Trans World Corporation Reports 2012 Fourth Quarter and Year End Financial Results

Company to Host Conference Call at 2:00 PM ET

Year 2012 versus 2011 Financial Highlights

  • Income from continuing operations, before income taxes, increased by 9.5% to $3.7 million, from approximately $3.4 million in 2011;
  • Revenue from continuing operations decreased 1.4% to $36.0 million, from $36.5 million a year ago;
  • Income from continuing operations (after income taxes of approximately $2.1 million) was $1.6 million, or $0.18 per diluted share, compared with approximately $3.2 million, or $0.36 per diluted share, in the prior year period, which did not have such corporate tax on gaming income, plus had lower gaming tax rates;
  • EBITDA from continuing operations decreased 3.8% to $5.7 million, from $5.9 million a year ago; and
  • Stockholders’ equity at December 31, 2012 was approximately $41.2 million, or $4.56 per diluted share, compared with $37.2 million, or $4.16 per diluted share, at December 31, 2011.

Fourth Quarter 2012 versus Fourth Quarter 2011 Financial Highlights

  • Income from continuing operations before income taxes was approximately $1.3 million versus approximately $1.4 million in the same period a year ago, a decrease of 7.1%;
  • Revenue from continuing operations increased 1.2% to approximately $9.6 million, from approximately $9.5 million, a year ago this period;
  • Income from continuing operations (after income taxes of $802,000) was $394,000, or $0.04 per diluted share, compared with approximately $1.1 million, or $0.12 per diluted share, in the prior year period, which was not subject to corporate tax on gaming income and had lower gaming tax rates; and
  • EBITDA from continuing operations decreased 9.6% to approximately $1.7 million, from approximately $1.9 million, largely from higher gaming taxes.

NEW YORK--()--Trans World Corporation (“TWC” or the “Company”) (OTC: TWOC), a premier owner and operator of casinos and a hotel in Europe, today reported financial results for its fourth quarter and year ended December 31, 2012.

Mr. Rami Ramadan, Chief Executive Officer of TWC, noted, “Despite the negative impact of the new tax laws that took effect in 2012, we remained profitable, our 10th consecutive year now. Thanks to improved operational efficiencies and lower overhead expenses, with roughly the same level of total revenue as in 2011, we were able to absorb approximately $4.3 million in additional taxes, of which $2.4 million were in gaming taxes and approximately $1.9 million were in foreign income taxes. Further, our operations also overcame a decline in business volume during the second quarter, when we experienced lower than average attendance at our casinos as a result of the 2012 Euro Cup Championship. Attendance levels quickly returned to normal once the tournament ended, and our revenues remained steady for the remainder of the year. As for the top line, we continued to develop and enhance marketing and promotional programs at our casinos throughout the year, focusing, primarily, on internal and customer-oriented loyalty rewards programs. These programs have proven to be cost effective and have the dual benefit of increasing the time players spend at the tables and slots as well as retaining existing, and attracting new, quality players.”

Operational Review

Year 2012:

Total revenue for the year ended December 31, 2012 decreased 1.4% to $36.0 million, from $36.5 million a year ago, principally, as a result of lower live-game revenue, which was partially offset by improved slot business. Income from continuing operations before income taxes rose 9.5% to $3.7 million, from approximately $3.4 million in the prior year, due, notably, to lower overhead and depreciation expenses.

As TWC previously reported, the Czech government passed amendments in 2011, which became effective on January 1, 2012, that changed the tax rates on gaming revenues to a new, flat gaming tax of 20.0% of gross gaming revenue and imposed a 19% corporate income tax on casino operations. Consequently, gaming taxes and fees for the Company effectively rose to 21.0% of gross gaming revenue in 2012, from 15.6% of gross gaming revenue a year ago.

The Company accrued approximately $2.1 million as a provision for foreign income taxes for the year ended December 31, 2012, which reduced income from continuing operations after taxes to $1.6 million, or $0.18 per diluted share, compared with a tax provision of $199,000 and income from continuing operations after taxes of approximately $3.2 million, or $0.36 per diluted share, for the prior year. The 2012 tax provision includes $505,000 of deferred income taxes.

EBITDA from continuing operations decreased 3.8% to $5.7 million, from $5.9 million in 2011, principally due to the aforementioned higher gaming tax burden. A table reconciling EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, to the appropriate GAAP measure is included with the Company’s financial information below.

Q4 2012:

Fourth quarter revenue from TWC’s continuing operations was approximately $9.6 million, up 1.2% from the approximate $9.5 million generated in the same quarter a year ago. The increase was largely due to improvements in slot revenues, which were up 13.0%.

Income from continuing operations before income taxes for the last quarter of 2012 decreased 8.6%, to approximately $1.3 million, versus approximately $1.4 million for the same quarter in 2011. The decrease was attributable to higher gaming tax rates, which went into effect in 2012 and increased gaming taxes by 55% for the quarter versus the fourth quarter of 2011.

Income from continuing operations after income taxes of $802,000 was $394,000, or $0.04 per diluted share, versus approximately $1.1 million, or $0.12 per diluted share, after income taxes of $199,000, for the same quarter a year ago, which was not subject to material income taxes.

EBITDA from continuing operations was approximately $1.7 million in the fourth quarter of 2012, compared with approximately $1.9 million in the prior year quarter, a 9.6% decrease, principally due to the higher tax burden.

Outlook for 2013

Mr. Ramadan concluded, “TWC is committed to maximizing shareholder value, improving operational efficiencies and providing our patrons with the highest level of service. We will continue to seek opportunities in the hospitality and gaming arena, including potential strategic acquisitions or partnerships throughout Europe. However, we will remain selective and will only move forward in a manner that is accretive and adds value to our shareholders. TWC’s capital position has improved dramatically over the past year, thus we believe that TWC is well-positioned for growth.”

Stock Repurchase Program Update

In November 2012, TWC’s Board of Directors approved a stock repurchase program, in accordance with the retirement method, authorizing the repurchase of up to 500,000 shares of the Company's common stock over a 12-month period. The Company and its Board believe that by implementing this repurchase program they can demonstrate to TWC’s shareholders their confidence in the long-term prospects of the Company.

The Company has since repurchased 34,900 shares of common stock at an average stock price of $2.63, arriving at 8,836,735 outstanding shares, as of December 31, 2012.

Balance Sheet Highlights

The Company had cash of approximately $6.9 million at December 31, 2012 compared with $5.6 million at December 31, 2011. Total assets at the end of the year reached $51.0 million, from approximately $50.5 million in 2011. Stockholders’ equity at December 31, 2012 improved to approximately $41.2 million, or $4.56 per diluted share, from $37.2 million, or $4.16 per diluted share, at December 31, 2011. The Company lowered its long term debt less current maturities to approximately $1.4 million at December 31, 2012 from approximately $3.1 million at December 31, 2011.

Conference Call

The Company will discuss these results in a conference call later today at 2:00 PM ET.

 
The dial-in numbers are:      
Live Participant Dial In (Toll Free): 877-407-9037
Live Participant Dial In (International): 201-493-6738
 

The conference call will also be webcast live. To listen to the call, please go to the Investor Relations section of Trans World’s website at www.transwc.com, or click on the following link:
http://transwc.equisolvewebcast.com/

About Trans World Corporation

Trans World Corporation, founded in 1993, is a publicly traded, US corporation with all of its gaming and hotel operations in Europe. Additional information about TWC and its Czech subsidiaries, American Chance Casinos and Hotel Savannah, can be found at www.transwc.com, www.american-chance-casinos.com and www.hotel-savannah.com.

The press release herein contains certain forward-looking statements and data. For this purpose, any statements and data contained herein that are not historical fact may be deemed to be forward-looking data. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipates,” “estimates,” or “continue” or comparable terminology or the negative thereof are intended to identify certain forward-looking statements. These statements, by their nature, involve substantial risks and uncertainties, both known and unknown, and actual results may differ materially from any future results expressed or implied by such forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements or data whether as a result of new information, future events or otherwise.

 

TRANS WORLD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
Years Ended December 31, 2012 and 2011
(in thousands, except for share data)

               
Years Ended December 31, Three Months Ended December 31,
2012 2011 2012 2011
(Unaudited) (Unaudited)
 
REVENUES $ 36,021 $ 36,532 $ 9,593 $ 9,479
 
 
OPERATING EXPENSES:
 
Cost of revenues 19,358 18,956 5,070 4,692
Depreciation and amortization 1,728 2,150 427 487
Selling, general and administrative 10,961 11,651 2,845 2,931
               
  32,047   32,757   8,342   8,110
 

INCOME FROM CONTINUING OPERATIONS, before other
expense and foreign income taxes

  3,974   3,775   1,251   1,369
 
OTHER INCOME (EXPENSES):
Interest income 1 1
Interest expense (251) (388) (42) (81)
Foreign exchange loss   (13)   (1)   (13)   (1)
 
  (264)   (388)   (55)   (81)
INCOME FROM CONTINUING OPERATIONS, before
foreign income taxes 3,710 3,387 1,196 1,288
 
FOREIGN INCOME TAXES   (2,069)   (199)   (802)   (199)
 
INCOME FROM CONTINUING OPERATIONS 1,641 3,188 394 1,089
 
DISCONTINUED OPERATIONS, gain (loss) from operation of
discontinued Rozvadov Casino, net of tax   162   (225)   (38)   (49)
 
NET INCOME   1,803   2,963   356   1,040
 
Other comprehensive income (loss), foreign currency
translation adjustments, net of taxes   1,875   (1,858)   1,221   (3,636)
 
COMPREHENSIVE INCOME $ 3,678 $ 1,105 $ 1,577 $ (2,596)
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 8,870,129 8,871,637 8,865,645 8,871,637
Diluted   9,025,176   8,935,189   9,020,691   8,935,189
 
EARNINGS PER COMMON SHARE:
From continuing operations:
Basic $ 0.18 $ 0.36 $ 0.04 $ 0.12
Diluted $ 0.18 $ 0.36 $ 0.04 $ 0.12
From discontinued operations:
Basic $ 0.02 $ (0.03) $ (0.00) $ (0.01)
Diluted $

0.02

$ (0.03) $ (0.00) $ (0.01)
 
 

TRANS WORLD CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, 2012 and December 31, 2011
(in thousands, except for share data)

           
ASSETS
December 31, 2012 December 31, 2011
CURRENT ASSETS:
Cash $ 6,887 $ 5,636
Prepaid expenses 316 719
Notes receivable, current portion 663 413
Other current assets 262 284
Assets held for sale       900
 
Total current assets   8,128   7,952
 
PROPERTY AND EQUIPMENT, less accumulated depreciation of
$12,877 and $11,108, respectively   34,067   33,068
 
OTHER ASSETS:
Goodwill 6,396 6,119
Notes receivable, less current portion - 609
Deposits and other assets   2,439   2,723
 
Total other assets   8,835   9,451
 
$ 51,030 $ 50,471
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES:
Long-term debt, current maturities $ 1,836 $ 3,490
Capital lease, current portion 55 37
Accounts payable 804 548
Interest payable 15 49
Czech gaming tax accrual 1,943 3,905
Foreign income tax accrual 1,480 84
Accrued expenses and other current liabilities 1,612 1,726
Liabilities related to assets held for sale       207
 
Total current liabilities   7,745   10,046
 
LONG-TERM LIABILITIES:
Long-term debt, less current maturities 1,376 3,065
Capital lease, less current portion 134 81
Deferred foreign tax liability   581   76
 
Total long-term liabilities   2,091   3,222
 
COMMITMENTS AND CONTINGENCIES
 
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 4,000,000 shares authorized,
none issued
Common stock, $.001 par value, 20,000,000 shares authorized,
8,836,735 shares in 2012 and 8,871,635 in 2011, issued and outstanding 9 9
Additional paid-in capital 52,454 52,141
Accumulated other comprehensive income 7,562 5,687
Accumulated deficit   (18,831)   (20,634)
 
Total stockholders' equity   41,194   37,203
 
$ 51,030 $ 50,471
 

Reconciliation of Non-GAAP Measures to GAAP

The below table reconciles EBITDA, a non-GAAP (Generally Accepted Accounting Principles) financial measure, to the appropriate GAAP measure. The Company believes that EBITDA, a non-GAAP financial measure, provides useful information to its investors as well as to others who might be interested in purchasing shares of TWC common stock. This belief is based on conversations and meetings TWC’s management has had with its investors where the substance of these talks has centered around historical and prospective EBITDA measurements. Based on management’s observations, it appears that, even though the EBITDA measurement is not “GAAP,” it does enhance investors’ understanding of the Company’s business. In short, this performance measurement gives an analytic view of the Company’s operational earnings on a cash-basis, excluding the impact of debt obligations and (non-cash) depreciation and amortization.

 
TRANS WORLD CORPORATION AND SUBSIDIARIES
EBITDA Reconciliation
Three and 12 months Ended December 31, 2012 and 2011
(in thousands)
 
      Years Ended December 31,   Three Months Ended December 31,
2012   2011 2012   2011
unaudited unaudited
 
NET INCOME $ 1,803 $ 2,963 $ 356 $ 1,040
less: discontinued operations (162) 225 38 49
Add back: Interest expense, net 251 387 42 80
Add back: Foreign exchange gain (loss) 13 1 13 1
Add back: Foreign income taxes 2,069 199 802 199
Add back: Depreciation and amortization expense   1,728   2,150   427   487
EBITDA $ 5,702 $ 5,925 $ 1,678 $ 1,856
 
EBITDA margin (EBITDA / Revenues) 15.8% 16.2% 17.5% 19.6%

Contacts

Trans World Corporation
www.transwc.com
Jill Yarussi, 212-983-3355
Manager of Communications
JYarussi@transwc.com
or
Investor Relations Counsel:
The Equity Group Inc.
www.theequitygroup.com
Adam Prior, 212-836-9606
Senior Vice President
APrior@equityny.com
or
Terry Downs, 212-836-9615
Associate
Tdowns@equityny.com

Sharing

Contacts

Trans World Corporation
www.transwc.com
Jill Yarussi, 212-983-3355
Manager of Communications
JYarussi@transwc.com
or
Investor Relations Counsel:
The Equity Group Inc.
www.theequitygroup.com
Adam Prior, 212-836-9606
Senior Vice President
APrior@equityny.com
or
Terry Downs, 212-836-9615
Associate
Tdowns@equityny.com