Trans World Corporation Announces 2012 Third Quarter Financial Results

Trans World Corporation Announces 2012 Third Quarter Financial Results

Company to hold conference call today at 2:00pm ET (details below)

Third Quarter 2012 Highlights

  • Income from continuing operations before income taxes increased 41.9%, despite higher gaming taxes, to approximately $1.1 million;

  • Revenue from continuing operations decreased 4.6% to approximately $9.0 million;

  • Income from continuing operations (after income taxes of $583,000) was $498,000, or $0.06 per diluted share, compared with $762,000, or $0.09 per diluted share, in the prior year period, which did not have such corporate tax and had lower gaming tax rates; and

  • EBITDA from continuing operations increased 12.4% to approximately $1.6 million.


Year-to-date 2012 Highlights

  • Income from continuing operations before income taxes rose 19.8% to $2.5 million;

  • Revenue from continuing operations decreased 2.3% to $26.4 million;

  • Income from continuing operations (after income taxes of approximately $1.3 million) was $1.2 million, or $0.14 per diluted share, compared with approximately $2.1 million, or $0.24 per diluted share, in the prior year period, which did not have such corporate tax and had lower gaming tax rates; and

  • EBITDA from continuing operations, in spite of a higher, flat gaming tax rate of 20% beginning in 2012, was on par with the prior year period, at $4.0 million.

NEW YORK--(BUSINESS WIRE)-- Trans World Corporation ("TWC" or the "Company") (OTC: TWOC), a premier hotel and casino owner and operator in Europe, today reported financial results for its third quarter and nine months ended September 30, 2012.

Mr. Rami Ramadan, Chief Executive Officer of TWC commented, "We are very pleased with our third quarter operating results, and believe we have remained successful in spite of significant tax increases in 2012. The shift of the gaming revenue mix over the past few years toward slot business, which has lower associated operating costs, boosted our operating margins and bottom line. Our ancillary revenues, including food & beverage, hotel and spa revenues have all posted moderate growth in the past quarter. While still a relatively small percentage of our total revenue, our Hotel Savannah achieved 8.1 and 5.8 percentage point increases in occupancy over the same quarter and year to date to September a year ago, respectively. Our balance sheet has significantly strengthened since year end 2011, with improvements in working capital and lower debt balances. Going forward, we expect to utilize our stable capital position to leverage potential opportunities for growth, both through expansion of our current properties and through the evaluation of potential acquisitions."

Financial and Operating Review

On July 11, 2012, the Company sold its smallest casino asset, formerly the Rozvadov Casino, for €1.0 million, or approximately $1.3 million, pursuant to the exercise of the buyout option in the five-year lease agreement. The Company's net gain on the sale of its Rozvadov facility, inclusive of rent income and net of related costs, was approximately $345,000, recorded in the third quarter period.

Q3 2012 Review:

Third quarter 2012 revenue from TWC's continuing operations was approximately $9.0 million, compared with $9.4 million in the same period of 2011, a 4.6% decrease. The decrease was primarily the result of lower live game revenue, partially offset by higher revenue from the Company's slot business and increases in hotel revenues from improvement in Hotel Savannah's occupancy.

Income from continuing operations before income taxes for the third quarter of 2012 was approximately $1.1 million, versus $762,000 for the same quarter in 2011, a 41.9% increase. The increase was largely due to lower labor expenses, associated with the increase in slot business.

Income from continuing operations after estimated income taxes of $583,000 was $498,000, or $0.06 per diluted share, versus $762,000, or $0.09 per diluted share, for the same quarter a year ago, which was not subject to income taxes.

The increase in gaming taxes and income taxes were due to amendments to the local tax regulations for casino operations in the Czech Republic that became effective in 2012. As TWC previously reported, the Czech government changed the gaming taxes to a new flat gaming tax of 20.0% of gross gaming revenue and imposed a 19% corporate income tax for casino operations. Gaming taxes and fees for the Company effectively rose to 21.0% of gross gaming revenue in the third quarter of 2012, from 15.7% of gross gaming revenue in the same period a year ago.

EBITDA from continuing operations was $1.6 million in the third quarter of 2012, compared with $1.4 million in the prior year period, a 12.4% increase. 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.

YTD 2012 Review:

Total revenue for the nine months ended September 30, 2012 decreased 2.3% to $26.4 million, from approximately $27.1 million one year ago. Income from continuing operations before income taxes, for the same nine months, was $2.5 million, a 19.8% improvement when compared with approximately $2.1 million for the period a year ago.

The Company accrued approximately $1.3 million for the provision of foreign income taxes for the first nine months of 2012, which reduced income from continuing operations to $1.2 million, or $0.14 per diluted share, compared with approximately $2.1 million, or $0.24 per diluted share, for the same nine-month period last year.

EBITDA from continuing operations was $4.0 million, which was flat to last year's comparable period, despite the higher gaming taxes in effect starting in 2012.

Balance Sheet Highlights

At September 30, 2012, stockholders' equity was approximately $39.7 million, or $4.40 per diluted share, compared with $37.2 million, or $4.16 per diluted share, at December 31, 2011. The Company reported cash and cash equivalents of $7.2 million at September 30, 2012, compared with $5.6 million at December 31, 2011. The increase is largely due a combination of positive earnings and to the proceeds from the Company's sale of its Rozvadov property.

Conference Call

TWC will host a conference call to discuss these results at 2:00 p.m. EDT today, November 8, 2012.

Live Participant Dial In (Toll Free):

877-407-8035

Live Participant Dial In (International):

201-689-8035

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://www.investorcalendar.com/IC/CEPage.asp?ID=169969

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 American Chance Casinos and the Hotel Savannah, can be found at www.transwc.com, www.american-chance-casinos.com and www.hotel-savannah.com, which are not part of this release.

This press release contains certain forward-looking statements and data.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)

Nine and Three Months Ended September 30, 2012 and 2011

(in thousands, except for share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2012

2011

2012

2011

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

REVENUES

$

8,996

$

9,432

$

26,428

$

27,053

COSTS AND EXPENSES:

Cost of revenues

4,306

4,887

14,288

14,264

Depreciation and amortization

422

536

1,301

1,663

Selling, general and administrative

3,122

3,150

8,116

8,720

7,850

8,573

23,705

24,647

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

1,146

859

2,723

2,406

OTHER EXPENSE:

Interest expense, net

(65

)

(97

)

(209

)

(307

)

`

INCOME FROM CONTINUING OPERATIONS, before income taxes

1,081

762

2,514

2,099

FOREIGN INCOME TAXES

(583

)

-

(1,267

)

-

INCOME FROM CONTINUING OPERATIONS

498

762

1,247

2,099

DISCONTINUED OPERATIONS, gain (loss) from operation of discontinued Rozvadov Casino, net of tax

306

(54

)

200

(176

)

NET INCOME

804

708

1,447

1,923

Other comprehensive income (loss), foreign currency translation adjustments, net of tax

2,224

(3,070

)

654

1,778

TOTAL COMPREHENSIVE INCOME (LOSS)

$

3,028

$

(2,362

)

$

2,101

$

3,701

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

8,871,635

8,871,640

8,871,635

8,871,640

Diluted

9,022,346

8,924,359

9,022,346

8,924,359

EARNINGS PER COMMON SHARE:

From continuing operations:

Basic

$

0.06

$

0.09

$

0.14

$

0.24

Diluted

$

0.06

$

0.09

$

0.14

$

0.24

From discontinued operations:

Basic

$

0.03

$

(0.01

)

$

0.02

$

(0.02

)

Diluted

$

0.03

$

(0.01

)

$

0.02

$

(0.02

)

TRANS WORLD CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, 2012 and December 31, 2011

(in thousands, except for share data)

ASSETS

September 30, 2012

December 31, 2011

CURRENT ASSETS:

(Unaudited)

Cash

$

7,171

$

5,636

Prepaid expenses

305

719

Notes receivable, current portion

986

413

Other current assets

360

284

Assets held for sale

900

Total current assets

8,822

7,952

PROPERTY AND EQUIPMENT, less accumulated depreciation of $12,184 and $11,108, respectively

33,024

33,068

OTHER ASSETS:

Goodwill

6,213

6,119

Notes receivable, less current portion

-

609

Deposits and other assets

2,464

2,723

Total other assets

8,677

9,451

$

50,523

$

50,471

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Long-term debt, current maturities

$

3,548

$

3,490

Capital lease, current portion

61

37

Accounts payable

559

548

Interest payable

33

49

Czech tax accrual

1,789

3,905

Income tax accrual

1,210

84

Accrued expenses and other current liabilities

1,696

1,802

Liabilities related to assets held for sale

207

Total current liabilities

8,896

10,122

LONG-TERM LIABILITIES:

Long-term debt, less current maturities

1,795

3,065

Capital lease, less current portion

157

81

Total long-term liabilities

1,952

3,146

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

Preferred stock, $0.001 par value, 4,000,000 shares authorized, none issued

Common stock, $0.001 par value, 20,000,000 shares authorized, 8,871,635 shares in 2012 and 2011, issued and outstanding, respectively

9

9

Additional paid-in capital

52,512

52,141

Accumulated other comprehensive income

6,341

5,687

Accumulated deficit

(19,187

)

(20,634

)