain control of ~~casino equipment if~~CCB and determined that it was appropriate to deconsolidate CCB effective as of May 6, 2020. The Company will not retain any ownership in CCB and CCB will be dissolved as a company following its liquidation. The Company recognized a gain of $7.4 million in general and administrative expenses on its statement of (loss) earnings for the ~~license is awarded.~~three and six months ended June 30, 2020.

‎

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.~~2019. The results of operations for the quarter ended ~~September~~June 30, ~~2019~~2020 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 condensed consolidated statements of cash flows is presented in the following table:


	September 30,		September 30,		June 30,		June 30,
Amounts in thousands	2019		2018		2020		2019
Cash and cash equivalents	$	44,029	$	46,818	$	51,641	$	47,000
Restricted cash included in deposits and other		874		721		827		740
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	44,903	$	47,539	$	52,468	$	47,740

As of ~~September~~June 30, ~~2019,~~2020, restricted cash included $0.6 million in deposits and other related to a cash guarantee ~~for~~under the ~~Company’s CCB~~UniCredit loan agreement ~~and $0.3~~with CCB that CRM assumed in February 2020, $0.2 million in deposits and other related to payments of prizes and giveaways for Casinos ~~Poland.~~

~~Note Receivable, Net of Current Portion~~Poland and ~~Unamortized Discount~~

~~In May 2019, the Company sold its interest in GHL for a non-interest bearing promissory note of $0.7 million. The remaining balance will be repaid with annual payments of~~less than $0.1 million ~~due under~~in deposits and other related to an insurance policy.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the ~~note beginning in June 2020 with a final payment~~reported amount of ~~$0.3 million in June 2023. The current portion~~assets and liabilities, the disclosure of contingent assets and liabilities at the date of the ~~note receivable is presented in other current~~financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Management’s use of estimates includes estimates for property and equipment, goodwill, intangible assets ~~on the Company’s condensed consolidated balance sheets.~~and income tax.

~~A reconciliation of the note receivable, net of current portion and unamortized discount in the Company’s condensed consolidated balance sheets is presented in the following table:~~


	~~September 30,~~
~~Amounts in thousands~~	~~2019~~
~~Non-interest bearing note issued~~	$	~~650~~
~~Less payments~~		~~(25)~~
~~Non-interest bearing note due June 2023~~	$	~~625~~
~~Less unamortized discount based on imputed interest rate of 6%~~		~~(102)~~
~~Note receivable less unamortized discount~~	$	~~523~~
~~Less current portion of note receivable~~		~~(100)~~
~~Note receivable, net of current portion and unamortized discount~~	$	~~423~~

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:


	September 30,	December 31,	June 30,	December 31,
Ending Rates	2019	2018	2020	2019
Canadian dollar (CAD)	1.3243	1.3642	1.3628	1.2988
Euros (EUR)	0.9172	0.8738	0.8904	0.8906
Polish zloty (PLN)	4.0100	3.7606	3.9628	3.7873
British pound (GBP)	0.8130	0.7823	0.8097	0.7563

‎

1213

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



	For the three months			For the nine months			For the three months			For the six months
	ended September 30,			ended September 30,			ended June 30,			ended June 30,
Average Rates	2019	2018	% Change	2019	2018	% Change	2020	2019	% Change	2020	2019	% Change
Canadian dollar (CAD)	1.3205	1.3068	(1.0%)	1.3292	1.2874	(3.2%)	1.3863	1.3376	(3.6%)	1.3646	1.3335	(2.3%)
Euros (EUR)	0.8997	0.8601	(4.6%)	0.8901	0.8377	(6.3%)	0.9085	0.8898	(2.1%)	0.9080	0.8853	(2.6%)
Polish zloty (PLN)	3.8850	3.6981	(5.1%)	3.8270	3.5581	(7.6%)	4.0959	3.8090	(7.5%)	4.0090	3.7980	(5.6%)
British pound (GBP)	0.8111	0.7676	(5.7%)	0.7859	0.7405	(6.1%)	0.8060	0.7782	(3.6%)	0.7938	0.7732	(2.7%)
Source: Pacific Exchange Rate Service

2. SIGNIFICANT ACCOUNTING POLICIES

Recently ~~Issued~~Adopted Accounting Pronouncements - – The Company has recently adopted the following 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 15, 2019, and interim periods within those fiscal years. ~~Early adoption of~~The Company adopted ASU 2017-04 ~~is permitted on goodwill impairment tests performed after January 1, 2017. ASU 2017-04 should be applied~~ on a prospective ~~basis.~~basis on January 1, 2020. The ~~Company is currently evaluating the impact~~adoption of ~~adopting ASU 2017-04; however,~~ the standard isdid not ~~expected to~~ have a material impact on ~~its consolidated~~the Company’s 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 15, 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~~adopted ASU 2018-13 on January 1, 2020. The adoption of ~~this~~the standard todid not have a material impact on the Company’s financial statements or its ~~consolidated financial statements.~~disclosures.

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 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The ~~amendments can be applied either retrospectively or prospectively.~~Company adopted ASU 2018-15 on January 1, 2020 using the prospective method and accounts for new contracts that are service arrangements using this guidance. The ~~Company does not expect the~~ adoption of ~~this~~the standard todid not have a material impact on ~~its consolidated~~the Company’s financial statements.

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 15, 2019, and interim periods within those fiscal years. The Company adopted ASU 2018-17 on January 1, 2020. The adoption of the standard did not have a material impact on the Company’s financial statements.

Accounting Pronouncements Not Yet Adopted – The Company has not yet adopted the following accounting pronouncements:

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The objective of ASU 2019-12 is (i) to simplify the accounting for income taxes by removing certain exceptions, (ii) to update certain requirements to simplify the accounting for income taxes, and (iii) to make minor codification improvements for income taxes. The guidance is effective for fiscal years beginning after December 15, 2020, 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~~the Company’s financial statements.

1314

~~Changes Related to Adoption of ASU 2016-02~~

In ~~February 2016,~~March 2020, the FASB issued ASU ~~2016-02,~~ ~~Leases~~2020-04, Reference Rate Reform (Topic ~~842)~~ (“848) (“ASU ~~2016-02”~~2020-04”). The objective of ASU ~~2016-02 and subsequent amendments~~2020-04 is to ~~recognize~~provide optional expedients and exceptions for applying US GAAP to contracts, hedging relationships and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The guidance is effective from March 12, 2020 through December 31, 2022. The Company is evaluating the expedients and exceptions provided by this standard.

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements or notes thereto.

3.ACQUISITIONS

On December 6, 2019, the Company completed the Acquisition of the operations of the Acquired Casinos from Eldorado Resorts. Immediately prior to the Acquisition, the real estate assets underlying the Acquired Casinos were sold to an affiliate of VICI Properties Inc. (“VICI PropCo”). On the closing date, certain subsidiaries of the Company and subsidiaries of VICI PropCo entered into a triple net lease agreement (the “Master Lease”) for the three Acquired Casino properties. The Master Lease has an initial annual rent of approximately $25.0 million and an initial term of 15 years, with 4 five year renewal options. The Master Lease was evaluated as a sale-leaseback of real estate. The Company determined that the Master Lease did not qualify for sale-leaseback accounting and accounted for the transaction as a financing obligation. See Note 7 for additional information about the Master Lease.

The Company paid for the Acquisition using a portion of the $180.0 million credit facility under the Macquarie Credit Agreement (see Note 6). The total consideration of $389.6 million (the “Purchase Price”) for the Acquisition was paid through the Macquarie Credit Agreement, with cash on hand and by VICI PropCo in connection with its purchase of the real estate assets underlying the Acquired Casinos.

In connection with the Acquisition, the Company made an initial payment to the seller of $110.6 million on December 6, 2019. This amount included a base price of $107.2 million plus an adjustment based on the estimated working capital of the acquired entities at closing. The Company paid $1.2 million on May 22, 2020 related to the working capital adjustment.

As of December 6, 2019, the Company began consolidating the Acquired Casinos as wholly-owned subsidiaries. CCG contributed $20.0 million in net operating revenue and ($25.8) million in net loss attributable to Century Casinos, Inc. shareholders for the six months ended June 30, 2020. CCV contributed $11.3 million in net operating revenue and ($10.6) million in net loss attributable to Century Casinos, Inc. shareholders for the six months ended June 30, 2020. MTR contributed $37.3 million in net operating revenue and ($6.8) million in net loss attributable to Century Casinos, Inc. shareholders for the six months ended June 30, 2020.

The Company accounted for the transaction as a business combination, and accordingly, the acquired assets of $379.8 million (including $13.9 million in cash and restricted cash) and liabilities of $287.9 million were included in the Company’s consolidated balance sheet at December 6, 2019. The Acquisition leverages the Company’s management specialties and expertise in the gaming industry, expands the Company’s casino offerings into each of the three new markets and creates operational synergies. The Acquisition generated $19.8 million of tax deductible goodwill for the Company’s United States segment attributable to the business expansion opportunity for the Company (see Note 5).

The fair value of the assets acquired and liabilities assumed (excluding cash and restricted cash received) was determined to be $97.8 million as of June 30, 2020. The fair values of the acquired tangible and intangible assets were determined using variations of the income, market and cost approaches, including the following methods which the Company considered appropriate:

multi-period excess earningsmethod;

costmethod;

capitalized cash flowmethod;

relief from royalty method;

discounted cash flow method;and

direct market valueapproach.

Both the income and market approach valuation methodologies used for the identifiable net assets acquired in the Acquisition use Level 3 inputs and are provisional pending development of a final valuation.

Trade receivables and payables, inventory and other current and noncurrent assets and ~~lease~~ liabilities were valued at the existing carrying values as they represented a reasonable approximation of the fair value of those items at the Acquisition date, based on management’s judgment and estimates.

The personal property components of the fixed assets were primarily valued utilizing the market and cost approaches. Certain personal property with an active and identifiable secondary market value were valued using the market approach. This property included, but was not limited to, certain gaming/slot equipment, information and technology equipment and vehicles. The cost approach was utilized to value all other personal property.

The cost approach estimates fair value as the current cost of replacing or reproducing the utility of an asset, or group of assets and adjusting it for any depreciation resulting from one or more of the following: physical deterioration, functional obsolescence, and/or economic obsolescence.

The real estate assets that were sold to VICI PropCo subsidiaries and leased back by ~~lessees~~the Company were first adjusted to fair value concurrently with the Acquisition. The fair value of the properties was determined utilizing the direct capitalization method of the income approach. The fair value of the acquired real estate assets was determined to be $277.8 million.

The income approach incorporates all tangible and intangible property and served as a ceiling for ~~those leases classified~~the fair values of the acquired assets of the ongoing business enterprise, while still taking into account the premise of highest and best use.

The fair value of the gaming licenses was determined using the multi-period excess earnings methodology (“MPEEM”). The MPEEM is a variation of the income approach that allocates projected cash flows of the business to the gaming license intangible, including charges for contributory assets that, in addition to the gaming licenses, are required to generate the operating cash flows. The contributory assets of each reporting unit included working capital, real estate, fixed assets and other intangible assets. This methodology was considered appropriate as the gaming licenses are considered the primary intangible asset of the acquired entities and the licenses are linked to each respective facility. Under the respective state’s gaming legislation, the property-specific licenses can only be acquired if a theoretical buyer were to acquire each existing facility. The existing licenses could not be acquired and used for a different facility. The properties’ estimated future cash flows were the primary assumption in the respective valuations. Cash flow estimates included net gaming revenue, gaming operating ~~leases~~expenses, general and administrative expenses, and tax expense.

The fair value of the customer relationships from the player’s club lists was valued using the incremental cash flow method under ~~previous US GAAP.~~the income approach. The incremental cash flow method is used to estimate the fair value of an intangible asset based on a residual cash flow notion. This method measures the benefits (e.g., cash flows) derived from ownership of an acquired intangible asset as if it were in place, as compared to the acquirer’s expected cash flows as if the intangible asset were not in place (i.e., with-and-without). The present value difference in the two cash flow streams is ascribable to the intangible asset. The Company ~~adopted ASU 2016-02~~has assigned a seven year useful life to the player loyalty programs based on estimated revenue attrition among the player’s club members, based on each property’s historical operations as estimated by management.

The fair value of the trade names was valued using the relief from royalty method. The relief from royalty method presumes that, without ownership of the asset, the Company would have to make a stream of payments to a brand or franchise owner in return for the right to use their name. By virtue of this asset, the Company avoids any such payments and records the related intangible value of the trade name. The primary assumptions in the valuation included projected revenue, a pre-tax royalty rate, the trade name’s useful life, and tax expense. The Company has assigned the Mountaineer trade name a 10 year useful life after considering, among other things, the expected use of the asset, the expected useful life of other related assets or asset groups, any legal, regulatory, or contractual provisions that may limit the useful life, the effects of obsolescence, demand and other economic factors, and the ~~subsequent amendments retrospectively~~maintenance expenditures required to promote and support the trade name.

The Company has assigned an indefinite useful life to the gaming licenses, in accordance with its review of the applicable guidance of ASC Topic 350, Intangibles-Goodwill and Other (“ASC 350”). The standard requires the Company to consider, among other things, the expected use of the asset, the expected useful life of other related assets or asset groups, any legal, regulatory, or contractual provisions that may limit the useful life, the Company’s own historical experience in renewing similar arrangements, the effects of obsolescence, demand and other economic factors, and the maintenance expenditures required to obtain the expected cash flows. In that analysis, the Company determined that no legal, regulatory, contractual, competitive, economic or other factors limit the useful lives of these intangible assets. The Acquired Casinos currently have licenses in Missouri and West Virginia. The renewal of each state’s gaming license depends on ~~January 1, 2019~~a number of factors, including payment of certain fees and taxes, providing certain information to the state’s gaming regulator, and meeting certain inspection requirements. However, the Company’s historical experience has not indicated, nor does the Company expect, any limitations regarding its ability to continue to renew each license. No other competitive, contractual, or economic factor limits the useful lives of these assets. Accordingly, the Company has concluded that the useful lives of these licenses are indefinite.

Details of the Acquisition in ~~its condensed consolidated financial statements~~the table below are based on estimated fair values of assets and liabilities as of December 6, 2019. The Acquisition was accounted for using the acquisition method of accounting. Assets acquired and liabilities assumed in connection with the Acquisition have been recorded at their preliminary fair values. Certain estimated values for the Acquisition for accrued liabilities, intangible assets, and deferred income taxes are not yet finalized pending the final purchase price allocations and the receipt of additional information from the acquired entities. As a result, the Company's estimates and assumptions are subject to change within the measurement period as valuations are finalized. The Company expects to finalize the allocation of the purchase price within one year of the Acquisition.


Amounts in thousands
Cash	$	13,688
Receivables		3,400
Prepaid expenses		2,949
Inventories		1,047
Property and equipment		28,824
Property subject to financing obligation		277,800
Leased right-of-use assets		127
Casino licenses		28,922
Players club lists		20,373
Trademarks		2,368
Deposits and other		329
Accounts payable		(690)
Accrued liabilities		(6,299)
Accrued payroll		(2,969)
Operating lease liabilities		(127)
Financing obligation to VICI Properties, Inc. subsidiaries ⁽¹⁾		(277,800)
Net identifiable assets acquired		91,942
Add: Goodwill		19,786
Net assets acquired	$	111,728

(1)See Note 7 for additional information about the Master Lease.

The following table details the purchase consideration net cash outflow.


Amounts in thousands
Outflow of cash to acquire subsidiaries, net of cash acquired
Cash consideration	$	111,728
Less: cash and restricted cash balances acquired		(13,942)
Net cash used in investing activities	$	97,786

‎

Acquisition-related costs

The Company incurred acquisition costs of approximately $0.1 million and $0.3 million for the three and ~~nine~~six months ended ~~September~~June 30, 2020, respectively, in connection with the Acquisition. These costs include legal and accounting fees and have been recorded as general and administrative expenses in the Corporate and Other segment.

Ancillary Agreements

In connection with the Acquisition, the Company and the sellers entered into a transition services agreement dated December 6, 2019, whereby the sellers agreed to provide the Company with certain transitional services following the Acquisition. The agreement compensates the sellers for services following the Acquisition as performed by employees at stated hourly rates. Fees incurred by the Company under the agreement amounted to $0.5 million during the six months ended June 30, 2020 and were recorded as general and administrative expenses in the Corporate and Other segment.

Acquisition-Related Contingencies

Each of the acquired entities is a party to various legal and administrative proceedings, which have arisen in the normal course of business and relate to underlying events that occurred on or before December 6, 2019. Estimated losses have been accrued as of the Acquisition date for these proceedings in accordance with ASC Topic 450, which requires that an amount be accrued if the loss is probable and can be estimated. The current liability for the estimated losses associated with these proceedings is not material to the Company’s consolidated financial condition and those estimated losses are not expected to have a material impact on its results of operations. However, such proceedings can be costly, time consuming and unpredictable and, therefore, no assurance can be given that the final outcome of such proceedings may not materially impact the Company’s consolidated financial condition or results of operations. The Company ~~used~~accrued $1.0 million related to these contingencies as accrued liabilities on its consolidated balance sheets as of June 30, 2020 and December 31, 2019.

Pro forma results (Unaudited)

The following table provides unaudited pro forma information of the ~~alternative modified retrospective method, also known~~Company as if the ~~transition relief method permitted under ASU 2018-11,~~ ~~Leases (Topic 842) Targeted Improvements, which did not require~~Acquisition had occurred at the ~~restatement~~beginning of ~~prior periods~~the earliest comparable period presented. The unaudited pro forma financial results include adjustments for transaction-related costs that are directly attributable to the Acquisition for the three and ~~instead recognized a $0.3 million cumulative-effect adjustment~~six months ended June 30, 2019 including (i) removal of acquisition costs reported by the Company, (ii) pro forma adjustments to ~~retained earnings upon transition. See Note 11 for additional information~~record the removal of interest expense 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 right-of-use (“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 hindsight 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

~~As of December 31, 2018, maturities~~BMO Credit Agreement (as defined below), (iii) pro forma adjustments to record interest expense related to ~~operating leases were reported as follows:~~the Macquarie Credit Agreement and Master Lease, (iv) pro forma adjustments to record depreciation for assets acquired in the Acquisition, and (v) an estimated tax impact. This pro forma information is not necessarily indicative either of the combined results of operations that actually would have been realized had the acquisition been consummated during the periods for which the pro forma information is presented, or of future results. For the purposes of this table, financial information has been provided for the three and six months ended June 30, 2019 for the Acquired Casinos and the Company.

Amounts in thousands

2019

$
4,079
2020

2,783
2021

2,748
2022

2,700
2023

2,646
Total

$
14,956



	For the three months ended		For the six months ended
	June 30, 2019		June 30, 2019
Amounts in thousands, except for per share information	(Unaudited)		(Unaudited)
Net operating revenue	$	108,143	$	208,249
Net earnings attributable to Century Casinos, Inc. shareholders	$	870	$	3,958
Basic and diluted earnings per share	$	0.03	$	0.13

4.INVESTMENTS

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~~1 director to MCE’s board of directors and had a ~~three-year~~three year option through October 2017 to purchase up to 50% of the shares of MCE, which the Company did not exercise.

In March 2020, the Company assessed the MCE investment due to COVID-19. Casino de Mendoza, MCE’s only customer, was temporarily closed in March 2020. The investment was valued using the following approaches: (i) income approach utilizing the business enterprise value which resulted in no value, and (ii) a value in exchange basis which resulted in no value due to the current circumstances of COVID-19. The Company ~~accounts~~charged $1.0 million to impairment – goodwill and intangible assets in the Corporate and Other segment on the Company’s condensed consolidated statement of (loss) earnings for the ~~$1.0 million investment in MCE using the cost method.~~six months ended June 30, 2020. Casino de Mendoza has not yet reopened.

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~~three year period for approximately $3.6 million. GHL had the option to purchase an additional 19% ownership interest in MCL for a total of 70% of MCL under certain conditions. As of May 2019, GHL had paid $0.6 million for a total ownership interest in MCL of 9.21%. GHL and MCL also entered into a management agreement, which provided that GHL would 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 accounted 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.

In May 2019, the Company sold its ownership interest in GHL to the unaffiliated shareholders of GHL for a $0.7 million non-interest bearing promissory note. The Company derecognized the equity investment in MCL on its condensed consolidated balance sheets as a result of the sale and is no longer an indirect party to the agreements between GHL and MCL.

4.5.GOODWILL AND INTANGIBLE ASSETS

Goodwill represents the future economic benefits of a business combination to the extent that the purchase price exceeds the fair value of the net identified tangible and intangible assets acquired and liabilities assumed. The Company determines the estimated fair value of the net identified tangible and intangible assets acquired and liabilities assumed after review and consideration of relevant information including discounted cash flows, quoted market prices, and estimates made by management.

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~~reportable segments with goodwill balances as of ~~September~~June 30, ~~2019 include~~2020 included Canada and Poland. For the ~~operations at CRA, CDR, CSA and CPL. The Company considers a variety of factors when estimating~~quantitative goodwill impairment test, the current fair value ~~of its reporting units, including estimates about the future operating results~~ of each reporting unit ~~multiples~~with goodwill balances is estimated using a combination of ~~earnings, various~~(i) the income approach using the discounted cash flow method for projected revenue, EBITDA and working capital, (ii) the market ~~analyses, and recent sales~~approach observing the price at which comparable companies or shares of comparable ~~businesses, if such information is available.~~companies are bought or sold, and (iii) fair value measurements using either quoted market price or an estimate of fair value using a present value technique. The ~~Company makes a variety~~cost approach, estimating the cost of ~~estimates and judgments about the relevance and comparability~~reproduction or replacement of ~~these factors to the reporting units in estimating their fair values.~~an asset, was considered but not used because it does not adequately capture an operating company’s intangible value. 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~~

The Company tests its indefinite-lived intangible assets as of October 1 each year, or more frequently as circumstances indicate it is necessary. The fair value is determined primarily using the multi period excess earnings model and the relief from royalty method under the income approach. The Company impaired the casino license at Century Casino Bath in December 2019.

During the first quarter of 2020, as a result of the COVID-19 pandemic and associated closure of its casinos, the Company concluded these triggering events could indicate possible impairment ~~at CRA, CDR, CSA~~of its goodwill and indefinite-lived intangible assets. The Company performed a quantitative and qualitative impairment analysis and determined that goodwill and casino licenses related to certain reporting units were impaired. During the second quarter of 2020, the Company paid an additional $1.2 million related to the working capital adjustment for the Acquisition that resulted in additional goodwill. This amount was subsequently impaired in the same period. The Company recorded $1.2 million and $34.2 million to impairment – goodwill and intangible assets on its condensed consolidated statement of (loss) earnings for the three and six months ended June 30, 2020 related to the impairment of its goodwill and casino licenses for certain reporting units. The impairment analysis required management to make estimates about future operating results, valuation multiples and discount rates and assumptions based on historical data and consideration of future market conditions. Changes in the assumptions can materially affect these estimates. Given the uncertainty inherent in any projection, heightened by the possibility of additional effects of COVID-19, actual results may differ from the estimates and assumptions used, or ~~CPL since the Company’s last annual analysis that would necessitate~~conditions may change, which could result in additional impairment ~~testing by~~charges in the ~~Company.~~future. Such impairments could be material.

‎

Goodwill

Changes in the carrying amount of goodwill related to ~~CRA, CDR, CSA~~the United States, Canada and ~~CPL~~Poland segments 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

109

4

104

(424)

(207)
Balance -- September 30, 2019

$
3,712

$
143

$
3,550

$
6,381

$
13,786


Amounts in thousands		Balance at January 1, 2020		Acquisition		Impairment		Currency translation		Balance at ‎June 30, 2020
Goodwill, net by segment:
United States	$	18,629	$	1,157	$	(19,786)	$	—	$	—
Canada		7,550		—		(3,375)		(430)		3,745
Poland		6,757		—		—		(299)		6,458
	$	32,936	$	1,157	$	(23,161)	$	(729)	$	10,203

Intangible Assets

~~Trademarks~~Intangible assets at June 30, 2020 and December 31, 2019 consisted of the following:


		June 30,		December 31,
Amounts in thousands	2020		2019
Finite-lived
Casino licenses	$	2,829	$	2,960
Less: accumulated amortization		(1,079)		(882)
		1,750		2,078
Trademarks		2,368		2,368
Less: accumulated amortization		(138)		(19)
		2,230		2,349
Players Club Lists		20,373		20,373
Less: accumulated amortization		(1,698)		(240)
		18,675		20,133
Total finite-lived intangible assets, net		22,655		24,560
Indefinite-lived
Casino licenses		29,265		40,782
Trademarks		1,647		1,719
Total indefinite-lived intangible assets		30,912		42,501
Total intangible assets, net	$	53,567	$	67,061

Trademarks

The Company currently owns ~~two~~3 trademarks, the Century Casinos trademark, the Mountaineer trademark and the Casinos Poland trademark, which are reported as intangible assets on the Company’s condensed consolidated balance sheets.

Trademarks: Finite-Lived

The Company has determined that the Mountaineer trademark, reported in the United States segment, has a useful life of ten years after considering, among other things, the expected use of the asset, the expected useful life of other related assets or asset groups, any legal, regulatory, or contractual provisions that may limit the useful life, the effects of obsolescence, demand and other economic factors, and the maintenance expenditures required to promote and support the trade name. As such the trademark will be amortized over its useful life. Costs incurred to renew trademarks that are indefinite-lived are expensed over the renewal period to general and administrative expenses on the Company’s condensed consolidated statements of (loss) earnings. Changes in the carrying amount of the ~~trademarks~~Mountaineer trademark 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

—

(101)

(101)
Balance -- September 30, 2019

$
108

$
1,521

$
1,629

Amounts in thousands

Balance at
‎January 1, 2020

Amortization

Balance at

June 30, 2020

United States

2,349

(119)

2,230

‎

As of June 30, 2020, estimated amortization expense of the Mountaineer trademark over the next five years was as follows:


Amounts in thousands
2020	$	118
2021		237
2022		237
2023		237
2024		237
Thereafter		1,164
	$	2,230

The weighted-average amortization period of the Mountaineer trademark is 9.4 years.

Trademarks: Indefinite-Lived

The Company has determined ~~both trademarks~~the Century Casinos trademark, reported in the Corporate and Other segment, and the Casinos Poland trademark, reported in the Poland segment, have indefinite useful lives and therefore the Company does not amortize these trademarks. Costs incurred to renew trademarks that are indefinite-lived are expensed over the ~~trademarks. Rather,~~renewal period as general and administrative expenses on the ~~Company tests its trademarks for impairment as~~Company’s condensed consolidated statement of ~~October 1 each year, or more frequently as circumstances indicate it is necessary. The Company tests trademarks for impairment using~~(loss) earnings. Changes in 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:~~indefinite-lived trademarks are as follows:

September 30,

December 31,
Amounts in thousands

2019

2018
Finite-lived

Casino licenses

$
2,795

$
2,883
Less: accumulated amortization

(716)

(708)
Total finite-lived casino licenses, net

2,079

2,175
Infinite-lived

Casino licenses

12,749

12,453
Total infinite-lived casino licenses

12,749

12,453
Casino licenses, net

$
14,828

$
14,628


Amounts in thousands		Balance at January 1, 2020		Currency translation		Balance at June 30, 2020
Poland	$	1,611	$	(72)	$	1,539
Corporate and Other		108		—		108
	$	1,719	$	(72)	$	1,647

~~Poland~~Casino Licenses: Finite-Lived

As of ~~September~~June 30, ~~2019,~~2020, Casinos Poland had ~~eight~~8 casino licenses, each with an original term of six years, which are reported as 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~~
~~New casino license~~		~~412~~
~~Amortization~~		~~(362)~~
~~Effect of foreign currency translation~~		~~(146)~~
~~Balance -- September 30, 2019~~	$	~~2,079~~

Amounts in thousands

Balance at January 1, 2020

Amortization

Currency translation

Balance at

June 30, 2020

Poland

2,078

(234)

(94)

1,750

As of ~~September~~June 30, ~~2019,~~2020, estimated amortization expense for the CPL casino licenses over the next five years was as follows:



Amounts in thousands
2019	$	117
2020		466	$	236
2021		466		472
2022		452		459
2023		388		394
2024				161
Thereafter		190		28
	$	2,079	$	1,750

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 ~~3.7~~3.6 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~~

‎

Casino Licenses: Indefinite-Lived

The Company has determined that the ~~two~~casino licenses ~~used to operate casinos~~held in the ~~Warsaw Marriott Hotel into one license and transferred~~United States segment from the ~~remaining license to the Hilton Hotel in Warsaw. This transfer extends the Hilton Hotel’s license to September 2022~~Missouri Gaming Commission and the ~~Marriott Hotel’s license to July 2024. CPL opened a third casino~~West Virginia Lottery Commission and held in ~~Warsaw at~~ the ~~LIM Center in August 2019.~~

Canada ~~and Corporate and Other~~

~~The licenses at CDR, CSA and CCB are infinite-lived intangible assets that are not amortized. CDR holds licenses~~segment from the Alberta Gaming, Liquor and Cannabis Commission ~~(“AGLC”)~~ and Horse Racing Alberta ~~(“HRA”). CSA holds a license from~~are indefinite-lived. Costs incurred to renew licenses that are indefinite-lived are expensed over the ~~AGLC. CCB holds licenses from~~renewal period to general and administrative expenses on the ~~Great Britain Gambling Commission. No impairment charges related to the licenses have been recorded.~~Company’s condensed consolidated statement of (loss) earnings. 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

70

270

(44)
Balance -- September 30, 2019

$
2,402

$
9,230

$
1,117


Amounts in thousands		Balance at January 1, 2020		Impairment		Currency translation		Balance at June 30, 2020
United States	$	28,922	$	(10,960)	$	—	$	17,962
Canada		11,860		—		(557)		11,303
	$	40,782	$	(10,960)	$	(557)	$	29,265

Player’s Club Lists

The Company has determined that the player’s club lists, reported in the United States segment, have a useful life of seven years based on estimated revenue attrition among the player’s club members over each property’s historical operations as estimated by management. As such, the player’s club lists will be amortized over their useful lives. Changes in the carrying amount of the player’s club lists are as follows:

Amounts in thousands

Balance at
‎January 1, 2020

Amortization

Balance at

June 30, 2020

United States

20,133

(1,458)

18,675

As of June 30, 2020, estimated amortization expense for the player’s club lists over the next five years was as follows:


Amounts in thousands
2020	$	1,455
2021		2,910
2022		2,910
2023		2,910
2024		2,910
Thereafter		5,580
	$	18,675

The weighted-average amortization period for the player’s club lists is 6.4 years.

6. LONG-TERM DEBT

Long-term debt and the weighted average interest rates as of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018~~2019 consisted of the following:



Amounts in thousands	September 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Credit agreement - Bank of Montreal	$	52,412	5.11%	$	40,515	4.43%
Credit agreement - Macquarie							$	179,100	7.56%	$	170,000	7.22%
Credit agreements - CPL		2,076	3.08%		1,949	1.77%		1,583	3.14%		1,966	3.13%
Credit facilities - CPL		278	5.17%		647	3.57%
Credit agreement - CCB		1,968	2.48%		2,429	2.34%
UniCredit loan ⁽¹⁾								1,606	2.29%		1,983	2.47%
UniCredit agreement								7,400	2.60%		—	—
Financing obligation - CDR land lease		14,722	15.03%		14,291	13.79%		14,306	13.09%		15,012	14.88%
Capital leases (1)		—	—		188	7.06%
Total principal	$	71,456	6.99%	$	60,019	6.74%	$	203,995	7.74%	$	188,961	7.06%
Deferred financing costs		(387)			(496)			(9,846)			(9,998)
Total long-term debt	$	71,069		$	59,523		$	194,149		$	178,963
Less current portion		(17,363)			(17,482)			(20,354)			(3,157)
Long-term portion	$	53,706		$	42,041		$	173,795		$	175,806

~~(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.~~

(1)CRM assumed the UniCredit loan to CCB in February 2020.

‎

1822

Credit Agreement ~~- Bank of Montreal~~– Macquarie Capital

~~In May 2012,~~On December 6, 2019, the Company ~~through its Canadian subsidiaries,~~ entered into ~~the CAD 28.0~~a $180.0 million credit agreement with ~~BMO. In August 2014,~~Macquarie Capital Funding LLC, as swingline lender, administrative agent and collateral agent, Macquarie Capital (USA) Inc., as sole lead arranger and sole bookrunner, and the ~~Company, through its Canadian subsidiaries, entered into an amended~~Lenders and ~~restated~~L/C Lenders party thereto. The Macquarie Credit Agreement replaces the Company’s 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 BMOBank of Montreal (the “BMO Credit Agreement”). The Macquarie Credit Agreement provides for a $170.0 million term loan (the “Term Loan”) and the $10.0 million Revolving Facility. The Revolving Facility includes up to ~~provide additional financing~~$5.0 million available for the ~~Century Mile project and a leasing credit facility. On October 31, 2019,~~issuance of letters of credit. The Company used proceeds from the ~~Company, through its Canadian subsidiaries, amended~~Term Loan to fund the Acquisition, for the repayment of approximately $52.0 million outstanding under the BMO Credit Agreement ~~by extending one~~and for general working capital and corporate purposes. In March 2020, the Company drew $10.0 million on the Revolving Facility. As of June 30, 2020, the outstanding balances of the ~~maturity date triggers applicable to Credit~~Term Loan and Revolving Facility ~~B, Credit Facility C~~were $169.1 million and ~~Credit Facility F from October 31, 2019 to January 31, 2020. Under the BMO Credit Agreement, the Company’s borrowing capacity was increased to CAD 102.2~~$10.0 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 September 30, 2019, the Company had borrowed CAD 96.1 million, of which the outstanding balance was CAD 69.4 million ($52.4 million based on the exchange rate in effect on September 30, 2019)respectively, and the Company had ~~approximately CAD 8.5 million ($6.4 million based on the exchange rate in effect on September 30, 2019)~~0 available borrowings under the ~~BMO~~Revolving Facility.

The Term Loan matures on December 6, 2026, and the Revolving Facility matures on December 6, 2024. The Term Loan requires scheduled quarterly payments in amounts equal to 0.25% of the original aggregate principal amount of the Term Loan, with the balance due at maturity.

Borrowings under the Macquarie Credit ~~Agreement. In addition,~~Agreement bear interest at a rate equal to, at the Company’s option, either (a) the London Interbank Offered Rate (“LIBOR”) (as defined in the Macquarie Credit Agreement), plus an applicable margin (each loan, being a “LIBOR Loan”) or (b) the Alternate Base Rate (as defined in the Macquarie Credit Agreement) (each loan, being a “ABR Loan”). The applicable margin for borrowings under the Term Loan is currently 5.50% per annum with respect to LIBOR Loans and 4.50% per annum with respect to ABR Loans. The applicable margin for borrowings under the Revolving Facility is determined as follows: (1) so long as the Consolidated First Lien Net Leverage Ratio (as defined in the Macquarie Credit Agreement) of the Company is ~~using CAD 3.0 million ($2.3 million~~greater than 2.75 to 1.00, the applicable margin for LIBOR Loans is 4.25% per annum, and for ABR Loans is 3.25% per annum, and (2) so long as the Consolidated First Lien Net Leverage Ratio of the Company is less than or equal to 2.75 to 1.00, the applicable margin for LIBOR Loans is 4.00% per annum, and for ABR Loans is 3.00% per annum.

In addition, on a quarterly basis, the Company is required to pay each lender under the Revolving Facility a commitment fee in respect of any unused commitments under the Revolving Facility in the amount of 0.50% of the principal amount of unused commitments of such lender, subject to a stepdown to 0.375% based onupon the ~~exchange rate~~Company’s Consolidated First Lien Net Leverage Ratio. The Company is also required to pay letter of credit participation fees equal to the applicable margin then in effect ~~on September 30, 2019) from Credit Facility E~~ for LIBOR Loans multiplied by the ~~interest rate swap agreement discussed below.~~

~~The BMO Credit Agreement consists~~average aggregate daily maximum amount available to be drawn under all letters of credit, plus such letter of credit issuer’s customary documentary and processing fees and charges and a fronting fee in an amount equal to 0.125% of the ~~following credit facilities:~~

Credit Facility A is a CAD 1.1 million revolving credit facility with a term of five years that expires in September 2021. 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 September 30, 2019, the Company had CAD 1.1 million ($0.8 million based on the exchange rate in effect on September 30, 2019) available for borrowing under Credit Facility A.

Credit Facility B is an approximately CAD 24.1 million committed, non-revolving, reducing standby facility with a term of five years that expires January 31, 2020. 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 September 30, 2019, the Company had no additional available borrowings under Credit Facility B.

Credit Facility C is a CAD 11.0 million revolving credit facility with a term of five years that expires January 31, 2020. 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 September 30, 2019, the Company had CAD 6.5 million ($4.9 million based on the exchange rate in effect on September 30, 2019) available for borrowing under Credit Facility C.

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 September 30, 2019, the Company had no additional available borrowings under Credit Facility D.

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 agreement discussed below. The Company is currently utilizing Credit Facility E to hedge interest rate risk as discussed below.

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) January 31, 2020; (iii) the Project Construction Completion Date, as defined in the BMO Credit Agreement, or at the option of the Company, the date on which the Century Mile REC achieves “substantial performance” under certain Alberta legislation; 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 September 30, 2019, the Company had CAD 0.8 million ($0.6 million based on the exchange rate in effect on September 30, 2019) available for borrowing under Credit Facility F.

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.

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. The Company entered into a five-year lease with BMO in May 2019. The outstanding balance as of September 30, 2019 was CAD 1.3 million ($1.0 million based on the exchange rate in effect on September 30, 2019), and the Company had CAD 0.7 million ($0.5 million based on the exchange rate in effect on September 30, 2019) available for borrowing under Credit Facility H. The equipment lease is presented in finance lease liabilities on the Company’s condensed consolidated balance sheets. See Note 11 for more information.

~~Any funds not drawn down under specified facilities in the BMO Credit Agreement are subject~~face amount of such letter of credit. The Company is also required to ~~standby fees ranging from 0.50% to 0.75% payable quarterly in arrears. Standby~~pay customary agency fees. Commitment fees of ~~CAD 0.1~~less than $0.1 million ~~($0.1 million based on the exchange rates in effect on September 30, 2019 and 2018)~~ were recorded as interest expense in the condensed consolidated ~~statements~~statement of (loss) earnings for ~~each of~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020.

The Macquarie Credit Agreement requires the Company to prepay the Term Loan, subject to certain exceptions, with:

100% of the net cash proceeds of certain non-ordinary course asset sales or certain casualty events, subject to certain exceptions; and ~~2018. The shares~~

50% of the Company’s ~~Canadian~~annual Excess Cash Flow (as defined in the Macquarie Credit Agreement) (which percentage will be reduced to 25% if the Consolidated First Lien Net Leverage Ratio is greater than 2.25 to 1.00 but less than or equal to 2.75 to 1.00, and to 0% if the Consolidated First Lien Net Leverage Ratio is less than or equal to 2.25 to 1.00).

The Macquarie Credit Agreement provides that the Term Loan may be prepaid, subject to a prepayment premium in an amount equal to 1.00% of the principal amount of the Term Loan if such event occurs on or before the date that is 12 months following the Acquisition closing date.

The borrowings under the Macquarie Credit Agreement are guaranteed by the material subsidiaries ~~that own CRA, CAL, CSA~~of the Company, subject to certain exceptions, and ~~Century Mile~~are secured by a pledge (and, with respect to real property, mortgage) of substantially all of the existing and future property and assets of the Company and the ~~Company's 75% interest in CDR are pledged as collateral for the BMO Credit Agreement.~~ guarantors, subject to certain exceptions.

The ~~BMO~~Macquarie Credit Agreement contains ~~a number~~customary representations and warranties, affirmative, negative and financial covenants, and events of ~~covenants applicable~~default. All future borrowings under the Macquarie Credit Agreement are subject to the ~~Canadian subsidiaries,~~satisfaction of customary conditions, 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~~the absence of a ~~CAD 50.0 million equity balance~~default and ~~a capital expenditure limit~~the accuracy of ~~CAD 5.5 million~~representations and warranties. See Note 1 for ~~2019. The Company was in compliance with all financial covenants~~further discussion of the ~~BMO~~Macquarie Credit ~~Agreement as of September 30, 2019.~~Agreement.

The Company has entered into interest rate swap agreements to partially hedge the risk of future increases in the variable rate debt under the BMO Credit Agreement. The interest rate swap agreements are not designated as hedges for accounting purposes. As a result, changes in fair value of the interest rate swaps are recognized in interest expense on the Company’s condensed consolidated statements of earnings. As of September 30, 2019, the Company had an interest rate swap agreement set at a Canadian Dollar Offered Rate (“CDOR”) with a notional amount of CAD 10.5 million ($7.9 million based on the exchange rate in effect on September 30, 2019) with a rate of 4.83% expiring in December 2021.

Deferred financing costs consist of the Company’s costs related to the financing of the ~~BMO~~ Macquarie Credit Agreement. The Company recognized $10.7 million in deferred financing costs related to the Macquarie Credit Agreement as of June 30, 2020. Amortization expenses relating to Macquarie Credit Agreement deferred financing ~~charges~~costs were ~~$0.1~~$0.4 million and $0.8 million for ~~each of~~ the ~~nine~~three and six months ended ~~September~~June 30, ~~2019 and 2018.~~2020, respectively. These costs are included in interest expense in the condensed consolidated ~~statements~~statement of ~~earnings.~~(loss) earnings for the three and six months ended June 30, 2020.

Casinos Poland

~~As of September 30, 2019, CPL had a~~CPL’s short-term line of credit with Alior Bank ~~used to finance current operations.~~ended in April 2020. The line of credit ~~bears~~bore an interest rate of three-month ~~WIBOR~~Warsaw Interbank Offered Rate (“WIBOR”) plus 1.55% ~~with a borrowing capacity of PLN 13.0 million, of which PLN 2.0 million may only be used to secure bank guarantees.~~ .

As of ~~September~~June 30, ~~2019, the~~2020, CPL had 4 credit ~~facility had an outstanding balance~~agreements with mBank as detailed below. As of ~~PLN 1.1 million ($0.3 million based on the exchange rate in effect on September~~June 30, 2019), Alior Bank had secured bank guarantees of PLN 3.3 million ($0.8 million based on the exchange rate in effect on September 30, 2019) and approximately PLN 8.6 million ($2.1 million based on the exchange rate in effect on September 30, 2019) was available for borrowing. The credit facility contains a number of covenants applicable to CPL, including covenants that restrict the incurrence of additional debt and require CPL to maintain certain debt to EBITDA ratios.2020, CPL was in compliance with all financial covenants ~~of this~~under these credit facility as of September 30, 2019. The borrowing capacity of the credit facility lowers to PLN 4.0 million after April 2020 through April 2021, at which time the credit facility may only be used to secure bank guarantees.agreements.

~~As of September 30, 2019, CPL also had four credit agreements with mBank as detailed below.~~

The first credit agreement between CPL and mBank is a PLN 3.0 million term loan that was used to renovate the existing casino space at the Marriott Hotel in Warsaw. The credit agreement bears an interest rate of 1-month WIBOR plus 1.70%. The credit agreement has a ~~three-year~~three year term through November 30, 2021. As of ~~September~~June 30, ~~2019,~~2020, the credit agreement had an outstanding balance of PLN ~~2.6~~1.9 million ($~~0.6~~0.5 million based on the exchange rate in effect on ~~September~~June 30, ~~2019)~~2020). CPL has no0 further borrowing availability under this credit agreement. The credit agreement is secured by a building owned by CPL in Warsaw. In addition, CPL is required to maintain cash ~~inflows of PLN 1.0 million to its~~in an account ~~held~~ with mBank and to comply with financial covenants, including covenants that relate to profit margins not lower than 0.3% to 0.4%, liquidity ratios no less than 1.3 and a debt ratio not higher than 60%. ~~CPL~~In May 2020, the credit agreement was ~~in compliance with all~~amended to defer three months of payments to November 30, 2021 and waive financial covenants ~~of this credit agreement as of September~~through August 30, ~~2019.~~2020.

The second credit agreement between CPL and mBank is a PLN 4.0 million term loan that was used to renovate and enlarge the casino space at the Marriott Hotel in Warsaw. The credit agreement bears an interest rate of 1-month WIBOR plus 1.70%. The credit agreement has a ~~three-year~~three year term through November 30, 2021. As of ~~September~~June 30, ~~2019,~~2020, the credit agreement had an outstanding balance of PLN ~~3.5~~2.5 million ($~~0.9~~0.6 million based on the exchange rate in effect on ~~September~~June 30, ~~2019)~~2020). CPL has no0 further borrowing availability under this credit agreement. The credit agreement is secured by a building owned by CPL in Warsaw. In addition, CPL is required to maintain cash inflows of PLN 7.0 million to its account held with mBank and to comply with financial covenants, including covenants that relate to profit margins not lower than 0.5%, liquidity ratios no less than 0.6 and a debt ratio not higher than 70%. ~~CPL~~In May 2020, the credit agreement was ~~in compliance with all~~amended to defer three months of payments to November 30, 2021 and waive financial covenants ~~of this credit agreement as of September~~through August 30, ~~2019.~~2020.

The third credit agreement between CPL and mBank is a PLN 2.5 million term loan that ~~will be~~was used to purchase gaming and other equipment for the Marriott Hotel in Warsaw. The credit agreement bears interest at an interest rate of 1-month WIBOR plus 1.90%. The credit agreement has a ~~four-year~~four year term through November 30, 2022. As of ~~September~~June 30, ~~2019,~~2020, the credit agreement had an outstanding balance of PLN ~~2.3~~1.8 million ($~~0.6~~0.5 million based on the exchange rate in effect on ~~September~~June 30, ~~2019)~~2020). CPL has no0 further borrowing availability under this credit agreement. The credit agreement is secured by a building owned by CPL in Warsaw. In addition, CPL is required to maintain cash inflows of PLN 7.0 million to its account held with mBank and to comply with financial covenants, including covenants that relate to profit margins not lower than 0.5%, liquidity ratios no less than 0.6 and a debt ratio not higher than 70%. ~~CPL~~In May 2020, the credit agreement was ~~in compliance with all~~amended to defer three months of payments to November 30, 2021 and waive financial covenants ~~of this credit agreement as of September~~through August 30, ~~2019.~~2020.

As of ~~September~~June 30, ~~2019,~~2020, CPL also had a short-term line of credit with mBank used to finance current operations. The line of credit bears an interest rate of overnight WIBOR plus ~~1.40%~~1.50% with a borrowing capacity of PLN 5.0 million. As of ~~September~~June 30, ~~2019,~~2020, the credit facility had no0 outstanding balance and ~~approximately~~ PLN 5.0 million ($~~1.2~~1.3 million based on the exchange rate in effect on ~~September~~June 30, ~~2019)~~2020) was available for additional borrowing. The credit facility contains a number of covenants applicable to CPL, including covenants that require CPL to maintain certain liquidity and liability to asset ratios. ~~CPL~~In May 2020, the credit agreement was ~~in compliance with all financial covenants of this credit facility as of September 30, 2019. The~~amended to extend the line of credit ~~terminates on March 30,~~and waive financial covenants through August 27, 2020.

‎

Under Polish gaming law, CPL is required to maintain PLN ~~4.8~~3.6 million in the form of deposits or bank guarantees for payment of casino jackpots and gaming tax obligations. mBank issued guarantees to CPL for this purpose totaling PLN ~~4.8~~3.6 million ($~~1.2~~0.9 million based on the exchange rate in effect on ~~September~~June 30, ~~2019)~~2020). The mBank guarantees are secured by land owned by CPL in Kolbaskowo, Poland as well as a deposit of PLN ~~1.4~~1.2 million ($~~0.4~~0.3 million based on the exchange rate in effect on ~~September~~June 30, ~~2019)~~2020) with mBank and will terminate in June 2024 and January 2025. In addition, Alior Bank issued guarantees to CPL totaling PLN 1.3 million ($0.3 million based on the exchange rate in effect on June 30, 2020). CPL also is required to maintain deposits or provide bank guarantees for payment of additional prizes and giveaways at the casinos. The amount of these deposits varies depending on the value of the prizes. CPL maintained PLN ~~1.1~~0.8 million ($~~0.3~~0.2 million based on the exchange rate in effect on ~~September~~June 30, ~~2019)~~2020) in deposits for this purpose as of ~~September~~June 30, ~~2019.~~2020. These deposits are included in deposits and other on the Company’s condensed consolidated balance sheets.

Century ~~Casino Bath~~Resorts Management

In August 2017, the Company’s subsidiary CCB entered into a GBP 2.0 million term loan with UniCredit ~~Bank Austria AG (“UniCredit”~~(the “UniCredit Loan”). In February 2020, the Company’s subsidiary CRM assumed the UniCredit Loan. The ~~loan~~UniCredit Loan matures in September 30, 2023 and bears interest at the ~~London Interbank Offered Rate (“LIBOR”)~~LIBOR plus 1.625%. Proceeds from the loan were used for construction and fitting out of CCB. As of ~~September~~June 30, ~~2019,~~2020, the amount outstanding on the ~~loan~~UniCredit Loan was GBP ~~1.6~~1.3 million ($~~2.0~~1.6 million based on the exchange rate in effect on ~~September~~June 30, ~~2019)~~2020). ~~CCB~~CRM has no0 further borrowing availability under the loan agreement. The loan is guaranteed by a $0.6 million cash ~~guarantee by CRM.~~guarantee. The amount of this guarantee is included in deposits and other on the Company’s condensed consolidated balance sheets.

In August 2018, CRM entered into a loan agreement with UniCredit (the “UniCredit Agreement”) for a revolving line of credit of up to EUR 7.0 million ($7.9 million based on the exchange rate in effect on June 30, 2020) to be used for acquisitions and capital expenditures at the Company’s existing operations or new operations. The borrowings may be denominated in EUR, bearing an interest rate of EURIBOR plus a margin of 1.5%, or USD, bearing an interest rate of LIBOR plus a margin of 1.5%. The line of credit is available until terminated by either party. Funds can be borrowed with terms of 1, 3, 6, 9 or 12 months. In March 2020, CRM borrowed $7.4 million with a 12 month term under the UniCredit Agreement and the Company had 0 further borrowings available as of March 31, 2020. The UniCredit Agreement is secured by a EUR 7.0 million guarantee by the Company. The UniCredit Agreement contains customary events of default, including the failure to make required payments. Upon a failure to make required payments following a grace period, amounts due under the UniCredit Agreement may be accelerated.

Century Downs Racetrack and Casino

CDR’s land lease is a financing obligation of the Company. Prior to the Company’s acquisition of its ownership interest in CDR, CDR sold a portion of the land on which the REC project is located and then entered into an agreement to lease back a portion of the land sold. The Company accounts for the lease using the financing method by accounting for the land subject to lease as an asset and the lease payments as interest on the financing obligation. Under the land lease, CDR has ~~four~~4 options to purchase the land. The first option date is July 1, 2023. Due to the nature of the CDR land lease financing obligation, there are no0 principal payments due until the Company exercises its option to purchase the land. Lease payments are applied to interest only, and any change in the outstanding balance of the financing obligation relates to foreign currency translation. As of ~~September~~June 30, ~~2019,~~2020, the outstanding balance on the financing obligation was CAD 19.5 million ($~~14.7~~14.3 million based on the exchange rate in effect on ~~September~~June 30, ~~2019)~~2020).

~~Century Resorts Management~~

In August 2018, the Company’s subsidiary, CRM, entered into a loan agreement with UniCredit (the “UniCredit Agreement”) for a revolving line of credit of up to EUR 7.0 million ($7.6 million based on the exchange rate in effect on September 30, 2019) to be used for acquisitions and capital expenditures at the Company’s existing operations or new operations. The borrowings may be denominated in EUR, bearing an interest rate of EURIBOR plus a margin of 1.5%, or USD, bearing an interest rate of LIBOR plus a margin of 1.5%. The line of credit is available until terminated by either party. Funds can be borrowed with terms of 1, 3, 6, 9 or 12 months. The UniCredit Agreement is secured by a EUR 7.0 million guarantee by the Company. The UniCredit Agreement contains customary events of default, including the failure to make required payments. Upon a failure to make required payments following a grace period, amounts due under the UniCredit Agreement may be accelerated.

As of ~~September~~June 30, ~~2019,~~2020, scheduled maturities related to long-term debt were as follows:


Amounts in thousands	Bank of Montreal		Casinos Poland Credit Agreements		Casinos Poland Credit Facilities		Century Casino Bath Credit Agreement		Century Downs Land Lease		Total		Macquarie Credit Agreement		Casinos Poland ‎Credit Agreements		UniCredit Loan		Century Downs ‎Land Lease		UniCredit Agreement		Total
2019	$	13,106	$	220	$	278	$	123	$	—	$	13,727
2020		3,481		876		—		492		—		4,849	$	10,800	$	370	$	247	$	—	$	—	$	11,417
2021		14,242		818		—		492		—		15,552		1,700		1,005		494		—		7,400		10,599
2022		1,216		162		—		492		—		1,870		1,700		208		494		—		—		2,402
2023		1,216		—		—		369		—		1,585		1,700		—		371		—		—		2,071
2024														1,700		—		—		—		—		1,700
Thereafter		19,151		—		—		—		14,722		33,873		161,500		—		—		14,306		—		175,806
Total	$	52,412	$	2,076	$	278	$	1,968	$	14,722	$	71,456	$	179,100	$	1,583	$	1,606	$	14,306	$	7,400	$	203,995

There is no set repayment schedule for the CPL credit ~~facilities,~~facility, and the Company classifies ~~them~~it as short-term debt due to the nature of the agreements.

‎

7.LONG-TERM FINANCING OBLIGATION

On December 6, 2019, certain subsidiaries of the Company (collectively, the “Tenant”) and certain subsidiaries of VICI PropCo (collectively, the “Landlord”) entered into the sale and leaseback transaction for the Acquired Casino properties. The ~~UniCredit Agreement~~Master Lease does not transfer control of the Acquired Casino properties to VICI Propco subsidiaries. The Company accounts for the transaction as a failed sale-leaseback financing obligation.

When cash proceeds are exchanged, a failed sale-leaseback financing obligation is equal to the proceeds received for the assets that are sold and then leased back. The value of the failed sale-leaseback financing obligations recognized in this transaction was determined to be the fair value of the leased real estate assets. In subsequent periods, a portion of the periodic payment under the Master Lease will be recognized as interest expense with the remainder of the payment reducing the failed sale-leaseback financing obligation using the effective interest method. The failed sale-leaseback obligations will not be reduced to less than the net book value of the leased real estate assets as of the end of the lease term, which is estimated to be $28.5 million.

The fair values of the real estate assets and the related failed sale-leaseback financing obligation were estimated based on the present value of the estimated future payments over the term plus renewal options of 35 years, using the imputed discount rate of approximately 10.6%. The value of the failed sale-leaseback financing obligation is dependent upon assumptions regarding the amount of the payments and the estimated discount rate of the payments required by a market participant.

The Master Lease provides for the lease of land, buildings, structures and other improvements on the land (including barges and riverboats), easements and similar appurtenances to the land and improvements relating to the operations of the leased properties. The Master Lease has an initial term of 15 years with no purchase option. At the Company’s option, the Master Lease may be extended for up to 4 five year renewal terms beyond the initial 15 year term. The renewal terms are effective as to all, but not less than all, of the property then subject to the Master Lease. The Company does not have the ability to terminate its obligations under the Master Lease prior to its expiration without the Landlord’s consent.

The Master Lease has a triple-net structure, which requires the Tenant to pay substantially all costs associated with the Acquired Casino properties, including real estate taxes, insurance, utilities, maintenance and operational costs. The Master Lease contains certain covenants, including minimum capital improvement expenditures. The covenants under the Master Lease began on January 1, 2020; however, as a result of the casino closures in connection with the COVID-19 pandemic, the Landlord and the Tenant entered into an amendment to the Master Lease in May 2020 that, among other things, waived the Tenant’s capital improvement expenditure requirements for 2020 and deferred to not later than December 31, 2021 certain other expenditures contemplated in the underwriting of the Acquired Casino properties. The Company has provided a guarantee of the Tenant’s obligations under the Master Lease.

The rent payable under the Master Lease is comprised of “Base Rent” and “Variable Rent”. Base rent is:

An initial annual rent (the “Rent”) of approximately $25.0 million.

The Rent will escalate at a rate of 1% for the 2^nd and 3^rd years and the greater of either 1.25% (the “Base Rent Escalator”) or the increase in the Consumer Price Index (“CPI”) for each year starting in the 4^th year and ending the 7^th year.

The Base Rent Escalator is subject to adjustment from and after the 6^th year if the Minimum Rent Coverage Ratio (as defined in the Master Lease) is not ~~included~~satisfied.

Beginning in the ~~table~~8^th year of the lease term, Rent will be calculated as (i) 80% of the Rent for the 7^th lease year (“Base Rent”), subject to an annual Base Rent Escalator of the greater of 1.25% or CPI subject to adjustment if the Minimum Rent Coverage Ratio is not satisfied, plus (ii) variable rent (“Variable Rent”) equal to 20% of the Rent for the 7^th lease year, plus or minus 4% of the change in average net revenue of the Acquired Casinos calculated as set forth in the Master Lease.

For the 11^th year and thereafter of the initial lease term, the Base Rent will escalate annually as set forth above ~~because no amounts~~and the Variable Rent will be recalculated as set forth in the Master Lease.

The estimated future payments include the payments and adjustments to reflect estimated payments as described in the Master Lease, including an annual escalator of up to 1.25% and estimates based on contingent rental payments.

‎

Total payments and interest expense related to the Master Lease were ~~borrowed~~$10.4 million and $14.2 million, respectively, for the six months ended June 30, 2020.

The future payments related to the Master Lease financing obligation with the Landlord at June 30, 2020 are as ~~of September 30, 2019.~~follows.


Amounts in thousands
2020	$	12,500
2021		25,250
2022		25,502
2023		25,821
2024		26,144
Thereafter		1,061,061
Total payments		1,176,278
Less imputed interest		(927,637)
Residual Value		28,492
Total	$	277,133

8.COMMITMENTS AND CONTINGENCIES

Litigation

Since 2011, the Polish Internal Revenue Service (“Polish IRS”) has conducted a series of tax audits of CPL to review the calculation and payment of personal income tax by CPL employees for periods ranging from 2007 to 2013. The Polish IRS has asserted that CPL should calculate, collect and remit to the Polish IRS personal income tax on tips received by CPL employees from casino customers and has prevailed in several court challenges by CPL. Through ~~September~~June 30, ~~2019,~~2020, CPL has paid PLN 14.3 million ($4.2 million) related to these audits.

The balance of the potential liability on the Company’s condensed consolidated balance sheet for all open periods as of ~~September~~June 30, ~~2019~~2020 is PLN ~~3.4~~4.4 million ($~~0.8~~1.1 million based on the exchange rate in effect on ~~September~~June 30, ~~2019)~~2020). The Company has evaluated the contingent liability recorded on its condensed consolidated balance sheet as of ~~September~~June 30, ~~2019~~2020 and has concluded that it is properly accrued in light of the Company’s estimated obligation related to personal income tax on tips as of ~~September~~June 30, ~~2019.~~2020. Additional court decisions and other proceedings by the Polish IRS may expose the Company to additional employment tax obligations in the future. Any additional tax obligations are not probable or estimable and the Company has not recorded any additional obligation related to such taxes as of ~~September~~June 30, ~~2019.~~2020. Additional tax obligations assessed in the future as a result of these matters, if any, may be material to the Company’s financial position, results of operations and cash flows.

In March 2020, the Company assessed the likelihood of collecting the portion of the liability that it had sought to collect from LOT Polish Airlines (“LOT”), which previously owned a 33.3% interest in CPL that it sold to the Company in 2013. Due to COVID-19, LOT grounded flights in March 2020. Based on past efforts to collect on LOT’s portions of payments made by CPL to the Polish IRS for tax periods in January 2009 to March 2013 and analysis of LOT’s ability to pay, the Company determined that it was more likely than not that the amounts owed would not be collected. As a result, the Company wrote-down PLN 3.0 million ($0.7 million based on the exchange rate in effect on March 31, 2020) to general and administrative expenses on its condensed consolidated statement of (loss) earnings for the six months ended June 30, 2020.

9.INCOME TAXES

Income tax expense is recorded relative to the jurisdictions that recognize book earnings. For the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, the Company recognized an income tax expense of ~~$3.2~~$3.1 million on pre-tax ~~income~~loss of ~~$6.3~~($55.8) million, representing an effective income tax rate of ~~50.7%~~(5.6%) compared to an income tax expense of ~~$1.8~~$2.1 million on pre-tax income of ~~$5.0~~$4.2 million, representing an effective income tax rate of ~~35.7%~~50.1% for the same period in ~~2018.~~2019. The comparison of pre-tax loss of ($55.8) million for the six months ended June 30, 2020 to the pre-tax income of $4.2 million for the six months ended June 30, 2019 should be considered when comparing effective tax rates for the respective periods.

For the six months ended June 30, 2020, the Company computed its effective tax rate using actual year to date information rather than a full year forecast to compute an annual effective tax rate. Based on current forecasts, which take into account a range of potential impacts from the COVID-19 pandemic, the Company’s effective tax rate is expected to be highly sensitive to changes in earnings. The extent of the effects of the COVID-19 pandemic on the Company and the casino industry at large is highly uncertain and will ultimately depend on future developments, including but not limited to, the duration and severity of the outbreak, future recurrences of the outbreak and the length of time it takes for normal economic and operating conditions to resume, if at all. Accordingly, the Company concluded that computing its effective tax rate using year to date actual results is its best estimate of tax expense for the six months ended June 30, 2020.

A number of items caused the effective income tax rate for the ~~nine~~three and six months ended ~~September~~June 30, ~~2019~~2020 to ~~exceed~~differ from the US federal statutory income tax rate of 21% including a ~~26%~~25% statutory tax rate in Canada, ~~where the Company earns a significant portion of its income, nondeductible stock compensation expense in the United States,~~ certain nondeductible business expenses in Poland and the other items discussed below. The ~~increase~~change in the effective tax rate compared to the same period in ~~2018~~2019 is primarily the result of the valuation ~~allowance~~allowances recorded in the first and second ~~quarter~~quarters of ~~2019,~~2020 as well as the impairment of goodwill and intangible assets at certain reporting units, which is described below. ~~This was partially offset by~~

During the ~~enactment~~first quarter of ~~a reduction~~2020, the Company recorded valuation allowances on its net deferred tax assets related to CMR, resulting in $1.5 million of tax expense and on its net deferred tax assets related to the ~~Alberta, Canada income tax rate,~~United States resulting in ~~an income~~$1.0 million of tax benefit of $0.3 million for the nine months ended September 30, 2019. During 2018, CRM received an intercompany dividend, which increased the income tax expense by $0.3 million for the nine months ended September 30, 2018.

expense. During the second quarter of ~~2019,~~2020, the Company recorded a valuation allowance on its net deferred tax assets related to ~~CCB, resulting~~CRM, which resulted in ~~$0.5~~$1.1 million of tax expense. Based on the analysis of future realization of the ~~CCB~~CMR, United States and CRM deferred tax assets, the Company concluded that it is more likely than not that the benefit from certain deferred tax assets will not be realized and therefore recorded athe valuation ~~allowance.~~allowances. Additionally, the Company impaired goodwill and intangible assets during 2020 at certain of its reporting units and recorded $35.1 million to impairment – goodwill and intangible assets on its condensed consolidated statement of (loss) earnings during the six months ended June 30, 2020. These impairments affected the income tax rates, but there was limited tax expense associated with these impairments.

8.10.EARNINGS PER SHARE

The calculation of basic earnings per share considers only weighted average outstanding common shares in the computation. The calculation of diluted earnings per share gives effect to all potentially dilutive stock options. The calculation of diluted earnings per share is based upon the weighted average number of common shares outstanding during the period, plus, if dilutive, the assumed exercise of stock options using the treasury stock method. Weighted average shares outstanding for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019 were as follows:



	For the three months				For the nine months				For the three months				For the six months
	ended September 30,				ended September 30,				ended June 30,				ended June 30,
Amounts in thousands	2019		2018		2019		2018		2020		2019		2020		2019
Weighted average common shares, basic		29,453		29,425		29,444		29,388		29,576		29,440		29,541		29,440
Dilutive effect of stock options		726		562		690		598		—		—		—		674
Weighted average common shares, diluted		30,179		29,987		30,134		29,986		29,576		29,440		29,541		30,114

The following stock options are anti-dilutive and have not been included in the weighted average shares outstanding calculation:



	For the three months				For the nine months				For the three months				For the six months
	ended September 30,				ended September 30,				ended June 30,				ended June 30,
Amounts in thousands	2019		2018		2019		2018		2020		2019		2020		2019
Stock options		755		102		690		60		113		1,686		1,411		115

‎

9. 11. FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS REPORTING

Fair Value Measurements

The Company follows fair value measurement authoritative accounting guidance for all assets and liabilities measured at fair value. That authoritative accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. Market or observable inputs are the preferred sources of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. The fair value hierarchy for grouping these assets and liabilities is based on the significance level of the following inputs:

~~Level 1 – quoted prices in active markets for identical assets or liabilities~~

Level 2 – quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose inputs are observable or whose significant value drivers are observable

~~Level 3 – significant inputs to the valuation model are unobservable~~

Level 1 – quoted prices in active markets for identical assets or liabilities

Level 2 – quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations whose inputs are observable or whose significant value drivers are observable

Level 3 – significant inputs to the valuation model are unobservable

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company reflects transfers between the three levels at the beginning of the reporting period in which the availability of observable inputs no longer justifies classification in the original level. There were 0 transfers between the three levels for the three and six months ended June 30, 2020.

Recurring Fair Value Measurements

~~The estimated fair value and basis of valuation of the Company’s financial liabilities that are measured at fair value on a recurring basis were as follows:~~

Amounts in thousands

September 30, 2019

December 31, 2018

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3
Interest rate swap asset (1)

$
—

$
33

$
—

$
—

$
169

$
—

~~(1)~~

~~See “Derivative Instruments Reporting” below for detailed information regarding the Company’s interest rate swap agreements.~~

The Company ~~determines~~determined the fair value of its interest rate swap agreements based on the notional amount of the ~~swap~~swaps and the forward rate CAD-CDOR curve provided by Bloomberg and zero-coupon Canadian spot rates as of the valuation date. The Company ~~classifies~~classified these instruments as Level 2 because the inputs into the valuation model can be corroborated utilizing observable benchmark market rates at commonly quoted intervals. The interest rate swap agreements ended in December 2019 when the Company’s BMO Credit Agreement was repaid.

Non-Recurring Fair Value Measurements

The Company applies the provisions of the fair value measurement standard to its non-recurring, non-financial assets and liabilities measured at fair value. ~~There~~During 2020, the Company wrote-down goodwill and intangible assets at certain properties based on forecast losses and cash flows at these reporting units resulting from the triggering events caused by COVID-19 and, as a result, charged $34.1 million to impairment – goodwill and intangible assets on its condensed consolidated statement of (loss) earnings for the six months ended June 30, 2020. Management’s assessments were nodesignated as Level 3 measurements based on the unobservable nature of the inputs used to evaluate the goodwill and intangible assets. In addition, the Company impaired its MCE investment based on evaluations of the investment resulting from the triggering events caused by COVID-19. The Company made assessments about MCE’s ability to continue as a going concern and future cash flows of MCE. Management’s assessments were designated as Level 3 measurements based on the unobservable nature of the inputs used to evaluate the investment. The Company used an income approach and cost approach and weighted both equally. The resulting fair value was insignificant, and consequently the investment was fully impaired resulting in $1.0 million expense recorded as impairment – goodwill and intangible assets oron the Company’s condensed consolidated statement of (loss) earnings for the six months ended June 30, 2020.

The Company applied the acquisition method of accounting for the Acquisition. Identifiable assets and liabilities assumed were recognized and measured at the fair value ~~on a non-recurring basis~~ as of ~~September 30, 2019.~~the Acquisition date. The valuation of intangible assets was determined using an income approach methodology. The Company’s key assumptions include projected future revenues, customer attrition rates and discount rates. See Note 3 for more information about the Acquisition and accounting for the Acquisition.

Long-Term Debt – The carrying value of the ~~BMO~~Macquarie Credit Agreement approximates fair value based on recently negotiated terms and the variable interest paid on the obligations. The carrying value of the ~~CPL credit facilities approximates fair value based on the short-term nature of the facilities, the variable interest paid on the Alior Bank facility~~UniCredit Agreement and ~~the recently negotiated terms. The carrying value of the~~ CPL credit agreements ~~approximates~~approximate fair value based on the variable interest paid on ~~the~~ obligations. The carrying ~~value~~values of the ~~CCB loan agreement approximates~~CRM and CPL short-term lines of credit approximate fair value ~~based on~~due to the ~~variable interest paid on~~short-term nature of the ~~obligation.~~agreements and recently negotiated terms. The estimated fair values of the outstanding balances under the ~~BMO~~Macquarie Credit Agreement, CPL credit ~~facilities,~~facility, CPL credit agreements, and ~~CCB loan agreement~~UniCredit Loan Agreement are designated as Level 2 measurements in the fair value hierarchy based on quoted prices in active markets for similar liabilities. The carrying values of the Company’s finance lease obligations approximate fair value based on the similar terms and conditions currently available to the Company in the marketplace for similar financings. The fair value of the CDR land lease was CAD 28.6 million ($21.6 million based on the exchange rate in effect on September 30, 2019) as of September 30, 2019. The estimated fair values of the outstanding balances related to the Company’s finance lease obligations and the CDR land lease are designated as Level 3 measurements based on the unobservable nature of the inputs used to evaluate such liabilities. The Company entered into a line of credit agreement with UniCredit in August 2018. The Company had not borrowed against this line of credit as of September 30, 2019.

Other Estimated Fair Value Measurements – The estimated fair value of the Company’s other assets and liabilities, such as cash and cash equivalents, accounts receivable, inventory, accrued payroll and accounts payable, have been determined to approximate carrying value based on the short-term nature of those financial instruments. As of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company had no0 cash equivalents.

Derivative Instruments Reporting

~~As of~~In April ~~2015,~~2016, the Company began using interest rate swaps to mitigate the risk of variable interest rates under its BMO Credit Agreement. The interest rate swaps were repaid in December 2019 when the BMO Credit Agreement was repaid. The interest rate swaps were not designated as accounting hedges. The interest rate ~~swap resets~~swaps reset monthly, and the difference to be paid or received under the terms of the interest rate swap agreement iswas accrued as interest rates ~~change~~changed and is recognized as an adjustment to interest expense for the related debt. ~~See Note 5 for details of the Company’s outstanding interest rate swap agreement~~.

~~Changes in the variable interest rates to be paid or received pursuant to the terms of the interest rate swap agreements are~~The Company recognized $0.2 million and $0.5 million in interest expense related to its interest rate swaps on ~~the Company’s~~its condensed consolidated ~~statements~~statement of ~~earnings. The location~~(loss) earnings for the three and ~~effects of derivative instruments on the condensed consolidated statements of earnings were as follows:~~

Amounts in thousands

For the three months

For the nine months
Derivatives not designated as

Income Statement

ended September 30,

ended September 30,
ASC 815 hedges

Classification

2019

2018

2019

2018
Interest Rate Swaps

Interest Expense

$
153

$
171

$
669

$
624

~~The location and fair value amounts of the Company’s derivative instruments in the condensed consolidated balance sheets were as follows:~~six months ended June 30, 2019, respectively.

Amounts in thousands

As of September 30, 2019

As of December 31, 2018
Derivatives not designated as ASC 815 hedges

Balance Sheet Classification

Gross Recognized Assets (Liabilities)

Gross Amounts Offset

Net Recognized Fair Value Assets (Liabilities)

Gross Recognized Assets (Liabilities)

Gross Amounts Offset

Net Recognized Fair Value Assets (Liabilities)
Derivative assets:

Interest rate swaps - current

Other current assets

$
24

$
—

$
24

$
94

$
—

$
94
Interest rate swaps - non-current

Deposits and other

9

—

9

75

—

75
Total derivative assets

$
33

$
—

$
33

$
169

$
—

$
169

~~10.~~12.REVENUE RECOGNITION

The Company derives revenue ~~from:~~

~~(1)~~

~~contracts with customers,~~

~~(2)~~

~~financial instruments,~~

~~(3)~~

~~cost recovery payments, and~~

~~(4)~~

~~dividends from its cost investment.~~

and other income from contracts with customers and financial instruments. A breakout of the Company’s derived revenue and other income is presented in the table below.


	For the three months				For the nine months				For the three months				For the six months
	ended September 30,				ended September 30,				ended June 30,				ended June 30,
Amounts in thousands	2019		2018		2019		2018		2020		2019		2020		2019
Revenue from contracts with customers	$	52,935	$	43,564	$	150,990	$	123,834	$	36,103	$	52,445	$	123,760	$	98,057
Interest income		11		74		20		107		5		5		6		9
Cost recovery income		—		—		417		—		158		417		158		417
Dividend income		—		—		18		—		—		18		—		18
Total revenue	$	52,946	$	43,638	$	151,445	$	123,941	$	36,266	$	52,885	$	123,924	$	98,501

The Company operates gaming establishments as well as related lodging, restaurant, horse racing (including off-track betting) and entertainment facilities around the world. The Company generates revenue at its properties by providing the following types of products and services: gaming, hotel, food and beverage, and pari-mutuel and other. Disaggregation of the Company’s revenue from contracts with customers by type of revenue and ~~geographical location~~reportable segment is presented in the tables below.


	For the three months ended September 30, 2019										For the three months ended June 30, 2020
Amounts in thousands		Canada		United States		Poland		Corporate Other		Total		United States		Canada		Poland		Corporate and Other		Total
Gaming	$	13,252	$	7,637	$	20,107	$	1,023	$	42,019	$	21,095	$	2,077	$	6,748	$	2	$	29,922
Hotel		119		443		—		—		562		476		—		—		—		476
Food and beverage		4,021		1,022		215		167		5,425		774		313		64		—		1,151
Other		4,671		97		38		123		4,929		1,487		2,329		578		160		4,554
Net operating revenue	$	22,063	$	9,199	$	20,360	$	1,313	$	52,935	$	23,832	$	4,719	$	7,390	$	162	$	36,103


	For the three months ended September 30, 2018										For the three months ended June 30, 2019
Amounts in thousands		Canada		United States		Poland		Corporate Other		Total		United States		Canada		Poland		Corporate and Other		Total
Gaming	$	10,337	$	7,615	$	16,569	$	1,462	$	35,983	$	7,381	$	13,649	$	19,875	$	1,081	$	41,986
Hotel		129		446		—		—		575		373		121		—		—		494
Food and beverage		2,691		1,194		205		200		4,290		949		3,656		214		235		5,054
Other		2,526		105		(27)		112		2,716		106		4,562		18		225		4,911
Net operating revenue	$	15,683	$	9,360	$	16,747	$	1,774	$	43,564	$	8,809	$	21,988	$	20,107	$	1,541	$	52,445

‎

2630


	For the six months ended June 30, 2020
Amounts in thousands		United States		Canada		Poland		Corporate and Other		Total
Gaming	$	67,631	$	12,286	$	23,503	$	795	$	104,215
Hotel		2,209		83		—		—		2,292
Food and beverage		4,528		2,812		258		105		7,703
Other		2,894		5,721		692		243		9,550
Net operating revenue	$	77,262	$	20,902	$	24,453	$	1,143	$	123,760


	For the six months ended June 30, 2019
Amounts in thousands		United States		Canada		Poland		Corporate and Other		Total
Gaming	$	14,179	$	23,582	$	39,335	$	2,230	$	79,326
Hotel		694		246		—		—		940
Food and beverage		1,811		6,097		441		456		8,805
Other		190		8,364		83		349		8,986
Net operating revenue	$	16,874	$	38,289	$	39,859	$	3,035	$	98,057

For the nine months ended September 30, 2019
Amounts in thousands

Canada

United States

Poland

Corporate Other

Total
Gaming
$
36,834

$
21,815

$
59,443

$
3,253

$
121,345
Hotel

365

1,137

—

—

1,502
Food and beverage

10,118

2,833

656

623

14,230
Other

13,036

288

122

467

13,913
Net operating revenue
$
60,353

$
26,073

$
60,221

$
4,343

$
150,990

For the nine months ended September 30, 2018
Amounts in thousands

Canada

United States

Poland

Corporate Other

Total
Gaming
$
30,190

$
21,056

$
48,010

$
3,339

$
102,595
Hotel

396

1,138

—

—

1,534
Food and beverage

7,713

3,063

551

303

11,630
Other

7,391

285

134

265

8,075
Net operating revenue
$
45,690

$
25,542

$
48,695

$
3,907

$
123,834

For the majority of the Company’s contracts with customers, payment is made in advance of the services and contracts are settled on the same day the sale occurs with revenue recognized on the date of the sale. For contracts that are not settled, a contract liability is created. The expected duration of the performance obligation is less than one year.

The amount of revenue recognized that was included in the opening contract liability balance was less than $0.1 million and $0.6 million for the three and six months ended June 30, 2020, respectively, and $0.2 million for ~~each of~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2019 and 2018.~~2019. This revenue consists primarily of the Company’s deferred gaming revenue from player points earned through play at the Company’s casinos located in the United States. Activity in the Company’s ~~contract~~ receivables and contract liabilities is presented in the tables below.


	For the three months				For the three months				For the three months				For the three months
	ended September 30, 2019				ended September 30, 2018				ended June 30, 2020				ended June 30, 2019
Amounts in thousands	Receivables		Contract Liability		Receivables		Contract Liability		Receivables		Contract Liabilities		Receivables		Contract Liabilities
Opening	$	310		242		260		193	$	19		722	$	320	$	214
Closing		308		228		281		236		9		2,193		310		242
Increase/(decrease)	$	(2)	$	(14)	$	21	$	43	$	(10)	$	1,471	$	(10)	$	28

	For the nine months				For the nine months				For the six months				For the six months
	ended September 30, 2019				ended September 30, 2018				ended June 30, 2020				ended June 30, 2019
Amounts in thousands	Receivables		Contract Liability		Receivables		Contract Liability		Receivables		Contract Liabilities		Receivables		Contract Liabilities
Opening	$	305	$	219	$	266	$	235	$	326		663	$	305	$	219
Closing		308		228		281		236		9		2,193		310		242
Increase/(decrease)	$	3	$	9	$	15	$	1	$	(317)	$	1,530	$	5	$	23

Receivables are included in accounts receivable and contract liabilities are included in accrued liabilities on the Company’s condensed consolidated balance sheets. ~~There were no impairment losses for~~In March 2020, the ~~Company’s~~Company wrote-down its receivables related to MCE based on assessments made due to COVID-19 and future cash flows of MCE, and as a result, charged $0.3 million to general and administrative expenses during the six months ended June 30, 2020. The increase in contract liabilities for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020 relates to deferred revenue for a sports betting agreement entered into by the Company’s subsidiary CRC.

Substantially all of the Company’s contracts and contract liabilities have an original duration of one year or less. The Company applies the practical expedient for such contracts and does not consider the effects of the time value of money. Further, because of the short duration of these contracts, the Company has not disclosed the transaction price for the remaining performance obligations as of the end of each reporting period or when the Company expects to recognize this revenue.

‎

2731

13.LEASES

~~11.LEASES~~In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). The Company adopted ASU 2016-02 with a date of initial application of January 1, 2019. The Company applied ASU 2016-02 by recognizing (i) a $38.3 million right-of-use (“ROU”) asset which represents the right to use, or control the use of, specified assets for a lease term; and (ii) a $40.4 million lease liability for the obligation to make lease payments arising from the leases. The ROU asset is included in leased right-of-use assets, net, and the lease liability is included in current portion of operating lease liability and operating lease liability, net of current portion, on the Company’s condensed consolidated balance sheets. The comparative information has not been adjusted and is reported under the accounting standards in effect for those periods. The Company used the alternative modified retrospective method, also known as the transition relief method, which did not require the restatement of prior periods and instead recognized a $0.3 million cumulative-effect adjustment to retained earnings upon transition.

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

The Company elected the practical expedient to account for the 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 hindsight 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 Company determines if an arrangement is a lease at inception. Operating leases and finance lease ROU assets are included in leased ROU assets in the Company’s condensed consolidated balance sheets. Operating lease liabilities are included in current portion of lease liabilities and operating lease liabilities in the Company’s condensed consolidated balance sheets. Finance lease liabilities are included in current portion of lease liabilities and finance lease liabilities in the Company’s condensed consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. ~~As the rate implicit is not readily determinable for the Company’s leases, the~~The Company uses its incremental borrowing rate in each of the jurisdictions in which its subsidiaries operate to calculate the present value of lease payments. ~~If an implicit rate is readily determinable in the arrangement, the Company will utilize the implicit rate.~~ Lease terms may include options to extend or terminate the lease. These options are included in the lease term when it is reasonably certain that the Company will exercise those options. Operating lease expense is recorded on a straight-line basis over the lease term.

The Company accounts for lease agreements with lease and non-lease components as a single lease component for all asset classes. The Company does not establish ROU assets or lease liabilities for operating leases with terms of 12 months or less.

The Company’s operating and finance leases include land, casino space, corporate offices, and gaming ~~equipment~~ and other equipment. The leases have remaining lease terms of one month to 2820 years.

~~Land – The Company leases the land on which the REC at CMR is built. The lease term is 20 years and the Company has six options to renew for additional five year terms.~~

Casino space - The Company leases space for its casino in Bath, England, its eight casinos operating in Poland and its casinos onboard five cruise ships. The lease term for CCB is 28 years with an option to renew for an additional 15 year term. The lease terms for the casinos in Poland range from six to 12 years. The lease terms for the casinos onboard the cruise ships mirror the agreement terms with the cruise ships, and the lease payments are variable based on revenue.

Corporate offices – The Company leases space for its corporate offices in Vienna, Austria and Colorado Springs, Colorado. The lease terms are three and 10 years, respectively. The corporate office lease in Vienna has an option to renew for an additional three years.

~~Gaming equipment – The majority of the gaming equipment that the Company leases is on a monthly basis with variable payments based on revenue.~~

~~Other equipment – The lease terms range from one to six years, some of which include options to extend the lease and some of which include options to terminate within one year.~~

The components of lease expense were as follows:


					For the three months ended				For the six months ended
	For the three months ended		For the nine months ended		June 30,				June 30,
Amounts in thousands	September 30, 2019		September 30, 2019		2020		2019		2020		2019
Operating lease expense	$	1,495	$	4,367	$	1,260	$	1,537	$	2,651	$	3,015

Finance lease expense:
Amortization of right-of-use assets	$	142	$	203	$	38	$	29	$	79	$	61
Interest on lease liabilities		20		31		4		8		8		11
Total finance lease expense	$	162	$	234	$	42	$	37	$	87	$	72

Short-term lease expense	$	132	$	679	$	68	$	401	$	147	$	539

Variable lease expense	$	904	$	2,614	$	(151)	$	1,085	$	568	$	1,766

Variable lease expense relates primarily to rates based on a percentage of gaming revenue, changes in indexes that are excluded from the lease liability and fluctuations in foreign currency related to leases in Poland.

‎

Supplemental cash flow information related to leases was as follows:


	~~For the nine months~~
	~~ended September 30,~~
~~Amounts in thousands~~	~~2019~~
~~Cash paid for amounts included in the measurement of lease liabilities:~~
~~Operating cash flows from finance leases~~	$	31
~~Operating cash flows from operating leases~~		~~5,185~~
~~Financing cash flows from finance leases~~		~~250~~


	For the six months
	ended June 30,
Amounts in thousands	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	$	—	$	7
Operating cash flows from operating leases		3,430		3,418
Financing cash flows from finance leases		79		111

Supplemental balance sheet information related to leases was as follows:


	~~As of~~
~~Amounts in thousands~~	~~September 30, 2019~~
~~Operating leases~~
~~Leased right-of-use assets, net~~	$	~~45,860~~

~~Current portion of operating lease liabilities~~		~~4,229~~
~~Operating lease liabilities, net of current portion~~		~~44,550~~
~~Total operating lease liabilities~~		~~48,779~~

~~Finance leases~~
~~Finance lease right-of-use assets, gross~~		~~1,768~~
~~Accumulated depreciation~~		~~(386)~~
~~Leased right-of-use assets, net~~		~~1,382~~

~~Current portion of finance lease liabilities~~		~~351~~
~~Finance lease liabilities, net of current portion~~		~~979~~
~~Total finance lease liabilities~~		~~1,330~~

~~Weighted-average remaining lease term~~
~~Operating leases~~		~~14.6 years~~
~~Finance leases~~		~~4.1 years~~

~~Weighted-average discount rate~~
~~Operating leases~~		~~4.7%~~
~~Finance leases~~		~~4.3%~~


	As of		As of
Amounts in thousands	June 30, 2020		December 31, 2019
Operating leases
Leased right-of-use assets, net	$	33,891	$	37,040

Current portion of operating lease liabilities		4,003		4,235
Operating lease liabilities, net of current portion		32,152		42,942
Total operating lease liabilities		36,155		47,177

Finance leases
Finance lease right-of-use assets, gross		553		731
Accumulated depreciation		(276)		(338)
Property and equipment, net		277		393

Current portion of finance lease liabilities		135		161
Finance lease liabilities, net of current portion		137		217
Total finance lease liabilities		272		378

Weighted-average remaining lease term
Operating leases		11.5 years		14.4 years
Finance leases		2.4 years		2.7 years

Weighted-average discount rate
Operating leases		4.5%		4.8%
Finance leases		5.0%		5.1%

Maturities of lease liabilities as of ~~September~~June 30, ~~2019~~2020 were as follows:


Amounts in thousands		Operating leases	Finance leases			Operating leases	Finance leases
Remaining 2019	$	1,451	$	107
2020		5,791		403	$	2,665	$	77
2021		5,754		370		5,299		128
2022		5,525		271		5,064		39
2023		4,898		257		4,426		25
2024						3,734		19
Thereafter		46,957		85		27,380		—
Total lease payments		70,376		1,493		48,568		288
Less imputed interest		(21,597)		(163)		(12,413)		(16)
Total	$	48,779	$	1,330	$	36,155	$	272

‎

~~12.~~14.SEGMENT INFORMATION

The Company reports its financial performance in ~~three~~3 reportable segments based on the geographical locations in which its casinos operate: the United States, Canada and Poland. The Company views each market in which it operates as a separate operating segment and each casino within those markets as a reporting unit. Operating segments are aggregated within reportable segments based on their similar economic characteristics, types of customers, types of services and products provided, the regulatory environments in which they operate, and their management and reporting structure. The Company’s operations related to Century Casino Bath, its concession, management and consulting ~~agreements;~~agreements and certain other corporate and management operations have not been identified as separate reportable segments; therefore, these operations are included in Corporate and Other in the following segment disclosures to reconcile to consolidated results. All intercompany transactions are eliminated in consolidation.

The table below provides information about the aggregation of the Company’s reporting units and operating segments into reportable segments:


Reportable Segment	Operating Segment	Reporting Unit
~~Canada~~United States	Colorado	Century Casino & Hotel - Central City
		Century Casino & Hotel - Cripple Creek
	West Virginia	Mountaineer Casino, Racetrack & Resort
	Missouri	Century Casino Cape Girardeau
		Century Casino Caruthersville
Canada	Edmonton	Century Casino & Hotel - Edmonton
~~Canada~~		Century Casino ~~Calgary~~St. Albert
~~Canada~~		Century Mile Racetrack and Casino
	Calgary	Century Casino Calgary
		Century Downs Racetrack and Casino
~~Canada~~		Century Bets! Inc.
~~Canada~~Poland	~~Century Casino St. Albert~~Poland	Casinos Poland
~~Canada~~	~~Century Mile Racetrack and Casino~~
~~United States~~	~~Century Casino & Hotel – Central City~~
~~United States~~	~~Century Casino & Hotel – Cripple Creek~~
~~Poland~~	~~Casinos Poland~~
Corporate and Other	Corporate and Other	Cruise Ships & Other
~~Corporate and Other~~	~~Century Casino Bath~~
~~Corporate and Other~~	Corporate Other

The Company’s chief operating decision maker is a management function comprised of two individuals. These two individuals are ~~our~~the Company’s Co-Chief Executive Officers. The Company’s chief operating decision makers and management utilize Adjusted EBITDA as the primary profit measure for its reportable segments. Adjusted EBITDA is a non-US GAAP measure defined as net earnings (loss) attributable to Century Casinos, Inc. shareholders before interest expense (income), net, income taxes (benefit), depreciation, amortization, non-controlling interest ~~earnings (losses)~~(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 ~~cost recovery income~~ and other, gain on business combination and certain other one-time ~~items.~~transactions. Expense related to the Master Lease is included in the interest expense (income), net line item. 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. Non-cash stock-based compensation expense is presented under Corporate and Other in the tables below as the expense is not allocated to reportable segments when reviewed by the Company’s chief operating decision makers.

‎

3034

The following tables provide information regarding the Company’s segments:


	For the three months ended September 30, 2019											For the three months ended June 30, 2020
Amounts in thousands		Canada		United States		Poland		Corporate and Other		Total			United States		Canada		Poland		Corporate and Other		Total
Net operating revenue (1)		$	22,063	$	9,199	$	20,360	$	1,313	$	52,935		$	23,832	$	4,719	$	7,390	$	162	$	36,103

Earnings (loss) before income taxes		$	2,169	$	1,813	$	1,679	$	(3,481)	$	2,180
(Loss) earnings before income taxes													$	(10,271)	$	(1,791)	$	(2,162)	$	1,609	$	(12,615)

Net earnings (loss) attributable to Century Casinos, Inc. shareholders		$	1,623	$	1,348	$	775	$	(3,264)	$	482
Net (loss) earnings attributable to Century Casinos, Inc. shareholders													$	(10,271)	$	(1,781)	$	(1,246)	$	691	$	(12,607)
Interest expense (income), net(2)			1,346		—		51		19		1,416			6,954		435		(14)		3,204		10,579
Income taxes (benefit)			367		465		518		(217)		1,133
Income (benefit) taxes														—		(44)		(292)		918		582
Depreciation and amortization			1,327		488		797		217		2,829			4,246		1,289		735		135		6,405
Net earnings attributable to non-controlling interests			179		—		386		—		565
Net earnings (loss) attributable to non-controlling interests														—		34		(624)		—		(590)
Non-cash stock-based compensation			—		—		—		358		358			—		—		—		249		249
Loss (gain) on foreign currency transactions, cost recovery income and other			12		—		(139)		11		(116)			1,157		135		(25)		(7,631)		(6,364)
Loss on disposition of fixed assets			—		—		85		44		129
(Gain) on disposition of fixed assets														—		(69)		—		—		(69)
Acquisition costs			—		—		—		297		297			—		—		—		53		53
Adjusted EBITDA		$	4,854	$	2,301	$	2,473	$	(2,535)	$	7,093		$	2,086	$	(1)	$	(1,466)	$	(2,381)	$	(1,762)

(1)Net operating revenue for Corporate and Other primarily relates to the Company’s cruise ship operations and consulting agreements.

(2)Expense of $7.0 million related to the Master Lease is included in interest expense (income), net in the United States segment. Expense of $0.4 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the Master Lease and CDR land lease were $4.2 million and $0.4 million, respectively, for the period presented.

~~(1)~~

~~Net operating revenue for Corporate and Other primarily relates to CCB and the Company’s cruise ship operations.~~


	For the three months ended June 30, 2019
Amounts in thousands		United States		Canada		Poland		Corporate and Other		Total
Net operating revenue ⁽¹⁾		$	8,809	$	21,988	$	20,107	$	1,541	$	52,445

Earnings (loss) before income taxes		$	1,642	$	3,995	$	1,054	$	(4,963)	$	1,728

Net earnings (loss) attributable to Century Casinos, Inc. shareholders		$	1,236	$	2,536	$	425	$	(4,762)	$	(565)
Interest expense (income), net ⁽²⁾			—		1,320		45		28		1,393
Income taxes (benefit)			406		778		416		(230)		1,370
Depreciation and amortization			527		1,059		716		141		2,443
Net earnings attributable to non-controlling interests			—		681		213		29		923
Non-cash stock-based compensation			—		—		—		359		359
(Gain) loss on foreign currency transactions and cost recovery income			—		(432)		(78)		5		(505)
Loss on disposition of fixed assets			1		2		248		272		523
Acquisition costs			—		—		—		768		768
Adjusted EBITDA		$	2,170	$	5,944	$	1,985	$	(3,390)	$	6,709

(1)Net operating revenue for Corporate and Other primarily relates to CCB, the Company’s cruise ship operations and consulting agreements.

(2)Expense of $0.6 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the CDR land lease were $0.5 million for the period presented.

For the three months ended September 30, 2018
Amounts in thousands

Canada

United States

Poland

Corporate and Other

Total
Net operating revenue (1)

$
15,683

$
9,360

$
16,747

$
1,774

$
43,564

Earnings (loss) before income taxes

$
2,766

$
2,121

$
83

$
(2,384)

$
2,586

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 (2)

—

—

—

(91)

(91)
Adjusted EBITDA

$
4,830

$
2,666

$
902

$
(2,048)

$
6,350

‎

~~(1)~~

~~Net operating revenue for Corporate and Other primarily relates to the Company’s cruise ship operations.~~

~~(2)~~

~~Other one-time income relates to an arbitration award from LOT Polish Airlines in July 2018.~~

3135


	For the six months ended June 30, 2020
Amounts in thousands		United States		Canada		Poland		Corporate and Other		Total
Net operating revenue ⁽¹⁾		$	77,262	$	20,902	$	24,453	$	1,143	$	123,760

Loss before income taxes		$	(42,636)	$	(3,960)	$	(2,074)	$	(7,082)	$	(55,752)

Net loss attributable to Century Casinos, Inc. shareholders		$	(43,659)	$	(5,987)	$	(1,218)	$	(7,599)	$	(58,463)
Interest expense (income), net ⁽²⁾			14,235		979		17		6,713		21,944
Income taxes (benefit)			1,023		1,813		(247)		517		3,106
Depreciation and amortization			8,505		2,628		1,501		265		12,899
Net earnings (loss) attributable to non-controlling interests			—		214		(609)		—		(395)
Non-cash stock-based compensation			—		—		—		236		236
Loss (gain) on foreign currency transactions, cost recovery income and other			30,746		3,447		147		(6,046)		28,294
(Gain) loss on disposition of fixed assets			—		(69)		2		2		(65)
Acquisition costs			—		—		—		266		266
Adjusted EBITDA		$	10,850	$	3,025	$	(407)	$	(5,646)	$	7,822

(1)Net operating revenue for Corporate and Other primarily relates to CCB, the Company’s cruise ship operations and consulting agreements.

(2)Expense of $14.2 million related to the Master Lease is included in interest expense (income), net in the United States segment. Expense of $0.9 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the Master Lease and CDR land lease were $10.4 million and $0.9 million, respectively, for the period presented.


	For the six months ended June 30, 2019
Amounts in thousands		United States		Canada		Poland		Corporate and Other			Total
Net operating revenue ⁽¹⁾		$	16,874	$	38,289	$	39,859	$	3,035	$	98,057

Earnings (loss) before income taxes		$	2,979	$	6,548	$	2,884	$	(8,244)	$	4,167

Net earnings (loss) attributable to Century Casinos, Inc. shareholders		$	2,215	$	4,085	$	1,339	$	(7,136)	$	503
Interest expense (income), net ⁽²⁾			—		2,511		91		45		2,647
Income taxes (benefit)			764		1,542		876		(1,096)		2,086
Depreciation and amortization			1,086		1,856		1,487		439		4,868
Net earnings (loss) attributable to non-controlling interests			—		921		669		(12)		1,578
Non-cash stock-based compensation			—		—		—		620		620
Gain on foreign currency transactions and cost recovery income			—		(476)		(280)		(7)		(763)
Loss (gain) on disposition of fixed assets			17		(3)		253		300		567
Acquisition costs			—		—		—		768		768
Pre-opening expenses			—		538		—		—		538
Adjusted EBITDA		$	4,082	$	10,974	$	4,435	$	(6,079)	$	13,412

(1)Net operating revenue for Corporate and Other primarily relates to CCB, the Company’s cruise ship operations and consulting agreements.

(2)Expense of $1.1 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the CDR land lease were $1.0 million for the period presented.

‎

For the nine months ended September 30, 2019
Amounts in thousands

Canada

United States

Poland

Corporate and Other

Total
Net operating revenue (1)

$
60,353

$
26,073

$
60,221

$
4,343

$
150,990

Earnings (loss) before income taxes

$
8,716

$
4,793

$
4,566

$
(11,728)

$
6,347

Net earnings (loss) attributable to Century Casinos, Inc. shareholders

$
5,704

$
3,564

$
2,115

$
(10,398)

$
985
Interest expense (income), net

3,856

—

142

65

4,063
Income taxes (benefit)

1,913

1,229

1,395

(1,318)

3,219
Depreciation and amortization

3,184

1,573

2,284

657

7,698
Net earnings (loss) attributable to non-controlling interests

1,099

—

1,056

(12)

2,143
Non-cash stock-based compensation

—

—

—

979

979
(Gain) loss on foreign currency transactions, cost recovery income and other

(465)

—

(419)

5

(879)
(Gain) loss on disposition of fixed assets

(1)

17

338

342

696
Acquisition costs

—

—

—

1,064

1,064
Pre-opening expenses

538

—

—

—

538
Adjusted EBITDA

$
15,828

$
6,383

$
6,911

$
(8,616)

$
20,506

~~(1)~~

~~Net operating revenue for Corporate and Other primarily relates to the Company’s cruise ship operations.~~

For the nine months ended September 30, 2018
Amounts in thousands

Canada

United States

Poland

Corporate and Other

Total
Net operating revenue (1)

$
45,690

$
25,542

$
48,695

$
3,907

$
123,834

Earnings (loss) before income taxes

$
8,288

$
4,844

$
(177)

$
(7,956)

$
4,999

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 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 (2)

—

—

—

(91)

(91)
Adjusted EBITDA

$
14,534

$
6,477

$
3,158

$
(6,593)

$
17,576

~~(1)~~

~~Net operating revenue for Corporate and Other primarily relates to the Company’s cruise ship operations.~~

~~(2)~~

~~Other one-time income relates to an arbitration award from LOT Polish Airlines in July 2018.~~

3236

~~13.~~15.SUBSEQUENT EVENTS

The Company evaluated subsequent events and accounting and disclosure requirements related to including material subsequent events in its condensed consolidated financial statements and related notes.

On ~~October 17, 2019,~~August 5, 2020, the ~~Board~~Company announced that it had entered into a definitive agreement to sell the casino operations of ~~Directors~~Century Casino Calgary for CAD 10.0 million ($7.5 million based on the exchange rate on July 31, 2020) plus a three year quarterly earn out as specified in the agreement. The CAD 10.0 million was paid at the execution of the definitive agreement and is non-refundable except in the event the Company ~~approved a resolution~~is in breach of certain covenants set out in the agreement and subject to ~~grant a bonus of $600,000 to certain employees~~working capital and ~~non-executive Board members for their work in negotiating and completing the Acquisition.~~other adjustments. The Company ~~anticipates this bonus~~ will ~~be paid~~continue to operate Century Sports (sports bar, bowling and entertainment) and to own the real estate. Upon closing of the transaction, the Company will enter into a three year lease agreement with the purchaser of the casino operations for annual net rent of CAD 480,000 ($358,102 based on the exchange rate on July 31, 2020). The transaction is expected to close in fall 2020 subject to approval by the ~~fourth quarter~~AGLC as well as other customary closing conditions. On August 2, 2020, Macquarie provided a consent to the sale of ~~2019 or early 2020.~~the casino operations of Century Casino Calgary.

The Company recorded a loss of $0.1 million to general and administrative expenses on its condensed consolidated statement of (loss) earnings for the three and six months ended June 30, 2020 related to the estimated costs the Company will incur for the sale. Held for sale assets on the Company’s condensed consolidated balance sheet as of June 30, 2020 include $0.1 million in inventories and $0.5 million in property and equipment, net. Held for sale liabilities on the Company’s condensed consolidated balance sheet as of June 30, 2020 include $0.2 million in accrued liabilities.

‎

3337

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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 “ExchangeAct”), 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, ~~2018.~~2019, in Item 8.01 in our Current Report on Form 8-K filed on May 8, 2020, as well as under Part II, Item 1A of this quarterly report on Form 10-Q. 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~~market in which we operate as a separate operating segment and each casino within those markets as a reporting unit. We aggregate all ~~such properties~~operating segments into three reportable segments based on the geographical locations in which our casinos operate: ~~Canada,~~ United States, Canada and Poland. We have additional business activities including ~~our casino in Bath, England;~~ concession agreements, management ~~and~~agreements, consulting ~~agreements;~~agreements and certain other corporate and management operations that we report as Corporate and Other.

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3438

The table below provides information about the aggregation of ~~the Company’s~~our reporting units and operating segments into reportable ~~segments:~~segments. The reporting units, except for Century Downs Racetrack and Casino and Casinos Poland, are owned, operated and managed through wholly-owned subsidiaries. Our ownership and operation of Century Downs Racetrack and Casino and Casinos Poland are discussed below.


Reportable Segment	Operating Segment	Reporting Unit
~~Canada~~United States	Colorado	Century Casino & Hotel - Central City
		Century Casino & Hotel - Cripple Creek
	West Virginia	Mountaineer Casino, Racetrack & Resort
	Missouri	Century Casino Cape Girardeau
		Century Casino Caruthersville
Canada	Edmonton	Century Casino & Hotel - Edmonton
~~Canada~~		Century Casino ~~Calgary~~St. Albert
~~Canada~~		Century Mile Racetrack and Casino
	Calgary	Century Casino Calgary
		Century Downs Racetrack and Casino
~~Canada~~		Century Bets! Inc.
~~Canada~~Poland	~~Century Casino St. Albert~~Poland	Casinos Poland
~~Canada~~	~~Century Mile Racetrack and Casino~~
~~United States~~	~~Century Casino & Hotel – Central City~~
~~United States~~	~~Century Casino & Hotel – Cripple Creek~~
~~Poland~~	~~Casinos Poland~~
Corporate and Other	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;~~

~~Century Mile Racetrack and Casino 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 Century Mile opened on April 1, 2019, and as of September 30, 2019, operated 590 slot machines and electronic gaming units and 14 video lottery terminals. The first horse race at Century Mile was held on April 28, 2019.

CBS operates the pari-mutuel off-track betting network in Southern Alberta, Canada. Prior to August 2019, we had a 75% controlling financial interest in CBS through our wholly-owned subsidiary CRM. In August 2019, we purchased the 25% non-controlling financial interest from Rocky Mountain Turf Club for CAD 0.2 million ($0.2 million based on the exchange rate in effect on August 5, 2019), resulting in CBS becoming a wholly-owned subsidiary.

On March 17, 2020, we announced that we had permanently closed CCB. CCB voluntarily surrendered its casino gaming license on April 28, 2020 and entered into a creditors voluntary liquidation on May 6, 2020. For additional information related to CCB, see Note 1, “Description of Business and Basis of Presentation,” to our condensed consolidated financial statements in Part I, Item 1 of this report.

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

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. As of June 30, 2020, CPL owned eight casinos throughout Poland with a total of 526 slot machines and 119 tables. The following table summarizes information about CPL’s casinos as of June 30, 2020.

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, 2019, owned and operated eight casinos throughout Poland. As of September 30, 2019, CPL operated a total of 501 slot machines and 118 tables. The following table summarizes the Polish cities in which CPL operated casinos as of September 30, 2019. 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. CPL opened a third casino in Warsaw at the LIM Center, where it previously operated a casino, in August 2019.


City	Location	License Expiration	Number of Slots	Number of Tables
Warsaw	Marriott Hotel	July 2024	70	37
Warsaw	Hilton Hotel	September 2022	70	26
Warsaw	LIM Center	June 2025	63	4
Bielsko-Biala	Hotel President	October 2023	48	5
Katowice	Park Inn by Radisson	October 2023	70	14
Wroclaw	Double Tree Hilton Hotel	November 2023	70	18
Krakow	Dwor Kosciuszko Hotel	May 2024	70	5
Lodz	Manufaktura Entertainment Complex	June 2024	65	10

City
Location
License Expiration
Number of Slots
Number of Tables
Warsaw
Marriott Hotel
July 2024
70
37
Warsaw
Hilton Hotel
September 2022
70
26
Warsaw
LIM Center
June 2025
50
4
Bielsko-Biala
Hotel President
October 2023
43
5
Katowice
Park Inn by Radisson
October 2023
68
14
Wroclaw
Double Tree Hilton Hotel
November 2023
70
17
Krakow
Dwor Kosciuszko Hotel
May 2024
69
5
Lodz
Manufaktura Entertainment Complex
June 2024
61
10

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.

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 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 racetrack 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.

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

As of September 30, 2019, we operated five ship-based casinos through concession agreements with TUI Cruises. The following table summarizes the cruise lines and the associated ships on which we operated ship-based casinos as of September 30, 2019.

Cruise Line
Ship
Number of Slots
Number of Tables
TUI Cruises
Mein Schiff Herz(1)
17
1
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

~~(1)~~

~~Formerly the Mein Schiff 2.~~

As of June 30, 2020, we had a concession agreement with TUI Cruises for one ship-based casino. Our concession agreements for four of the TUI Cruises ship-based casinos that we operated prior to their COVID-19 related closures in March 2020 ended on May 12, 2020. We are negotiating a concession agreement with TUI Cruises to operate three ship-based casinos ~~onboard four Windstar Cruises ships ended~~through May 2021.

Through our subsidiary CRM, we have a 7.5% ownership interest in ~~January 2019,~~MCE. In addition, CRM provides advice to MCE on casino matters pursuant to a consulting agreement for a service fee consisting of a fixed fee plus a percentage of MCE’s EBITDA. In March ~~2019, April 2019~~2020, due to the impact of COVID-19 on MCE, we impaired the $1.0 million MCE investment and wrote-down a $0.3 million receivable related to MCE. For additional information related to MCE, see Note 4, “Investments,” to our condensed consolidated financial statements included in Part I, Item 1 of this report.

Through our subsidiary CRM, we had a 51% ownership interest in GHL. We sold our interest in GHL to the unaffiliated shareholders of GHL in May 2019 ~~respectively.~~

Infor a $0.7 million non-interest bearing promissory note. We recognized a loss on the sale of this investment of less than ($0.1) million in general and administrative expenses on our condensed consolidated statement of earnings for the three and six months ended June ~~2019, we evaluated~~30, 2019. The sale of our ~~agreement with Diamond Cruises~~equity interest in GHL also ended our equity interest in MCL. For additional information related to ~~the operation~~GHL and MCL, see Note 1, “Description of Business and Basis of Presentation,” and Note 4, “Investments,” to our condensed consolidated financial statements in Part I, Item 1 of this report.

Recent Developments Related to COVID-19

In late 2019, an outbreak of COVID-19 was identified in China and has since spread throughout much of the ~~ship-based casino onboard the Glory Sea. We determined that it was more likely than not that the agreement was impaired~~world. The COVID-19 pandemic has had an adverse effect on our first and ~~wrote-down $1.0 million in property~~second quarter 2020 results of operations and ~~equipment and net receivables in June 2019. The Glory Sea is currently not sailing,~~financial condition, and we ~~have not determined whether we~~expect the situation will continue to ~~operate this ship-based casino if~~have an adverse impact on our results for the ~~ship begins sailing again. We are considering continuing~~remainder of 2020. The duration and impact of the COVID-19 pandemic otherwise remains uncertain. Between March 13, 2020 and March 17, 2020, we closed all of our casinos, hotels and other facilities to ~~exit from operating ship-based casinos~~comply with quarantines issued by governments to contain the spread of COVID-19. Our Polish locations reopened on ~~cruise ships as the contracts expire.~~

Through our subsidiary CRM, we have a 7.5% ownership interest in MCE. In addition, CRM provides advice to MCE on casino matters pursuant to a consulting agreement for a service fee consisting of a fixed fee plus a percentage of MCE’s EBITDA. For additional information related to MCE, see Note 3, “Investments,” to our condensed consolidated financial statements included in Part I, Item 1 of this report.

Through our subsidiary CRM, we had a 51% ownership interest in GHL. We sold our interest in GHL to the unaffiliated shareholders of GHL in May 2019 for a $0.7 million non-interest bearing promissory note. We recognized a loss on the sale of this investment of less than ($0.1) million in generalMay 18, 2020 and our North American operations reopened between June 1, 2020 and administrative expenses on our condensed consolidated statement of earnings for the nine months ended September 30, 2019. The sale of our equity interest in GHL also ended our equity interest in MCL. For additional information related to GHL and MCL, see Note 1, “Description of Business and Basis of Presentation,” and Note 3, “Investments,” to our condensed consolidated financial statements in Part I, Item 1 of this report.

~~Acquisition~~

On June 17, 2020. The reopening approaches varied, with casinos in some jurisdictions reopening fully and others permitted to operate with reduced levels of gaming space or without table games. In addition, some locations are operating with limited restaurant operating hours or continued closure of restaurants, requirements to wear face masks, including the potential to require guests to wear face masks, increased frequency of disinfecting surfaces and other measures to account for varying levels of demand.

Temporary closures of all our facilities between March 2020 and June 2020 due to COVID-19 negatively impacted results for the three and six months ended June 30, 2020. We estimate that net operating revenue and Adjusted EBITDA for the six months ended June 30, 2020 were adversely impacted by approximately $91.3 million and $34.3 million, respectively, due to these closures. We estimate that the net cash outflows related to operations during the time they were fully suspended were, on average, approximately $8.0 million per month. In March 2020, as a proactive measure to increase our cash position and preserve financial flexibility in light of current uncertainty resulting from the COVID-19 pandemic, we borrowed an additional $17.4 million on our revolving credit facilities with Macquarie Capital (“Macquarie”) and UniCredit Bank Austria AG (“UniCredit”).

During the temporary closures of our casinos, hotels and other facilities, we took actions to reduce operating costs, including furloughing most of our personnel, implementing reduced work weeks for other personnel and temporarily reducing salaries to senior management on a voluntary basis. During the closures, we continued to pay benefits to our United States and Canadian employees, including part time employees. In Poland, all employees were paid reduced salaries based on local employment laws. We continue to operate with reduced spending on most advertising and marketing costs as well as implementing cost saving initiatives that are intended to eliminate approximately $13.7 million of non-labor operating costs in 2020. We intend to defer or eliminate approximately $2.2 million of discretionary capital projects for the remainder of 2020 in order to proactively address our capital spending for 2020. Additionally, we negotiated arrangements with some of our contractual counterparties, such as vendors and lessors, to modify the timing of certain contractual payments.

We cannot predict the negative impacts that the failure to suppress the spread of COVID-19 will have on our consumer demand, workforce, suppliers, contractors and other partners and, although all locations have reopened, whether future closures will be required. Such closures have had and will continue to have a material impact on us. While the severity and duration of such business impacts cannot currently be estimated, the effects of COVID-19 and the requirements of health and safety protocols are expected to continue to have a material impact on us.

For additional information, see “Liquidity and Capital Resources – Potential Sources of Liquidity and Short-Term Liquidity.”

Acquisition

On December 6, 2019, we ~~entered into a definitive agreement to acquire~~completed the Acquisition of the operations of Cape Girardeau, Caruthersville and Mountaineer from Eldorado Resorts, Inc. for an aggregate purchase price of approximately ~~$107.0 million, which we expect~~$111.7 million. Immediately prior to ~~finance through a new $180.0 million credit facility that will replace the BMO Credit Agreement. Simultaneous with the closing of~~ the Acquisition, ~~VICI will acquire~~ the real estate assets ofunderlying the ~~three properties for approximately $278.0 million~~Acquired Casinos were sold to VICI PropCo, and we ~~will enter~~and VICI PropCo subsidiaries entered into a triple net ~~lease agreement with VICI~~Master Lease for the three ~~casino~~Acquired Casino properties. The ~~lease will have~~Master Lease has an initial annual rent of approximately $25.0 million and an initial term of 15 years, with four ~~five-year~~five year renewal options.

Cape Girardeau is located in Cape Girardeau, Missouri, approximately 120 miles south of St. Louis, Missouri, overlooking the Mississippi river. The property opened in 2012 and consists of a dockside casino featuring 41,500 square feet of casino space, 863 gaming machines, 20 table games, three dining venues, a pavilion and an entertainment center. The property also includes a wide variety of non-gaming amenities, including an events center.

Caruthersville is a riverboat casino located along the Mississippi river in Caruthersville, Missouri. The property opened in 1995 and consists of a dockside casino featuring 21,000 square feet of casino space, 507 slot machines, nine table games, two dining venues, a 40,000 square foot pavilion and a 28-space RV park.

Mountaineer is a hotel, casino, entertainment and live thoroughbred horse racing facility located in New Cumberland, West Virginia, one hour from downtown Pittsburgh, Pennsylvania. The property originally opened in 1951 with the casino opening in 1994 and features a 357-room hotel, approximately 1,486 slot machines, 36 table games, a poker room, a racetrack and five dining venues.

The Acquisition, which is expected to close by year end, is subject to approval of the Missouri Gaming Commission as well as other customary closing conditions. We received approval of our acquisition of Mountaineer from the West Virginia Lottery Commission in September 2019.

On October 17, 2019, our Board of Directors (the “Board”) approved a resolution to grant bonuses to certain employees and non-executive Board members for their work in negotiating and completing material acquisitions, including the Acquisition. The award is set between 0.15% and 0.25% of the total acquisition value, with final amounts and recipients to be determined by the Board. The Board set an award value for the Acquisition bonus of $600,000, or 0.156% of the total acquisition value (the “Eldorado Bonus”). The Eldorado Bonus will be awarded upon successful completion of the Acquisition, as follows: $24,000 each to Gottfried Schellmann, Dinah Corbaci and Eduard Berger, $144,000 each to Peter Hoetzinger and Erwin Haitzmann, $100,000 to Margaret Stapleton, and $75,000 to Timothy Wright. The remaining $65,000 will be paid to non-executive officers.

On October 17, 2019, the Compensation Committee of the Board approved a resolution to increase the annual base salaries of some of our named executive officers effective after the closing of the Acquisition, in recognition of the increased size and complexity of the Company following the Acquisition. The annual base salaries will be increased to $250,000 for Margaret Stapleton, €165,000 for Andreas Terler and €125,000 for Nikolaus Strohriegel. These are the first salary increases for these officers since 2014. In addition, the annual base salary for Timothy Wright will be increased to $200,000.

Additional Projects Under Development

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~~would 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 expanding~~ In September 2017, the Bermuda Casino Gaming Commission granted a provisional casino gaming ~~floor at CDR by approximately 3,500 square feet,~~license, which is ~~a 20% increase in~~subject to certain conditions and approvals including the ~~gaming floor. We have received regulatory approval~~adoption of certain rules and ~~have begun construction. We anticipate completing~~regulations by the ~~project in November 2019. We estimate~~Parliament of Bermuda. The Parliament of Bermuda has not taken action on this project, ~~will cost approximately CAD 1.5 million ($1.1 million based on the exchange rate in effect on September 30, 2019).~~and we do not currently expect this project to go forward.

~~We are exploring an expansion at Century Casino & Hotel Cripple Creek to provide additional hotel rooms for our existing casino and hotel.~~

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



	For the three months			For the nine months			For the three months			For the six months
	ended September 30,			ended September 30,			ended June 30,			ended June 30,
Average Rates	2019	2018	% Change	2019	2018	% Change	2020	2019	% Change	2020	2019	% Change
Canadian dollar (CAD)	1.3205	1.3068	(1.0%)	1.3292	1.2874	(3.2%)	1.3863	1.3376	(3.6%)	1.3646	1.3335	(2.3%)
Euros (EUR)	0.8997	0.8601	(4.6%)	0.8901	0.8377	(6.3%)	0.9085	0.8898	(2.1%)	0.9080	0.8853	(2.6%)
Polish zloty (PLN)	3.8850	3.6981	(5.1%)	3.8270	3.5581	(7.6%)	4.0959	3.8090	(7.5%)	4.0090	3.7980	(5.6%)
British pound (GBP)	0.8111	0.7676	(5.7%)	0.7859	0.7405	(6.1%)	0.8060	0.7782	(3.6%)	0.7938	0.7732	(2.7%)
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 US 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 US dollar would decrease the earnings from our foreign operations when translated into US dollars. An increase in the value of these currencies in relation to the value of the US dollar would increase the earnings from our foreign operations when translated into US dollars.

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DISCUSSION OF RESULTS

Century Casinos, Inc. and Subsidiaries


	For the three months							For the nine months							For the three months							For the six months
	ended September 30,						%	ended September 30,						%	ended June 30,						%	ended June 30,						%
Amounts in thousands		2019		2018		Change	Change		2019		2018		Change	Change		2020		2019		Change	Change		2020		2019		Change	Change
Gaming Revenue	$	42,019	$	35,983	$	6,036	16.8%	$	121,345	$	102,595	$	18,750	18.3%	$	29,922	$	41,986	$	(12,064)	(28.7%)	$	104,215	$	79,326	$	24,889	31.4%
Hotel Revenue		562		575		(13)	(2.3%)		1,502		1,534		(32)	(2.1%)		476		494		(18)	(3.6%)		2,292		940		1,352	143.8%
Food and Beverage Revenue		5,425		4,290		1,135	26.5%		14,230		11,630		2,600	22.4%		1,151		5,054		(3,903)	(77.2%)		7,703		8,805		(1,102)	(12.5%)
Other Revenue		4,929		2,716		2,213	81.5%		13,913		8,075		5,838	72.3%		4,554		4,911		(357)	(7.3%)		9,550		8,986		564	6.3%
Net Operating Revenue		52,935		43,564		9,371	21.5%		150,990		123,834		27,156	21.9%		36,103		52,445		(16,342)	(31.2%)		123,760		98,057		25,703	26.2%
Gaming Expenses		(21,589)		(18,490)		3,099	16.8%		(62,873)		(52,666)		10,207	19.4%		(16,482)		(21,718)		(5,236)	(24.1%)		(58,525)		(41,284)		17,241	41.8%
Hotel Expenses		(200)		(197)		3	1.5%		(565)		(551)		14	2.5%		(254)		(187)		67	35.8%		(978)		(365)		613	167.9%
Food and Beverage Expenses		(5,411)		(4,148)		1,263	30.4%		(13,891)		(11,708)		2,183	18.6%		(1,468)		(4,550)		(3,082)	(67.7%)		(8,138)		(8,480)		(342)	(4.0%)
General and Administrative Expenses		(19,426)		(15,174)		4,252	28.0%		(56,438)		(44,781)		11,657	26.0%		(12,451)		(20,963)		(8,512)	(40.6%)		(41,986)		(37,015)		4,971	13.4%
Impairment - Goodwill and Intangible Assets																(1,157)		—		1,157	100.0%		(35,121)		—		35,121	100.0%
Total Operating Costs and Expenses		(49,455)		(40,332)		9,123	22.6%		(141,465)		(116,351)		25,114	21.6%		(38,217)		(49,861)		(11,644)	(23.4%)		(157,647)		(92,012)		65,635	71.3%
Earnings (Loss) from Equity Investment		—		2		(2)	(100.0%)		(1)		1		(2)	(200.0%)
Earnings from Operations		3,480		3,234		246	7.6%		9,524		7,484		2,040	27.3%
Loss from Equity Investment																—		14		(14)	(100.0%)		—		(1)		1	100.0%
(Loss) Earnings from Operations																(2,114)		2,598		(4,712)	(181.4%)		(33,887)		6,044		(39,931)	(660.7%)
Non-Controlling Interest		(565)		(155)		410	264.5%		(2,143)		(328)		1,815	553.4%		590		(923)		(1,513)	(163.9%)		395		(1,578)		(1,973)	(125.0%)
Net Earnings Attributable to Century Casinos, Inc. Shareholders		482		1,640		(1,158)	(70.6%)		985		2,887		(1,902)	(65.9%)
Net (Loss) Earnings Attributable to Century Casinos, Inc. Shareholders																(12,607)		(565)		(12,042)	(2131.3%)		(58,463)		503		(58,966)	(11722.9%)
Adjusted EBITDA (1)	$	7,093	$	6,350	$	743	11.7%	$	20,506	$	17,576	$	2,930	16.7%	$	(1,762)	$	6,709	$	(8,471)	(126.3%)	$	7,822	$	13,412	$	(5,590)	(41.7%)

(Loss) Earnings Per Share Attributable to Century Casinos, Inc. Shareholders
Basic Earnings Per Share	$	0.02	$	0.06	$	(0.04)	(66.7%)	$	0.03	$	0.10	$	(0.07)	(70.0%)
Diluted Earnings Per Share	$	0.02	$	0.05	$	(0.03)	(60.0%)	$	0.03	$	0.10	$	(0.07)	(70.0%)
Basic (Loss) Earnings Per Share															$	(0.43)	$	(0.02)	$	(0.41)	(2050.0%)	$	(1.98)	$	0.02	$	(2.00)	(10000.0%)
Diluted (Loss) Earnings Per Share															$	(0.43)	$	(0.02)	$	(0.41)	(2050.0%)	$	(1.98)	$	0.02	$	(2.00)	(10000.0%)

~~(1)~~

~~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.~~

(1)For a discussion of Adjusted EBITDA and reconciliation of Adjusted EBITDA to net earnings attributable to Century Casinos, Inc. shareholders, see “Non-US GAAP Measures – Adjusted EBITDA” below.

Items impacting comparability of the results include the following:

COVID-19

Closures of all our facilities due to COVID-19 had a significant negative impact on our results for the three and six months ended June 30, 2020. A discussion of the estimated impact of COVID-19 on our reportable segments is presented below.

Below is a summary of the closures in each operating segment and the percentage of the gaming floors that were open upon reopening:

CMR began operating the Northern Alberta off-track betting network in January 2019. The casino opened and horse racing began in April 2019. CMR is reported in the Canada reportable segment. CMR’s operating results for the three and nine months ended September 30, 2019 and 2018 were as follows:

Operating Segment

·Closure Date

Reopen Date

~~$6.1 million in net operating revenue and ($0.8) million in net losses for the three months ended September 30, 2019.~~Gaming Floor Open

Colorado

·March 17

June 15 and June 17

~~($0.5) million in net losses for the three months ended September 30, 2018.~~77% ⁽¹⁾

Missouri

·March 17

June 1

~~$14.2 million in net operating revenue and ($1.6) million in net losses for the nine months ended September 30, 2019.~~83%

West Virginia	·March 17	June 5	~~($0.7) million in net losses for the nine months ended September 30, 2018.~~48%
Edmonton	March 17	June 13	26% ⁽²⁾
Calgary	March 17	June 13	28% ⁽³⁾
Poland	March 13	May 18	100%

(1)CRC’s gaming floor is fully open. CTL’s floor is 60% open due to a county variance requiring every other machine to be powered off. No table games are open in Colorado.

(2)Barriers put in place in early July 2020 allowed us to reopen an additional 29% of our gaming floors at these properties.

(3)Barriers put in place in early July 2020 allowed us to reopen an additional 20% of our gaming floors at these properties.

The casino at CCB began operating in May 2018. CCB is reported in the Corporate and Other reportable segment. CCB’s operating results for the three and nine months ended September 30, 2019 and 2018 were as follows:

~~$0.7 million in net operating revenue and ($0.6) million in net losses for the three months ended September 30, 2019.~~

~~$1.1 million in net operating revenue and ($0.7) million in net losses for the three months ended September 30, 2018.~~

~~$2.5 million in net operating revenue and ($2.8) million in net losses for the nine months ended September 30, 2019.~~

~~$1.6 million in net operating revenue and ($1.5) million in net losses for the nine months ended September 30, 2018.~~

Additional expenses related to the Acquisition of $0.4 million and $1.2 million increased net losses for the Corporate and Other reportable segment for the three and nine months ended September 30, 2019, respectively.

The loss on disposal of fixed assets and the write-down of the net receivables of Glory Sea of $1.0 million increased net losses for the Corporate and Other segment for the nine months ended September 30, 2019.

3942

We impaired goodwill and intangible assets in the three and six months ended June 30, 2020 due to quantitative and qualitative impairment analysis performed related to the triggering events caused by COVID 19. We impaired $30.7 million in the United States segment and $3.4 million in the Canada segment.

We impaired the $1.0 million MCE investment and wrote-down a $0.3 million receivable related to MCE in the Corporate and Other segment due to assessments made related to the impact of COVID-19 on MCE in the six months ended June 30, 2020.

We recorded valuation allowances on our net deferred tax assets in the United States and Canada segments in the six months ended June 30, 2020 which resulted in $1.0 million and $1.5 million of tax expense in the United States and Canada segments, respectively. In addition, for the three and six months ended June 30, 2020, we recorded a valuation allowance on our net deferred tax assets at CRM that resulted in $1.1 million of tax expense in the Corporate and Other segment.

Results for June 2020 and 2019 are presented below.


	For the month ended
Amounts in thousands	June 30,
Consolidated Results	2020		2019		% Change
Net Operating Revenue	$	32,524	$	17,828	82%
Earnings (Loss) from Operations		7,081		(7)	101257%
Net Earnings (Loss) Attributable to Century Casinos, Inc. Shareholders	$	2,664	$	(1,858)	243%

Adjusted EBITDA*	$	10,806	$	2,274	375%

* For a discussion of Adjusted EBITDA see “Non-US GAAP Measures – Adjusted EBITDA” below.

United States

We acquired the operations at MTR, CCG and CCV in the Acquisition in December 2019. The results of operations from the properties acquired in the Acquisition and payment obligations under the Master Lease significantly impact the comparability of our results of operations in the United States segment for the 2020 and 2019 periods. MTR is reported in the West Virginia operating segment, and CCG and CCV are reported in the Missouri operating segment.

West Virginia contributed a total of $12.2 million in net operating revenue and ($4.4) million in net losses for the three months ended June 30, 2020 and $37.3 million in net operating revenue and ($6.8) million in net losses for the six months ended June 30, 2020.

Missouri contributed a total of $9.7 million in net operating revenue and ($5.6) million in net losses for the three months ended June 30, 2020 and $31.3 million in net operating revenue and ($36.4) million in net losses for the six months ended June 30, 2020.

Canada

CMR is reported in the Edmonton operating segment within the Canada reportable segment. CMR began operating the Northern Alberta off-track betting network in January 2019. The Edmonton casino opened and horse racing began in April 2019. CMR contributed $1.9 million in net operating revenue and ($0.9) million in net losses for the three months ended June 30, 2020 and $6.5 million in net operating revenue and ($0.1) million in net losses for the three months ended June 30, 2019. CMR contributed $5.5 million in net operating revenue and ($3.2) million in net losses for the six months ended June 30, 2020 and $8.0 million in net operating revenue and ($0.8) million in net losses for the six months ended June 30, 2019.

Corporate and Other

The interest payments under our Macquarie Credit Agreement significantly impact the comparability of our results of operations in the Corporate and Other segment for the 2020 and 2019 periods.

We wrote-down $0.7 million related to the portion of the liability that we had sought to collect from LOT in the six months ended June 30, 2020.

We closed CCB during the six months ended June 30, 2020.

We operated fewer ship-based casinos during the six months ended June 30, 2020, compared to the six months ended June 30, 2019, and all cruise ships suspended operations in March 2020 due to COVID-19.

‎

Casino closures in Poland in 2018 due to license expirations and delays in license tender awards in Poland and the opening of casinos during 2019 impacted comparability of results for CPL. See the Poland discussion below for additional information.

Net operating revenue decreased by ($16.3) million, or (31.2%), and increased by ~~$9.4~~$25.7 million, or ~~21.5%, and by $27.2 million, or 21.9%~~26.2%, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. Following is a breakout of net operating revenue by segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2018:~~ 2019:

~~Canada increased by $6.4 million, or 40.7%, and by $14.7 million, or 32.1%.~~

~~United States decreased by ($0.2) million, or (1.7%), and increased by $0.5 million, or 2.1%.~~

~~Poland increased by $3.6 million, or 21.6%, and by $11.5 million, or 23.7%.~~

~~Corporate and Other decreased by ($0.5) million, or (26.0%), and increased by $0.4 million, or 11.2%.~~

United States increased by $15.0 million, or 170.5%, and by $60.4 million, or 357.9%.

Canada decreased by ($17.3) million, or (78.5%), and by ($17.4) million, or (45.4%).

Poland decreased by ($12.7) million, or (63.2%), and by ($15.4) million, or (38.7%).

Corporate and Other decreased by ($1.4) million, or (89.5%), and by ($1.9) million, or (62.3%).

Operating costs and expenses decreased by ($11.6) million, or (23.4%), and increased by ~~$9.1~~$65.6 million, or ~~22.6%, and by $25.1 million, or 21.6%~~71.3%, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. Following is a breakout of operating costs and expenses by segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2018:~~ 2019:

~~Canada increased by $6.5 million, or 53.6%, and by $13.5 million, or 38.9%.~~

~~United States increased by $0.1 million, or 2.0%, and by $0.6 million, or 2.8%.~~

~~Poland increased by $2.0 million, or 12.2%, and by $6.9 million, or 14.1%.~~

~~Corporate and Other increased by $0.5 million, or 10.8%, and by $4.1 million, or 34.3%.~~

United States increased by $20.0 million, or 278.8%, and by $91.8 million, or 660.4%.

Canada decreased by ($11.2) million, or (65.2%), and by ($5.9) million, or (19.8%).

Poland decreased by ($9.5) million, or (49.7%), and by ($10.8) million, or (29.1%).

Corporate and Other decreased by ($11.0) million, or (168.8%), and by ($9.4) million, or (84.0%).

Earnings from operations ~~increased~~decreased by ~~$0.2~~($4.7) million, or ~~7.6%~~(181.4%), and by ~~$2.0~~($39.9) million, or ~~27.3%~~(660.7%), for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. Following is a breakout of earnings from operations by segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2018:~~ 2019:

~~Canada decreased by ($0.1) million, or (2.5%), and increased by $1.1 million, or 10.5%.~~

~~United States decreased by ($0.3) million, or (14.5%), and by ($0.1) million, or (1.1%).~~

~~Poland increased by $1.6 million, or 9843.8%, and by $4.6 million, or 1465.9%.~~

~~Corporate and Other decreased by ($0.9) million, or (36.8%), and by ($3.7) million, or (45.7%).~~

United States decreased by ($5.0) million, or (302.0%), and by ($31.4) million, or (1053.4%).

Canada decreased by ($6.1) million, or (125.2%), and by ($11.5) million, or (134.0%).

Poland decreased by ($3.2) million, or (315.6%), and by ($4.6) million, or (170.9%).

Corporate and Other increased by $9.6 million, or 193.6%, and by $7.6 million, or 92.0%.

Net earnings decreased by ($~~1.2)~~12.0) million, or ~~(70.6%~~(2131.3%), and by ($~~1.9)~~59.0) million, or ~~(65.9%~~(11722.9%), for the three and ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. 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~~Non-US GAAP Measures – Adjusted EBITDA

We define Adjusted EBITDA as net earnings (loss) attributable to Century Casinos, Inc. shareholders before interest expense (income), net, income taxes (benefit), depreciation and amortization, non-controlling ~~interest~~interests net earnings ~~(losses)~~(loss) 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, cost recovery income and other, gain on business combination and certain other one-time ~~items.~~transactions. Expense related to the Master Lease is included in the interest expense (income), net line item. 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) attributable to Century Casinos, Inc. shareholders 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.~~generally accepted accounting principles (“US GAAP”). Adjusted EBITDA is not considered a measure of performance recognized under US GAAP.

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~~reportable segments by eliminating the ~~above mentioned~~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, 2019											For the three months ended June 30, 2020
Amounts in thousands		Canada		United States		Poland		Corporate and Other		Total			United States		Canada		Poland		Corporate and Other		Total
Net earnings (loss) attributable to Century Casinos, Inc. shareholders		$	1,623	$	1,348	$	775	$	(3,264)	$	482
Net (loss) earnings attributable to Century Casinos, Inc. shareholders													$	(10,271)	$	(1,781)	$	(1,246)	$	691	$	(12,607)
Interest expense (income), net(1)			1,346		—		51		19		1,416			6,954		435		(14)		3,204		10,579
Income taxes (benefit)			367		465		518		(217)		1,133
Income (benefit) taxes														—		(44)		(292)		918		582
Depreciation and amortization			1,327		488		797		217		2,829			4,246		1,289		735		135		6,405
Net earnings attributable to non-controlling interests			179		—		386		—		565
Net earnings (loss) attributable to non-controlling interests														—		34		(624)		—		(590)
Non-cash stock-based compensation			—		—		—		358		358			—		—		—		249		249
Loss (gain) on foreign currency transactions, cost recovery income and other			12		—		(139)		11		(116)			1,157		135		(25)		(7,631)		(6,364)
Loss on disposition of fixed assets			—		—		85		44		129
(Gain) on disposition of fixed assets														—		(69)		—		—		(69)
Acquisition costs			—		—		—		297		297			—		—		—		53		53
Adjusted EBITDA		$	4,854	$	2,301	$	2,473	$	(2,535)	$	7,093		$	2,086	$	(1)	$	(1,466)	$	(2,381)	$	(1,762)

(1)Expense of $7.0 million related to the Master Lease is included in interest expense (income), net in the United States segment. Expense of $0.4 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the Master Lease and CDR land lease were $4.2 million and $0.4 million, respectively, for the period presented.


	For the three months ended September 30, 2018											For the three months ended June 30, 2019
Amounts in thousands		Canada		United States		Poland		Corporate and Other		Total			United States		Canada		Poland		Corporate and Other		Total
Net earnings (loss) attributable to Century Casinos, Inc. shareholders		$	1,668	$	1,578	$	(81)	$	(1,525)	$	1,640		$	1,236	$	2,536	$	425	$	(4,762)	$	(565)
Interest expense (income), net(1)			854		—		42		(66)		830			—		1,320		45		28		1,393
Income taxes (benefit)			880		543		204		(836)		791			406		778		416		(230)		1,370
Depreciation and amortization			762		545		717		299		2,323			527		1,059		716		141		2,443
Net earnings (loss) attributable to non-controlling interests			218		—		(40)		(23)		155
Net earnings attributable to non-controlling interests														—		681		213		29		923
Non-cash stock-based compensation			—		—		—		266		266			—		—		—		359		359
Gain on foreign currency transactions and cost recovery income			(1)		—		(109)		(72)		(182)
(Gain) loss on foreign currency transactions and cost recovery income														—		(432)		(78)		5		(505)
Loss on disposition of fixed assets			3		—		169		—		172			1		2		248		272		523
Pre-opening expenses			446		—		—		—		446
Other one-time income (1)			—		—		—		(91)		(91)
Acquisition costs														—		—		—		768		768
Adjusted EBITDA		$	4,830	$	2,666	$	902	$	(2,048)	$	6,350		$	2,170	$	5,944	$	1,985	$	(3,390)	$	6,709

(1)Expense of $0.6 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the CDR land lease were $0.5 million for the period presented.

‎

~~(1)~~

~~Other one-time income relates to an arbitration award from LOT Polish Airlines in July 2018.~~

For the nine months ended September 30, 2019
Amounts in thousands

Canada

United States

Poland

Corporate and Other

Total
Net earnings (loss) attributable to Century Casinos, Inc. shareholders

$
5,704

$
3,564

$
2,115

$
(10,398)

$
985
Interest expense (income), net

3,856

—

142

65

4,063
Income taxes (benefit)

1,913

1,229

1,395

(1,318)

3,219
Depreciation and amortization

3,184

1,573

2,284

657

7,698
Net earnings (loss) attributable to non-controlling interests

1,099

—

1,056

(12)

2,143
Non-cash stock-based compensation

—

—

—

979

979
(Gain) loss on foreign currency transactions, cost recovery income and other

(465)

—

(419)

5

(879)
(Gain) loss on disposition of fixed assets

(1)

17

338

342

696
Acquisition costs

—

—

—

1,064

1,064
Pre-opening expenses

538

—

—

—

538
Adjusted EBITDA

$
15,828

$
6,383

$
6,911

$
(8,616)

$
20,506

For the nine months ended September 30, 2018
Amounts in thousands

Canada

United States

Poland

Corporate 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 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 (1)

—

—

—

(91)

(91)
Adjusted EBITDA

$
14,534

$
6,477

$
3,158

$
(6,593)

$
17,576

~~(1)~~

~~Other one-time income relates to an arbitration award from LOT Polish Airlines in July 2018.~~

4245


	For the six months ended June 30, 2020
Amounts in thousands		United States		Canada		Poland		Corporate and Other		Total
Net loss attributable to Century Casinos, Inc. shareholders		$	(43,659)	$	(5,987)	$	(1,218)	$	(7,599)	$	(58,463)
Interest expense (income), net ⁽¹⁾			14,235		979		17		6,713		21,944
Income taxes (benefit)			1,023		1,813		(247)		517		3,106
Depreciation and amortization			8,505		2,628		1,501		265		12,899
Net earnings (loss) attributable to non-controlling interests			—		214		(609)		—		(395)
Non-cash stock-based compensation			—		—		—		236		236
Loss (gain) on foreign currency transactions, cost recovery income and other			30,746		3,447		147		(6,046)		28,294
(Gain) loss on disposition of fixed assets			—		(69)		2		2		(65)
Acquisition costs			—		—		—		266		266
Adjusted EBITDA		$	10,850	$	3,025	$	(407)	$	(5,646)	$	7,822

(1)Expense of $14.2 million related to the Master Lease is included in interest expense (income), net in the United States segment. Expense of $0.9 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the Master Lease and CDR land lease were $10.4 million and $0.9 million, respectively, for the period presented.


	For the six months ended June 30, 2019
Amounts in thousands		United States		Canada		Poland		Corporate and Other		Total
Net earnings (loss) attributable to Century Casinos, Inc. shareholders		$	2,215	$	4,085	$	1,339	$	(7,136)	$	503
Interest expense (income), net ⁽¹⁾			—		2,511		91		45		2,647
Income taxes (benefit)			764		1,542		876		(1,096)		2,086
Depreciation and amortization			1,086		1,856		1,487		439		4,868
Net earnings (loss) attributable to non-controlling interests			—		921		669		(12)		1,578
Non-cash stock-based compensation			—		—		—		620		620
Gain on foreign currency transactions and cost recovery income			—		(476)		(280)		(7)		(763)
Loss (gain) on disposition of fixed assets			17		(3)		253		300		567
Acquisition costs			—		—		—		768		768
Pre-opening expenses			—		538		—		—		538
Adjusted EBITDA		$	4,082	$	10,974	$	4,435	$	(6,079)	$	13,412

(1)Expense of $1.1 million related to the CDR land lease is included in interest expense (income), net in the Canada segment. Cash payments related to the CDR land lease were $1.0 million for the period presented.

‎

~~Non-GAAP~~Non-US 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, (loss) 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 US 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~~three-month periods are presented above. Constant Currency results are not considered a measure of performance recognized under US GAAP. The Constant Currency results are presented below.

For the three months

For the nine months

ended September 30,

ended September 30,

Amounts in thousands

2019

2018

% Change

2019

2018

% Change
Net operating revenue as reported (GAAP)

$
52,935

$
43,564

22%

$
150,990

$
123,834

22%
Foreign currency impact vs. 2018

1,278

6,639

Net operating revenue constant currency (non-GAAP)

$
54,213

$
43,564

24%

$
157,629

$
123,834

27%

Earnings from operations (GAAP)

$
3,480

$
3,234

8%

$
9,524

$
7,484

27%
Foreign currency impact vs. 2018

69

599

Earnings from operations constant currency (non-GAAP)

$
3,549

$
3,234

10%

$
10,123

$
7,484

35%

Net earnings attributable to Century Casinos, Inc. shareholders as reported (GAAP)

$
482

$
1,640

(71%)

$
985

$
2,887

(66%)
Foreign currency impact vs. 2018

16

206

Net earnings attributable to Century Casinos, Inc. shareholders constant currency (non-GAAP)

$
498

$
1,640

(70%)

$
1,191

$
2,887

(59%)


	For the three months					For the six months
	ended June 30,					ended June 30,
Amounts in thousands		2020		2019	% Change		2020		2019	% Change
Net operating revenue as reported (US GAAP)	$	36,103	$	52,445	(31%)	$	123,760	$	98,057	26%
Foreign currency impact vs. 2019		474					989
Net operating revenue constant currency (non-US GAAP)	$	36,577	$	52,445	(30%)	$	124,749	$	98,057	27%

(Loss) earnings from operations (US GAAP)	$	(2,114)	$	2,598	(181%)	$	(33,887)	$	6,044	(661%)
Foreign currency impact vs. 2019		540					446
(Loss) earnings from operations constant currency (non-US GAAP)	$	(1,574)	$	2,598	(161%)	$	(33,441)	$	6,044	(653%)

Net (loss) earnings attributable to Century Casinos, Inc. shareholders as reported (US GAAP)	$	(12,607)	$	(565)	(2131%)	$	(58,463)	$	503	(11723%)
Foreign currency impact vs. 2019		413					159
Net (loss) earnings attributable to Century Casinos, Inc. shareholders constant currency (non-US GAAP)	$	(12,194)	$	(565)	(2058%)	$	(58,304)	$	503	(11691%)

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~~Non-US 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, 2019		September 30, 2018		June 30, 2020		June 30, 2019
Total long-term debt, including current portion	$	71,069	$	53,285	$	194,149	$	72,057
Deferred financing costs		387		250		9,846		411
Total principal	$	71,456	$	53,535	$	203,995	$	72,468
Less: Cash and cash equivalents	$	44,029	$	46,818	$	51,641	$	47,000
Net Debt	$	27,427	$	6,717	$	152,354	$	25,468

‎

4347

Reportable Segments

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


Canada
United States
	For the three months							For the nine months							For the three months							For the six months
	ended September 30,						%	ended September 30,						%	ended June 30,						%	ended June 30,						%
Amounts in thousands		2019		2018		Change	Change		2019		2018		Change	Change		2020		2019		Change	Change		2020		2019		Change	Change
Gaming	$	13,252	$	10,337	$	2,915	28.2%	$	36,834	$	30,190	$	6,644	22.0%	$	21,095	$	7,381	$	13,714	185.8%	$	67,631	$	14,179	$	53,452	377.0%
Hotel		119		129		(10)	(7.8%)		365		396		(31)	(7.8%)		476		373		103	27.6%		2,209		694		1,515	218.3%
Food and Beverage		4,021		2,691		1,330	49.4%		10,118		7,713		2,405	31.2%		774		949		(175)	(18.4%)		4,528		1,811		2,717	150.0%
Other		4,671		2,526		2,145	84.9%		13,036		7,391		5,645	76.4%		1,487		106		1,381	1302.8%		2,894		190		2,704	1423.2%
Net Operating Revenue		22,063		15,683		6,380	40.7%		60,353		45,690		14,663	32.1%		23,832		8,809		15,023	170.5%		77,262		16,874		60,388	357.9%
Gaming Expenses		(3,974)		(3,040)		934	30.7%		(10,372)		(9,004)		1,368	15.2%		(11,813)		(3,409)		8,404	246.5%		(39,628)		(6,649)		32,979	496.0%
Hotel Expenses		(55)		(53)		2	3.8%		(162)		(151)		11	7.3%		(256)		(130)		126	96.9%		(930)		(258)		672	260.5%
Food and Beverage Expenses		(3,279)		(2,182)		1,097	50.3%		(8,575)		(6,349)		2,226	35.1%		(1,005)		(1,005)		—	—		(4,489)		(1,918)		2,571	134.0%
General and Administrative Expenses		(9,901)		(6,027)		3,874	64.3%		(25,953)		(16,793)		9,160	54.5%		(8,672)		(2,096)		6,576	313.7%		(21,365)		(3,984)		17,381	436.3%
Impairment - Goodwill and Intangible Assets																(1,157)		—		1,157	100.0%		(30,746)		—		30,746	100.0%
Total Operating Costs and Expenses		(18,536)		(12,064)		6,472	53.6%		(48,246)		(34,730)		13,516	38.9%		(27,149)		(7,167)		19,982	278.8%		(105,663)		(13,895)		91,768	660.4%
Earnings from Operations		3,527		3,619		(92)	(2.5%)		12,107		10,960		1,147	10.5%
Non-Controlling Interest		(179)		(218)		(39)	(17.9%)		(1,099)		(546)		553	101.3%
Net Earnings Attributable to Century Casinos, Inc. Shareholders		1,623		1,668		(45)	(2.7%)		5,704		5,641		63	1.1%
(Loss) Earnings from Operations																(3,317)		1,642		(4,959)	(302.0%)		(28,401)		2,979		(31,380)	(1053.4%)
Net (Loss) Earnings Attributable to Century Casinos, Inc. Shareholders																(10,271)		1,236		(11,507)	(931.0%)		(43,659)		2,215		(45,874)	(2071.1%)
Adjusted EBITDA	$	4,854	$	4,830	$	24	0.5%	$	15,828	$	14,534	$	1,294	8.9%	$	2,086	$	2,170	$	(84)	(3.9%)	$	10,850	$	4,082	$	6,768	165.8%

We acquired MTR in West Virginia and CCG and CCV in Missouri in the Acquisition in December 2019.

Sports wagering in Colorado became legal on May 1, 2020. We have partnered with sports betting operators that will conduct sports wagering under two of our three Colorado master licenses for sports wagering held by our Colorado subsidiaries. One of these mobile sports betting apps launched in July 2020. Each agreement with the sports betting operators provides for a share of net gaming revenue and a minimum revenue guarantee each year.

Our US operations closed due to COVID-19 on March 17, 2020 and reopened between June 1, 2020 and June 17, 2020.The results below are presented to illustrate the impact of COVID-19 on net operating revenue in the United States segment for the six months ended June 30, 2020 compared to the six months ended June 30, 2019. We did not acquire the West Virginia and Missouri properties until December 2019.


Amounts in millions, except percentages	Jan	Feb	Mar	Apr	May	Jun	Q2	YTD
Colorado
2020	2.8	2.8	1.1	—	—	2.0	2.0	8.7
2019	2.6	2.5	3.0	2.8	3.0	3.0	8.8	16.9
	0.2	0.3	(1.9)	(2.8)	(3.0)	(1.0)	(6.8)	(8.2)
	7.7%	12.0%	(63.3%)	(100.0%)	(100.0%)	(33.3%)	(77.3%)	(48.5%)

West Virginia
2020	9.6	10.3	5.2	—	0.2	12.0	12.2	37.3

Missouri
2020	7.9	9.0	4.7	—	—	9.6	9.6	31.2

Preliminary net operating revenue estimates for July 2020 are $3.6 million for Colorado, $8.1 million for West Virginia and $8.1 million for Missouri.

‎

The results below are presented to illustrate the impact of COVID-19 on operating expenses in the United States segment for the six months ended June 30, 2020 compared to the six months ended June 30, 2019, excluding depreciation and amortization expense and impairment – goodwill and intangible assets.


Amounts in millions, except percentages	Jan	Feb	Mar	Apr	May	Jun	Q2	YTD
Colorado
2020	2.2	2.1	1.6	0.5	0.4	0.8	1.7	7.6
2019	2.1	2.0	2.1	2.2	2.2	2.2	6.6	12.8
	0.1	0.1	(0.5)	(1.7)	(1.8)	(1.4)	(4.9)	(5.2)
	4.8%	5.0%	(23.8%)	(77.3%)	(81.8%)	(63.6%)	(74.2%)	(40.6%)

West Virginia
2020	8.5	8.5	6.3	2.2	1.8	8.7	12.7	36.0

Missouri
2020	5.2	6.0	4.3	1.5	1.3	4.5	7.3	22.8

During the United States closures we suspended marketing initiatives, furloughed employees and reduced operating costs and expenses as much as possible. Additional savings related to gaming-related expenses. COVID-19 continues to impact results, and we are seeking to maintain operating costs at or below prior year levels for the remainder of 2020. In Colorado, we expect payroll costs will continue to trend below the prior year due to table game closures anticipated through at least mid-August 2020. We anticipate increasing our promotional offerings as needed to compete in the competitive markets in which we operate our US casinos. Special events at our properties have been cancelled or postponed, which will reduce advertising costs. We plan to continue to update our properties with enhancements to encourage social distancing and other measures to allow us to reopen additional gaming space and other facilities that currently are closed due to COVID-19 restrictions.

Estimated preliminary Adjusted EBITDA for July 2020 are $1.6 million for Colorado, $0.7 million for West Virginia and $3.2 million for Missouri.

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


Canada
	For the three months							For the six months
	ended June 30,						%	ended June 30,						%
Amounts in thousands		2020		2019		Change	Change		2020		2019		Change	Change
Gaming	$	2,077	$	13,649	$	(11,572)	(84.8%)	$	12,286	$	23,582	$	(11,296)	(47.9%)
Hotel		—		121		(121)	(100.0%)		83		246		(163)	(66.3%)
Food and Beverage		313		3,656		(3,343)	(91.4%)		2,812		6,097		(3,285)	(53.9%)
Other		2,329		4,562		(2,233)	(48.9%)		5,721		8,364		(2,643)	(31.6%)
Net Operating Revenue		4,719		21,988		(17,269)	(78.5%)		20,902		38,289		(17,387)	(45.4%)
Gaming Expenses		(12)		(3,456)		(3,444)	(99.7%)		(2,986)		(6,399)		(3,413)	(53.3%)
Hotel Expenses		2		(57)		(59)	(103.5%)		(48)		(107)		(59)	(55.1%)
Food and Beverage Expenses		(99)		(3,192)		(3,093)	(96.9%)		(2,486)		(5,295)		(2,809)	(53.1%)
General and Administrative Expenses		(4,550)		(9,341)		(4,791)	(51.3%)		(12,296)		(16,049)		(3,753)	(23.4%)
Impairment - Goodwill and Intangible Assets		—		—		—	—		(3,375)		—		3,375	100.0%
Total Operating Costs and Expenses		(5,948)		(17,105)		(11,157)	(65.2%)		(23,819)		(29,706)		(5,887)	(19.8%)
(Loss) Earnings from Operations		(1,229)		4,883		(6,112)	(125.2%)		(2,917)		8,583		(11,500)	(134.0%)
Non-Controlling Interest		(34)		(681)		(647)	(95.0%)		(1,973)		(921)		1,052	114.2%
Net (Loss) Earnings Attributable to Century Casinos, Inc. Shareholders		(1,781)		2,536		(4,317)	(170.2%)		(5,987)		4,085		(10,072)	(246.6%)
Adjusted EBITDA	$	(1)	$	5,944	$	(5,945)	(100.0%)	$	3,025	$	10,974	$	(7,949)	(72.4%)

In January 2019, CMR began operating the Northern Alberta off-track betting network. The CMR casino in Edmonton opened on April 1, 2019, and the first horse race was held on April 28, 2019.

~~In January 2019, we opened off-track betting (“OTB”) parlors in CRA and CSA.~~

~~Three Months Ended September 30, 2019 and 2018~~

~~The following discussion highlights results for the three months ended September 30, 2019 compared to the three months ended September 30, 2018.~~

Results in US dollars were impacted by ~~a 1.0%~~3.6% and 2.3% exchange rate ~~decrease~~decreases in the average rate between the US dollar and the Canadian dollar for the three and six months ended ~~September~~June 30, ~~2019~~2020 compared to the three and six months ended ~~September~~June 30, ~~2018.~~2019, respectively.

~~Revenue Highlights~~


	~~In CAD~~		~~In US dollars~~
	~~At CRA, net operating revenue increased by CAD 0.1 million, or 1.1%, due to revenue from the OTB parlor and increased food and beverage revenue.~~		~~At CRA, net operating revenue remained constant.~~
	~~At CSA, net operating revenue increased by CAD 0.1 million, or 2.6%, due to increased gaming and food and beverage revenue.~~		~~At CSA, net operating revenue remained constant.~~
	~~At CMR, net operating revenue was CAD 8.1 million for the three months ended September 30, 2019. CMR did not have any net operating revenue for the three months ended September 30, 2018.~~		~~At CMR, net operating revenue was $6.1 million for the three months ended September 30, 2019.~~
	~~At CAL, net operating revenue increased by CAD 0.1 million, or 2.7%, due to increased gaming revenue.~~		~~At CAL, net operating revenue remained constant.~~
	~~At CDR, net operating revenue increased by CAD 0.4 million, or 5.8%, due to increased gaming and food and beverage revenue.~~		~~At CDR, net operating revenue increased by $0.3 million, or 4.6%.~~

‎

4449

~~Operating Expense Highlights~~


	~~In CAD~~		~~In US dollars~~
	~~At CRA, operating expenses remained constant.~~		~~At CRA, operating expenses remained constant.~~
	~~At CSA, operating expenses remained constant.~~		~~At CSA, operating expenses remained constant.~~
	At CMR, operating expenses increased by CAD 8.1 million, or 1379.3%. Operating expenses increased by CAD 7.4 million due to expenses related to operating the REC and the Northern Alberta pari-mutuel OTB network, including payroll, marketing and general and administrative expenses. In addition, CMR had CAD 0.8 million in depreciation expense.		~~At CMR, operating expenses increased by $6.1 million, or 1362.3%.~~
	~~At CAL, operating expenses decreased by (CAD 0.1) million, or (3.1%), due to decreased marketing expenses resulting from a focus on cost savings.~~		~~At CAL, operating expenses decreased by ($0.1) million, or (4.1%).~~
	~~At CDR, operating expenses increased by CAD 0.8 million, or 15.2%, due to increased marketing and general and administrative expenses.~~		~~At CDR, operating expenses increased by $0.5 million, or 13.9%.~~

~~Earnings from~~Our Canadian operations ~~at CBS, which operates~~closed due to COVID-19 on March 17, 2020 and reopened on June 13, 2020. The results below are presented to illustrate the ~~Southern Alberta pari-mutuel OTB network, remained constant~~impact of COVID-19 on net operating revenue in the Canada segment for the ~~three~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~three~~six months ended ~~September~~June 30, ~~2018.~~ 2019.


Amounts in millions, except percentages	Jan	Feb	Mar	Apr	May	Jun	Q2	YTD
Edmonton - CAD
2020	4.8	5.3	3.0	0.4	0.5	3.0	3.9	17.0
2019	3.7	3.7	4.4	6.4	6.1	6.0	18.5	30.3
	1.1	1.6	(1.4)	(6.0)	(5.6)	(3.0)	(14.6)	(13.3)
	29.7%	43.2%	(31.8%)	(93.8%)	(91.8%)	(50.0%)	(78.9%)	(43.9%)
Edmonton - USD
2020	3.6	4.0	2.2	0.3	0.3	2.2	2.8	12.6
2019	2.8	2.8	3.3	4.7	4.6	4.5	13.8	22.7
	0.8	1.2	(1.1)	(4.4)	(4.3)	(2.3)	(11.0)	(10.1)
	28.6%	42.9%	(33.3%)	(93.6%)	(93.5%)	(51.1%)	(79.7%)	(44.5%)

Calgary - CAD
2020	3.3	3.5	1.7	0.2	0.4	2.0	2.6	11.1
2019	3.4	2.7	3.8	3.4	3.8	3.7	10.9	20.8
	(0.1)	0.8	(2.1)	(3.2)	(3.4)	(1.7)	(8.3)	(9.7)
	(2.9%)	29.6%	(55.3%)	(94.1%)	(89.5%)	(45.9%)	(76.1%)	(46.6%)
Calgary - USD
2020	2.6	2.6	1.2	0.2	0.3	1.4	1.9	8.3
2019	2.5	2.0	2.9	2.6	2.8	2.8	8.2	15.6
	0.1	0.6	(1.7)	(2.4)	(2.5)	(1.4)	(6.3)	(7.3)
	4.0%	30.0%	(58.6%)	(92.3%)	(89.3%)	(50.0%)	(76.8%)	(46.8%)

Preliminary net operating revenue estimates for July 2020 are CAD 4.4 million ($3.3 million based on the exchange rate on July 31, 2020) for Edmonton and CAD 2.7 million ($2.0 million based on the exchange rate on July 31, 2020) for Calgary.

The results below are presented to illustrate the impact of COVID-19 on operating expenses in the Canada segment for the six months ended June 30, 2020 compared to the six months ended June 30, 2019, excluding depreciation and amortization expense and impairment – goodwill and intangible assets.


Amounts in millions, except percentages	Jan	Feb	Mar	Apr	May	Jun	Q2	YTD
Edmonton - CAD
2020	3.9	4.0	3.7	1.1	1.0	2.0	4.1	15.7
2019	2.9	3.1	3.6	4.7	5.2	4.6	14.5	24.1
	1.0	0.9	0.1	(3.6)	(4.2)	(2.6)	(10.4)	(8.4)
	34.5%	29.0%	2.8%	(76.6%)	(80.8%)	(56.5%)	(71.7%)	(34.9%)
Edmonton - USD
2020	3.0	3.0	2.7	0.7	0.7	1.5	2.9	11.6
2019	2.2	2.4	2.7	3.5	3.8	3.5	10.8	18.1
	0.8	0.6	—	(2.8)	(3.1)	(2.0)	(7.9)	(6.5)
	36.4%	25.0%	—	(80.0%)	(81.6%)	(57.1%)	(73.1%)	(35.9%)

Calgary - CAD
2020	1.9	2.1	2.0	0.7	0.6	1.3	2.6	8.6
2019	2.0	2.0	2.1	2.2	2.4	2.4	7.0	13.1
	(0.1)	0.1	(0.1)	(1.5)	(1.8)	(1.1)	(4.4)	(4.5)
	(5.0%)	5.0%	(4.8%)	(68.2%)	(75.0%)	(45.8%)	(62.9%)	(34.4%)
Calgary - USD
2020	1.5	1.6	1.4	0.5	0.4	0.9	1.8	6.3
2019	1.5	1.5	1.6	1.6	1.8	1.8	5.2	9.8
	—	0.1	(0.2)	(1.1)	(1.4)	(0.9)	(3.4)	(3.5)
	—	6.7%	(12.5%)	(68.8%)	(77.8%)	(50.0%)	(65.4%)	(35.7%)

‎

During the Canadian closures we suspended marketing initiatives, furloughed employees and reduced operating costs and expenses as much as possible. Additional savings related to wage subsidies provided by the Canadian government. Because COVID-19 continues to impact results, and we are focusing on managing costs. We continue to look for synergies between our Canadian properties including prizes that are available to guests at all locations instead of at individual casinos only. We expect payroll costs will continue to trend below the prior year due to closures of table games, limited attendance allowed for horse racing and government wage subsidies through December 2020. We plan to continue to update our properties with enhancements to encourage social distancing and other measures to allow us to reopen additional gaming space and other facilities that currently are closed due to COVID-19 restrictions.

Estimated preliminary Adjusted EBITDA for July 2020 are CAD 2.1 million ($1.6 million based on the exchange rate on July 31, 2020) for Edmonton and CAD 1.2 million ($0.9 million based on the exchange rate on July 31, 2020) for Calgary.

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

~~Nine Months Ended September 30, 2019 and 2018~~

~~The following discussion highlights results for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.~~


Poland
	For the three months							For the six months
	ended June 30,						%	ended June 30,						%
Amounts in thousands		2020		2019		Change	Change		2020		2019		Change	Change
Gaming	$	6,748	$	19,875	$	(13,127)	(66.0%)	$	23,503	$	39,335	$	(15,832)	(40.2%)
Food and Beverage		64		214		(150)	(70.1%)		258		441		(183)	(41.5%)
Other		578		18		560	3111.1%		692		83		609	733.7%
Net Operating Revenue		7,390		20,107		(12,717)	(63.2%)		24,453		39,859		(15,406)	(38.7%)
Gaming Expenses		(4,641)		(14,012)		(9,371)	(66.9%)		(15,224)		(26,475)		(11,251)	(42.5%)
Food and Beverage Expenses		(364)		(142)		222	156.3%		(1,030)		(856)		174	20.3%
General and Administrative Expenses		(3,851)		(4,216)		(365)	(8.7%)		(8,608)		(8,346)		262	3.1%
Total Operating Costs and Expenses		(9,591)		(19,086)		(9,495)	(49.7%)		(26,363)		(37,164)		(10,801)	(29.1%)
(Loss) Earnings from Operations		(2,201)		1,021		(3,222)	(315.6%)		(1,910)		2,695		(4,605)	(170.9%)
Non-Controlling Interest		624		(213)		(837)	(393.0%)		609		(669)		(1,278)	(191.0%)
Net (Loss) Earnings Attributable to Century Casinos, Inc. Shareholders		(1,246)		425		(1,671)	(393.2%)		(1,218)		1,339		(2,557)	(191.0%)
Adjusted EBITDA	$	(1,466)	$	1,985	$	(3,451)	(173.9%)	$	(407)	$	4,435	$	(4,842)	(109.2%)

Results in US dollars were impacted by a 3.2% exchange rate decrease in the average rate between the US dollar and the Canadian dollar for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.

~~Revenue Highlights~~


	~~In CAD~~		~~In US dollars~~
	~~At CRA, net operating revenue increased by CAD 0.1 million, or 0.5%, due to the opening of the OTB parlor.~~		~~At CRA, net operating revenue decreased by ($0.4) million, or (2.7%).~~
	~~At CSA, net operating revenue increased by CAD 0.5 million, or 5.3%, due to increased gaming and food and beverage revenue.~~		~~At CSA, net operating revenue increased by $0.1 million, or 2.0%.~~
	~~At CMR, net operating revenue was CAD 18.9 million for the nine months ended September 30, 2019. CMR did not have any net operating revenue for the nine months ended September 30, 2018.~~		~~At CMR, net operating revenue was $14.2 million for the nine months ended September 30, 2019.~~
	~~At CAL, net operating revenue increased by CAD 0.5 million, or 5.9%, due to increased gaming revenue.~~		~~At CAL, net operating revenue increased by $0.1 million, or 2.4%.~~
	~~At CDR, net operating revenue increased by CAD 1.8 million, or 9.0%, due to increased gaming and food and beverage revenue.~~		~~At CDR, net operating revenue increased by $0.9 million, or 5.8%.~~

~~Operating Expense Highlights~~


	~~In CAD~~		~~In US dollars~~
	~~At CRA, operating expenses increased by CAD 0.1 million, or 0.4%, due to increased payroll expenses partially offset by decreased general and administrative expenses.~~		~~At CRA, operating expenses decreased by ($0.3) million, or (2.8%).~~
	~~At CSA, operating expenses remained constant.~~		~~At CSA, operating expenses decreased by ($0.2) million, or (3.5%).~~
	At CMR, operating expenses increased by CAD 18.9 million, or 1269.9%. Operating expenses increased by CAD 16.2 million related to expenses due to operating the REC, including payroll, marketing and general and administrative expenses. CMR had CAD 1.2 million in depreciation expense. In addition, CMR had CAD 1.5 million in expenses related to operating the Northern Alberta pari-mutuel OTB network from January to March 2019, prior to the REC opening.		~~At CMR, operating expenses increased by $14.2 million, or 1236.3%.~~
	At CAL, operating expenses decreased by (CAD 0.2) million, or (2.3%), due to decreased general and administrative expenses and marketing expenses resulting from a focus on cost savings partially offset by increased payroll expenses.		~~At CAL, operating expenses decreased by ($0.3) million, or (5.4%).~~
	~~At CDR, operating expenses increased by CAD 0.9 million, or 6.7%, due to increased marketing and general and administrative expenses.~~		~~At CDR, operating expenses increased by $0.4 million, or 3.6%.~~

~~Earnings from operations at CBS remained constant for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.~~

~~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.~~

United States

For the three months

For the nine months

ended September 30,

%

ended September 30,

%
Amounts in thousands

2019

2018

Change

Change

2019

2018

Change

Change
Gaming

$
7,637

$
7,615

$
22

0.3%

$
21,815

$
21,056

$
759

3.6%
Hotel

443

446

(3)

(0.7%)

1,137

1,138

(1)

(0.1%)
Food and Beverage

1,022

1,194

(172)

(14.4%)

2,833

3,063

(230)

(7.5%)
Other

97

105

(8)

(7.6%)

288

285

3

1.1%
Net Operating Revenue

9,199

9,360

(161)

(1.7%)

26,073

25,542

531

2.1%
Gaming Expenses

(3,496)

(3,465)

31

0.9%

(10,145)

(9,746)

399

4.1%
Hotel Expenses

(145)

(144)

1

0.7%

(403)

(400)

3

0.8%
Food and Beverage Expenses

(1,043)

(1,087)

(44)

(4.0%)

(2,961)

(3,008)

(47)

(1.6%)
General and Administrative Expenses

(2,214)

(1,998)

216

10.8%

(6,198)

(5,912)

286

4.8%
Total Operating Costs and Expenses

(7,386)

(7,239)

147

2.0%

(21,280)

(20,697)

583

2.8%
Earnings from Operations

1,813

2,121

(308)

(14.5%)

4,793

4,845

(52)

(1.1%)
Net Earnings Attributable to Century Casinos, Inc. Shareholders

1,348

1,578

(230)

(14.6%)

3,564

3,602

(38)

(1.1%)
Adjusted EBITDA

$
2,301

$
2,666

$
(365)

(13.7%)

$
6,383

$
6,477

$
(94)

(1.5%)

~~Three Months Ended September 30, 2019 and 2018~~

~~The following discussion highlights results for the three months ended September 30, 2019 compared to the three months ended September 30, 2018.~~

~~Market Share Highlights~~

~~The Central City market increased by 0.6% and CTL’s share of the Central City market was 27.2% compared to 26.3% for the three months ended September 30, 2018.~~

~~The Cripple Creek market increased by 1.6% and CRC’s share of the Cripple Creek market was 10.1% compared to 11.1% for the three months ended September 30, 2018.~~

~~Revenue Highlights~~

~~At CTL, net operating revenue increased by $0.1 million, or 2.7%, due to increased gaming revenue partially offset by decreased food and beverage revenue.~~

~~At CRC, net operating revenue decreased by ($0.3) million, or (7.3%), due to decreased gaming and food and beverage revenue.~~

~~Operating Expense Highlights~~

~~At CTL, operating expenses increased by $0.1 million, or 3.0%, due to increased gaming-related expenses.~~

~~At CRC, operating expenses remained constant.~~

~~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, 2019 and 2018~~

~~The following discussion highlights results for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.~~

~~Market Share Highlights~~

~~The Central City market increased by 1.6% and CTL’s share of the Central City market was 26.8% compared to 26.6% for the nine months ended September 30, 2018.~~

~~The Cripple Creek market increased by 2.2% and CRC’s share of the Cripple Creek market was 10.7% compared to 10.5% for the nine months ended September 30, 2018.~~

~~Revenue Highlights~~

~~At CTL, net operating revenue increased by $0.3 million, or 1.9%, due to increased gaming revenue partially offset by decreased food and beverage revenue.~~

~~At CRC, net operating revenue increased by $0.2 million, or 2.3%, due to increased gaming revenue.~~

~~Operating Expense Highlights~~

~~At CTL, operating expenses increased by $0.2 million, or 1.6%, due to gaming-related expenses.~~

~~At CRC, operating expenses increased by $0.4 million, or 4.8%, due to increased gaming-related and payroll 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.~~

Poland

For the three months

For the nine months

ended September 30,

%

ended September 30,

%
Amounts in thousands

2019

2018

Change

Change

2019

2018

Change

Change
Gaming

$
20,107

$
16,569

$
3,538

21.4%

$
59,443

$
48,010

$
11,433

23.8%
Food and Beverage

215

205

10

4.9%

656

551

105

19.1%
Other

38

(27)

65

240.7%

122

134

(12)

(9.0%)
Net Operating Revenue

20,360

16,747

3,613

21.6%

60,221

48,695

11,526

23.7%
Gaming Expenses

(12,563)

(11,000)

1,563

14.2%

(39,038)

(31,455)

7,583

24.1%
Food and Beverage Expenses

(695)

(687)

8

1.2%

(1,550)

(1,964)

(414)

(21.1%)
General and Administrative Expenses

(4,714)

(4,327)

387

8.9%

(13,060)

(13,550)

(490)

(3.6%)
Total Operating Costs and Expenses

(18,769)

(16,731)

2,038

12.2%

(55,932)

(49,009)

6,923

14.1%
Earnings (Loss) from Operations

1,591

16

1,575

9843.8%

4,289

(314)

4,603

1465.9%
Non-Controlling Interest

(386)

40

426

1065.0%

(1,056)

164

1,220

743.9%
Net Earnings (Loss) Attributable to Century Casinos, Inc. Shareholders

775

(81)

856

1056.8%

2,115

(329)

2,444

742.9%
Adjusted EBITDA

$
2,473

$
902

$
1,571

174.2%

$
6,911

$
3,158

$
3,753

118.8%

In Poland, casino gaming licenses are granted for a term of six years. These licenses are not renewable. ~~Once~~When a gaming license ~~has expired,~~expires, any gaming company can apply for a new license for that city. The casino at the LIM Center in Warsaw reopened in August 2019. We expanded the gaming floor at the Marriott Hotel and added an additional six table games in May 2019.

~~In April 2019, CPL combined the two licenses used to~~We currently operate three casinos in Warsaw. There is proposed legislation to split the Warsaw ~~Marriott Hotel into one license and transferred~~voivodship (or province), which could limit the ~~remaining license~~number of casino licenses available in Warsaw in the future. If the legislation is passed, it is expected that as licenses in Warsaw expire a new tender would not be offered until the maximum number of licenses available is reached. Any change to the ~~Hilton Hotel~~number of licenses available in ~~Warsaw.~~

~~Effective April 2017, the Polish gaming laws permit online gaming and slot arcades operated through~~ a ~~state-run company. The first slot arcades opened in Poland in June 2018, and online gaming began operating in December 2018. We~~city could have ~~not experienced~~ a negative impact on results if we are unable to renew our ~~results of operations in Poland from slot arcades and online gaming; however, increased competition could occur and adversely affect our results of operations in the future.~~casino licenses.

~~Three Months Ended September 30, 2019 and 2018~~

Results in US dollars were impacted by ~~a 5.1% decrease~~7.5% and 5.6% decreases in the average exchange rate between the US dollar and Polish zloty for the three and six months ended ~~September~~June 30, ~~2019~~2020 compared to the three and six months ended ~~September~~June 30, ~~2018.~~2019, respectively.

‎

The ~~following is a summary of changes in and comparability of the~~ casinos in Poland ~~operated by CPL~~closed due to COVID-19 on March 13, 2020 and reopened on May 18, 2020. The results below are presented to illustrate the impact of COVID-19 on net operating revenue in the Poland segment for the ~~three~~six months ended ~~September~~June 30, 2020 compared to the six months ended June 30, 2019.


Amounts in millions, except percentages	Jan	Feb	Mar	Apr	May	Jun	Q2	YTD
PLN
2020	26.6	26.2	13.8	(0.3)	8.1	21.8	29.6	96.2
2019	22.7	22.8	29.3	24.7	25.2	26.7	76.6	151.4
	3.9	3.4	(15.5)	(25.0)	(17.1)	(4.9)	(47.0)	(55.2)
	17.2%	14.9%	(52.9%)	(101.2%)	(67.9%)	(18.4%)	(61.4%)	(36.5%)
USD
2020	7.0	6.7	3.4	—	1.9	5.5	7.4	24.5
2019	6.1	6.0	7.7	6.5	6.5	7.1	20.1	39.9
	0.9	0.7	(4.3)	(6.5)	(4.6)	(1.6)	(12.7)	(15.4)
	14.8%	11.7%	(55.8%)	(100.0%)	(70.8%)	(22.5%)	(63.2%)	(38.6%)

Preliminary net operating revenue estimates for July 2020 are PLN 20.1 million ($5.4 million based on the exchange rate on July 31, 2020) for Poland.

The results below are presented to illustrate the impact of COVID-19 on operating expenses in the Poland segment for the six months ended June 30, 2020 compared to the six months ended June 30, 2019, ~~compared~~excluding depreciation and amortization expense and impairment – goodwill and intangible assets.


Amounts in millions, except percentages	Jan	Feb	Mar	Apr	May	Jun	Q2	YTD
PLN
2020	24.5	23.9	14.1	6.0	11.8	18.1	35.9	98.4
2019	20.1	20.7	24.7	22.6	23.1	23.3	69.0	134.5
	4.4	3.2	(10.6)	(16.6)	(11.3)	(5.2)	(33.1)	(36.1)
	21.9%	15.5%	(42.9%)	(73.5%)	(48.9%)	(22.3%)	(48.0%)	(26.8%)
USD
2020	6.4	6.1	3.5	1.4	2.9	4.6	8.9	24.9
2019	5.4	5.5	6.4	5.9	6.0	6.2	18.1	35.4
	(1.0)	(0.6)	2.9	4.5	3.1	1.6	9.2	10.5
	18.5%	10.9%	(45.3%)	(76.3%)	(51.7%)	(25.8%)	(50.8%)	(29.7%)

During the closures of our Poland casinos we reduced operating costs and expenses as much as possible. Additional cost savings related to ~~2018.~~wage subsidies were provided by the Polish government. COVID-19 continues to impact results, and we are focusing on analyzing staffing needs to match customer volumes to continue to manage our costs.

~~The casino at the Manufaktura Entertainment Complex in Lodz operated one additional month for the three months ended September 30, 2019 compared to the same period of 2018.~~

~~The casino at the LIM Center in Warsaw reopened in August 2019. The casino did not operate in 2018.~~

~~All other casinos were operational for the full three months ended September 30, 2019 and 2018.~~

~~Revenue Highlights~~


	~~In PLN~~		~~In US dollars~~
	~~Net operating revenue increased by PLN 17.1 million, or 27.6%, due to the additional gaming revenue from all of the casinos that were operational in 2019 compared to 2018 as described above.~~		~~Net operating revenue increased by $3.6 million, or 21.6%.~~

Estimated preliminary Adjusted EBITDA for Poland for July 2020 is PLN 1.5 million ($0.4 million based on the exchange rate on July 31, 2020).

~~Operating Expense Highlights~~


	~~In PLN~~		~~In US dollars~~
	Operating expenses increased by PLN 11.0 million, or 17.8%, primarily due to increased gaming tax expense of PLN 7.9 million resulting from the increase in gaming revenue and increased payroll costs of PLN 2.6 million.		~~Operating expenses increased by $2.0 million, or 12.2%.~~

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

~~Nine Months Ended September 30, 2019~~
‎


Corporate and Other
	For the three months							For the six months
	ended June 30,						%	ended June 30,						%
Amounts in thousands		2020		2019		Change	Change		2020		2019		Change	Change
Gaming	$	2	$	1,081	$	(1,079)	(99.8%)	$	795	$	2,230	$	(1,435)	(64.3%)
Food and Beverage		—		235		(235)	(100.0%)		105		456		(351)	(77.0%)
Other		160		225		(65)	(28.9%)		243		349		(106)	(30.4%)
Net Operating Revenue		162		1,541		(1,379)	(89.5%)		1,143		3,035		(1,892)	(62.3%)
Gaming Expenses		(16)		(841)		(825)	(98.1%)		(687)		(1,761)		(1,074)	(61.0%)
Food and Beverage Expenses		—		(211)		(211)	(100.0%)		(133)		(411)		(278)	(67.6%)
General and Administrative Expenses		4,622		(5,310)		(9,932)	(187.0%)		283		(8,636)		(8,919)	(103.3%)
Impairment - Goodwill and Intangible Assets		—		—		—	—		(1,000)		—		1,000	100.0%
Total Operating Costs and Expenses		4,471		(6,503)		(10,974)	(168.8%)		(1,802)		(11,247)		(9,445)	(84.0%)
Loss from Equity Investment		—		14		(14)	(100.0%)		—		(1)		1	100.0%
Earnings (Loss) from Operations		4,633		(4,948)		9,581	193.6%		(659)		(8,213)		7,554	92.0%
Non-Controlling Interest		—		(29)		29	100.0%		—		12		(12)	(100.0%)
Net Earnings (Loss) Attributable to Century Casinos, Inc. Shareholders		691		(4,762)		5,453	114.5%		(7,599)		(7,136)		(463)	(6.5%)
Adjusted EBITDA	$	(2,381)	$	(3,390)	$	1,009	29.8%	$	(5,646)	$	(6,079)	$	433	7.1%

We permanently closed the casino at CCB on March 17, 2020. CCB entered creditor’s voluntary liquidation in May 2020 and ~~2018~~

~~Results in US dollars were impacted by~~was deconsolidated as a ~~7.6% decrease in~~subsidiary during the ~~average exchange rate between the US dollar and Polish zloty for the nine~~three months ended ~~September~~June 30, ~~2019 compared~~2020. For additional information related to ~~the nine months ended September~~CCB, see Note 1, “Description of Business and Basis of Presentation,” to our condensed consolidated financial statements in Part I, Item 1 of this report.

The cruise ships on which our ship-based casinos are located stopped sailing around March 10, 2020 due to COVID-19. As of June 30, ~~2018.~~

~~The following is~~2020, we had a ~~summary of changes in and comparability~~concession agreement with TUI Cruises for one ship-based casino. Our concession agreements for four of the ship-based casinos that we operated prior to their COVID-19 related closures in ~~Poland operated by CPL for the nine months~~March 2020 ended ~~September 30, 2019 compared~~on May 12, 2020. We are negotiating a concession agreement with TUI Cruises to ~~the nine months ended September 30, 2018.~~operate three ship-based casinos through May 2021

~~The casino at the Dwor Kosciuszko Hotel in Krakow operated four additional months during 2019.~~

~~The casino at the Manufaktura Entertainment Complex in Lodz operated six additional months during 2019.~~

~~The casino at the HP Park Plaza Hotel in Wroclaw operated three additional months during 2019.~~

~~The casino at the Park Inn by Radisson in Katowice operated four additional months during 2019.~~

~~The casino at the LIM Center in Warsaw reopened in August 2019. The casino did not operate in 2018.~~

~~The casinos at the Hotel Andersia in Poznan and the Hotel Plock in Plock were closed in April 2018 and February 2018, respectively.~~

~~All other casinos were operational for the full nine months ended September 30, 2019 and 2018.~~

~~Revenue Highlights~~


	~~In PLN~~		~~In US dollars~~
	Net operating revenue increased by PLN 57.2 million, or 33.0%, due to the additional gaming revenue from the casinos that were operational in 2019 compared to 2018, partially offset by the decrease in revenue from the closure of the Poznan and Plock casinos as described above.		~~Net operating revenue increased by $11.5 million, or 23.7%.~~

~~Operating Expense Highlights~~


	~~In PLN~~		~~In US dollars~~
	Operating expenses increased by PLN 39.5 million, or 22.6%, primarily due to increased gaming tax expense of PLN 28.5 million resulting from the increase in gaming revenue, increased general and administrative expenses and marketing costs of PLN 6.0 million from the casinos that were operational in 2019 compared to 2018 and increased payroll costs of PLN 6.0 million. CPL incurred PLN 2.0 million in additional expense related to the disposal of assets at the Poznan and Plock casinos for the nine months ended September 30, 2018.		~~Operating expenses increased by $6.9 million, or 14.1%.~~

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

Corporate and Other

For the three months

For the nine months

ended September 30,

%

ended September 30,

%
Amounts in thousands

2019

2018

Change

Change

2019

2018

Change

Change
Gaming

$
1,023

$
1,462

$
(439)

(30.0%)

$
3,253

$
3,339

$
(86)

(2.6%)
Food and Beverage

167

200

(33)

(16.5%)

623

303

320

105.6%
Other

123

112

11

9.8%

467

265

202

76.2%
Net Operating Revenue

1,313

1,774

(461)

(26.0%)

4,343

3,907

436

11.2%
Gaming Expenses

(1,556)

(985)

571

58.0%

(3,318)

(2,461)

857

34.8%
Food and Beverage Expenses

(394)

(192)

202

105.2%

(805)

(387)

418

108.0%
General and Administrative Expenses

(2,597)

(2,822)

(225)

(8.0%)

(11,227)

(8,526)

2,701

31.7%
Total Operating Costs and Expenses

(4,764)

(4,298)

466

10.8%

(16,007)

(11,915)

4,092

34.3%
Earnings (Loss) from Equity Investment

—

2

(2)

(100.0%)

(1)

1

(2)

(200.0%)
Losses from Operations

(3,451)

(2,522)

(929)

(36.8%)

(11,665)

(8,007)

(3,658)

(45.7%)
Non-Controlling Interest

—

23

(23)

(100.0%)

12

54

(42)

(77.8%)
Net (Loss) Attributable to Century Casinos, Inc. Shareholders

(3,264)

(1,525)

(1,739)

(114.0%)

(10,398)

(6,027)

(4,371)

(72.5%)
Adjusted EBITDA

$
(2,535)

$
(2,048)

$
(487)

(23.8%)

$
(8,616)

$
(6,593)

$
(2,023)

(30.7%)

We have mutually agreed with the cruise lines through which we have concession agreements not to extend certain agreements at their termination dates. The following is a summary of concession agreements that ended in ~~2018~~2019 and ~~the first nine months of 2019.~~2020.


Cruise Ship	Month of ~~Termination~~Contract Expiration
~~Mein Schiff 1~~Wind Spirit	~~April 2018~~January 2019
~~Marella Discovery~~Star Pride	~~October 2018~~March 2019
Wind ~~Star~~Surf	~~November 2018~~April 2019
~~Wind Spirit~~Star Breeze	~~January~~April 2019
Star ~~Pride~~Legend	~~March~~May 2019
~~Wind Surf~~Mein Schiff 3	~~April 2019~~
~~Star Breeze~~	~~April 2019~~
~~Star Legend~~	May ~~2019~~2020

In addition, we evaluated our agreement with Diamond Cruises related to the operation of the ship-based casino onboard the Glory Sea. We determined that it was more likely than not that the agreement was impaired and wrote-down $1.0 million in property and equipment and net receivables in June 2019. The ship is currently not sailing, and we have not determined whether we will continue to operate this ship-based casino if the ship begins sailing again. We are considering continuing to exit from operating ship-based casinos on cruise ships as the contracts expire.

~~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 hotel and international entertainment and gaming club in the Cao Bang province of Vietnam, under which GHL manages MCL and owns 9.21% of its outstanding shares. We sold our interest in GHL to the unaffiliated shareholders of GHL in May 2019 for a $0.7 million non-interest bearing promissory note. We recognized a loss on sale of less than ($0.1) million in general and administrative expenses on our condensed consolidated statement of (loss) earnings for the ~~nine months~~year ended ~~September 30,~~December 31, 2019. We consolidated GHL as a majority-owned subsidiary for which we have a controlling financial interest and accounted for GHL’s interest in MCL as an equity investment through May 2019. The sale of our equity interest in GHL also ended our equity interest in MCL.

Three Months Ended ~~September~~June 30, ~~2019~~2020 and ~~2018~~2019

The following discussion highlights results for the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018. Results~~2019.

Revenue Highlights

Non-Corporate Reporting Units

Net operating revenue decreased due to the casino closures at CCB ~~were impacted by~~and on the ships.

Operating Expense Highlights

Non-Corporate Reporting Units

Total operating costs and expenses decreased due to the casino closures at CCB and on the ships. In addition, the deconsolidation of CCB resulted in a ~~5.7% exchange rate decrease~~gain of $7.4 million that we recognized in general and administrative expenses on our statement of (loss) earnings for the three months ended ~~September~~June 30, ~~2019 compared to the three months ended September 30, 2018.~~2020.

~~Revenue Highlights~~

Net operating revenue for Cruise Ships & Other decreased by ($0.1) million, or (16.2%), due to decreases in gaming revenue resulting from the termination of certain of our concession agreements for the operation of ship-based casinos as detailed above.

Net operating revenue for CCB decreased by (GBP 0.2) million, or (28.6%), due to lower gaming revenue as a result of enforcement of anti-money laundering and social responsibility regulations that require us to limit customers play until the required information is provided by the player. This reduction in customer play has impacted the gaming market throughout the United Kingdom. In addition, concerns about the United Kingdom’s expected withdrawal from the European Union, commonly referred to as “Brexit”, have reduced discretionary consumer spending in the market. In US dollars, net operating revenue decreased by ($0.3) million, or (32.5%).

Corporate Reporting Units

~~Operating Expense Highlights~~

Operating expenses for Cruise Ships & Other decreased by ($0.2) million, or (34.4%), due to the termination of certain of our concession agreements for the operation of ship-based casinos as detailed above.

Operating expenses for CCB decreased by (GBP 0.2) million, or (16.7%), due to decreased payroll expenses as the result of cost saving initiatives. In US dollars, operating expenses decreased by ($0.3) million, or (21.0%).

~~Losses from operations attributable to our Corporate Other operating segment, which includes~~Our corporate reporting units include certain other corporate and management ~~operations, increased~~operations. Total operating costs and expenses decreased by ($~~1.0)~~0.6) million, or ~~(51.5%~~(19.5%)~~, for the three months ended September 30, 2019 compared~~ due to the ~~three months ended September 30, 2018 primarily due to $0.4 million~~closures. During the closures, certain of our corporate staff voluntarily decreased their salaries. In addition, in ~~legal and other professional fees and~~2019 there were additional expenses related to the Acquisition ~~$0.1~~that did not reoccur in 2020.

Six Months Ended June 30, 2020 and 2019

The following discussion highlights results for the six months ended June 30, 2020 compared to the six months ended June 30, 2019.

Revenue Highlights

Non-Corporate Reporting Units

Net operating revenue decreased due to the casino closures at CCB and on the ships due to COVID-19.

Operating Expense Highlights

Non-Corporate Reporting Units

Total operating costs and expenses decreased due to casino closures at CCB and on the ships. In addition, the deconsolidation of CCB resulted in a gain of $7.4 million that we recognized in general and administrative expenses on our statement of (loss) earnings for the six months ended June 30, 2020.

Corporate Reporting Units

Total operating costs and expenses increased ~~stock compensation~~by $0.3 million, or 5.6%. In March 2020, we impaired the MCE investment due to an assessment of their operations resulting from COVID-19. As a result of the impairment, we recorded $1.0 million to impairment – goodwill and ~~$0.4~~intangible assets during the six months ended June 30, 2020. In addition, we assessed the collectability of a receivable from LOT related to the Poland contingent liability and determined that, due to COVID-19, it was more likely than not that LOT will be unable to repay us for its portion of taxes paid by CPL to the Polish IRS. As a result, we wrote-down the $0.7 million receivable to general and administrative expenses for the six months ended June 30, 2020. Offsetting these increases, during the closures certain of our corporate staff voluntarily decreased their salaries. In addition, in 2019 there were additional ~~payroll and operating expenses.~~expenses related to the Acquisition that did not reoccur in 2020

A reconciliation of net loss attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the ~~“Non-GAAP~~“Non-US GAAP Measures – Adjusted EBITDA” discussion above.

~~Nine Months Ended September 30, 2019 and 2018~~

The following discussion highlights results for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. Results at CCB were impacted by a 6.1% exchange rate decrease for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.

~~Revenue Highlights~~

Net operating revenue for Cruise Ships & Other decreased by ($0.6) million, or (24.9%), due to decreases in gaming revenue resulting from the termination of certain of our concession agreements for the operation of ship-based casinos as detailed above.

Net operating revenue for CCB increased by GBP 0.8 million, or 62.2%, due to operating the casino for an additional four months during the nine months ended September 30, 2019 compared to the same period of 2018. Revenue growth was impacted by enforcement of anti-money laundering and social responsibility regulations that require us to limit customers play until the required information is provided by the player. In addition, concerns about Brexit have reduced discretionary consumer spending in the market. In US dollars, net operating revenue increased by $0.9 million, or 57.6%.

~~Operating Expense Highlights~~

Operating expenses for Cruise Ships & Other increased by $0.3 million, or 14.0%, due to the write-down of $0.9 million in receivables related to the Glory Sea and $0.1 million related to the loss on disposal of fixed assets related to the Glory Sea, as well as $0.2 million related to the loss on disposal of fixed assets removed from storage. These increased expenses were partially offset by ($0.9) million in decreased operating expenses related to the termination of certain of our concession agreements for the operation of ship-based casinos as detailed above.

Operating expenses for CCB increased by GBP 1.1 million, or 41.4%, due to increased costs related to operating the casino for an additional four months during the nine months ended September 30, 2019 compared to the same period of 2018, including additional payroll and operating costs. In US dollars, operating expenses increased by $1.2 million, or 35.8%.

Losses from operations attributable to our Corporate Other operating segment, which includes certain other corporate and management operations, increased by ($2.5) million, or (39.0%), for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 primarily due to $1.2 million in legal and professional fees and expenses related to the Acquisition, $0.4 million in increased stock compensation and $0.5 million in additional payroll and operating expenses.

~~A reconciliation of net loss attributable to Century Casinos, Inc. shareholders to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.~~

Non-Operating Income (Expense)

Non-operating income (expense) was as follows:


	For the three months							For the nine months							For the three months							For the six months
	ended September 30,						%	ended September 30,						%	ended June 30,						%	ended June 30,						%
Amounts in thousands	2019		2018		Change		Change	2019		2018		Change		Change	2020		2019		Change		Change	2020		2019		Change		Change
Interest Income	$	11	$	74	$	(63)	(85.1%)	$	20	$	107	$	(87)	(81.3%)	$	5	$	5	$	—	—	$	6	$	9	$	(3)	(33.3%)
Interest Expense		(1,427)		(904)		523	57.9%		(4,083)		(3,023)		1,060	35.1%		(10,584)		(1,398)		9,186	657.1%		(21,950)		(2,656)		19,294	726.4%
Gain on Foreign Currency Transactions and Other		116		182		(66)	(36.3%)		886		431		455	105.6%		78		523		(445)	(85.1%)		79		770		(691)	(89.7%)
Non-Operating (Expense) Income	$	(1,300)	$	(648)	$	652	100.6%	$	(3,177)	$	(2,485)	$	692	27.8%	$	(10,501)	$	(870)	$	9,631	1107.0%	$	(21,865)	$	(1,877)	$	19,988	1064.9%

Interest income

Interest income is directly related to interest earned on our cash ~~reserves and interest from the promissory note with GHL.~~ reserves.

Interest expense

Interest expense is directly related to interest owed on our borrowings under our Macquarie Credit Agreement, our financing obligation with VICI PropCo, the BMO Credit Agreement, the fair value adjustments for our interest rate swap agreements, our CPL and ~~CCB~~CRM borrowings, our capital lease agreements and interest expense related to the CDR land lease and our finance lease agreements. The increased interest expense for the three and nine months ended September 30, 2019 compared to the three and nine months ended September 30, 2018 is due primarily to increased interest expense related to additional borrowings for CMR under 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~~six months ended ~~September~~June 30, ~~2019,~~2020, we recognized an income tax expense of ~~$3.2~~$3.1 million on pre-tax ~~income~~loss of ~~$6.3~~($55.8) million, representing an effective income tax rate of ~~50.7%~~(5.6%), compared to an income tax expense of ~~$1.8~~$2.1 million on pre-tax income of ~~$5.0~~$4.2 million, representing an effective income tax rate of ~~35.7%~~50.1% for the same period in ~~2018.~~2019. For further discussion on our effective income tax rates and an analysis of our effective income tax rate compared to the US federal statutory income tax rate, see Note 7,9, “Income Taxes,” to our condensed consolidated financial statements included in Part I, Item 1 of this report.

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. In 2020, our liquidity has been adversely affected by temporary closures of all of our casinos, hotels and other facilities to comply with quarantines issued by governments to contain the spread of COVID-19, as discussed below.

As of ~~September~~June 30, ~~2019,~~2020, our total debt under bank borrowings and other agreements net of ~~$0.4~~$9.8 million related to deferred financing costs was ~~$71.1~~$194.2 million, of which ~~$53.7~~$183.5 million was long-term debt and ~~$17.4~~$10.6 million was the current portion of long-term debt. The current portion relates to payments due within one year under our ~~BMO~~Macquarie Credit Agreement, the CPL credit ~~facilities~~facility, the UniCredit Loan and the CCB loan agreement. A principal amount of approximately CAD 15.3 million ($11.6 million based on the exchange rate in effect on September 30, 2019) under our BMO Credit Agreement is due January 31, 2020 and is presented in the current portion of long-term debt. We extended the maturity of this amount from October 2019 and, if necessary, we intend to seek an additional extension of the maturity of this amount pending closing of the committed financing discussed below. We plan to pay off the BMO Credit Agreement and finance the Acquisition with a new $180.0 millionCRM credit ~~facility for which we have a commitment from Macquarie Capital. We intend to repay the remaining current portion of our debt obligations with available cash.~~facility. For a description of our debt agreements, see Note 5,6, “Long-Term Debt,” to our condensed consolidated financial statements included in Part I, Item 1 of this report. Net Debt was ~~$27.4~~$152.4 million as of ~~September~~June 30, ~~2019~~2020 compared to ~~$6.7~~$25.5 million as of ~~September~~June 30, ~~2018,~~2019, due to additional borrowings related to the ~~Century Mile project.~~Acquisition and drawdowns of $17.4 million on our Revolving Facility and credit agreement with UniCredit in March 2020 as a proactive measure to increase our cash position and preserve financial flexibility in light of the uncertainty resulting from the COVID-19 pandemic. For the definition and reconciliation of Net Debt to the most directly comparable US GAAP measure, see ~~“Non-GAAP~~“Non-US GAAP Measures – Net Debt” above.

The following table lists the amount of ~~2019~~remaining 2020 maturities of our debt:


Amounts in thousands	Amounts in thousands											Amounts in thousands
Bank of Montreal		Casinos Poland Credit Agreements		Casinos Poland Credit Facilities		Century Casino Bath Credit Agreement		Century Downs Land Lease		Total
Macquarie Credit Agreement												Macquarie Credit Agreement	Casinos Poland ‎Credit Agreements		UniCredit Loan		Century Downs ‎Land Lease		UniCredit Agreement		Total
$	13,106	$	220	$	278	$	123	$	—	$	13,727	10,800	$	370	$	247	$	—	$	—	$	11,417

There is no set repayment schedule for the CPL credit ~~facilities,~~facility, and we classify ~~them~~it as short-term debt due to the nature of the agreements. ~~The UniCredit Agreement is not included in~~We classified the ~~table above because no amounts were borrowed~~$10.0 million Revolving Facility as current portion of ~~September~~long-term debt due to the repayment of the Revolving Facility on July 30, ~~2019.~~2020.

The following table lists the ~~2019~~amount of remaining 2020 payments due under our lease agreements:


Amounts in thousands	Amounts in thousands					Amounts in thousands
	Operating leases	Finance leases			Total	Operating leases	Finance leases			Total
$	1,451	$	107	$	1,558	2,665	$	77	$	2,742

In addition to these payment obligations, we are required to pay annual rent of approximately $25.1 million under the Master Lease and $1.5 million under the CDR land lease financing obligation, excluding variable rent payments. Cash payments related to the Master Lease and CDR land lease were $10.4 million and $0.9 million, respectively, for the six months ended June 30, 2020.

Cash Flows

At ~~September~~June 30, ~~2019,~~2020, cash, cash equivalents and restricted cash totaled ~~$44.9~~$52.5 million, and we had working capital (current assets minus current liabilities) of ~~$5.8~~$2.6 million compared to cash, cash equivalents and restricted cash of ~~$46.3~~$55.6 million and working capital of ~~$5.0~~$22.8 million at December 31, ~~2018.~~2019. The decrease in cash, cash equivalents and restricted cash from December 31, ~~2018~~2019 is due to ~~$10.9~~$6.0 million ofused to purchase property and equipment, a $1.2 million payment related to the working capital adjustment in the Acquisition, $0.7 million in deferred financing costs, $0.4 million net cash ~~provided~~used by operating activities, ~~$9.9~~a $0.2 million distribution to non-controlling interests at CDR and $0.7 million in exchange rate changes, offset by $5.8 million in proceeds from borrowings net of principal ~~payments,~~payments.

Net cash used in operating activities was $0.4 million for the six months ended June 30, 2020 and $0.2 million in proceeds from the exercise of stock options, offset by $18.5 million used to purchase property and equipment, $0.2 million used to acquire the non-controlling interest in CBS, $1.0 million used for a distribution to non-controlling interest, and $2.7 million in exchange rate changes.

~~Net~~net cash provided by operating activities was ~~$10.9~~$7.5 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019 and $14.6 million for the nine months ended September 30, 2018.~~2019. Our cash flows from operations have historically been positive and sufficient to fund ordinary operations. Cash flow from operations for the six months ended June 30, 2020 was negatively impacted by the suspension of our operations due to COVID-19. 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 ~~$18.7~~$7.1 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 consisted of ~~$11.4~~$0.4 million for ~~construction costs related to the Century Mile project; $3.8~~slot machine purchases at our Colorado properties; $0.6 million for slot machine purchases, $0.2 million in ~~leasehold improvements~~rebranding signage and $1.7 million for player tracking systems at ~~the Marriott Hotel in Warsaw, Poland~~our Missouri properties; $0.2 million for surveillance upgrades at our West Virginia property; $0.4 million for table game equipment and ~~additional assets for the casinos in Poland;~~ $0.5 million in ~~slot machines, chairs and security upgrades for CTL and CRC; $0.5~~building updates at our Edmonton properties; $0.2 million for ~~the building expansion at CDR; $0.3 million for new carpet and surveillance~~table game equipment at ~~CRA; $2.0~~our Calgary properties; $0.2 million in casino improvements in Poland; $1.5 million in other fixed asset additions at our properties; and ~~$0.2~~the $1.2 million ~~used to acquire the non-controlling interest in CBS.~~

~~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~~payment related to the ~~Century Mile project; $8.4 million for~~working capital adjustment in 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.Acquisition.

Net cash provided by financing activities of ~~$9.1~~$5.0 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 consisted of ~~$9.9~~$5.8 million in proceeds from borrowings on our long-term debt net of principal repayments, ~~and $0.2 million in proceeds from the exercise of stock options,~~ offset by ~~$1.0 million in distributions to non-controlling interests.~~

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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, $0.6 million in distributions to non-controlling interest and $0.1$0.7 million in deferred financing ~~cost payments, offset by $0.3~~costs and a $0.2 million distribution to non-controlling interests in ~~proceeds from the exercise of stock options.~~CDR.

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~~six months ended ~~September~~June 30, ~~2019.~~2020. The total amount remaining under the repurchase program was $14.7 million as of ~~September~~June 30, ~~2019.~~2020. The repurchase program has no set expiration or termination date.

Potential Sources of Liquidity and Short-Term Liquidity

Historically, our primary ~~sources~~source of liquidity and capital resources ~~have~~has been cash flow from operations. When necessary and available, we supplement the cash flows generated by our operations with funds provided by bank borrowings or other debt or equity financing activities. In addition, we have generated cash from 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 used $24.2 million of the net proceeds for construction of the Century Mile project. We are using 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, 2019, 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, CAD 15.3 million ($11.6 million based on the exchange rate inCOVID-19 pandemic has had an adverse effect on ~~September 30, 2019) current portion~~our first and second quarter 2020 results of ~~our BMO Credit Agreement is scheduled to mature on January 31, 2020. We have a signed commitment letter from Macquarie Capital related to~~operations, financial condition and liquidity, and we expect the Acquisition, which is expected to close by year end, for a $170.0 million senior secured term loan and a $10.0 million senior secured revolving credit facility. We plan to pay off the BMO Credit Agreement with the committed financing discussed above. If necessary, we intend to seek an extension of the maturity of the current portion of our BMO Credit Agreement maturing in January 2020 pending closing of the committed financing. We expect that the primary sources of cash will be from our gaming operations and additional borrowings under our credit arrangements. In addition to the payment of operating costs, expected or potential uses of cash within one year include the Acquisition, capital expenditures for our existing properties, interest and principal payments on outstanding debt, remaining payments for the Century Mile project, a casino expansion at CDR, an expansion at CRC to provide additional hotel rooms for our existing casino and hotel, and other potential new projects. Wesituation will continue to ~~evaluate our planned capital expenditures at each~~have an adverse effect on results of operations, financial condition and liquidity for the remainder of 2020. The duration and impact of the COVID-19 pandemic otherwise remains uncertain. Between March 13, 2020 and March 17, 2020, we closed all of our ~~existing~~casinos, hotels and other facilities to comply with quarantines issued by governments to contain the spread of COVID-19. Our Polish locations reopened on May 18, 2020 and our North American operations reopened between June 1, 2020 and June 17, 2020.

During to the temporary closures of our casinos, hotels and other facilities, we took actions to reduce operating costs, including furloughing most of our personnel, implementing reduced work weeks for other personnel and temporarily reducing salaries to senior management on a voluntary basis. During the closures, we continued to pay benefits to our United States and Canadian employees, including part time employees. In Poland, all employees were paid reduced salaries based on local employment laws. We continue to operate with reduced spending on most advertising and marketing costs as well as implementing cost saving initiatives that are intended to eliminate approximately $13.7 million of non-labor operating costs in 2020. We intend to defer or eliminate approximately $2.2 million of discretionary capital projects for the remainder of 2020 in order to proactively address our capital spending for 2020. Additionally, we negotiated arrangements with some of our contractual counterparties, such as vendors and lessors, to modify the timing of certain contractual payments.

‎

In March 2020, as a proactive measure to increase our cash position and preserve financial flexibility in light of the ~~operating performance~~uncertainty resulting from the COVID-19 pandemic, we borrowed an additional $9.95 million on the Revolving Facility under the Macquarie Credit Agreement and $7.4 million on the UniCredit credit agreement. We did not use any portion of the ~~facilities at~~$9.95 million borrowed under the Revolving Facility to fund operations, and maintained such ~~locations.~~borrowings in cash and cash equivalents until repaid as described below.

The ~~Century Mile project cost approximately CAD 61.5 million ($46.4 million~~Revolving Facility includes a springing leverage ratio (the “Financial Covenant”) tested as of the last day of each fiscal quarter in which borrowings under the Revolving Facility as of such day equal or exceed $3.5 million. In March 2020, based on the ~~exchange rate in effect~~anticipated timing of reopening our casinos, hotels and other operations that had been closed due to the COVID-19 pandemic, and based on ~~September 30, 2019). We used $24.2 million~~the anticipated use of all or a portion of the ~~net proceeds from~~$9.95 million borrowed under the ~~common stock offering, $23.3~~Revolving Facility to fund operations prior to such reopening, we projected that, if we were unable to repay the Revolving Facility below $3.5 million ~~from~~on or before the ~~BMO~~last day of a fiscal quarter, a potential future violation of the Financial Covenant could occur. Prior to June 30, 2020, we projected that we would be in compliance with the Financial Covenant as of June 30, 2020 and therefore we elected not to pay the Revolving Facility below $3.5 million on or before such date.

We and the lender under the Macquarie Credit Agreement are currently reviewing the Financial Covenant calculation as of June 30, 2020 to determine whether we were in compliance with the covenant or were in default as of such date. If a default exists under the Financial Covenant as of June 30, 2020, we will not be able to borrow under the Revolving Facility or take certain actions that would otherwise be permitted under the Revolving Facility, and ~~available~~the lender may exercise other remedies, until such default is waived by the lender or the Macquarie Credit Agreement is amended. We repaid the Revolving Facility down to $0 as of July 30, 2020, except for a $50,000 letter of credit that we are in the process of cash collateralizing. We do not project a need for ~~construction~~borrowing under the Revolving Facility in the future. As a result, compliance with the Financial Covenant under the Revolving Facility would not be required in future periods. If a default under the Financial Covenant has occurred, management intends to discuss a waiver of the ~~Century Mile project.~~ default or amendment to the Macquarie Credit Agreement. We were in compliance with all financial covenants under our other credit agreements as of June 30, 2020.

We estimate that the net cash outflows related to operations during the time they were fully suspended were, on average, approximately $8.0 million per month, and that we spent approximately $14.7 million through June 30, 2020 to reopen operations and cover short-term cash needs at the casinos.

We cannot predict the negative impacts that the failure to suppress the spread of COVID-19 will have on our consumer demand, workforce, suppliers, contractors and other partners and, although all locations have reopened, whether future closures will be required. Such closures have had and will continue to have a material impact on our business. While the severity and duration of such business impacts cannot currently be estimated, the effects of COVID-19 and the requirements of health and safety protocols are expected to continue to have a material impact on our business.

We may be required to raise additional capital to address our liquidity and capital needs. We have a shelf registration statement with the SEC that became effective in July ~~2017~~2020 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.~~ securities.

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. Our access to and cost of financing will depend on, among other things, global economic conditions, conditions in the financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings. 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.The failure to raise the funds necessary to fund our debt service and rent obligations and finance our operations and other capital requirements could have a material and adverse effect on our business, financial condition and liquidity.

In addition, we expect our US domestic cash resources will be sufficient to fund our US 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 US than is generated by our US 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 US through debt or equity issuances. We estimate that approximately ~~$26.7~~$23.7 million of our total ~~$44.0~~$51.6 million in cash and cash equivalents at ~~September~~June 30, ~~2019~~2020 is held by our foreign subsidiaries and is not available to fund US operations unless repatriated.

Item 3.Quantitative and Qualitative Disclosures about Market Risk.

We had no material changes in our exposure to market risks from that previously reported in Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2018.~~2019.

Item 4.Controls and Procedures.

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

Changes in Internal Control Over Financial Reporting –There were no changes in our internal control over financial reporting that occurred during the three months ended ~~September~~June 30, ~~2019~~2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1A. Risk Factors

The COVID-19 pandemic has had and will continue to have an adverse effect on our business, operations, financial condition, operating results and liquidity, and the ultimate outcome of the pandemic is uncertain

In late 2019, an outbreak of a new strain of coronavirus, COVID-19, was identified in China and has since spread rapidly around the world as a pandemic, prompting aggressive actions by local, state, federal and provincial governments in the US, Canada and elsewhere to control the spread of the coronavirus. COVID-19 has significantly affected virtually all facets of the United States and global economies. This outbreak and the actions taken in response to this public health epidemic, pose the risk that we or our employees, suppliers, and other business partners may be prevented from conducting business activities for an unknown period of time. Restrictions on travel, quarantines and other measures imposed in response to the COVID-19 pandemic, as well as ongoing concern regarding the virus’ potential impact, have had and will likely continue to have a negative effect on economies and financial markets, including supply chain shortages and additional business disruptions. Between March 13, 2020 and March 17, 2020, we temporarily closed all of our casinos, hotels and other facilities to comply with quarantine orders issued by governments to contain the spread of COVID-19. Our Polish locations reopened on May 18, 2020 and our North American operations reopened between June 1, 2020 and June 17, 2020. The reopening approaches varied, with casinos in some jurisdictions reopening fully and others permitted to operate with reduced levels of gaming space or without table games. In addition, some locations are operating with limited restaurant operating hours or continued closure of restaurants, requirements to wear face masks, including the potential to require guests to wear face masks, increased frequency of disinfecting surfaces and other measures to account for varying levels of demand. The temporary closures of all our facilities between March 2020 and June 2020 due to COVID-19 negatively impacted our results for the three and six months ended June 30, 2020. We estimate that net operating revenue and Adjusted EBITDA for the six months ended June 30, 2020 were adversely impacted by approximately $91.3 million and $34.3 million, respectively, due to these closures. We estimate that the net cash outflows related to operations during the time they were fully suspended were, on average, approximately $8.0 million per month.

‎

The COVID-19 pandemic has significantly increased demand uncertainty. Although our properties are again operating, some customers may choose for a period of time not to visit our properties as a result of continuing concerns related to COVID-19, which could lead to lower attendance and further disruptions in our business and results of operations. Governmental officials may impose restrictions on travel or introduce social distancing measures. If the coronavirus continues to spread in the United States or in other jurisdictions in which we operate, or the virus recurs, we may elect on a voluntary basis to again close certain of our properties or portions thereof, or governmental officials may order additional closures, impose further restrictions on travel or introduce additional social distancing measures. The current and future impact of the COVID-19 pandemic, including its effect on the ability and desire of people to visit is expected to continue to impact our results, operations, outlooks, plans, goals, growth cash flows and liquidity. The extent of the effects of the outbreak on our business and the casino industry at large is highly uncertain and will ultimately depend on future developments, including, but not limited to, the duration and severity of the outbreak, future recurrences of the outbreak and the length of time it takes for normal economic and operating conditions to resume, if at all.

Even after the COVID-19 pandemic subsides, we could experience a longer-term impact on our costs, such as, for example, the need for enhanced health and hygiene requirements in one or more regions in attempts to counteract future outbreaks. Further, COVID-19 may also affect our operating and financial results in ways that are not presently known to us or that we currently do not consider present significant risks to our operations. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and liquidity.

General economic conditions affecting discretionary consumer spending may have an adverse impact on our business, financial condition or results of operations.

The current outbreak and continued spread of COVID-19 has created economic uncertainty and could cause a global recession. Adverse changes in the economic climate, including higher unemployment rates, declines in income levels and loss of personal wealth resulting from business shutdowns and associated mass layoffs by businesses, and the adoption of social distancing and other policies to slow or control the spread of the virus, are likely to have a negative impact on demand for casinos, including ours, and these impacts could exist for an extensive period of time. Our success depends to a large extent on discretionary consumer spending, which is heavily influenced by general economic conditions and the availability of discretionary income. Difficult economic conditions and recessionary periods may have an adverse impact on our business and our financial condition. Negative economic conditions, coupled with high volatility and uncertainty as to the future economic landscape, have at times had a negative effect on consumers’ discretionary income and consumer confidence, and similar impacts can be expected should such conditions recur. A decrease in discretionary spending due to decreases in consumer confidence in the economy or us, or a continued economic slowdown or deterioration in the economy, could adversely affect the frequency with which customers choose to visit our properties and the amount that our customers spend when they visit. The actual or perceived weakness in the economy could also lead to decreased spending by our customers. Both customer visits and customer spending at our casinos are key drivers of our revenue and profitability, and reductions in either could materially adversely affect our business, financial condition and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In March 2000, our board of directors approved a discretionary program to repurchase up to $5.0 million of our outstanding common stock. In November 2009, our board of directors approved an increase of the amount available to be repurchased under the program to $15.0 million. The repurchase program has no set expiration or termination date and had approximately $14.7 million remaining as of ~~September~~June 30, ~~2019.~~2020. There were no repurchases of common stock during the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020.

Item 5.Other Information

On ~~October 31, 2019, Century Resorts Alberta Inc.,~~August 5, 2020 we announced that we had entered into a definitive agreement to sell the casino operations of Century Casino ~~St. Albert Inc.~~Calgary for CAD 10.0 million ($7.5 million based on the exchange rate on July 31, 2020) plus a three year quarterly earn out as specified in the agreement. The CAD 10.0 million was paid at the execution of the definitive agreement and is non-refundable except in the event we are in breach of certain covenants set out in the agreement and subject to working capital and other adjustments. We will continue to operate Century ~~Mile Inc.,~~Sports (sports bar, bowling and entertainment) and to own the real estate. Upon closing of the transaction, we will enter into a three year lease agreement with the purchaser of the casinos operations for annual net rent of CAD 480,000 ($358,102 based on the exchange rate on July 31, 2020). The transaction is expected to close in consent to the sale of the casino operations of Century Casino Calgary.

We recorded a loss of $0.1 million to general and administrative expenses on our ~~wholly owned subsidiaries, entered into~~condensed consolidated statement of (loss) earnings for the ~~Second Amending Agreement (the “Second Amendment”), dated~~three and six months ended June 30, 2020 related to the estimated costs we will incur for the sale. Held for sale assets on our condensed consolidated balance sheet as of ~~October 31, 2019,~~June 30, 2020 include $0.1 million in inventories and $0.5 million in property and equipment, net. Held for sale liabilities on our condensed consolidated balance sheet as ~~borrowers, with BMO, as lender. The Second Amendment amends the BMO Credit Agreement by extending one~~ of ~~the maturity date triggers applicable to Credit Facility B, Credit Facility C and Credit Facility F from October 31, 2019 to January 31, 2020.~~June 30, 2020 include $0.2 million in accrued liabilities.
‎

5559

Item 6.E xhibits



Exhibit No.	Document
3.1^P	Certificate of Incorporation of Century Casinos, Inc. is hereby incorporated by reference to the Company’s Proxy Statement for the 1994 Annual Meeting of Stockholders.
3.2	Amended and Restated Bylaws of Century Casinos, Inc. is hereby incorporated by reference to Exhibit 11.14 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002.
~~10.1~~31.1*	First Amending Agreement, dated August 1, 2019, by and among Century Resorts Alberta Inc., Century Casino St. Albert Inc., Century Mile Inc. and Bank of Montreal is hereby incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 1, 2019.
~~10.2~~	~~Second Amending Agreement, dated October 31, 2019, by and among Century Resorts Alberta Inc., Century Casino St. Albert Inc., Century Mile Inc. and Bank of Montreal.~~
~~31.1~~*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Co-Chief Executive Officer.
31.2*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Co-Chief Executive Officer and President.
31.3*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Chief Financial Officer.
32.1**	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Co-Chief Executive Officer.
32.2**	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Co-Chief Executive Officer and President.
32.3**	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Chief Financial Officer.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** Furnished herewith.

P Filed on Paper

5660

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CENTURY CASINOS, INC.

/s/ Margaret Stapleton

Chief Financial Officer

Date: ~~November 4, 2019~~August 7, 2020

5761



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


Amounts in thousands
2019	$	4,079
2020		2,783
2021		2,748
2022		2,700
2023		2,646
Total	$	14,956



Amounts in thousands	Century Casinos		Casinos Poland		Total
Balance – December 31, 2018	$	108	$	1,622	$	1,730
Effect of foreign currency translation		—		(101)		(101)
Balance -- September 30, 2019	$	108	$	1,521	$	1,629


Amounts in thousands		As of September 30, 2019						As of December 31, 2018
Derivatives not designated as ASC 815 hedges	Balance Sheet Classification	Gross Recognized Assets (Liabilities)		Gross Amounts Offset		Net Recognized Fair Value Assets (Liabilities)		Gross Recognized Assets (Liabilities)		Gross Amounts Offset		Net Recognized Fair Value Assets (Liabilities)
Derivative assets:
Interest rate swaps - current	Other current assets	$	24	$	—	$	24	$	94	$	—	$	94
Interest rate swaps - non-current	Deposits and other		9		—		9		75		—		75
Total derivative assets		$	33	$	—	$	33	$	169	$	—	$	169

Cruise Line	Ship	Number of Slots	Number of Tables
TUI Cruises	Mein Schiff Herz(1)	17	1
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