UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2016

☐ 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)

~~DELAWARE84-1271317~~

~~(State or other jurisdiction of~~ ~~(I.R.S. Employer Identification No.)~~

~~incorporation or organization)~~


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

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

(Address of principal executive offices, including zip code)

(719) 527-8300

(Registrant’s telephone number, including area code)

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

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

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

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

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

~~24,431,120~~24,434,571 shares of common stock, $0.01 par value per share, were outstanding as of ~~April~~July 27, 2016.

INDEX


Part I	FINANCIAL INFORMATION	Page
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets as of ~~March 31,~~June 30, 2016 and December 31, 2015	3
	Condensed Consolidated Statements of Earnings for the Three and Six Months Ended ~~March 31,~~June 30, 2016 and 2015	5
	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Three and Six Months Ended ~~March 31,~~June 30, 2016 and 2015	6
	Condensed Consolidated Statements of Equity as of ~~March 31,~~June 30, 2016 and 2015	7
	Condensed Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2016 and 2015	8
	Notes to Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2628
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4050
Item 4.	Controls and Procedures	4050
Part II	OTHER INFORMATION
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4150
Item 6.	Exhibits	4251
Signatures		4251

PART I – FINANCIAL INFORMATION

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)


	March 31,			December 31,	June 30,			December 31,
Amounts in thousands, except for share and per share information	2016			2015	2016			2015
ASSETS		(unaudited)				(unaudited)
Current Assets:
Cash and cash equivalents	$	29,932	$	29,366	$	31,267	$	29,366
Receivables, net		2,626		3,279		3,059		3,279
Prepaid expenses		1,349		997		1,351		997
Inventories		536		529		552		529
Deferred income taxes		416		309		421		309
Other current assets		35		60		40		60
Total Current Assets		34,894		34,540		36,690		34,540

Property and equipment, net		136,053		131,582		135,056		131,582
Goodwill		10,799		10,173		10,382		10,173
Deferred income taxes		5,034		4,834		5,068		4,834
Casino licenses		3,134		3,028		3,016		3,028
Trademarks		1,744		1,654		1,648		1,654
Cost investment		1,000		1,000		1,000		1,000
Deposits and other		827		272		1,288		272
Total Assets	$	193,485	$	187,083	$	194,148	$	187,083

LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt	$	4,062	$	4,123	$	3,790	$	4,123
Accounts payable		1,322		2,692		1,991		2,692
Accrued liabilities		6,033		5,619		6,366		5,619
Accrued payroll		3,843		4,162		3,917		4,162
Taxes payable		4,290		4,371		3,199		4,371
Contingent liability (note 8)		2,307		2,180		2,171		2,180
Deferred income taxes		153		153		153		153
Total Current Liabilities		22,010		23,300		21,587		23,300

Long-term debt, net of current portion and deferred financing costs (note 7)		33,792		32,397		33,159		32,397
Taxes payable and other		687		630		702		630
Deferred income taxes		3,507		3,481		3,628		3,481
Total Liabilities		59,996		59,808		59,076		59,808
Commitments and Contingencies

See notes to condensed consolidated financial statements.

Continued -

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (continued)



	March 31,			December 31,	June 30,			December 31,
Amounts in thousands, except for share and per share information	2016			2015	2016			2015
Equity:		(unaudited)				(unaudited)
Preferred stock; $0.01 par value; 20,000,000 shares authorized; no shares issued or outstanding		0		0		0		0
Common stock; $0.01 par value; 50,000,000 shares authorized; 24,431,120 and 24,414,083 shares issued and outstanding		244		244
Common stock; $0.01 par value; 50,000,000 shares authorized; 24,434,571 and 24,414,083 shares issued and outstanding						244		244
Additional paid-in capital		77,551		77,318		77,745		77,318
Retained earnings		59,452		57,558		61,700		57,558
Accumulated other comprehensive earnings		(9,336)		(12,704)		(10,262)		(12,704)
Total Century Casinos, Inc. shareholders' equity		127,911		122,416		129,427		122,416
Non-controlling interest		5,578		4,859		5,645		4,859
Total Equity		133,489		127,275		135,072		127,275
Total Liabilities and Equity	$	193,485	$	187,083	$	194,148	$	187,083

See notes to condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)



	For the three months				For the three months				For the six months
	ended March 31,				ended June 30,				ended June 30,
Amounts in thousands, except for per share information	2016		2015		2016		2015		2016		2015
Operating revenue:
Gaming	$	28,160	$	28,179	$	30,901	$	30,470	$	59,060	$	58,649
Hotel		444		387		490		400		935		787
Food and beverage		2,892		2,567		3,028		3,218		5,920		5,785
Termination of concession agreements						0		3,365		0		3,365
Other		3,040		1,174		2,988		2,595		6,028		3,769
Gross revenue		34,536		32,307		37,407		40,048		71,943		72,355
Less: Promotional allowances		(2,006)		(1,902)		(2,206)		(2,173)		(4,212)		(4,076)
Net operating revenue		32,530		30,405		35,201		37,875		67,731		68,279
Operating costs and expenses:
Gaming		13,355		14,691		14,251		14,206		27,616		28,895
Hotel		139		128		134		139		273		267
Food and beverage		2,574		2,147		2,659		2,834		5,222		4,981
General and administrative		11,067		9,528		11,499		10,967		22,569		20,494
Depreciation and amortization		2,010		1,811		2,117		1,890		4,127		3,702
Total operating costs and expenses		29,145		28,305		30,660		30,036		59,807		58,339
Earnings from operations		3,385		2,100		4,541		7,839		7,924		9,940
Non-operating income (expense):
Interest income		17		14		14		1		31		15
Interest expense		(778)		(678)		(802)		(1,034)		(1,580)		(1,712)
Gain on foreign currency transactions and other		198		495		1,560		407		1,758		902
Non-operating (expense) income, net		(563)		(169)
Non-operating income (expense), net						772		(626)		209		(795)
Earnings before income taxes		2,822		1,931		5,313		7,213		8,133		9,145
Income tax expense		(598)		(434)
Income tax (expense) benefit						(987)		406		(1,584)		(29)
Net earnings		2,224		1,497		4,326		7,619		6,549		9,116
Net (earnings) loss attributable to non-controlling interests		(330)		348
Net earnings attributable to non-controlling interests						(2,077)		(1,022)		(2,407)		(674)
Net earnings attributable to Century Casinos, Inc. shareholders	$	1,894	$	1,845	$	2,249	$	6,597	$	4,142	$	8,442

Earnings per share attributable to Century Casinos, Inc. shareholders:
Basic	$	0.08	$	0.08	$	0.09	$	0.27	$	0.17	$	0.35
Diluted	$	0.08	$	0.08	$	0.09	$	0.27	$	0.17	$	0.35
Weighted average shares outstanding - basic		24,436		24,381		24,432		24,386		24,445		24,384
Weighted average shares outstanding - diluted		24,662		24,420		24,548		24,428		24,616		24,424

See notes to condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

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

For the three months

ended March 31,

Amounts in thousands

2016

2015

Net earnings

$
2,224

$
1,497

Other comprehensive income (loss)

Foreign currency translation adjustments

3,757

(5,194)
Other comprehensive income (loss)

3,757

(5,194)
Comprehensive income (loss)

$
5,981

$
(3,697)

Comprehensive (income) loss attributable to non-controlling interests

Net (earnings) loss attributable to non-controlling interests

(330)

348
Foreign currency translation adjustments

(389)

373
Comprehensive income (loss) attributable to Century Casinos, Inc. shareholders

$
5,262

$
(2,976)



	For the three months				For the six months
	ended June 30,				ended June 30,

Amounts in thousands	2016		2015		2016		2015

Net earnings	$	4,326	$	7,619	$	6,549	$	9,116

Other comprehensive (loss) income
Foreign currency translation adjustments		(1,309)		1,055		2,447		(4,139)
Other comprehensive (loss) income		(1,309)		1,055		2,447		(4,139)
Comprehensive income	$	3,017	$	8,674	$	8,996	$	4,977

Comprehensive income attributable to non-controlling interests
Net earnings attributable to non-controlling interests		(2,077)		(1,022)		(2,407)		(674)
Foreign currency translation adjustments		383		(109)		(5)		399
Comprehensive income attributable to Century Casinos, Inc. shareholders	$	1,323	$	7,543	$	6,584	$	4,702

See notes to condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)


Amounts in thousands, except share information	Common Shares		Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total Century Casinos Shareholders' Equity		Noncontrolling Interest		Total Equity	Common Shares		Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total Century Casinos Shareholders' Equity		Noncontrolling Interest		Total Equity
BALANCE AT January 1, 2015	24,381,057	$	244	$	76,169	$	(3,636)	$	45,651	$	118,428	$	3,998	$	122,426	24,381,057	$	244	$	76,169	$	(3,636)	$	45,651	$	118,428	$	3,998	$	122,426
Net earnings (loss)	0		0		0		0		1,845		1,845		(348)		1,497
Net earnings																0		0		0		0		8,442		8,442		674		9,116
Foreign currency translation adjustment	0		0		0		(4,686)		0		(4,686)		(508)		(5,194)	0		0		0		(3,740)		0		(3,740)		(399)		(4,139)
Amortization of stock-based compensation	0		0		388		0		0		388		0		388	0		0		807		0		0		807		0		807
Distribution to non-controlling interest																0		0		0		0		0		0		(490)		(490)
Exercise of stock options																16,250		0		83		0		0		83		0		83
Conversion of CDR equity (note 3)	0		0		(581)		(135)		0		(716)		716		0	0		0		(581)		(135)		0		(716)		716		0
BALANCE AT March 31, 2015	24,381,057	$	244	$	75,976	$	(8,457)	$	47,496	$	115,259	$	3,858	$	119,117
BALANCE AT June 30, 2015																24,397,307	$	244	$	76,478	$	(7,511)	$	54,093	$	123,304	$	4,499	$	127,803

BALANCE AT January 1, 2016	24,414,083	$	244	$	77,318	$	(12,704)	$	57,558	$	122,416	$	4,859	$	127,275	24,414,083	$	244	$	77,318	$	(12,704)	$	57,558	$	122,416	$	4,859	$	127,275
Net earnings	0		0		0		0		1,894		1,894		330		2,224	0		0		0		0		4,142		4,142		2,407		6,549
Foreign currency translation adjustment	0		0		0		3,368		0		3,368		389		3,757	0		0		0		2,442		0		2,442		5		2,447
Amortization of stock-based compensation	0		0		190		0		0		190		0		190	0		0		381		0		0		381		0		381
Distribution to non-controlling interest																0		0		0		0		0		0		(1,626)		(1,626)
Exercise of stock options	17,037		0		43		0		0		43		0		43	20,488		0		46		0		0		46		0		46
BALANCE AT March 31, 2016	24,431,120	$	244	$	77,551	$	(9,336)	$	59,452	$	127,911	$	5,578	$	133,489
BALANCE AT June 30, 2016																24,434,571	$	244	$	77,745	$	(10,262)	$	61,700	$	129,427	$	5,645	$	135,072

See notes to condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	For the three months				For the six months
	ended March 31,				ended June 30,
Amounts in thousands	2016		2015		2016		2015

Cash Flows from Operating Activities:
Net earnings	$	2,224	$	1,497	$	6,549	$	9,116
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		2,010		1,811		4,127		3,702
Loss on disposition of fixed assets		26		122		37		146
Unrealized loss on interest rate swaps		5		0		23		173
Amortization of stock-based compensation expense		190		388		381		807
Amortization of deferred financing costs		28		17		57		62
Deferred taxes		(41)		(240)		(197)		(1,810)
Changes in Operating Assets and Liabilities:
Receivables, net		716		244		278		(2,062)
Prepaid expenses and other assets		(833)		703		(847)		1,467
Accounts payable		(539)		80		(257)		(570)
Accrued liabilities		245		(1,132)		717		(797)
Inventories		21		106		2		30
Other operating assets						(489)		0
Other operating liabilities		1		2		3		4
Accrued payroll		(440)		(387)		(296)		(248)
Taxes payable		(350)		(634)		(1,209)		(1,452)
Contingent liability payment						0		(159)
Net cash provided by operating activities		3,263		2,577		8,879		8,409

Cash Flows used in Investing Activities:
Purchases of property and equipment		(2,245)		(7,164)		(3,805)		(12,958)
Proceeds from disposition of assets		0		61		10		696
Net cash used in investing activities		(2,245)		(7,103)		(3,795)		(12,262)

Continued –

See notes to condensed consolidated financial statements.

CENTURY CASINOS, INC. AND SUBSIDIARIES

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


	For the three months				For the six months
	ended March 31,				ended June 30,
Amounts in thousands	2016		2015		2016		2015

Cash Flows (used in) provided by Financing Activities:
Proceeds from borrowings		0		7,707		379		11,243
Principal repayments		(1,183)		(975)		(2,426)		(2,271)
Payment of deferred financing costs		0		(1)
Distribution to non-controlling interest						(1,626)		(490)
Proceeds from exercise of stock options		43		0		46		83
Net cash (used in) provided by financing activities		(1,140)		6,731		(3,627)		8,565

Effect of Exchange Rate Changes on Cash	$	688	$	(1,038)	$	444	$	(528)

Increase in Cash and Cash Equivalents	$	566	$	1,167	$	1,901	$	4,184

Cash and Cash Equivalents at Beginning of Period	$	29,366	$	24,741	$	29,366	$	24,741
Cash and Cash Equivalents at End of Period	$	29,932	$	25,908	$	31,267	$	28,925
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	712	$	180	$	1,459	$	399
Income taxes paid	$	933	$	1,072	$	1,896	$	2,036
Non-Cash Investing Activities:
Purchase of property, plant and equipment on account	$	324	$	547	$	740	$	965
Conversion of CDR equity (note 3)	$	0	$	716	$	0	$	716

See notes to 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. (“CCI” or the “Company”) is an international casino entertainment company. As of ~~March 31,~~June 30, 2016, the Company owned casino operations in North America; held a majority ownership interest in nine casinos throughout Poland, a racetrack and entertainment center (“REC”) in Canada and the pari-mutuel off-track betting network in southern Alberta, Canada; managed cruise ship-based casinos on international waters; managed a casino in Aruba and provided gaming services in Argentina.

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

The Century Casino & Hotel in Edmonton, Alberta, Canada

The Century Casino Calgary, Alberta, Canada

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

The Century Casino & Hotel in Cripple Creek, Colorado

The Company currently has a controlling financial interest through its subsidiary Century Casinos Europe GmbH (“CCE”) in the following majority-owned subsidiaries:

The Company owns 66.6% of Casinos Poland Ltd (“CPL” or “Casinos Poland”). CPL is the owner and operator of ~~nine~~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.

In July 2016, the casino license at the Katowice casino expired. The Company has applied for the license and expects a decision in September 2016. Until the license is awarded, the casino operations at the Katowice casino have been moved to the Sosnowiec casino. See Note 5 for additional information related to Casinos Poland’s casino licenses.

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 casino at CDR opened in April 2015. The 2016 horse racing season is from February to November.

On March 20, 2015, CCE converted CAD 11 million that it had loaned to CDR into an additional 60% ownership interest in CDR. As a result of the conversion, the Company recognized $0.6 million in additional paid-in capital and $0.1 million in accumulated other comprehensive income that was previously attributed to non-controlling interest.

The Company owns 75% of Century Bets! Inc. (“CBS” or “Century Bets”). CBS is consolidated as a majority-owned subsidiary for which the Company has a controlling financial interest. Rocky Mountain Turf Club (“RMTC”) owns the remaining 25% of CBS, which is reported as a non-controlling financial interest. CBS began operating the pari-mutuel off-track horse betting network in southern Alberta in May 2015.

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

The Company operates 1013 ship-based casinos through concession agreements with ~~TUI Cruises and Windstar Cruises. In 2015, the~~four cruise ship owners. The Company ~~amended its concession agreement with TUI Cruises to include its operation of~~began operating the ship-based casinos onboard the Mein Schiff 5, ~~and Mein Schiff 6, two~~a new 2,500 passenger cruise ~~ships that are expected to begin operations in the third quarter of 2016~~ship, and ~~2017, respectively. In March 2016, the Company announced that it had signed an agreement with Thomson Cruises to operate the ship-based casino onboard the~~ TUI Discovery, a 2,067 passenger cruise ship, ~~that is expected to begin operations in~~during the second quarter of ~~2016. In addition, the Company signed an agreement with Taihu International Cruise Company~~2016, and ~~Diamond Cruise International to operate~~in July 2016 began operating the ship-based casino onboard Glory Sea, a 1,200 passenger cruise ship that will operate in the China market. Under an amended concession agreement with TUI Cruises, the Company also plans to operate the ship-based casino onboard Mein Schiff 6, a new 2,500 passenger cruise ship that is expected to begin ~~operations~~operating in the ~~second~~third quarter of ~~2016.~~2017.

In March 2015, the Company mutually agreed with Norwegian Cruise Line Holdings (“Norwegian”) to terminate its concession agreements with Oceania Cruises (“Oceania”) and Regent Seven Seas Cruises (“Regent”), indirect subsidiaries of Norwegian, effective June 1, 2015 (the “Termination Agreement”). The Company transitioned operations of the eight ship-based casinos that it operated onboard Oceania and Regent vessels to Norwegian in the second quarter of 2015. As consideration for the early termination of the concession agreements, the Company received $4.0 million in June 2015 and recorded this on its condensed consolidated statement of earnings (loss) under operating revenue net of $0.6 million related to assets that were sold to Norwegian as part of the Termination Agreement.

The Company also entered into a two-year consulting agreement, which became effective on June 1, 2015, under which the Company is providing limited consulting services for the ship-based casinos of Oceania and Regent in exchange for receiving a consulting fee of $2.0 million, which is payable $250,000 per quarter.

The Company has a long-term management agreement to direct the operation of the casino at the Hilton Aruba Caribbean Resort ~~and~~& Casino from which the Company receives a monthly management fee.

The Company, through its subsidiary CCE, has a 7.5% ownership interest in Mendoza Central Entretenimientos S.A., an Argentina company (“MCE”). The shares are reported on the condensed consolidated balance sheet using the cost method of accounting. MCE has an exclusive concession agreement with Instituto Provincial de Juegos y Casinos to lease slot machines and provide related services to Casino de Mendoza, a casino located in Mendoza, Argentina and owned by the Province of Mendoza. In addition, CCE and MCE have entered into a consulting services agreement pursuant to which CCE provides advice on casino matters and receives a service fee consisting of a fixed fee plus a percentage of MCE’s earnings before interest, taxes, depreciation and amortization (“EBITDA”). See Note 4 for additional information related to MCE.

The accompanying condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial reporting, the rules and regulations of the Securities and Exchange Commission which apply to interim financial statements and the instructions to Form ~~10-Q and Rule 8-03 of Regulation S-X.~~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, 2015. The results of operations for the period ended ~~March 31,~~June 30, 2016 are not necessarily indicative of the operating results for the full year.

Presentation of Foreign Currency Amounts

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

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


	March 31,	December 31,	June 30,	December 31,	June 30,
Ending Rates	2016	2015	2016	2015	2015
Canadian dollar (CAD)	1.2971	1.3840	1.3009	1.3840	1.2474
Euros (EUR)	0.8779	0.9209	0.9063	0.9209	0.8967
Polish zloty (PLN)	3.7284	3.9464	3.9625	3.9464	3.7550

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



	For the three months			For the three months			For the six months
	ended March 31,			ended June 30,			ended June 30,
Average Rates	2016	2015	% Change	2016	2015	% Change	2016	2015	% Change
Canadian dollar (CAD)	1.3732	1.2405	(10.7%)	1.2890	1.2302	(4.8%)	1.3311	1.2354	(7.7%)
Euros (EUR)	0.9065	0.8887	(2.0%)	0.8856	0.9041	2.0%	0.8961	0.8964	0.0%
Polish zloty (PLN)	3.9556	3.7236	(6.2%)	3.8726	3.6972	(4.7%)	3.9141	3.7104	(5.5%)
Source: Pacific Exchange Rate Service

Correction of Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015

The Company identified errors within its statements of cash flows for the six months ended June 30, 2015. The Company inadvertently failed to remove the effects of a portion of unpaid purchases of property and equipment from the change in accounts payable and purchases of property and equipment in the preparation of the statements of cash flows. This error resulted in the understatement of net cash provided by operating activities of $1.2 million and a corresponding understatement of net cash used in investing activities of $1.2 million, for the six months ended June 30, 2015. The prior period amounts within the condensed consolidated statements of cash flows for the six months ended June 30, 2015 have been revised to reflect the correct balances.

2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The objective of ASU 2014-09 is to clarify the principles for recognizing revenue and to develop a common revenue standard under US GAAP and International Financial Reporting Standards. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016; provided, however, that in August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date (“ASU 2015-14”), which deferred the effective date of ASU 2014-09 for one year. ASU 2015-14 is effective for fiscal years and interim periods beginning after December 15, 2017. The standards permit retrospective application using either of the following methodologies: (i) restatement of each prior reporting period presented or (ii) recognition of a cumulative-effect adjustment as of the date of initial application. In addition, the FASB has issued ~~two~~four related ASUs ~~clarifying the guidance~~ on principal versus agent guidance (ASU 2016-08) ~~and clarifying~~, identifying performance obligations and the licensing implementation guidance (ASU 2016-10), a revision of certain SEC Staff Observer comments (ASU 2016-11) and implementation guidance (ASU 2016-12). The Company is currently evaluating the impact of adopting these ASUs, including the transition method to be applied; however, the standards are not expected to have a material impact on its consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (“ASU 2014-15”). The objective of ASU 2014-15 is to provide guidance on management’s responsibility to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for fiscal years ending after December 15, 2016, and annual and interim periods thereafter. The Company is currently evaluating the impact of adopting ASU 2014-15; however, the standard is not expected to have a material impact on its consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (“ASU 2015-11”). The objective of ASU 2015-11 is to simplify the current guidance under which an entity must measure inventory at the lower of cost or market by requiring entities to measure most inventory at the lower of cost or net realizable value. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption of ASU 2015-11 is permitted. The Company is currently evaluating the impact of adopting ASU 2015-11; however, the standard is not expected to have a material impact on ~~the~~ its consolidated financial statements.

In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). The objective of ASU 2015-16 is to simplify the accounting for measurement-period adjustments for acquisitions by eliminating the requirement to retrospectively adjust provisional amounts recognized in a business combination during the measurement period. ASU 2015-16 requires adjustments to the provisional amounts that are identified during the measurement period to be recognized when they are identified. ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of ASU 2015-16 is permitted. ASU 2015-16 could have a material impact on the Company’s consolidated financial statements if we close the Apex Acquisition (see Note 3).

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). The objective of ASU 2015-17 is to simplify the presentation of deferred taxes in a classified statement of financial position. ASU 2015-17 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption of ASU 2015-17 is permitted. The Company is currently evaluating the impact of adopting ASU 2015-17; however, the standard is not expected to have a material impact on ~~the~~ its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). The objective of ASU 2016-02 is to recognize lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of ASU 2016-02 is permitted. The Company is currently evaluating the impact of adopting ASU 2016-02. Adoption of this standard may have a material impact on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The objective of ASU 2016-09 is to simplify the accounting for share-based payment transactions, including ~~the~~recording all excess tax benefits and tax deficiencies through income tax ~~consequences, classification~~on the statement of ~~awards as either equity or liabilities~~earnings and eliminating the requirement that excess tax benefits be realized before they can be recognized. ASU 2016-09 also simplifies several other aspects of the accounting for employee share-based payments, including forfeitures, statutory tax withholdings requirements and classification ofon the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption of ASU 2016-09 is permitted. The Company is currently evaluating the impact of adopting ASU 2016-09.

3.~~CENTURY DOWNS RACETRACK AND CASINO~~APEX ACQUISITION

In ~~November 2012,~~June 2016, the Company’s subsidiary, CCE, signed credit and management agreements with CDR in connection with the development of a REC project in Balzac, north metropolitan area of Calgary, Alberta, Canada, which the Company operates as Century Downs Racetrack and Casino. On November 29, 2013, CCE and CDR amended the credit agreement. Under the amended creditentered into an agreement ~~with CDR, CCE acquired 15% of CDR, manages the operation of CDR and controls the CDR board of directors and managed the development and operation~~to acquire 100% of the ~~REC project. CCE also had~~issued and outstanding shares and related land of Game Plan Developments Ltd., Casino St. Albert Inc., Action ATM Inc. and MVP Sports Bar Ltd., collectively operating the ~~right to convert CAD 11 million~~Apex Casino (“Apex”) in St. Albert, Edmonton, Canada (the “Apex Acquisition”). Apex is a 34,500 square foot casino facility located on approximately seven acres of the amounts loaned to CDR into an additional ownership position in CDR of up to 60%. As of November 29, 2013, the Company began consolidating CDR as a minority owned subsidiary for which it has a controlling financial interest and, as a result, the loans between CDR and CCE are considered an intercompany transaction and eliminated upon consolidation. On March 20, 2015, CCE converted CAD 11 million that it had loaned to CDR into an additional 60% ownership interest in CDR. As of March 20, 2015, the Company, through its subsidiary, CCE, had a 75% ownership interest in CDR. Unaffiliated shareholders own the remaining 25% of CDR.land. The ~~Company accounts for and reports the remaining 25% CDR ownership interest as a non-controlling financial interest.~~

~~The REC has the only horse race track in the Calgary area and consists of a 5.5 furlongs (0.7 mile) racetrack, a gaming floor with 544~~casino facility includes 382 slot machines, ~~seven video lottery terminals,~~11 live table games, a restaurant, a bar, a lounge ~~restaurant facilities, an off-track-betting area~~ and ~~an entertainment area. The Alberta Gaming and Liquor Commission (“AGLC”) and Horse Racing Alberta (“HRA”) have issued licenses~~a banquet facility that can accommodate up to ~~the REC. The casino and racetrack opened in April 2015.~~

~~Equity Conversion~~

~~Distribution to Non-Controlling Interest~~

CDR has an agreement with its non-controlling shareholders to distribute any funds received by CDR related to infrastructure built during the development of the REC project. After CCE’s conversion of CAD 11 million that it had loaned to CDR into an additional 60% ownership interest in CDR, all funds received related to the infrastructure are distributed to CDR’s non-controlling shareholders as stated in the Credit Agreement between CCE and CDR. In the second quarter of 2015, the Company distributed $0.5 million related to the infrastructure to CDR’s non-controlling shareholders.

~~Horse Racing Alberta~~

In March 2016, a new 10-year agreement was reached between the Alberta government and HRA. The terms of the agreement between CDR and HRA for the allocation of gross gaming revenue will remain the same for the current year ending December 31, 2016. 175 guests.

The Apex Acquisition, which is expected to close in the fourth quarter of 2016, is subject to, among other things, the Company’s obtaining financing for the acquisition and customary closing conditions, including the receipt of necessary regulatory and governmental approvals, as well as the completion of due diligence by the Company. The total consideration for the Apex Acquisition is CAD 29.9 million subject to adjustment for the closing date working capital of Apex. Payments for the Apex Acquisition include the following:

A CAD 0.6 million deposit ($0.5 million based on the exchange rate in effect on June 30, 2016), which was paid in two equal parts on April 25, 2016 and June 29, 2016 and was reported as deposits and other on the Company’s condensed consolidated balance sheet as of June 30, 2016.

CAD 29.3 million, which will be paid at closing.

The working capital of Apex will be held in an escrow account until completion of the closing working capital statement.

4.COST INVESTMENT

Mendoza Central Entretenimientos S.A.

On October 31, 2014, CCE entered into an agreement (the “MCE Agreement”) with Gambling and Entertainment LLC and its affiliates, pursuant to which CCE purchased 7.5% of the shares of MCE, a company formed in Argentina, for $1.0 million. Pursuant to the MCE Agreement, CCE ~~will work~~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, and owned by the Province of Mendoza. MCE may also pursue other gaming opportunities. Under the MCE Agreement, CCE has appointed one director to MCE’s board of directors and has the right to appoint additional directors to MCE’s board of directors based on its ownership percentage of MCE. In addition, CCE has a three-year option through October 2017 to purchase up to 50% of the shares of MCE. The option can be exercised by CCE in tranches of shares, with each tranche representing not less than ten percent of the total outstanding shares of MCE. The exercise price of the shares is based upon the value of MCE at the time the option is exercised, which value is determined by a multiple of MCE’s EBITDA less certain debt. There are no conditions that limit CCE’s ability to exercise this option. The Company accounts for the $1.0 million investment in MCE using the cost method.

5.GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company tests goodwill for impairment as of October 1 each year, or more frequently as circumstances indicate it is necessary. Testing compares the estimated fair values of our reporting units to the reporting units’ carrying values. The reporting units with goodwill balances as of ~~March 31,~~June 30, 2016 include the Edmonton casino property and the CDR and CPL operations. The Company considers a variety of factors when estimating the fair value of its reporting units, including estimates about the future operating results of each reporting unit, multiples of earnings, various market analyses, and recent sales of comparable businesses, if such information is available. The Company makes a variety of estimates and judgments about the relevance and comparability of these factors to the reporting units in estimating their fair values. If the carrying value of a reporting unit exceeds its estimated fair value, the fair value of each reporting unit is allocated to the reporting unit’s assets and liabilities to determine the implied fair value of the reporting unit’s goodwill and whether impairment is necessary. There have been no indications of impairment at the Company’s Edmonton property, CDR or CPL since the Company’s last annual analysis that would necessitate additional impairment testing by the Company.

Changes in the carrying amount of goodwill related to the Company’s Edmonton property, CDR and CPL are as follows:



	Canada				Poland				Canada				Poland
Amounts in thousands	Edmonton		Century Downs		Casinos Poland		Total		Edmonton		Century Downs		Casinos Poland		Total
Balance – December 31, 2015	$	3,551	$	137	$	6,485	$	10,173	$	3,551	$	137	$	6,485	$	10,173
Effect of foreign currency translation		238		9		379		626		227		8		(26)		209
Balance -- March 31, 2016	$	3,789	$	146	$	6,864	$	10,799
Balance -- June 30, 2016									$	3,778	$	145	$	6,459	$	10,382

Intangible Assets

Trademarks

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



Amounts in thousands	Century Casinos		Casinos Poland		Total		Century Casinos		Casinos Poland		Total
Balance -- December 31, 2015	$	108	$	1,546	$	1,654	$	108	$	1,546	$	1,654
Effect of foreign currency translation		0		90		90		0		(6)		(6)
Balance -- March 31, 2016	$	108	$	1,636	$	1,744
Balance -- June 30, 2016							$	108	$	1,540	$	1,648

The Company has determined both trademarks have indefinite useful lives and therefore the Company does not amortize the trademarks. Rather, the Company tests its trademarks for impairment annually or more frequently as circumstances indicate it is necessary. The Company tests trademarks for impairment using the relief-from-royalty method. If the fair value of an indefinite-lived intangible asset is less than its carrying amount, the Company would recognize an impairment charge equal to the difference. No impairment charges related to the Century Casinos and Casinos Poland trademarks have been recorded.

Casino Licenses

Casino licenses consist of the following:



	March 31,		December 31,		June 30,		December 31,
Amounts in thousands	2016		2015		2016		2015
Casino licenses	$	4,392	$	4,131	$	4,271	$	4,131
Less: accumulated amortization		(1,258)		(1,103)		(1,255)		(1,103)
Casino licenses, net	$	3,134	$	3,028	$	3,016	$	3,028

Casinos Poland

As of June 30, 2016, Casinos Poland ~~currently has~~had nine casino licenses, each with an original term of six years, which are ~~reported as~~ finite-lived intangible assets ~~on the Company’s condensed consolidated balance sheets.~~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, 2015	$	730
Amortization		~~(96)~~(200)
Effect of foreign currency translation		4841
Balance -- ~~March 31,~~June 30, 2016	$	~~682~~571

As of ~~March 31,~~June 30, 2016, estimated amortization expense for the CPL casino licenses over the next five years was as follows:



Amounts in thousands
2016	$	278	$	191
2017		297		280
2018		93		87
2019		14		13
2020		0		0
	$	682	$	571

Such estimates do not reflect the impact of future foreign exchange rate changes or the ~~renewal~~extension of the current licenses. The weighted average period before the ~~next renewal~~current casino licenses expire is ~~1.6~~1.4 years. In Poland, gaming licenses are not renewed. Once a gaming license has expired, any gaming company can apply for the license. On July 7, 2016, the casino license at the Katowice casino expired. The Company has applied for the license and expects a decision in September 2016. Until the license is awarded, the casino operations at the Katowice casino have been moved to the Sosnowiec casino. If the license is not granted, the Company will continue operations at the Sosnowiec casino until its license expires in May 2017. The casino ~~licenses~~license at ~~both~~ the Lim Center casino in Warsaw ~~and the Katowice casino are set to~~will expire in September 2016. The Company ~~intends to apply~~has applied for the ~~renewal of both licenses~~license and ~~anticipates the cost to renew to be approximately PLN 2.8 million ($0.8 million based on the exchange rate~~expects a decision in ~~effect on March 31, 2016).~~September 2016.

Century Downs Racetrack and Casino

CDR currently has two licenses, one from the AGLC and one from HRA. The licenses ~~were issued in November 2013 pending final approval of the REC project from the AGLC. The AGLC granted the final approval for the licenses in March 2015. The licenses~~ are ~~reported as indefinite lived~~indefinite-lived intangible assets ~~on the Company’s condensed consolidated balance sheets.~~and therefore are not amortized. No impairment charges related to the CDR licenses have been recorded. Changes in the carrying amount of the CDR licenses are as follows:



Amounts in thousands	Century Downs
Balance – December 31, 2015	$	2,298
Effect of foreign currency translation		~~154~~147
Balance -- ~~March 31,~~June 30, 2016	$	~~2,452~~2,445

6.PROMOTIONAL ALLOWANCES

Hotel accommodations, and food and beverage furnished without charge to customers are included in gross revenue at retail value and are deducted as promotional allowances to arrive at net operating revenue. The Company issues coupons and downloadable promotional credits to customers for the purpose of generating future revenue. The value of coupons and downloadable promotional credits redeemed is applied against the revenue generated on the day of the redemption. The estimated cost of provided promotional allowances is included in casino expenses. The ~~cost~~costs of providing promotional allowances were as follows:



	For the three months
	ended March 31,				For the three months				For the six months
	2016		2015		ended June 30,				ended June 30,
Amounts in thousands					2016		2015		2016		2015
Hotel	$	16	$	16	$	13	$	19	$	29	$	35
Food and beverage		248		237		245		260		494		497
	$	264	$	253	$	258	$	279	$	523	$	532

Members of the Company’s casinos’ player clubs earn points based on, among other things, their volume of play at the Company’s casinos. Players can accumulate points over time that they may redeem at their discretion under the terms of the program. The Company records a liability based on the redemption value of the points earned, and records a corresponding reduction in casino revenue. Points can be redeemed for cash, downloadable promotional credits and/or various amenities at the casino, such as meals, hotel stays and gift shop items. The value of the points is offset against the revenue in the period in which the points were earned. The value of unused or unredeemed points is included in accrued liabilities on the Company’s condensed consolidated balance sheets. The expiration of unused points results in a reduction of the liability. As of ~~March 31,~~June 30, 2016 and December 31, 2015, the outstanding balance of this liability was ~~$0.6 million and~~ $0.7 ~~million, respectively.~~

million.

7. LONG-TERM DEBT

Long-term debt and the weighted average interest rates as of ~~March 31,~~June 30, 2016 and December 31, 2015 consisted of the following:



Amounts in thousands	March 31, 2016		December 31, 2015		June 30, 2016			December 31, 2015
Credit agreement - Bank of Montreal	$	21,134	$	20,419	$	20,421	4.45%	$	20,419	5.07%
Capital leases - Edmonton						270	6.77%		0	0.00%
Credit agreement - Casinos Poland		1,341		1,647		883	3.50%		1,647	3.02%
Credit facility - Casinos Poland		0		0		0	0.00%		0	0.00%
Capital leases - Casinos Poland		7		13		4	59.33%		13	27.89%
Financing obligation - CDR land lease		15,031		14,087		14,987	14.21%		14,087	12.94%
Capital leases - CDR		590		615		604	5.48%		615	4.57%
Total principal	$	38,103	$	36,781	$	37,169	8.47%	$	36,781	8.21%
Deferred financing costs		(249)		(261)		(220)			(261)
Total long-term debt	$	37,854	$	36,520	$	36,949		$	36,520
Less current portion		(4,062)		(4,123)		(3,790)			(4,123)
Long-term portion	$	33,792	$	32,397	$	33,159		$	32,397

~~Interest Rates~~

~~Consolidated - The consolidated weighted average interest rate on all Company debt was~~ ~~8.43% for the three months ended March 31, 2016.~~

~~Bank of Montreal (“BMO”) -~~ ~~Borrowings bear interest at fixed rates or at BMO’s floating rate plus a margin. The Company’s two interest rate swap agreements are set~~ at a Canadian Dollar Offered Rate (“CDOR”) of 3.92% and 3.89%, respectively. The Company pays a floating interest rate on its remaining borrowings under the BMO Credit Agreement, and the current interest rate is approximately 3.47%.

~~Casinos Poland - The Company paid a weighted average interest rate of~~ ~~4.56% on its borrowings under the CPL loan agreements for the three months ended March 31, 2016.~~

~~Century Downs – The Company paid a weighted average interest rate of~~ ~~8.06% on its CDR lease agreements for the three months ended March 31, 2016. The weighted-average interest rate on the CDR land lease was 14.75% for the three months~~ ~~ended March 31, 2016~~.

~~Credit Agreement –~~ Bank of Montreal Credit Agreement

In May 2012, the Company, through its Canadian subsidiaries, entered into the CAD 28.0 million credit agreement with ~~BMO (the “BMO Credit Agreement”).~~BMO. On August 15, 2014, the Company, through its Canadian subsidiaries, entered into an amended and restated BMO Credit Agreement that increased the Company’s borrowing capacity to CAD 39.1 ~~million.~~million with an interest rate of BMO’s floating rate plus a margin on the debt that is not included in the interest rate swap agreements. As of ~~March 31,~~June 30, 2016, the Company had borrowed CAD 33.9 million, of which the outstanding balance was CAD ~~27.4~~26.6 million ($~~21.1~~20.4 million based on the exchange rate in effect on ~~March 31,~~June 30, 2016) and the Company had approximately CAD 5.2 million ($4.0 million based on the exchange rate in effect on ~~March 31,~~June 30, 2016) available under the BMO Credit Agreement. The outstanding borrowings cannot be re-borrowed once they are repaid. The Company has used borrowings under the BMO Credit Agreement primarily to repay the Company’s mortgage loan related to the Edmonton property, pay for the additional 33.3% investment in CPL and pay for development costs related to CDR. The Company can also use the proceeds to pursue the development or acquisition of new gaming opportunities and for general corporate purposes. Any funds not drawn down under the BMO Credit Agreement are subject to standby fees ranging from 0.50% to 0.75% payable quarterly in arrears. Standby fees of less than CAD 0.1 million (less than $0.1 million based on the exchange rates in effect on ~~March 31,~~June 30, 2016 and 2015) were recorded as general and administrative expense in the condensed consolidated ~~statement~~statements of earnings for each of the three and six months ended ~~March 31,~~June 30, 2016 and ~~March 31,~~June 30, 2015. The BMO Credit Agreement has a term of five years through August 2019 and is guaranteed by the Company. The shares of the Company’s subsidiaries in Edmonton and Calgary and the Company's 75% interest in CDR are pledged as collateral for the BMO Credit Agreement. The BMO Credit Agreement contains a number of financial covenants applicable to the Canadian subsidiaries, including covenants restricting their incurrence of additional debt, a debt to EBITDA ratio, a fixed charge coverage ratio, a requirement to maintain a CAD 28.0 million equity balance and a capital expenditure limit of CAD 2.0 million per year. The Company was in compliance with all covenants of the BMO Credit Agreement as of ~~March 31,~~June 30, 2016.

In April 2015, the Company entered into two interest rate swap agreements to partially hedge the risk of future increases in the variable rate debt under the Company’s BMO Credit Agreement. The Company’s two interest rate swap agreements are set at a Canadian Dollar Offered Rate (“CDOR”) of 3.92% and 3.89%, respectively. The notional amount for each of the interest rate swap agreements was CAD ~~10.1~~9.7 million ($~~7.8~~7.5 million based on the exchange rate in effect on ~~March 31,~~June 30, 2016). 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 ~~statement~~statements of earnings.

Deferred financing costs consist of the Company’s costs related to the financing of the BMO Credit Agreement. Amortization expenses relating to deferred financing charges were less than $0.1 million for each of the three months ended ~~March 31,~~June 30, 2016 and 2015. These costs are included in interest expense in the condensed consolidated statements of earnings.

~~Casinos Poland~~Edmonton

As of ~~March 31,~~June 30, 2016, ~~CPL~~Edmonton had ~~debt~~a capital lease agreement totaling ~~PLN 5.0~~CAD 0.4 million ($~~1.3~~0.3 million based on the exchange rate in effect on ~~March 31,~~June 30, 2016) for surveillance equipment.

Casinos Poland

As of June 30, 2016, CPL had debt totaling PLN 3.5 million ($0.9 million based on the exchange rate in effect on June 30, 2016) under two credit agreements and ~~three~~one capital lease ~~agreements.~~agreement. CPL also had a credit facility that had no outstanding balance as of ~~March 31,~~June 30, 2016.

The first credit agreement is with mBank (formerly known as BRE Bank). Under this credit agreement, CPL entered into a three year term loan in November 2013 at an interest rate of Warsaw Interbank Offered Rate (“WIBOR”) plus 1.75%. Proceeds from the loan were used to repay the balance of the Bank Pocztowy loan related to the CPL properties, invest in slot equipment and relocate the Company’s Poznan, Poland casino. The mBank credit agreement is secured by a building owned by CPL in Warsaw, Poland. As of ~~March 31,~~June 30, 2016, the amount outstanding on the term loan was PLN ~~3.2~~2.0 million ($~~0.9~~0.5 million based on the exchange rate in effect on ~~March 31,~~June 30, 2016). CPL has no further borrowing availability under the loan, and the loan matures in November 2016. The mBank credit agreement contains a number of financial covenants applicable to CPL, including covenants that restrict the incurrence of additional debt and require CPL to maintain debt ratios and current liquidity ratios of 0.6 or higher. On March 26, 2015, CPL and mBank amended the credit agreement to lower the current liquidity ratio to 0.5. CPL was in compliance with all covenants of this mBank agreement as of ~~March 31,~~June 30, 2016.

The second credit agreement is also with mBank. Under this credit agreement, CPL entered into a three year term loan on September 15, 2014 at an interest rate of WIBOR plus 1.70%. Proceeds from the loan were used to repay balances outstanding under a prior credit agreement that matured in September 2014 and to finance current operations. The mBank credit agreement is secured by a building owned by CPL in Warsaw, Poland. As of ~~March 31,~~June 30, 2016, the amount outstanding on the term loan was PLN ~~1.8~~1.5 million ($~~0.5~~0.4 million based on the exchange rate in effect on ~~March 31,~~June 30, 2016). CPL has no further borrowing availability under the loan, and the loan matures in September 2017. The mBank credit agreement contains a number of financial covenants applicable to CPL, including covenants that restrict the incurrence of additional debt and require CPL to maintain debt ratios and current liquidity ratios of 0.6 or higher. On March 26, 2015, CPL and mBank amended the credit agreement to lower the current liquidity ratio to 0.5. CPL was in compliance with all covenants of this mBank agreement as of ~~March 31,~~June 30, 2016.

The credit facility is a short-term line of credit with BPH Bank used to finance current operations. The bank line of credit bears an interest rate of WIBOR plus 1.85% with a borrowing capacity of PLN 13.0 million, of which PLN 2.0 million may only be used to secure bank guarantees. The credit facility terminates on February 11, 2018. The BPH Bank line of credit is secured by a building owned by CPL in Warsaw, Poland. As of ~~March 31,~~June 30, 2016, there was no outstanding amount on the credit facility, and CPL had approximately PLN 11.0 million ($~~3.0~~2.8 million based on the exchange rate in effect on ~~March 31,~~June 30, 2016) available under the agreement. The BPH Bank facility contains a number of financial covenants applicable to CPL, including covenants that restrict the incurrence of additional debt and debt to EBITDA ratios. CPL was in compliance with all covenants of the BPH Bank line of credit as of ~~March 31,~~June 30, 2016.

CPL’s remaining debt ~~consists of three~~is a capital lease ~~agreements~~agreement for ~~various vehicles.~~a vehicle. As of ~~March 31,~~June 30, 2016, the amount outstanding was less than PLN 0.1 million (less than $0.1 million based on the exchange rate in effect on ~~March 31,~~June 30, 2016).

In addition, under Polish gaming law, CPL is required to maintain PLN 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 3.6 million ($~~1.0~~0.9 million based on the exchange rate in effect on ~~March 31,~~June 30, 2016). The mBank guarantees are secured by land owned by CPL in Kolbaskowo, Poland and terminate on October 31, 2019. In addition, CPL 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 ~~$0.3~~$0.2 million in deposits for this purpose as of ~~March 31,~~June 30, 2016. These deposits are included in deposits and other on the Company’s condensed consolidated balance sheets.

Century Downs Racetrack and Casino

As of ~~March 31,~~June 30, 2016, CDR had debt totaling CAD 20.3 million ($15.6 million based on the exchange rate in effect on ~~March 31,~~June 30, 2016). The debt includes CDR’s land lease and ~~four~~five capital lease agreements.

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 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 no 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 ~~March 31,~~June 30, 2016, the outstanding balance on the financing obligation was CAD 19.5 million ($15.0 million based on the exchange rate in effect on ~~March 31,~~June 30, 2016) and the implicit interest rate was 10.0%.

CDR’s remaining debt consists of ~~four~~five capital lease agreements for equipment used in the operation of CDR. As of ~~March 31,~~June 30, 2016, the amount outstanding was CAD 0.8 million ($0.6 million based on the exchange rate in effect on ~~March 31,~~June 30, 2016).

As of ~~March 31,~~June 30, 2016, scheduled maturities related to long-term debt were as follows:


Amounts in thousands	Bank of Montreal		Century Downs		Casinos Poland		Total		Bank of Montreal		Edmonton		Century Downs		Casinos Poland		Total
2016	$	1,958	$	197	$	1,106	$	3,261	$	1,302	$	46	$	139	$	659	$	2,146
2017		2,611		274		242		3,127		2,604		96		289		228		3,217
2018		2,611		79		0		2,690		2,604		102		95		0		2,801
2019		13,954		26		0		13,980		13,911		26		44		0		13,981
2020		0		9		0		9		0		0		28		0		28
Thereafter		0		15,036		0		15,036		0		0		14,996		0		14,996
Total	$	21,134	$	15,621	$	1,348	$	38,103	$	20,421	$	270	$	15,591	$	887	$	37,169

8.COMMITMENTS AND CONTINGENCIES

Litigation

Casinos Poland

~~On March 9, 2016,~~Following multiple appeals by CPL, ~~received~~the Supreme Administrative Court issued an oral decision ~~from~~in March 2016, which was confirmed in a written decision issued in May 2016, finding in favor of the ~~Supreme Administrative Court~~Polish IRS for the tax periods of December 1, 2007 to December 31, 2008 and January 1, 2011 to January 31, 2011. ~~The court~~In October 2015, the Voivodship Administrative Court found in favor of ~~the Polish IRS.~~ CPL ~~expects to receive the written decision from the court in the second quarter of 2016. As previously disclosed, CPL paid the Polish IRS a total of PLN 3.6 ($1.2 million)~~ for ~~the taxes and interest owed in connection with these tax audits in December 2012 and December 2013.~~

~~For~~ the tax period from January 1, 2009 to December 31, 2009 ~~after further proceedings and appeals between CPL and the Polish IRS, the Voivodship Administrative Court found in favor of CPL in October 2015~~ on procedural grounds that the prior tax proceedings were not conducted by the appropriate taxing authority. However, the court also found that CPL’s tax records for 2009 remain open for audit by a different tax authority. CPL appealed this decision to the Supreme Administrative Court in December 2015 and expects a decision in 2018. ~~CPL paid PLN 2.8 million ($0.9 million) to the Polish IRS in December 2014 for taxes and interest owed in connection with this tax audit.~~

~~The statute of limitations for the Polish IRS to begin a~~A tax audit ~~is five years. The statute of limitations~~was not conducted for the period from January 1, 2010 to November 30, 2010, ~~ended on December 31, 2015 without a tax~~and the statute of limitations has passed for an audit ~~and as~~to be conducted. As a result, the Company adjusted ~~the~~its contingent liability to remove the estimated taxes accrued for the 2010 tax year. The adjustment reduced the contingent liability by PLN 3.4 million ($0.9 million) in December ~~2015. The adjustment~~2015 and was recorded as gain on foreign currency transactions and other on the Company’s consolidated statement of earnings (loss) during the fourth quarter of the year ended December 31, 2015.

The balance of the potential liability on the Company’s condensed consolidated balance sheet for all open periods as of ~~March 31,~~June 30, 2016 is estimated at PLN 8.6 million ($~~2.3~~2.2 million based on the exchange rate in effect on ~~March 31,~~June 30, 2016). Management is continuing to assess the impact of the outcome of the decisions relating to the Polish IRS tax audits for December 1, 2007 to December 31, 2008 and January 1, 2011 to January 31, 2011 as it relates to future tax years that have not been audited. The impact may be material to the Company’s consolidated financial statements.

The Company has evaluated the contingent liability recorded on its condensed consolidated balance sheet as of ~~March 31,~~June 30, 2016 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 ~~March 31,~~June 30, 2016. The decision rendered by the Supreme Administrative Court in March 2016 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 ~~March 31,~~June 30, 2016. 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. ~~Management is currently evaluating~~To address these issues, the ~~impact these matters may have on the Company’s payroll costs and related withholdings in Poland for future periods. Any~~Company expects changes to the ~~Company’s~~ payroll and withholding processes for Casinos Poland will be ~~evaluated and~~ implemented ~~if required after a final written decision is rendered~~in the third quarter of 2016. The Company anticipates payroll costs to increase by approximately PLN 5.0 million per year ($1.3 million based on the ~~Supreme Administrative Court and thereafter as management deems necessary.~~exchange rate in effect on June 30, 2016).

Distribution to Non-Controlling Interest

Century Downs

CDR has an agreement with its non-controlling shareholders to distribute any funds received by CDR related to infrastructure built during the development of the REC project. Following CCE’s conversion of CAD 11 million that it had loaned to CDR into an additional 60% ownership interest in CDR, all funds received related to the infrastructure are distributed to CDR’s non-controlling shareholders as stated in the Credit Agreement between CCE and CDR. The Company distributed $0.5 million related to the infrastructure to CDR’s non-controlling shareholders in the second quarter of 2015 and $1.6 million in the second quarter of 2016.

9.INCOME TAXES

Income tax expense is recorded relative to the jurisdictions that recognize book earnings. During the ~~three~~six months ended ~~March 31,~~June 30, 2016, the Company recognized income tax expense of ~~$0.6~~$1.6 million on pre-tax income of ~~$2.8~~$8.1 million, representing an effective income tax rate of ~~21.2%~~19.5% compared to an income tax expense of ~~$0.4~~less than $0.1 million on pre-tax income of ~~$1.9~~$9.1 million, representing an effective income tax rate of ~~22.5%~~0.3% for the same period in 2015.

The difference between the income taxes expected at the U.S. federal statutory income tax rate of 34% and the reported income tax expense are impacted by a number of items. The Company’s effective tax rate is lower because there is a lower statutory tax rate in the countries where the Company pays taxes, such as Austria, Mauritius, Canada and Poland, when compared to the United States. There is also a lower effective tax rate for the Company’s Canadian and Polish operations due to exchange rate benefits. The ~~effective tax rate in Canada is also impacted by the fair value measurement of the interest rate swap agreements for the Company’s Edmonton property. The~~ Company continues to maintain a full valuation allowance on all of its U.S. deferred tax assets and on certain Canadian deferred tax assets.

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 ~~securities.~~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 six months ended ~~March 31,~~June 30, 2016 and 2015 were as follows:



	For the three months				For the three months				For the six months
	ended March 31,				ended June 30,				ended June 30,
Amounts in thousands	2016		2015		2016		2015		2016		2015
Weighted average common shares, basic		24,436		24,381		24,432		24,386		24,445		24,384
Dilutive effect of stock options		226		39		116		42		171		40
Weighted average common shares, diluted		24,662		24,420		24,548		24,428		24,616		24,424

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 three months				For the six months
	ended March 31,				ended June 30,				ended June 30,
Amounts in thousands	2016		2015		2016		2015		2016		2015
Stock options		35		1,475		60		1,469		35		1,469

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

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.

Recurring Fair Value Measurements

The estimated fair value and basis of valuation of our financial liabilities that are measured at fair value on a recurring basis were as follows:


Amounts in thousands		March 31, 2016						December 31, 2015							June 30, 2016						December 31, 2015
		Level 1		Level 2		Level 3		Level 1		Level 2		Level 3			Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Interest rate swaps (1)		$	0	$	(218)	$	0	$	0	$	(194)	$	0		$	0	$	(237)	$	0	$	0	$	(194)	$	0

(1) See “Derivative Instruments Reporting” below for detailed information regarding the Company's interest rate swap agreements.	(1) See “Derivative Instruments Reporting” below for detailed information regarding the Company's interest rate swap agreements.													(1) See “Derivative Instruments Reporting” below for detailed information regarding the Company's interest rate swap agreements.

The Company determines the fair value of its interest rate swap agreements based on the notional amount of the 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 these instruments as Level 2 because the inputs into the valuation model can be corroborated utilizing observable benchmark market rates at commonly quoted intervals.

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 were no assets or liabilities measured at fair value on a non-recurring basis as of ~~March 31,~~June 30, 2016 and December 31, 2015.

Long-Term Debt – The carrying value of the Company’s long-term debt approximates fair value because it bears interest at the lender’s variable rate for the debt related to the BMO Credit Agreement, the CPL credit agreements and CPL credit facility as of ~~March 31,~~June 30, 2016 and December 31, 2015. The estimated fair values of the outstanding balances under the BMO Credit Agreement and CPL debt are designated as Level 2 measurements in the fair value hierarchy due to quoted prices in active markets for similar liabilities.

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 ~~March 31,~~June 30, 2016 and December 31, 2015, the Company had no cash equivalents.

Derivative Instruments Reporting

As of April 2015, the Company began using interest rate swaps to mitigate the risk of variable interest rates under its BMO Credit Agreement. As of ~~March 31,~~June 30, 2016, the Company had two interest rate swap agreements, each with a notional amount of CAD ~~10.1~~9.7 million ($~~7.8~~7.5 million based on the exchange rate in effect on ~~March 31,~~June 30, 2016) at a fixed CDOR rate of 3.92% and 3.89%, respectively, which were not designated as accounting hedges. These interest rate swaps reset monthly and expire on August 15, 2019. The difference to be paid or received under the terms of the interest rate swap agreements is accrued as interest rates change and recognized as an adjustment to interest expense for the related debt. Changes in the variable interest rates to be paid or received pursuant to the terms of the interest rate swap agreements are recognized in interest expense on the Company’s condensed consolidated statement of earnings. The location and effects of derivative instruments on the condensed consolidated statements of earnings were as follows:



Amounts in thousands
Derivatives not designated as	Income Statement	For the three months ended March 31,				Income Statement	For the three months ended June 30,				For the six months ended June 30,
ASC 815 hedges	Classification	2016		2015		Classification	2016		2015		2016		2015
Interest Rate Swaps	Interest Expense	$	151	$	0	Interest Expense	$	169	$	289	$	320	$	289

~~There were no derivative instruments for the three months ended March 31, 2015.~~

The location and fair value amounts of the Company’s derivative instruments in the condensed consolidated balance sheets were as follows:


Amounts in thousands		As of March 31, 2016						As of December 31, 2015							As of June 30, 2016						As of December 31, 2015
Derivatives not designated as ASC 815 hedges	Balance Sheet Classification	Gross Recognized Liabilities		Gross Amounts Offset		Net Recognized Fair Value Liabilities		Gross Recognized Liabilities		Gross Amounts Offset		Net Recognized Fair Value Liabilities		Balance Sheet Classification	Gross Recognized Liabilities		Gross Amounts Offset		Net Recognized Fair Value Liabilities		Gross Recognized Liabilities		Gross Amounts Offset		Net Recognized Fair Value Liabilities
Derivative liabilities:
Interest rate swaps - current	Accrued liabilities	$	(76)	$	0	$	(76)	$	(86)	$	0	$	(86)	Accrued liabilities	$	(71)	$	0	$	(71)	$	(86)	$	0	$	(86)
Interest rate swaps - non-current	Taxes payable and other		(142)		0		(142)		(108)		0		(108)	Taxes payable and other		(166)		0		(166)		(108)		0		(108)
Total derivative liabilities		$	(218)	$	0	$	(218)	$	(194)	$	0	$	(194)		$	(237)	$	0	$	(237)	$	(194)	$	0	$	(194)

12.SEGMENT INFORMATION

The Company reports its financial performance in three reportable segments based on the geographical locations in which its casinos operate: the United States, Canada and Poland. Operating segments are aggregated within reportable segments based on their similar 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 casino properties provide gaming, hotel accommodations, dining facilities and other amenities to the Company’s customers. The Company’s operations related to concession, management and consulting 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 operating segments into reportable segments:


Reportable Segment	Operating Segment
Canada	Century Casino & Hotel - Edmonton
Canada	Century Casino Calgary
Canada	Century Downs Racetrack and Casino
Canada	Century Bets!
United States	Century Casino & Hotel – Central City
United States	Century Casino & Hotel – Cripple Creek
Poland	Casinos Poland
Corporate and Other	Cruise Ships & Other
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 Co Chief Executive Officers. The Company’s chief operating decision makers and management utilize Adjusted EBITDA as a primary profit measure for its reportable segments. Adjusted EBITDA is a non-U.S. GAAP measure defined as net earnings (loss) before interest expense (income), net, income taxes (benefit), depreciation, amortization, non-controlling interest (earnings) losses and transactions, pre-opening expenses, acquisition costs, non-cash stock-based compensation charges, asset impairment costs, (gain) loss on disposition of fixed assets, discontinued operations, (gain) loss on foreign currency transactions and other, gain on business combination and certain other one-time items. Intercompany transactions consisting primarily of management and royalty fees and interest, along with their related tax effects, are excluded from the presentation of net earnings (loss) and Adjusted EBITDA reported for each segment. 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.

The following tables provide information regarding the Company’s segments for the three and six months ended ~~March 31,~~June 30, 2016 and 2015:

For the Three Months Ended March 31, 2016

Canada

United States

Poland

Corporate and Other

Total
Net operating revenue (1)

$
12,298

$
7,080

$
12,264

$
888

$
32,530

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

$
1,648

$
543

$
666

$
(963)

$
1,894
Interest expense (income), net

749

0

15

(3)

761
Income taxes (benefit)

444

333

267

(446)

598
Depreciation and amortization

697

626

602

85

2,010
Non-controlling interest

(2)

0

332

0

330
Non-cash stock-based compensation

0

0

0

190

190
(Gain) loss on foreign currency transactions and other

(20)

0

(200)

22

(198)
Loss on disposition of fixed assets

2

2

22

0

26
Adjusted EBITDA

$
3,518

$
1,504

$
1,704

$
(1,115)

$
5,611

~~(1)~~

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


	For the Three Months Ended March 31, 2015											For the Three Months Ended June 30, 2016
		Canada		United States		Poland		Corporate and Other		Total
Amounts in thousands													Canada		United States		Poland		Corporate and Other		Total
Net operating revenue (1)		$	8,445	$	6,793	$	13,534	$	1,633	$	30,405		$	13,167	$	7,703	$	13,570	$	761	$	35,201

Net earnings (loss) attributable to Century Casinos, Inc. shareholders		$	2,138	$	476	$	781	$	(1,550)	$	1,845		$	1,948	$	833	$	678	$	(1,210)	$	2,249
Interest expense (income), net			632		0		35		(3)		664			784		0		8		(4)		788
Income taxes (benefit)			348		369		248		(531)		434			688		511		350		(562)		987
Depreciation and amortization			418		634		610		149		1,811			772		625		633		87		2,117
Non-controlling interest			(739)		0		391		0		(348)			1,736		0		341		0		2,077
Non-cash stock-based compensation			0		0		0		388		388			0		0		0		190		190
(Gain) loss on foreign currency transactions and other			(164)		0		(333)		2		(495)			(1,524)		0		(22)		(14)		(1,560)
Loss on disposition of fixed assets			0		0		122		0		122
Acquisition costs			36		0		0		(36)		0
Preopening expenses			345		0		0		0		345
Loss (gain) on disposition of fixed assets														18		1		(9)		0		10
Adjusted EBITDA		$	3,014	$	1,479	$	1,854	$	(1,581)	$	4,766		$	4,422	$	1,970	$	1,979	$	(1,513)	$	6,858

(1)

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


	For the Three Months Ended June 30, 2015
Amounts in thousands		Canada		United States		Poland		Corporate and Other		Total
Net operating revenue (1)		$	13,309	$	7,210	$	12,875	$	4,481	$	37,875

Net earnings attributable to Century Casinos, Inc. shareholders		$	2,258	$	718	$	568	$	3,053	$	6,597
Interest expense (income), net			992		0		43		(2)		1,033
Income taxes (benefit)			611		362		268		(1,647)		(406)
Depreciation and amortization			573		632		636		49		1,890
Non-controlling interest			738		0		284		0		1,022
Non-cash stock-based compensation			0		0		0		419		419
Gain on foreign currency transactions and other			(357)		0		(35)		(15)		(407)
Loss on disposition of fixed assets			3		0		22		0		25
Acquisition costs			(36)		0		0		36		0
Other one-time income (2)			0		0		0		(3,365)		(3,365)
Adjusted EBITDA		$	4,782	$	1,712	$	1,786	$	(1,472)	$	6,808

(1)

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

(2)

Other one-time income for Corporate and Other relates to the $3.4 million consideration for the Termination Agreement with Norwegian.


	For the Six Months Ended June 30, 2016
		Canada		United States		Poland		Corporate and Other		Total
Net operating revenue (1)		$	25,462	$	14,784	$	25,835	$	1,650	$	67,731

Net earnings (loss) attributable to Century Casinos, Inc. shareholders		$	3,604	$	1,377	$	1,347	$	(2,186)	$	4,142
Interest expense (income), net			1,534		0		23		(8)		1,549
Income taxes (benefit)			1,118		844		617		(995)		1,584
Depreciation and amortization			1,470		1,251		1,234		172		4,127
Non-controlling interest			1,735		0		672		0		2,407
Non-cash stock-based compensation			0		0		0		381		381
(Gain) loss on foreign currency transactions and other			(1,544)		0		(222)		8		(1,758)
Loss on disposition of fixed assets			21		3		13		0		37
Adjusted EBITDA		$	7,938	$	3,475	$	3,684	$	(2,628)	$	12,469

(1)

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


	For the Six Months Ended June 30, 2015
		Canada		United States		Poland		Corporate and Other			Total
Net operating revenue (1)		$	21,754	$	14,003	$	26,409	$	6,113	$	68,279

Net earnings attributable to Century Casinos, Inc. shareholders		$	4,392	$	1,194	$	1,351	$	1,505	$	8,442
Interest expense (income), net			1,625		0		78		(6)		1,697
Income taxes (benefit)			957		731		516		(2,175)		29
Depreciation and amortization			992		1,266		1,247		197		3,702
Non-controlling interest			(1)		0		675		0		674
Non-cash stock-based compensation			0		0		0		807		807
Gain on foreign currency transactions and other			(519)		0		(368)		(15)		(902)
Loss on disposition of fixed assets			3		0		142		1		146
Preopening expenses			345		0		0		0		345
Other one-time income (2)			0		0		0		(3,365)		(3,365)
Adjusted EBITDA		$	7,794	$	3,191	$	3,641	$	(3,051)	$	11,575

(1)

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

(2)

Other one-time income for Corporate and Other relates to the $3.4 million consideration for the Termination Agreement with Norwegian.

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 “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. In addition, Century Casinos, Inc. (together with its subsidiaries, the “Company”) may make other written and oral communications from time to time that contain such statements. Forward-looking statements include statements as to industry trends and future expectations of the Company and other matters that do not relate strictly to historical facts and are based on certain assumptions by management at the time such statements are made. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” or “continue,” and similar expressions or variations. These statements are based on the beliefs and assumptions of the management of the Company based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, among others, the risks described in the section entitled “Risk Factors” under Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2015. 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 and the term “PLN” refers to Polish zloty. Certain terms used in this Item 2 without definition are defined in Item 1.

Amounts presented in this Item 2 are rounded. As such, rounding differences could occur in period over period changes and percentages reported throughout this Item 2.

EXECUTIVE OVERVIEW

Overview

Since our inception in 1992, we have been primarily engaged in developing and operating gaming establishments and related lodging, restaurant and entertainment facilities. Our primary source of revenue is from the net proceeds of our gaming machines and tables, with ancillary revenue generated from hotel, restaurant, horse racing (including off-track betting), bowling and entertainment facilities that are in most instances a part of the casinos.

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

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


Reportable Segment	Operating Segment
Canada	Century Casino & Hotel - Edmonton
Canada	Century Casino Calgary
Canada	Century Downs Racetrack and Casino
Canada	Century Bets!
United States	Century Casino & Hotel – Central City
United States	Century Casino & Hotel – Cripple Creek
Poland	Casinos Poland
Corporate and Other	Cruise Ships & Other
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 Calgary, Alberta, Canada;

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

The Century Casino & Hotel in Cripple Creek, Colorado.

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

We have a 66.6% ownership interest in CPL and we consolidate CPL as a majority-owned subsidiary for which we have a controlling financial interest. Polish Airports owns the remaining 33.3% of CPL. We account for and report the 33.3% Polish Airports ownership interest as a non-controlling financial interest. CPL has been in operation since 1989 and, ~~is the owner~~as of June 30, 2016, owned and ~~operator of~~operated nine casinos throughout Poland with a total of ~~505~~504 slot machines and 8179 tables. The following table summarizes the Polish cities in which CPL operated as of ~~March 31,~~June 30, 2016, each casino’s location and the number of slots and tables at each casino.


City	Location	Number of Slots	Number of Tables	Location	Number of Slots	Number of Tables
Warsaw	Marriott Hotel	70	25	Marriott Hotel	70	25
Warsaw	LIM Center	66	4	LIM Center	66	4
Krakow	Dwor Kosciuszko Hotel	58	8	Dwor Kosciuszko Hotel	59	8
Lodz	Manufaktura Entertainment Complex	58	9	Manufaktura Entertainment Complex	56	7
Wroclaw	HP Park Plaza Hotel	69	12	HP Park Plaza Hotel	69	12
Poznan	Hotel Andersia	57	9	Hotel Andersia	57	9
Katowice	Altus Building	70	9
Katowice*				Altus Building	70	9
Sosnowiec*	Sosnowiec City Center	10	1	Sosnowiec City Center	10	1
Plock	Hotel Plock	47	4	Hotel Plock	47	4

*Operations at the Sosnowiec casino were suspended as of June 30, 2014. The casino reopened on a limited basis in February ~~2015, and we expect~~2015. On July 7, 2016, the casino license at the Katowice casino expired. We have applied for the license and expect a decision in September 2016. Until the license is awarded, the casino operations at the Katowice casino have been moved to the Sosnowiec casino. If the license is not granted, we will continue ~~limited~~ operations at the Sosnowiec casino until ~~its gaming~~our license expires in May 2017.

2729

The casino license at the Lim Center casino in Warsaw will expire in September 2016. We have applied for the license and expect a decision in September 2016.

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’s casino and racetrack opened in April 2015. Century Downs 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.The 2016 horse racing season is from February to November.

We have a 75% ownership interest in CBS and we consolidate CBS as a majority-owned subsidiary for which we have a controlling financial interest. RMTC owns the remaining 25% of CBS. We account for and report the 25% ownership interest of RMTC in CBS as a non-controlling financial interest. CBS began operating the pari-mutuel network in May 2015. The pari-mutuel network consists of the sourcing of common pool pari-mutuel wagering content and live video to off-track betting parlors throughout southern Alberta.

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

~~We operate 10~~As of June 30, 2016, we operated 12 ship-based casinos through concession agreements with ~~TUI Cruises and Windstar Cruises. As of March 31, 2016,~~three cruise ship owners. The 12 ship-based casinos that we operated had a total of ~~155~~197 slot machines and ~~22 tables onboard the 10 cruise ships where we operated casinos.~~25 tables. The following table summarizes the cruise lines and the associated ships on which we operated ship-based casinos as of ~~March 31,~~June 30, 2016, and the number of slots and tables on each ship.


Cruise Line	Ship	Number of Slots	Number of Tables	Ship	Number of Slots	Number of Tables
TUI Cruises				Mein Schiff 1	19	5
TUI Cruises	Mein Schiff 1	19	5	Mein Schiff 2	21	0
TUI Cruises	Mein Schiff 2	20	0	Mein Schiff 3	20	1
TUI Cruises	Mein Schiff 3	20	1	Mein Schiff 4	17	1
TUI Cruises	Mein Schiff 4	17	1	Mein Schiff 5	20	1
Windstar Cruises	Wind Surf	27	4	Wind Surf	27	4
Windstar Cruises	Wind Star	11	2	Wind Star	11	2
Windstar Cruises	Wind Spirit	12	2	Wind Spirit	12	2
Windstar Cruises	Star Pride	7	3	Star Pride	11	2
Windstar Cruises	Star Breeze	11	2	Star Breeze	11	2
Windstar Cruises	Star Legend	11	2	Star Legend	11	2
TUI Cruises				TUI Discovery	17	3

In ~~September 2015,~~June 2016, we ~~amended our concession agreement with TUI Cruises to include our operation of~~began operating the ship-based casinos onboard the Mein Schiff 5, ~~and Mein Schiff 6, two~~a new 2,500 passenger cruise ~~ships that are scheduled to begin operations in the third quarter of 2016~~ship, and ~~2017, respectively. In March 2016, we announced that we had signed an agreement with Thomson Cruises to operate the ship-based casino onboard~~ the TUI Discovery, a 2,067 passenger cruise ~~ship that is expected to begin operations in the second quarter of 2016. In addition, we signed~~ship. Under an agreement with ~~Taihu International Cruise Company and~~ Diamond Cruise International ~~to operate~~Co., Ltd., a subsidiary of Chinese travel conglomerate Suzhou Taihu International Travel Agency, we began operating the ship-based casino onboard Glory Sea, a 1,200 passenger cruise ship, ~~that is expected~~in July 2016. Glory Sea, which has 40 slot machines and 16 tables games, will focus on the Chinese cruise market with four-day trips between China, South Korea and Japan. Under an amended concession agreement with TUI Cruises, we also plan to operate the ship-based casino onboard Mein Schiff 6, a new 2,500 passenger cruise ship scheduled to begin operations in the ~~second~~third quarter of ~~2016.~~ 2017.

In March 2015, we entered into a two-year consulting agreement with Norwegian that became effective on June 1, 2015. Under the consulting agreement, we are providing limited consulting services for the ship-based casinos of Oceania and Regent in exchange for receiving a consulting fee of $2.0 million payable $250,000 per quarter.

We have a long-term management agreement to direct the operation of the casino at the Hilton Aruba Caribbean Resort and Casino from which we receive a monthly management fee.

Through our subsidiary CCE, we have a 7.5% ownership interest in MCE and we report our ownership interest using the cost method of accounting. MCE has an exclusive concession agreement with Instituto Provincial de Juegos y Casinos to lease slot machines and provide related services to Casino de Mendoza, a casino located in Mendoza, Argentina and owned by the Province of Mendoza. MCE may also pursue other gaming opportunities. CCE has appointed one director to MCE’s board of directors and has a three-year option through October 2017 to purchase up to 50% of the shares of MCE. The option can be exercised by CCE in tranches of shares, with each tranche representing not less than ten percent of the total outstanding shares of MCE. The exercise price of the shares is based upon the value of MCE at the time the option is exercised, which value is determined by a multiple of MCE’s EBITDA less certain debt. There are no conditions that limit CCE’s ability to exercise this option. In addition, CCE and MCE have entered into a consulting services agreement pursuant to which CCE provides advice on casino matters and receives a service fee consisting of a fixed fee plus a percentage of MCE’s EBITDA.

Additional Project Under Development

In June 2016, our subsidiary, CCE, entered into an agreement to acquire 100% of the issued and outstanding shares and related land of Game Plan Developments Ltd., Casino St. Albert Inc., Action ATM Inc. and MVP Sports Bar Ltd., collectively operating the Apex Casino (“Apex”) in St. Albert, Edmonton, Canada (the “Apex Acquisition”). Apex is a 34,500 square foot casino facility located on approximately seven acres of land. The casino facility includes 382 slot machines, 11 live table games, a restaurant, a bar, a lounge and a banquet facility that can accommodate up to 175 guests.

The Apex Acquisition, which is expected to close in the fourth quarter of 2016, is subject to, among other things, our obtaining financing for the acquisition and customary closing conditions, including the receipt of necessary regulatory and governmental approvals as well as the completion of due diligence by us. The total consideration for the Apex Acquisition is CAD 29.9 million subject to adjustment for the closing date working capital of Apex. Payments for the Apex Acquisition include the following:

A CAD 0.6 million deposit ($0.5 million based on the exchange rate in effect on June 30, 2016), which was paid in two equal parts on April 25, 2016 and June 29, 2016 and was reported as deposits and other on our condensed consolidated balance sheet for the quarter ended June 30, 2016.

CAD 29.3 million, which will be paid at closing.

The working capital of Apex will be held in an escrow account until completion of the closing working capital statement.

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



	For the three months			For the three months			For the six months
	ended March 31,			ended June 30,			ended June 30,
Average Rates	2016	2015	% Change	2016	2015	% Change	2016	2015	% Change
Canadian dollar (CAD)	1.3732	1.2405	(10.7%)	1.2890	1.2302	(4.8%)	1.3311	1.2354	(7.7%)
Euros (EUR)	0.9065	0.8887	(2.0%)	0.8856	0.9041	2.0%	0.8961	0.8964	0.0%
Polish zloty (PLN)	3.9556	3.7236	(6.2%)	3.8726	3.6972	(4.7%)	3.9141	3.7104	(5.5%)
Source: Pacific Exchange Rate Service

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

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DISCUSSION OF RESULTS

Century Casinos, Inc. and Subsidiaries


	For the three months							For the three months							For the six months
	ended March 31,							ended June 30,							ended June 30,
Amounts in thousands		2016		2015		Change	% Change		2016		2015		Change	% Change		2016		2015		Change	% Change
Gaming Revenue	$	28,160	$	28,179	$	(19)	(0.1%)	$	30,901	$	30,470	$	431	1.4%	$	59,060	$	58,649	$	411	0.7%
Hotel Revenue		444		387		57	14.7%		490		400		90	22.5%		935		787		148	18.8%
Food and Beverage Revenue		2,892		2,567		325	12.7%		3,028		3,218		(190)	(5.9%)		5,920		5,785		135	2.3%
Termination of Concession Agreements									0		3,365		(3,365)	(100.0%)		0		3,365		(3,365)	(100.0%)
Other Revenue		3,040		1,174		1,866	158.9%		2,988		2,595		393	15.1%		6,028		3,769		2,259	59.9%
Gross Revenue		34,536		32,307		2,229	6.9%		37,407		40,048		(2,641)	(6.6%)		71,943		72,355		(412)	(0.6%)
Less Promotional Allowances		(2,006)		(1,902)		104	5.5%		(2,206)		(2,173)		33	1.5%		(4,212)		(4,076)		136	3.3%
Net Operating Revenue		32,530		30,405		2,125	7.0%		35,201		37,875		(2,674)	(7.1%)		67,731		68,279		(548)	(0.8%)
Gaming Expenses		(13,355)		(14,691)		(1,336)	(9.1%)		(14,251)		(14,206)		45	0.3%		(27,616)		(28,895)		(1,279)	(4.4%)
Hotel Expenses		(139)		(128)		11	8.6%		(134)		(139)		(5)	(3.6%)		(273)		(267)		6	2.2%
Food and Beverage Expenses		(2,574)		(2,147)		427	19.9%		(2,659)		(2,834)		(175)	(6.2%)		(5,222)		(4,981)		241	4.8%
General and Administrative Expenses		(11,067)		(9,528)		1,539	16.2%		(11,499)		(10,967)		532	4.9%		(22,569)		(20,494)		2,075	10.1%
Total Operating Costs and Expenses		(29,145)		(28,305)		840	3.0%		(30,660)		(30,036)		624	2.1%		(59,807)		(58,339)		1,468	2.5%
Earnings from Operations		3,385		2,100		1,285	61.2%		4,541		7,839		(3,298)	(42.1%)		7,924		9,940		(2,016)	(20.3%)
Non-Controlling Interest		(330)		348		(678)	(194.8%)		(2,077)		(1,022)		1,055	103.2%		(2,407)		(674)		1,733	257.1%
Net Earnings Attributable to Century Casinos, Inc. Shareholders		1,894		1,845		49	2.7%		2,249		6,597		(4,348)	(65.9%)		4,142		8,442		(4,300)	(50.9%)
Adjusted EBITDA	$	5,611	$	4,766	$	845	17.7%	$	6,858	$	6,808	$	50	0.7%	$	12,469	$	11,575	$	894	7.7%

Earnings Per Share Attributable to Century Casinos, Inc. Shareholders
Basic Earnings Per Share	$	0.08	$	0.08	$	0.00	0.0%	$	0.09	$	0.27	$	(0.18)	(66.7%)	$	0.17	$	0.35	$	(0.18)	(51.4%)
Diluted Earnings Per Share	$	0.08	$	0.08	$	0.00	0.0%	$	0.09	$	0.27	$	(0.18)	(66.7%)	$	0.17	$	0.35	$	(0.18)	(51.4%)

Factors that impact comparability between periods include the following:

In March 2015, we acquired an additional 60% ownership interest in CDR through the conversion of CAD 11 million in loans we made to CDR. We now own 75% of CDR. The non-controlling interest in CDR was 85% through March 19, 2015, and 25% beginning as of March 20, 2015. The casino and racetrack at Century Downs began operating in April 2015. Century Downs contributed no net operating revenue and less than $0.1 million in net earnings for the quarter ended March 31, 2015 and $3.6 million in net operating revenue and $0.6 million in net earnings for the quarter ended March 31, 2016 and is reported in the Canada reportable segment.

Century Downs contributed $4.4 million in net operating revenue and $0.6 million in net earnings and $4.7 million in net operating revenue and $0.9 million in net earnings for the quarters ended June 30, 2016 and 2015, respectively. Century Downs contributed $8.0 million in net operating revenue and $1.2 million in net earnings and $4.7 million in net operating revenue and $0.9 million in net earnings for the six months ended June 30, 2016 and 2015, respectively. Century Downs is reported in the Canada reportable segment.

Century Bets began operating the southern Alberta pari-mutuel network in May 2015. We have a 75% ownership interest in Century Bets. Century Bets contributed $0.1 million in net operating revenue and less than ($0.1) million in net losses for the quarter ended March 31, 2015 and $1.0 million in net operating revenue and ($0.3) million in net losses for the quarter ended March 31, 2016 and is reported in the Canada reportable segment.

Century Bets contributed $1.2 million in net operating revenue and $0.1 million in net earnings and $0.8 million in net operating revenue and $0.1 million in net earnings for the quarters ended June 30, 2016 and 2015, respectively. Century Bets contributed $2.2 million in net operating revenue and ($0.2) million in net losses and $0.9 million in net operating revenue and $0.1 million in net earnings for the six months ended June 30, 2016 and 2015, respectively. Century Bets is reported in the Canada reportable segment.

In March 2015, we mutually agreed with Norwegian to terminate our concession agreements with Oceania and Regent, indirect subsidiaries of Norwegian, effective June 1, 2015. We transitioned operations of the eight ship-based casinos that we operated onboard Oceania and Regent to Norwegian in the second quarter of 2015. As consideration for the early termination of the concession agreements, we received $4.0 million in June 2015 and recorded this on our condensed consolidated statement of earnings under operating revenue net of $0.6 million related to assets that were sold to Norwegian as part of the termination agreement.

Net operating revenue ~~increased~~decreased by ~~$2.1~~($2.7) million, or ~~7.0%~~(7.1%), and by ($0.5) million, or (0.8%), for the three and six months ended ~~March 31,~~June 30, 2016, respectively, compared to the three and six months ended ~~March 31,~~June 30, 2015. Following is a breakout of net operating revenue by segment for the three and six months ended ~~March 31,~~June 30, 2016 compared to the three and six months ended ~~March 31,~~June 30, 2015:

Canada decreased by ($0.1) million, or (1.1%), and increased by $3.7 million, or 17.0%.

United States increased by $0.5 million, or 6.8%, and by $0.8 million, or 5.6%.

Poland increased by $0.7 million, or 5.4%, and decreased by ($0.6) million, or (2.2%).

Corporate Other decreased by ($3.7) million, or (83.0%), and by ($4.5) million, or (73.0%).

Operating costs and expenses increased by $0.6 million, or 2.1%, and by $1.5 million, or 2.5%, for the three and six months ended June 30, 2016, respectively, compared to the three and six months ended June 30, 2015. Following is a breakout of total operating costs and expenses by segment for the three and six months ended June 30, 2016 compared to the three and six months ended June 30, 2015:

Canada increased by ~~$3.9~~$0.5 million, or ~~45.6%~~5.2%, and by $3.7 million, or 24.3%.

United States increased by $0.2 million, or 3.7%, and by $0.5 million, or 4.0%.

Poland increased by $0.5 million, or 4.0%, and decreased by ($0.8) million, or (3.1%).

Corporate Other decreased by ($0.5) million, or (17.5%), and by ($2.0) million, or (29.0%).

Earnings from operations decreased by ($3.3) million, or (42.1%), and by ($2.0) million, or (20.3%), for the three and six months ended June 30, 2016, respectively, compared to the three and six months ended June 30, 2015. Following is a breakout of earnings from operations by segment for the three and six months ended June 30, 2016 compared to the three and six months ended June 30, 2015:

Canada decreased by ($0.6) million, or (14.4%), and remained constant.

United States increased by $0.3 million, or ~~4.2%~~24.4%, and by $0.3 million, or 15.4%.

Poland ~~decreased~~increased by ~~($1.3)~~$0.2 million, or ~~(9.4%)~~20.1%, and by $0.2 million, or 8.2%.

Corporate ~~and other~~Other decreased by ($~~0.7)~~3.2) million, or ~~(45.6%~~(228.9%).

~~Operating costs~~, and expenses increased by $0.8 million, or 3.0%, for the three months ended March 31, 2016 compared to the three months ended March 31, 2015. Following is a breakout of total operating costs and expenses by segment for the three months ended March 31, 2016 compared to the three months ended March 31, 2015:

~~Canada increased~~ by ~~$3.2~~($2.5) million, or ~~52.2%.~~

~~United States increased by $0.3 million, or 4.3%.~~

~~Poland decreased by ($1.2) million, or (9.9%).~~

~~Corporate and other decreased by ($1.4) million, or (38.7%~~(360.3%).

~~Earnings from operations increased~~

Net earnings decreased by ~~$1.3~~($4.3) million, or ~~61.2%~~(65.9%), and by ($4.3) million, or (50.9%), for the three and six months ended ~~March 31,~~June 30, 2016, respectively, compared to the three and six months ended ~~March 31, 2015. Following is a breakout of earnings from operations by segment for the three months ended March 31, 2016 compared to the three months ended March 31, 2015:~~

~~Canada increased by $0.6 million, or 27.3%.~~

~~United States remained constant.~~

~~Poland remained constant.~~

~~Corporate and other increased by $0.7 million, or 33.2%.~~

~~Net earnings remained constant for the three months ended March 31, 2016 compared to the three months ended March 31,~~June 30, 2015. 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 interests.

Non-GAAP Measures – Adjusted EBITDA

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

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

The reconciliation of Adjusted EBITDA to net earnings (loss) is presented below.


	For the Three Months Ended March 31, 2016											For the Three Months Ended June 30, 2016
		Canada		United States		Poland		Corporate and Other		Total
Amounts in thousands													Canada		United States		Poland		Corporate and Other		Total
Net earnings (loss)		$	1,648	$	543	$	666	$	(963)	$	1,894		$	1,948	$	833	$	678	$	(1,210)	$	2,249
Interest expense (income), net			749		0		15		(3)		761			784		0		8		(4)		788
Income taxes (benefit)			444		333		267		(446)		598			688		511		350		(562)		987
Depreciation and amortization			697		626		602		85		2,010			772		625		633		87		2,117
Non-controlling interest			(2)		0		332		0		330			1,736		0		341		0		2,077
Non-cash stock-based compensation			0		0		0		190		190			0		0		0		190		190
(Gain) loss on foreign currency transactions and other			(20)		0		(200)		22		(198)			(1,524)		0		(22)		(14)		(1,560)
Loss on disposition of fixed assets			2		2		22		0		26
Loss (gain) on disposition of fixed assets														18		1		(9)		0		10
Adjusted EBITDA		$	3,518	$	1,504	$	1,704	$	(1,115)	$	5,611		$	4,422	$	1,970	$	1,979	$	(1,513)	$	6,858


	For the Three Months Ended March 31, 2015											For the Three Months Ended June 30, 2015
		Canada		United States		Poland		Corporate and Other		Total
Net earnings (loss)		$	2,138	$	476	$	781	$	(1,550)	$	1,845
Amounts in thousands													Canada		United States		Poland		Corporate and Other		Total
Net earnings													$	2,258	$	718	$	568	$	3,053	$	6,597
Interest expense (income), net			632		0		35		(3)		664			992		0		43		(2)		1,033
Income taxes (benefit)			348		369		248		(531)		434			611		362		268		(1,647)		(406)
Depreciation and amortization			418		634		610		149		1,811			573		632		636		49		1,890
Non-controlling interest			(739)		0		391		0		(348)			738		0		284		0		1,022
Non-cash stock-based compensation			0		0		0		388		388			0		0		0		419		419
(Gain) loss on foreign currency transactions and other			(164)		0		(333)		2		(495)
Gain on foreign currency transactions and other														(357)		0		(35)		(15)		(407)
Loss on disposition of fixed assets			0		0		122		0		122			3		0		22		0		25
Acquisition costs			36		0		0		(36)		0			(36)		0		0		36		0
Preopening expenses			345		0		0		0		345
Other one-time income														0		0		0		(3,365)		(3,365)
Adjusted EBITDA		$	3,014	$	1,479	$	1,854	$	(1,581)	$	4,766		$	4,782	$	1,712	$	1,786	$	(1,472)	$	6,808


	For the Six Months Ended June 30, 2016
		Canada		United States		Poland		Corporate and Other		Total
Net earnings (loss)		$	3,604	$	1,377	$	1,347	$	(2,186)	$	4,142
Interest expense (income), net			1,534		0		23		(8)		1,549
Income taxes (benefit)			1,118		844		617		(995)		1,584
Depreciation and amortization			1,470		1,251		1,234		172		4,127
Non-controlling interest			1,735		0		672		0		2,407
Non-cash stock-based compensation			0		0		0		381		381
(Gain) loss on foreign currency transactions and other			(1,544)		0		(222)		8		(1,758)
Loss on disposition of fixed assets			21		3		13		0		37
Adjusted EBITDA		$	7,938	$	3,475	$	3,684	$	(2,628)	$	12,469

3236


	For the Six Months Ended June 30, 2015
		Canada		United States		Poland		Corporate and Other			Total
Net earnings		$	4,392	$	1,194	$	1,351	$	1,505	$	8,442
Interest expense (income), net			1,625		0		78		(6)		1,697
Income taxes (benefit)			957		731		516		(2,175)		29
Depreciation and amortization			992		1,266		1,247		197		3,702
Non-controlling interest			(1)		0		675		0		674
Non-cash stock-based compensation			0		0		0		807		807
Gain on foreign currency transactions and other			(519)		0		(368)		(15)		(902)
Loss on disposition of fixed assets			3		0		142		1		146
Preopening expenses			345		0		0		0		345
Other one-time income			0		0		0		(3,365)		(3,365)
Adjusted EBITDA		$	7,794	$	3,191	$	3,641	$	(3,051)	$	11,575

Reportable Segments

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


Canada
	For the three months							For the three months							For the six months
	ended March 31,							ended June 30,							ended June 30,
Amounts in thousands		2016		2015		Change	% Change		2016		2015		Change	% Change		2016		2015		Change	% Change
Gaming	$	7,996	$	5,850	$	2,146	36.7%	$	8,803	$	9,247	$	(444)	(4.8%)	$	16,798	$	15,097	$	1,701	11.3%
Hotel		143		179		(36)	(20.1%)		148		159		(11)	(6.9%)		292		337		(45)	(13.4%)
Food and Beverage		2,001		1,751		250	14.3%		2,049		2,329		(280)	(12.0%)		4,048		4,080		(32)	(0.8%)
Other		2,316		885		1,431	161.7%		2,388		1,872		516	27.6%		4,703		2,759		1,944	70.5%
Gross Revenue		12,456		8,665		3,791	43.8%		13,388		13,607		(219)	(1.6%)		25,841		22,273		3,568	16.0%
Less Promotional Allowances		(158)		(220)		(62)	(28.2%)		(221)		(298)		(77)	(25.8%)		(379)		(519)		(140)	(27.0%)
Net Operating Revenue		12,298		8,445		3,853	45.6%		13,167		13,309		(142)	(1.1%)		25,462		21,754		3,708	17.0%
Gaming Expenses		(2,550)		(1,996)		554	27.8%		(2,532)		(2,458)		74	3.0%		(5,093)		(4,453)		640	14.4%
Hotel Expenses		(46)		(47)		(1)	(2.1%)		(45)		(49)		(4)	(8.2%)		(91)		(95)		(4)	(4.2%)
Food and Beverage Expenses		(1,625)		(1,251)		374	29.9%		(1,628)		(1,892)		(264)	(14.0%)		(3,241)		(3,146)		95	3.0%
General and Administrative Expenses		(4,561)		(2,518)		2,043	81.1%		(4,558)		(4,095)		463	11.3%		(9,120)		(6,614)		2,506	37.9%
Total Operating Costs and Expenses		(9,479)		(6,230)		3,249	52.2%		(9,535)		(9,067)		468	5.2%		(19,015)		(15,300)		3,715	24.3%
Earnings from Operations		2,819		2,215		604	27.3%		3,632		4,242		(610)	(14.4%)		6,447		6,454		(7)	(0.1%)
Non-Controlling Interest		2		739		(737)	(99.7%)		(1,736)		(738)		998	135.2%		(1,735)		1		1,736	173600.0%
Net Earnings		1,648		2,138		(490)	(22.9%)		1,948		2,258		(310)	(13.7%)		3,604		4,392		(788)	(17.9%)
Adjusted EBITDA	$	3,518	$	3,014	$	504	16.7%	$	4,422	$	4,782	$	(360)	(7.5%)	$	7,938	$	7,794	$	144	1.8%

Three Months Ended ~~March 31,~~June 30, 2016 and 2015

The ~~increased revenue and expenses in our Canada segment primarily relate~~following discussion highlights results for the three months ended June 30, 2016 compared to the ~~operations of Century Downs and Century Bets. Century Downs began operations in April 2015 and Century Bets began operations in May~~three months ended June 30, 2015.

Results in U.S. dollars were impacted by a ~~10.7%~~4.8% exchange rate decrease in the average rate between the U.S. dollar and Canadian dollar for the three months ended ~~March 31,~~June 30, 2016 compared to the three months ended ~~March 31, 2015. The following discussion highlights results for the three months ended March 31, 2016 compared to the three months ended March 31,~~June 30, 2015.

Revenue Highlights


	In ~~local currency~~CAD		In U.S. dollars
	~~Gaming~~At our property in Edmonton, gaming revenue ~~at Century Downs was CAD 3.7 million,~~remained constant, food and beverage revenue ~~was CAD 0.6~~decreased by (CAD 0.1) million, or (6.0%), due to closures of some food and beverage outlets during the casino renovation and other revenue ~~was CAD 0.6 million.~~decreased by (CAD 0.1) million, or (14.8%), due to decreased ticket sales for the showroom.		~~Gaming~~At our property in Edmonton, gaming revenue ~~at Century Downs was $2.7 million, food and beverage revenue was $0.4 million and other revenue was $0.5 million.~~
	~~Other revenue at Century Bets increased~~decreased by ~~CAD 1.4 million due to the operation of the southern Alberta pari-mutuel network for the three months ended March 31, 2016.~~		~~Other revenue at Century Bets increased by $1.0 million.~~
	~~Gaming revenue at Edmonton increased by CAD 0.1~~($0.2) million, or ~~2.1%, due to increased table game revenue, and food and beverage revenue increased by CAD 0.1 million, or 3.5%.~~		~~Gaming revenue at Edmonton decreased by ($0.3) million, or (7.6%~~(4.5%), ~~and~~ food and beverage revenue decreased by ($0.1) million, or ~~(6.5%~~(10.3%), and other revenue decreased by ($0.1) million, or (18.5%).

~~Revenue Highlights continued~~

	~~In local currency~~		~~In U.S. dollars~~
	~~Gaming~~At our property in Calgary, gaming revenue atincreased by CAD 0.3 million, or 18.1%, due to increased revenue from baccarat.		At our property in Calgary, gaming revenue increased by $0.2 million, or 12.6%.
	At Century Downs, gaming revenue decreased by (CAD 0.3) million, or (6.9%), due to decreased revenue from slots, food and beverage revenue decreased by (CAD 0.1) million, or ~~(5.9%~~(15.4%), and other revenue increased by CAD 0.3 million, or 138.6%, due to ~~decreased slot revenue. The decreased slot~~increased revenue ~~is due to a downturn in the Calgary economy related to the downturn in the energy industry. In addition, food~~from racing and ~~beverage~~ revenue ~~decreased (CAD 0.1) million, or (9.9%). These decreases in revenue were offset by decreased promotional allowances of CAD 0.1 million, or 143.0%.~~from leasing barn space.		~~Gaming~~At Century Downs, gaming revenue ~~at Calgary~~ decreased by ($~~0.2)~~0.4) million, or ~~(14.8%~~(11.2%), ~~and~~ food and beverage revenue decreased by ($0.1) million, or ~~(18.4%~~(19.1%)~~. These decreases in~~, and other revenue ~~were offset~~increased by ~~decreased promotional allowances of $0.1~~$0.2 million, or ~~134.8%~~66.8%.


	At Century Bets, other revenue increased by CAD 0.6 million, or 57.8%, due to increased revenue resulting from operating the pari-mutuel off-track betting network for the full quarter in 2016 as compared to May and June in 2015.		At Century Bets, other revenue increased by $0.4 million, or 50.2%.

Operating Expense Highlights


	In ~~local currency~~CAD		In U.S. dollars
	~~Operating~~At our property in Edmonton, operating expenses at Century Downs increased by CAD 2.6 million as a result of the casino being operational for the three months ended March 31, 2016 as opposed to having expenses related to preopening the casino for the three months ended March 31, 2015.remained constant.		At our property in Edmonton, operating expenses decreased by ($0.1) million, or (3.9%).
	At our property in Calgary, operating expenses increased by CAD 0.2 million, or 7.5%, primarily due to increased payroll costs, property taxes and administrative expenses.		At our property in Calgary, operating expenses remained constant.
	At Century Downs, operating expenses increased by ~~$1.9 million.~~CAD 0.3 million, or 8.6%, primarily due to increased marketing expenses offset by decreased food and beverage and administrative expenses.		At Century Downs, operating expenses increased by $0.1 million, or 3.5%.
	~~Operating expenses at Century Bets increased by CAD 2.2 million as a result of operating the southern Alberta pari-mutuel network for the three months ended March 31, 2016.~~		At Century Bets, operating expenses increased by ~~$1.6 million.~~
	~~Operating expenses at Edmonton increased by~~ CAD ~~0.3~~0.6 million, or ~~6.8%~~94.2%, due to ~~increased~~ operating ~~expenses related~~the pari-mutuel off-track betting network for the full quarter in 2016 as compared to ~~gaming~~May and ~~food and beverage.~~June in 2015.		~~Operating~~At Century Bets, operating expenses ~~at Edmonton decreased~~increased by ~~($0.1)~~$0.5 million, or ~~(3.5%).~~
	~~Operating expenses at Calgary remained constant.~~		~~Operating expenses at Calgary decreased by ($0.1) million, or (7.2%)~~84.8%.

Additional Items Impacting Net Income


	In ~~local~~CAD		In U.S. dollars
	Interest expense decreased by (CAD 0.2) million, or (17.0%), related to long-term debt at Edmonton and Century Downs.		Interest expense decreased by ($0.2) million, or (20.9%).
	Foreign currency losses at all Canadian properties increased by CAD 0.1 million, or 159.3%.		Foreign currency losses at all Canadian properties decreased by ($0.1) million, or (42.9%).
	Income tax expense increased by CAD 0.1 million, or 17.1%.		Income tax expense increased by $0.1 million, or 12.6%.

A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

Six Months Ended June 30, 2016 and 2015

The following discussion highlights results for the six months ended June 30, 2016 compared to the six months ended June 30, 2015. The increased revenue and expenses in our Canada segment primarily relate to the operations of Century Downs and Century Bets throughout the six-month period ended June 30, 2016. Century Downs began operations in April 2015 and Century Bets began operations in May 2015.

Results in U.S. dollars were impacted by a 7.7% exchange rate decrease in the average rate between the U.S. dollar and Canadian dollar for the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

Revenue Highlights


	In CAD		In U.S. dollars
	At our property in Edmonton, gaming revenue increased by CAD 0.1 million, or 1.1%, due to increased revenue from baccarat and blackjack. Food and beverage and other revenue remained constant.		At our property in Edmonton, gaming revenue decreased by ($0.5) million, or (6.1%), food and beverage revenue decreased by ($0.2) million, or (8.4%), and other revenue decreased by ($0.1) million, or (10.2%).


	At our property in Calgary, gaming revenue increased by CAD 0.2 million, or 6.3%, due to increased revenue from baccarat. Food and beverage revenue decreased by (CAD 0.1) million, or (5.5%), due to decreased events in the showroom.		At our property in Calgary, gaming revenue decreased by ($0.1) million, or (1.9%), and food and beverage revenue decreased by ($0.1) million, or (12.2%).
	At Century Downs, gaming revenue increased CAD 3.4 million, or 73.1%, food and beverage revenue increased CAD 0.4 million, or 49.1%, and other revenue increased CAD 0.9 million, or 238.5%, due to operating the casino for three additional months and the race track for approximately two additional months in 2016 compared to 2015.		At Century Downs, gaming revenue increased $2.3 million, or 60.7%, food and beverage revenue increased $0.3 million, or 39.0%, and other revenue increased $0.7 million, or 217.4%.
	At Century Bets, other revenue increased by CAD 1.9 million, or 181.1%, due to operating the pari-mutuel network for the full six months in 2016 as compared to May and June in 2015.		At Century Bets, other revenue increased by $1.4 million, or 160.4%.

Operating Expense Highlights


	In CAD		In U.S. dollars
	At our property in Edmonton, operating expenses increased by CAD 0.4 million, or 3.8%, primarily due to increased payroll costs, marketing expenses and administrative expenses.		At our property in Edmonton, operating expenses decreased by ($0.3) million, or (3.7%).
	At our property in Calgary, operating expenses increased by CAD 0.2 million, or 5.0%, primarily due to increased payroll costs, property taxes and administrative expenses.		At our property in Calgary, operating expenses decreased by ($0.1) million, or (2.3%).
	At Century Downs, operating expenses increased by CAD 2.9 million, or 72.1%, due to operating the casino for three additional months and the race track for approximately two additional months in 2016 compared to 2015.		At Century Downs, operating expenses increased by $2.0 million, or 60.0%.
	At Century Bets, operating expenses increased by CAD 2.8 million, or 368.8%, due to operating the pari-mutuel network for the full six months in 2016 as compared to May and June in 2015.		At Century Bets, operating expenses increased by $2.1 million, or 336.0%.

Additional Items Impacting Net Income


	In CAD		In U.S. dollars
	Interest expense increased by CAD ~~0.2~~0.3 million, or ~~31.9%~~13.0%, related to long-term debt at our property in Edmonton and Century Downs.		Interest expense ~~increased~~decreased by ~~$0.1~~($0.1) million, or ~~18.3%~~(5.6%).
	Foreign currency losses at all Canadian properties decreased by ~~CAD 1.1~~(CAD 1.0) million, or ~~103.1%~~(100.0%).		Foreign currency losses at all Canadian properties increased by $0.1 million, or ~~87.8%~~293.1%.
	Income tax expense increased by CAD 0.2 million, or ~~35.2%~~19.9%.		Income tax expense increased by $0.2 million, or 16.8%.

A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.


United States
	For the three months							For the six months
	ended June 30,							ended June 30,
Amounts in thousands		2016		2015		Change	% Change		2016		2015		Change	% Change
Gaming	$	8,232	$	7,893	$	339	4.3%	$	15,869	$	15,381	$	488	3.2%
Hotel		342		241		101	41.9%		643		450		193	42.9%
Food and Beverage		825		756		69	9.1%		1,577		1,444		133	9.2%
Other		95		101		(6)	(5.9%)		183		169		14	8.3%
Gross Revenue		9,494		8,991		503	5.6%		18,272		17,444		828	4.7%
Less Promotional Allowances		(1,791)		(1,781)		10	0.6%		(3,488)		(3,441)		47	1.4%
Net Operating Revenue		7,703		7,210		493	6.8%		14,784		14,003		781	5.6%
Gaming Expenses		(3,137)		(3,141)		(4)	(0.1%)		(6,257)		(6,156)		101	1.6%
Hotel Expenses		(89)		(90)		(1)	(1.1%)		(182)		(172)		10	5.8%
Food and Beverage Expenses		(608)		(575)		33	5.7%		(1,169)		(1,107)		62	5.6%
General and Administrative Expenses		(1,900)		(1,692)		208	12.3%		(3,704)		(3,377)		327	9.7%
Total Operating Costs and Expenses		(6,359)		(6,130)		229	3.7%		(12,563)		(12,078)		485	4.0%
Earnings from Operations		1,344		1,080		264	24.4%		2,221		1,925		296	15.4%
Net Earnings		833		718		115	16.0%		1,377		1,194		183	15.3%
Adjusted EBITDA	$	1,970	$	1,712	$	258	15.1%	$	3,475	$	3,191	$	284	8.9%

Three Months Ended June 30, 2016 and 2015

The following discussion highlights results for the three months ended June 30, 2016 compared to the three months ended June 30, 2015.

Market Share Highlights

The Central City market increased by 4.2% and our property’s share of the Central City market was 28.6%, an increase of 1.4% compared to the three months ended June 30, 2015.

The Cripple Creek market increased by 1.7% and our property’s share of the Cripple Creek market was 9.9%, an increase of 1.4% compared to the three months ended June 30, 2015.

Revenue Highlights

Net operating revenue at Central City increased by $0.4 million, or 9.8%, due to increased gaming revenue of $0.3 million, or 5.7%, primarily from slot machines and increased food and beverage revenue of $0.1 million, or ~~27.6%~~14.4%.

Net operating revenue at Cripple Creek increased by $0.1 million, or 2.5%, due to increased gaming revenue of $0.1 million, or 2.2%, primarily from slot machines and increased hotel revenue of $0.1 million, or 43.8%, offset by increased promotional allowances of $0.1 million, or 8.3%.

Operating Expense Highlights

Operating expenses at Central City increased by $0.2 million, or 6.5%, due to increased gaming-related expenses, payroll expenses and general and administrative expenses.

Operating expenses at Cripple Creek remained constant.

Additional Items Impacting Net Income

Income tax expense increased by $0.1 million, or 41.2%.

A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

Six Months Ended June 30, 2016 and 2015

The following discussion highlights results for the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

Market Share Highlights

The Central City market increased by 5.0% and our property’s share of the Central City market was 28.2%, a decrease of (1.9%) compared to the six months ended June 30, 2015.

The Cripple Creek market increased by 3.3% and our property’s share of the Cripple Creek market was 9.8%, an increase of 0.2% compared to the six months ended June 30, 2015.

Revenue Highlights

Net operating revenue at Central City increased by $0.5 million, or 6.3%, due to increased gaming revenue of $0.3 million, or 3.1%, primarily from slot machines, increased food and beverage revenue of $0.1 million, or 12.9%, and decreased promotional allowances of $0.1 million, or 2.5%.

Net operating revenue at Cripple Creek increased by $0.3 million, or 4.5%, due to increased gaming revenue of $0.2 million, or 3.2%, primarily from slot machines, and increased hotel revenue of $0.1 million, or 54.2%, offset by increased promotional allowances of $0.1 million, or 8.0%.

Operating Expense Highlights

Operating expenses at Central City increased by $0.4 million, or 5.7%, due to increased gaming-related expenses, payroll expenses and general and administrative expenses.

Operating expenses at Cripple Creek increased by $0.1 million, or 1.6%, due to increased gaming-related expenses.

Additional Items Impacting Net Income

Income tax expense increased by $0.1 million, or 15.5%.

A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

United States

For the three months

ended March 31,

Amounts in thousands

2016

2015

Change

% Change

Gaming

$
7,638

$
7,488

$
150

2.0%

Hotel

301

208

93

44.7%

Food and Beverage

751

688

63

9.2%

Other

87

69

18

26.1%

Gross Revenue

8,777

8,453

324

3.8%

Less Promotional Allowances

(1,697)

(1,660)

37

2.2%

Net Operating Revenue

7,080

6,793

287

4.2%

Gaming Expenses

(3,120)

(3,015)

105

3.5%

Hotel Expenses

(93)

(81)

12

14.8%

Food and Beverage Expenses

(561)

(534)

27

5.1%

General and Administrative Expenses

(1,804)

(1,684)

120

7.1%

Total Operating Costs and Expenses

(6,204)

(5,948)

256

4.3%

Earnings from Operations

876

845

31

3.7%

Net Earnings

543

476

67

14.1%

Adjusted EBITDA

$
1,504

$
1,479

$
25

1.7%

~~Three Months Ended March 31, 2016 and 2015~~

~~The following discussion highlights results for the three months ended March 31, 2016 compared to the three months ended March 31, 2015.~~

~~Market Share Highlights~~

~~The Central City market increased by 5.8% and our property’s share of the Central City market was 27.8%, a decrease of 5.2% compared to the three months ended March 31, 2015.~~

~~The Cripple Creek market increased by 5.1% and our property’s share of the Cripple Creek market was 9.8%, a decrease of 1.1% compared to the three months ended March 31, 2015.~~

~~Revenue Highlights~~

~~Net operating revenue at Central City increased by $0.1 million, or 2.7%, due to increased revenue in all categories.~~

Net operating revenue at Cripple Creek increased by $0.2 million, or 6.7%, due to increased gaming revenue primarily from slot machines of $0.1 million, or 4.4%, and increased hotel revenue of $0.1 million, or 70.2%.

~~Operating Expense Highlights~~

~~Operating expenses at Central City increased by $0.2 million, or 4.8%, due to increased gaming related expenses, payroll expenses and general and administrative expenses.~~

~~Operating expenses at Cripple Creek increased by $0.1 million, or 3.6%, due to increased gaming related expenses.~~

~~Additional Items Impacting Net Income~~

~~Income tax expense decreased by less than $0.1 million, or 9.8%.~~

~~A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.~~

3542


Poland
	For the three months							For the three months							For the six months
	ended March 31,							ended June 30,							ended June 30,
Amounts in thousands		2016		2015		Change	% Change		2016		2015		Change	% Change		2016		2015		Change	% Change
Gaming	$	12,128	$	13,410	$	(1,282)	(9.6%)	$	13,543	$	12,503	$	1,040	8.3%	$	25,671	$	25,913	$	(242)	(0.9%)
Food and Beverage		140		128		12	9.4%		154		133		21	15.8%		295		261		34	13.0%
Other		147		18		129	716.7%		67		333		(266)	(79.9%)		214		351		(137)	(39.0%)
Gross Revenue		12,415		13,556		(1,141)	(8.4%)		13,764		12,969		795	6.1%		26,180		26,525		(345)	(1.3%)
Less Promotional Allowances		(151)		(22)		129	586.4%		(194)		(94)		100	106.4%		(345)		(116)		229	197.4%
Net Operating Revenue		12,264		13,534		(1,270)	(9.4%)		13,570		12,875		695	5.4%		25,835		26,409		(574)	(2.2%)
Gaming Expenses		(7,401)		(8,398)		(997)	(11.9%)		(8,313)		(7,881)		432	5.5%		(15,713)		(16,278)		(565)	(3.5%)
Food and Beverage Expenses		(388)		(362)		26	7.2%		(423)		(367)		56	15.3%		(812)		(728)		84	11.5%
General and Administrative Expenses		(2,793)		(3,042)		(249)	(8.2%)		(2,846)		(2,863)		(17)	(0.6%)		(5,639)		(5,904)		(265)	(4.5%)
Total Operating Costs and Expenses		(11,184)		(12,412)		(1,228)	(9.9%)		(12,215)		(11,747)		468	4.0%		(23,398)		(24,157)		(759)	(3.1%)
Earnings from Operations		1,080		1,122		(42)	(3.7%)		1,355		1,128		227	20.1%		2,437		2,252		185	8.2%
Non-Controlling Interest		(332)		(391)		59	15.1%		(341)		(284)		57	20.1%		(672)		(675)		(3)	(0.4%)
Net Earnings		666		781		(115)	(14.7%)		678		568		110	19.4%		1,347		1,351		(4)	(0.3%)
Adjusted EBITDA	$	1,704	$	1,854	$	(150)	(8.1%)	$	1,979	$	1,786	$	193	10.8%	$	3,684	$	3,641	$	43	1.2%

Three Months Ended ~~March 31,~~June 30, 2016 and 2015

Results in U.S. dollars were impacted by a ~~6.2%~~4.7% exchange rate decrease in the average rate between the U.S. dollar and Polish zloty for the three months ended ~~March 31,~~June 30, 2016 compared to the three months ended ~~March 31,~~June 30, 2015. The following discussion highlights results for the three months ended ~~March 31,~~June 30, 2016 compared to the three months ended ~~March 31,~~June 30, 2015.

Revenue Highlights


	In ~~local currency~~PLN		In U.S. dollars
	Gaming revenue ~~decreased~~increased by PLN ~~(1.9)~~5.4 million, or ~~(3.9%)~~11.5%, due to ~~decreased table revenue of PLN (9.0) million, offset by~~ increased slot revenue of PLN ~~7.1 million.~~7.5 million, or 37.6%, offset by decreased table revenue of (PLN 2.1) million, or (7.7%) primarily in blackjack and roulette.		Gaming revenue ~~decreased~~increased by ~~($1.3)~~$1.0 million, or ~~(9.6%)~~8.3%.
	Food and beverage revenue increased by PLN 0.1 million, or 21.5%.		Food and beverage revenue remained constant.
	Other revenue ~~increased~~decreased by ~~PLN 0.5~~(PLN 0.2) million, or ~~775.8%.~~(38.6%), due to a VAT refund that was received in 2015 that was not received in 2016.		Other revenue ~~increased~~decreased by ~~$0.1~~($0.3) million, or ~~716.7%~~(79.9%).
	Promotional allowances increased by PLN ~~0.5~~0.4 million, or ~~604.7%.~~116.7%, due to increased promotional allowances in the Krakow and Warsaw casinos.		Promotional allowances increased by $0.1 million, or ~~586.4%~~106.4%.

Operating Expense Highlights


	In ~~local currency~~PLN		In U.S. dollars
	Operating expenses ~~decreased~~increased by PLN ~~(2.0)~~3.9 million, or ~~(4.3%)~~8.9%, primarily due to ~~decreased~~increased gaming ~~related expenses.~~expenses of PLN 2.9 million, or 12.3%, as well as increased marketing expenses and payroll costs.		Operating expenses ~~decreased~~increased by ~~($1.2)~~$0.5 million, or ~~(9.9%)~~4.0%.

3643

Additional Items Impacting Net Income


	In ~~local currency~~PLN		In U.S. dollars
	Interest expense decreased by ~~PLN 0.1~~(PLN 0.1) million, or ~~60.9%~~(71.5%).		Interest expense decreased by less than ~~$0.1~~($0.1) million, or ~~62.2%.~~
	~~Foreign currency losses decreased by less than PLN 0.1 million, or 19.5%.~~		~~Foreign currency losses increased by $0.1 million, or 39.9%~~(73.2%).
	Income tax expense increased by PLN ~~0.1~~0.4 million, or ~~15.4%~~36.6%.		Income tax expense ~~remained constant.~~increased by $0.1 million, or 30.6%.

A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

Six Months Ended June 30, 2016 and 2015

Results in U.S. dollars were impacted by a 5.5% exchange rate decrease in the average rate between the U.S. dollar and Polish zloty for the six months ended June 30, 2016 compared to the six months ended June 30, 2015. The following discussion highlights results for the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

Revenue Highlights


	In PLN		In U.S. dollars
	Gaming revenue increased by PLN 4.3 million, or 4.4%, due to increased slot revenue of PLN 14.6 million, or 38.6%, offset by decreased table revenue of (PLN 10.3) million, or (17.8%), primarily from blackjack and roulette.		Gaming revenue decreased by ($0.2) million, or (0.9%).
	Food and beverage revenue increased by PLN 0.2 million, or 19.3%.		Food and beverage revenue remained constant.
	Other revenue decreased by (PLN 0.4) million, or (34.7%), due to due to a VAT refund that was received in 2015 that was not received in 2016.		Other revenue decreased by ($0.1) million, or (39.0%).
	Promotional allowances increased by PLN 0.9 million, or 213.5%, due to increased promotional allowances in the Krakow and Warsaw casinos.		Promotional allowances increased by $0.2 million, or 197.4%

Operating Expense Highlights


	In PLN		In U.S. dollars
	Operating expenses increased by PLN 1.9 million, or 2.1%, primarily due to increased gaming expenses of PLN 1.8 million, or 3.7%, increased payroll costs and administrative expenses, offset by decreased marketing expenses.		Operating expenses decreased by ($0.8) million, or (3.1%).

Additional Items Impacting Net Income


	In PLN		In U.S. dollars
	Interest expense decreased by (PLN 0.2) million, or (66.0%).		Interest expense decreased by ($0.1) million, or (67.4%).
	Foreign currency losses increased by PLN 0.1 million, or 18.1%.		Foreign currency losses increased by $0.1 million, or 39.7%.
	Income tax expense increased by PLN 0.5 million, or 26.4%.		Income tax expense increased by $0.1 million, or 19.6%.

A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

In March 2011, the Polish Internal Revenue Service (“Polish IRS”) began conducting a series of tax audits of CPL to review the calculation and payment of personal income tax by CPL employees. Based on the March 2011 audit, the Polish IRS concluded that CPL should calculate, collect and remit to the Polish IRS personal income tax on tips received by CPL employees from casino customers. The Polish IRS has conducted tax audits for the periods from December 1, 2007 to December 31, 2008, January 1, 2009 to December 31, 2009 and January 1, 2011 to January 31, 2011. On March 9, 2016, CPL received an oral decision from the Supreme Administrative Court for the tax periods of December 1, 2007 to December 31, 2008 and January 1, 2011 to January 31, 2011. The court found in favor of the Polish IRS. CPL ~~expects to receive~~received the written decision from the court in the second quarter of ~~2016.~~2016 that confirmed the oral decision. See Note 8, “Commitments and Contingencies,” to our condensed consolidated financial statements included in this report.

The balance of the potential liability on our condensed consolidated balance sheet for all open periods as of June 30, 2016 is estimated at PLN 8.6 million ($2.2 million based on the exchange rate in effect on June 30, 2016). We have evaluated the contingent liability recorded on our condensed consolidated balance sheet as of June 30, 2016 and have concluded that it is properly accrued in light of our estimated obligation related to personal income tax on tips. The decision rendered by the Supreme Administrative Court in March 2016 and other proceedings by the Polish IRS may expose us to additional employment tax obligations in the future. Any additional tax obligations are not probable or estimable and we have not recorded any additional obligation related to such taxes as of June 30, 2016. Additional tax obligations assessed in the future as a result of these matters, if any, may be material to our financial position, results of operations and cash flows. To address these issues, we expect changes to the payroll and withholding processes for Casinos Poland will be implemented in the third quarter of 2016. We anticipate payroll costs to increase by approximately PLN 5.0 million per year ($1.3 million based on the exchange rate in effect on June 30, 2016).


Corporate and Other
	For the three months							For the three months							For the six months
	ended March 31,							ended June 30,							ended June 30,
Amounts in thousands		2016		2015		Change	% Change		2016		2015		Change	% Change		2016		2015		Change	% Change
Gaming	$	398	$	1,431	$	(1,033)	(72.2%)	$	323	$	827	$	(504)	(60.9%)	$	722	$	2,258	$	(1,536)	(68.0%)
Termination of Concession Agreements									0		3,365		(3,365)	(100.0%)		0		3,365		(3,365)	(100.0%)
Other		490		202		288	142.6%		438		289		149	51.6%		928		490		438	89.4%
Net Operating Revenue		888		1,633		(745)	(45.6%)		761		4,481		(3,720)	(83.0%)		1,650		6,113		(4,463)	(73.0%)
Gaming Expenses		(284)		(1,282)		(998)	(77.8%)		(269)		(726)		(457)	(62.9%)		(553)		(2,008)		(1,455)	(72.5%)
General and Administrative Expenses		(1,909)		(2,284)		(375)	(16.4%)		(2,195)		(2,317)		(122)	(5.3%)		(4,106)		(4,599)		(493)	(10.7%)
Total Operating Costs and Expenses		(2,278)		(3,715)		(1,437)	(38.7%)		(2,551)		(3,092)		(541)	(17.5%)		(4,831)		(6,804)		(1,973)	(29.0%)
Losses from Operations		(1,390)		(2,082)		(692)	(33.2%)
Net Loss		(963)		(1,550)		(587)	(37.9%)
(Losses) Earnings from Operations									(1,790)		1,389		(3,179)	(228.9%)		(3,181)		(691)		(2,490)	(360.3%)
Net (Loss) Earnings									(1,210)		3,053		(4,263)	(139.6%)		(2,186)		1,505		(3,691)	(245.2%)
Adjusted EBITDA	$	(1,115)	$	(1,581)	$	(466)	(29.5%)	$	(1,513)	$	(1,472)	$	(41)	(2.8%)	$	(2,628)	$	(3,051)	$	423	13.9%

Three Months Ended ~~March 31,~~June 30, 2016 and 2015

We terminated our concession agreements with Oceania and Regent, indirect subsidiaries of Norwegian, effective June 1, 2015. We transitioned operations of the eight ship-based casinos that we operated onboard Oceania and Regent vessels to Norwegian during the second quarter of 2015. As consideration for the early termination of the concession agreements, we received $4.0 million in June 2015 and recorded this on our condensed consolidated statement of earnings under operating revenue net of $0.6 million related to assets that were sold to Norwegian as part of the termination agreement. We also entered into a consulting agreement with Norwegian effective June 1, 2015, under which we are providing limited consulting services for the ship-based casinos of Oceania and Regent in exchange for receiving a consulting fee of $2.0 million that is payable in eight quarterly installments of $250,000 that commenced in July 2015.

The following discussion highlights results for the three months ended ~~March 31,~~June 30, 2016 compared to the three months ended ~~March 31,~~June 30, 2015.

Revenue Highlights

~~Net operating~~Gaming revenue decreased by ($~~0.7)~~0.5) million, or ~~(45.6%~~(60.9%), ~~due to decreased gaming revenue of ($1.0) million~~ as a result of the termination of the concession agreements with Oceania and ~~Regent, offset~~Regent.

Other revenue increased by ~~consulting~~$0.1 million, or 51.6%, due to an additional two months of revenue from ~~Norwegian of $0.3 million.~~the consulting agreement with Norwegian.

Operating Expense Highlights

Operating expenses decreased by ($~~1.4)~~0.5) million, or ~~(38.7%~~(17.5%), due to decreased cruise ship related expenses of ($~~1.0)~~0.2) million as a result of the termination of the concession agreements with Oceania and Regent, decreased stock compensation expense of ($0.2) million and decreased corporate expenses of ($~~0.2)~~0.1) million.

Additional Items Impacting Net Income

Income tax expense ~~decreased~~increased by ~~($0.1)~~$1.1 million, or ~~(16.0%).~~65.9%, as a result of releasing the Austrian valuation allowance of ($1.6) million in the second quarter of 2015, which did not recur during 2016.

A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

Six Months Ended June 30, 2016 and 2015

The following discussion highlights results for the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

Revenue Highlights

Gaming revenue decreased by ($1.5) million, or (68.0%), due to decreased revenue of ($1.8) million as a result of the termination of the concession agreements with Oceania and Regent, offset by increased gaming revenue of $0.2 million from the Mein Schiff ships.

Other revenue increased $0.4 million, or 89.4%, due to an additional five months of revenue from the consulting agreement with Norwegian.

Operating Expense Highlights

Operating expenses decreased by ($2.0) million, or (29.0%), due to decreased cruise ship related expenses of ($1.7) million as a result of the termination of the concession agreements with Oceania and Regent and decreased stock compensation expense of ($0.4) million.

Additional Items Impacting Net Income

Income tax expense increased by $1.2 million, or 54.3%, as a result of releasing the Austrian valuation allowance of ($1.6) million in the second quarter of 2015, which did not recur during 2016.

A reconciliation of net earnings to Adjusted EBITDA can be found in the “Non-GAAP Measures – Adjusted EBITDA” discussion above.

Non-Operating Income (Expense)

Non-operating income (expense) for the three and six months ended ~~March 31,~~June 30, 2016 and 2015 was as follows:


								For the three months							For the six months
	For the three months ended March 31,							ended June 30,							ended June 30,
Amounts in thousands	2016		2015		$ Change		% Change	2016		2015		$ Change		% Change	2016		2015		$ Change		% Change
Interest Income	$	17	$	14	$	3	21.4%	$	14	$	1	$	13	1300.0%	$	31	$	15	$	16	106.7%
Interest Expense		(778)		(678)		100	14.7%		(802)		(1,034)		(232)	(22.4%)		(1,580)		(1,712)		(132)	(7.7%)
Gain on Foreign Currency Transactions and Other		198		495		(297)	(60.0%)		1,560		407		1,153	283.3%		1,758		902		856	94.9%
Non-Operating (Expense)	$	(563)	$	(169)	$	394	233.1%
Non-Operating Income (Expense)								$	772	$	(626)	$	1,398	223.3%	$	209	$	(795)	$	1,004	126.3%

Interest income

Interest income is directly related to interest earned on our cash reserves.

Interest expense

Interest expense is directly related to interest owed on our credit agreement with the Bank of Montreal (the “BMO Credit Agreement”), the fair value adjustments for our interest rate swap agreements, our CPL borrowings, and interest expense related to CDR’s land lease and Edmonton’s and CDR’s capital lease agreements. Prior to the acquisition of our 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. We account for the lease using the financing method, accounting for the land subject to the lease as an asset and the lease payments as interest on the financing obligation.

Gain on Foreign Currency Transactions and Other

Gain on foreign currency transactions and other includes $1.6 million and $0.5 million received by CDR related to infrastructure built during the development of the REC project for the three and six months ended June 30, 2016 and June 30, 2015, respectively. The distribution to CDR’s non-controlling shareholders through non-controlling interest is part of the credit agreement between CCE and CDR.

Taxes

Income tax expense is recorded relative to the jurisdictions that recognize book earnings. During the ~~three~~six months ended ~~March 31,~~June 30, 2016, we recognized income tax expense of ~~$0.6~~$1.6 million on pre-tax income of ~~$2.8~~$8.1 million, representing an effective income tax rate of ~~21.2%~~19.5% compared to an income tax expense of ~~$0.4~~less than $0.1 million on pre-tax income of ~~$1.9~~$9.1 million, representing an effective income tax rate of ~~22.5%~~0.3% for the same period in 2015.

The difference between the income taxes expected at the U.S. federal statutory income tax rate of 34% and the reported income tax expense are impacted by a number of items. Our effective tax rate is lower because there is a lower statutory tax rate in the countries where we pay taxes, such as Austria, Mauritius, Canada and Poland, when compared to the United States. There is also a lower effective tax rate for our Canadian and Polish operations due to exchange rate benefits. ~~The effective tax rate in Canada also is impacted by the fair value measurement of the interest rate swap agreements for our Edmonton property.~~ We continue to maintain a full valuation allowance on all of our U.S. deferred tax assets and on certain Canadian deferred tax assets.

3847

LIQUIDITY AND CAPITAL RESOURCES

Our business is capital intensive, and we rely heavily on the ability of our casinos to generate operating cash flow. We use the cash flows that we generate to maintain operations, fund reinvestment in existing properties for both refurbishment and expansion projects, repay third party debt, and pursue additional growth via new development and acquisition opportunities. When necessary and available, we supplement the cash flows generated by our operations with either cash on hand or funds provided by bank borrowings or other debt or equity financing activities.

As of ~~March 31,~~June 30, 2016, our total debt under ~~the~~ bank borrowings and other agreements ~~was $37.9 million, of which $33.8 million was long-term debt~~ net of $0.2 million related to deferred financing costs was $37.0 million, of which $33.2 million was long-term debt and ~~$4.1~~$3.8 million was short-term debt. The short-term debt relates to payments due within one year under our BMO Credit Agreement, CPL’s two credit agreements and other capital lease agreements. We intend to repay the short-term debt obligations with available cash.

Net debt, which is total ~~debt~~principal minus cash and cash equivalents, was ~~$7.9~~$5.9 million as of ~~March 31,~~June 30, 2016. For a description of our debt agreements, see Note 7, “Long-Term Debt,” to our condensed consolidated financial statements included in this report.

The following table lists the amount of 2016 maturities of our debt:


Amounts in thousands	Amounts in thousands							Amounts in thousands
Bank of Montreal	Bank of Montreal	Century Downs		Casinos Poland		Total		Bank of Montreal	Edmonton		Century Downs		Casinos Poland		Total
$	1,958	$	197	$	1,106	$	3,261	1,302	$	46	$	139	$	659	$	2,146

The short-term debt relates to payments due within one year under our BMO Credit Agreement, CDR’s four capital lease agreements and CPL’s two credit agreements and three capital lease agreements. We intend to repay the short-term debt obligations with available cash.

Cash Flows

~~Cash~~At June 30, 2016, cash and cash equivalents totaled ~~$29.9~~$31.3 million, ~~at March 31, 2016,~~ and we had working capital (current assets minus current liabilities) of ~~$12.9~~$15.1 million compared to cash and cash equivalents of $29.4 million and working capital of $11.2 million at December 31, 2015. The increase in cash and cash equivalents from December 31, 2015 is due to ~~$3.3~~$8.9 million of net cash provided by operating activities, less than $0.1 million from the exercise of stock options and ~~$0.7~~$0.4 million in exchange rate changes. The cash provided by these activities was offset by ~~$2.2~~$3.8 million used to purchase property and equipment, $1.6 million used for a distribution to non-controlling interests, and ~~$1.2~~$2.0 million used for principal repayments on our long-term ~~debt.~~ debt net of proceeds.

We identified errors within the condensed consolidated statements of cash flows for the six months ended June 30, 2015. We inadvertently failed to remove the effects of a portion of unpaid purchases of property and equipment from the change in accounts payable and purchases of property and equipment in the preparation of the statements of cash flows. This error resulted in the understatement of net cash provided by operating activities of $1.2 million and a corresponding understatement of net cash used in investing activities, in the same amount, for the six months ended June 30, 2015. The prior period amounts within the condensed consolidated statement of cash flows for the six months ended June 30, 2015 have been revised to reflect the correct balances.

Net cash provided by operating activities was ~~$3.3~~$8.9 million for the ~~three~~six months ended ~~March 31,~~June 30, 2016 and ~~$2.6~~$8.4 million for the ~~three~~six months ended ~~March 31,~~June 30, 2015. Net cash provided by operating activities for the six months ended June 30, 2015 included $3.4 million from the termination of the concession agreements. Our cash flows from operations have historically been positive and sufficient to fund ordinary operations. Trends in our operating cash flows tend to follow trends in earnings from operations, excluding non-cash charges. Please refer to the condensed consolidated statements of cash flows in Part I, Item 1 of this Form 10-Q and to management’s discussion of the results of operations above in this Item 2 for a discussion of earnings from operations.

Net cash used in investing activities of ~~$2.2~~$3.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2016 consisted of $1.1 million in various projects for Century Downs including construction of a second barn and parking lots and landscaping, $0.1 million in capital lease equipment for Century Downs, $0.7 million to renovate the Edmonton casino, $0.3 million in capital lease equipment for Century Downs, $0.4 million in gaming equipment and furniture for three new cruise ships, $0.1 million to purchase new slot machines for our Cripple Creek property, $0.1 million to purchase new slot machines for our Central City property, ~~$0.2~~$0.1 million for hotel upgrades for our Central City property, $0.4 million to purchase new slot machines and table games for Casinos Poland and ~~$0.4~~$0.5 million in other fixed asset additions at our ~~properties.~~properties, offset by less than $0.1 million in proceeds from the disposition of fixed assets.

Net cash used in investing activities of ~~$7.1~~$12.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2015 consisted of ~~$6.0~~$10.7 million for development costs related to the REC project, ~~$0.2~~$0.4 million to purchase new slot machines and table equipment for the casinos operated by Casinos Poland, $0.1 million in improvements to the casinos in Poznan and Katowice operated by Casinos Poland, $0.3 million to purchase new slot machines for the Mein Schiff 4, Star Breeze and Star Legend ship-based casinos, $0.5 million to purchase slot machines for our Cripple Creek and Central City properties, $0.1 million to purchase new surveillance equipment at our Cripple Creek property, $0.1 million in sound equipment for the showroom and $0.1 million in parking lot repairs at our Edmonton property and ~~$0.5~~$0.7 million in cumulative additions at our properties, offset by ~~$0.1~~$0.7 million in proceeds from the disposition of assets.

Net cash used in financing activities of ~~$1.1~~$3.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2016 consisted of ~~$1.2~~$2.0 million of principal repayments on our long-term debt net of proceeds and a $1.6 million distribution to non-controlling interests, offset by less than $0.1 million received from the exercise of stock options.

Net cash provided by financing activities of ~~$6.7~~$8.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2015 consisted of ~~$6.7~~$9.0 million cash received under various loan agreements net of principal ~~repayments.~~repayments and $0.1 million cash from the exercise of stock options, offset by a $0.5 million distribution to non-controlling interests in 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 ~~three~~six months ended ~~March 31,~~June 30, 2016. The total amount remaining under the repurchase program was $14.7 million as of ~~March 31,~~June 30, 2016. The repurchase program has no set expiration or termination date.

Potential Sources of Liquidity, Short-Term Liquidity

Historically, our primary sources of liquidity and capital resources have been cash flow from operations, bank borrowings, sales of existing casino operations and proceeds from the issuance of equity securities.

We expect that the primary source of cash will be from our gaming ~~operations.~~operations and additional borrowings under the BMO Credit Agreement. In addition to the payment of operating costs, expected uses of cash within one year include capital expenditures for our existing properties, interest and principal payments on outstanding debt, payments for the Apex Acquisition, and potential new projects or dividends, if declared by the board of directors. We are currently seeking to amend the BMO Credit Agreement to obtain the financing needed to complete the Apex Acquisition. If necessary, we may seek to obtain ~~further~~additional term loans, mortgages or lines of credit with commercial banks or other debt or equity financings to supplement our working capital and investing requirements.

We believe that our cash at ~~March 31,~~June 30, 2016, as supplemented by cash flows from operations and additional borrowings under the BMO Credit Agreement, will be sufficient to fund our anticipated operating costs, capital expenditures at existing properties and current debt repayment obligations for at least the next 12 months. We will continue to evaluate our planned capital expenditures at each of our existing locations in light of the operating performance of the facilities at such locations. From time to time we expect to have cash needs for the development or purchase of new properties, including the Apex Acquisition, that exceed our current borrowing capacity and we may be required to seek additional debt, equity or bank financing.

In addition, we expect our U.S. domestic cash resources will be sufficient to fund our U.S. operating activities and cash commitments for investing and financing activities. While we currently do not have an intent nor foresee a need to repatriate funds, we could require more capital in the U.S. than is generated by our U.S. operations for operations, capital expenditures or significant discretionary activities such as acquisitions of businesses and share repurchases. If so, we could elect to repatriate earnings from foreign jurisdictions or raise capital in the U.S. through debt or equity issuances, which could have adverse tax consequences, as we have not accrued taxes for un-repatriated earnings of our foreign subsidiaries. We estimate that approximately ~~$25.4~~$26.6 million of our total ~~$29.9~~$31.3 million in cash and cash equivalents at ~~March 31,~~June 30, 2016 is held by our foreign subsidiaries and is not available to fund U.S. operations unless repatriated. The determination of the additional deferred taxes that would be provided for undistributed earnings has not been determined because the hypothetical calculation is not practicable.

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, 2015.

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 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 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 ~~March 31,~~June 30, 2016 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

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 ~~March 31,~~June 30, 2016. There were no repurchases of common stock during the ~~three~~six months ended ~~March 31,~~June 30, 2016.

4150

Item 6. Exhibits




3.1	Certificate of Incorporation of Century Casinos, Inc. is hereby incorporated by reference to the Company’s Proxy Statement in respect of 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 quarter ended June 30, 2002.
10.1	Century Casinos, Inc. 2016 Equity Incentive Plan is hereby incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed on April 29, 2016.
10.2*	Share and Real Property Purchase Agreement, dated as of June 29, 2016, by and among Century Casinos Europe GmbH, 851896 Alberta Ltd., Game Plan Developments Ltd., Casino St. Albert Inc., Action ATM Inc., MVP Sports Bar Ltd. and Bruce McPherson.
31.1*	Certification of Erwin Haitzmann, Co Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.2*	Certification of Peter Hoetzinger, President and Co Chief Executive Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
31.3*	Certification of Margaret Stapleton, Principal Financial Officer, pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.
32.1**	Certification of Erwin Haitzmann, Co Chief Executive Officer, pursuant to 18 U.S.C. Section 1350.
32.2**	Certification of Peter Hoetzinger, President and Co Chief Executive Officer, pursuant to 18 U.S.C. Section 1350.
32.3**	Certification of Margaret Stapleton, Principal Financial Officer, pursuant to 18 U.S.C. Section 1350.

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.

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

Margaret Stapleton

Principal Financial/Accounting Officer

Date: ~~May 6,~~August 5, 2016

4251

CENTURY CASINOS, INC.

INDEX TO EXHIBITS


Exhibit No.	Document
3.1	Certificate of Incorporation of Century Casinos, Inc. is hereby incorporated by reference to the Company’s Proxy Statement for the 1994 Annual Meeting of Stockholders.
3.2	Amended and Restated Bylaws of Century Casinos, Inc. is hereby incorporated by reference from Exhibit 11.14 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002.
10.1	Century Casinos, Inc. 2016 Equity Incentive Plan is hereby incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed on April 29, 2016.
10.2*	Share and Real Property Purchase Agreement, dated as of June 29, 2016, by and among Century Casinos Europe GmbH, 851896 Alberta Ltd., Game Plan Developments Ltd., Casino St. Albert Inc., Action ATM Inc., MVP Sports Bar Ltd. and Bruce McPherson.
31.1*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Co Chief Executive Officer.
31.2*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Co Chief Executive Officer and President.
31.3*	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Principal Financial Officer.
32.1**	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Co Chief Executive Officer.
32.2**	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Co Chief Executive Officer and President.
32.3**	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Principal Financial Officer.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.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.

4352

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