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Apex Acquisition | 12 Months Ended
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Dec. 31, 2016
Apex Acquisition [Abstract] |
Apex Acquisition | 3. APEX ACQUISITION ﻿ On October 1, 2016, the Company’s subsidiary, Century Casino St. Albert Inc., acquired 100% of the issued and outstanding shares of Casino St. Albert Inc. (“CSAI”), Action ATM Inc. (“AAI”) and MVP Sports Bar Ltd. (“MVP”), collectively operating the Apex Casino in St. Albert, Edmonton, Canada and acquired the related land and real property held by Game Plan Developments Ltd. (the “Apex Acquisition”). The Company merged CSAI, AAI and MVP with Century Casino St. Albert Inc., the surviving company, and renamed the casino Century Casino St. Albert. CSA is a 34,500 square foot casino facility located on approximately six acres of land that includes 381 slot machines, 11 live table games, a restaurant, a bar, a lounge and a banquet facility that can accommodate up to 175 guests. ﻿ The Company paid for the acquisition using additional financing from the second amended and restated credit agreement with the Bank of Montreal (the “BMO Credit Agreement”) (see Note 7). T he total consideration of CAD 29.9 million ($22.8 million) (the “Purchase Price”) for the Apex Acquisition consisted of the following: ﻿
| A) |  | CAD 27.7 million ($21.1 million), which was paid at closing on October 1, 2016.
| B) |  | The remaining CAD 2.2 million ($1.7 million) of the Purchase Price remains subject to certain holdbacks in respect of the closing date working capital and other indemnities that are set forth in the purchase agreement. The holdbacks will be held in an escrow account until the completion of the closing working capital statement and the expiration of the agreed upon timelines.
﻿ The Company had paid a CAD 0.6 million deposit in two equal parts on April 25, 2016 and June 29, 2016. This deposit was returned to the Company on October 6, 2016. ﻿ As part of the purchase agreement, if the working capital at closing exceeds CAD 2.0 million ($1.5 million based on the exchange rate in effect on December 31, 2016), the Company will pay the excess working capital as part of the Purchase Price. Working capital was calculated as CAD 4.0 million ($3.1 million based on the exchange rate in effect on October 1, 2016) and the Company has recorded CAD 2.0 million ($1.5 million based on the exchange rate in effect on December 31, 2016) as an accrued liability on its consolidated balance sheet for the year ended December 31, 2016. The Company paid this working capital adjustment in February 2017. ﻿ As of October 1, 2016, the Company began consolidating Century Casino St. Albert Inc. as a wholly-owned subsidiary. CSA contributed $2.0 million in net operating revenue and $0.3 million in net earnings attributable to Century Casinos, Inc. shareholders for the year ended December 31, 2016. ﻿ The Company accounted for the transaction as a business combination, and accordingly, CSA’s assets of $22.4 million (including $3.1 million in cash) and liabilities of $1.7 million were included in the Company’s consolidated balance sheet at October 1, 2016. Goodwill of $3.6 million is attributable to the business expansion opportunity for the Company. The acquisition leverages the Company’s management specialties and expertise in the gaming industry, expands the Company’s casino offerings in the Edmonton market and creates operational synergies. Goodwill is not a tax deductible item for the Company. ﻿ The fair value of the assets acquired and liabilities assumed (excluding cash received) was determined to be $21.2 million as of the acquisition date. The fair value was determined using the following methods, which the Company believes provide the most appropriate indicators of fair value: ﻿
| · |  | multi-period excess earnings method;
| · |  | cost method;
| · |  | capitalized cash flow method;
| · |  | discounted cash flow method; and
| · |  | direct market value approach.
﻿ Details of the purchase in the table below are based on estimated fair values of assets and liabilities as of October 1, 2016. The acquisition was accounted for using the acquisition method of accounting. Assets acquired and liabilities assumed in connection with the acquisition have been recorded at their preliminary fair values. Certain estimated values for the acquisition are not yet finalized pending the final purchase price allocations, and as a result, the Company's estimates and assumptions are subject to change within the measurement period as valuations are finalized. The Company expects to finalize the allocation of the purchase price within one year of the acquisition. ﻿ ﻿
﻿ |  |  |
﻿Amounts in thousands |  |
﻿Cash |  | $ | 3,060
﻿Accounts receivable |  |  | 331
﻿Prepaid expenses and other |  |  | 136
﻿Inventories |  |  | 39
﻿Property and equipment |  |  | 9,542
﻿Casino license |  |  | 9,318
﻿Accounts payable |  |  | (63)
﻿Accrued liabilities |  |  | (383)
﻿Accrued payroll |  |  | (37)
﻿Deferred tax liability |  |  | (1,238)
﻿Net identifiable assets acquired |  |  | 20,705
﻿ |  |  |
﻿Add: Goodwill |  |  | 3,584
﻿Net assets acquired |  | $ | 24,289
﻿ The following table details the purchase consideration net cash outflow. ﻿ ﻿
﻿ |  |  |
﻿Outflow of cash to acquire subsidiary, net of cash acquired |  |  |
﻿Cash consideration |  | $ | 24,289
﻿Less: working capital payable |  |  | (1,494)
﻿Less: cash balances acquired |  |  | (3,060)
﻿Net cash - investing activities |  | $ | 19,735
﻿ ﻿ Acquisition-related costs The Company incurred acquisition costs of approximately $0.2 million for the year ended December 31, 2016 in connection with the Apex Acquisition. These costs include legal and accounting fees and have been recorded as general and administrative expenses in the Corporate Other segment. ﻿ Pro forma results (Unaudited) The following table provides unaudited pro forma information of the Company as if the Apex Acquisition had occurred at the beginning of the earliest comparable period presented. This pro forma information is not necessarily indicative either of the combined results of operations that actually would have been realized had the acquisition been consummated during the periods for which the pro forma information is presented, or of future results. ﻿
﻿ |  |  |  |  |  |  |  |  |
﻿ |  |
﻿ |  | For the year ended December 31,
﻿Amounts in thousands, except for per share information |  | 2016 |  | 2015 |  | 2014
﻿ |  | (Unaudited) |  | (Unaudited) |  | (Unaudited)
﻿Net operating revenue |  | $ | 145,186 |  | $ | 143,152 |  | $ | 129,594
﻿Net earnings attributable to Century Casinos, Inc. shareholders |  | $ | 10,197 |  | $ | 13,103 |  | $ | 2,621
﻿Basic and diluted earnings per share |  | $ | 0.41 |  | $ | 0.52 |  | $ | 0.11
﻿ ﻿

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