NEW YORK--(BUSINESS WIRE)--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.
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TRANS WORLD CORPORATION AND SUBSIDIARIES |
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| 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 | |||||||||||||||
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INCOME FROM CONTINUING OPERATIONS, before other |
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) | ||||||||||
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TRANS WORLD CORPORATION AND SUBSIDIARIES |
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| 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.
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TRANS WORLD CORPORATION AND SUBSIDIARIES EBITDA Reconciliation Three and 12 months Ended December 31, 2012 and 2011 (in thousands) |
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| 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% | |||||||||||||