1.DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Century Casinos, Inc. (“CCI” or the “Company”) is an international casino entertainment company. As of December 31, 2016, the Company owned casino operations in North America; held a majority ownership interest in eight 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 St. Albert in Edmonton, Alberta, Canada

The Century Casino Calgary in Calgary, Alberta, Canada

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

The Century Casino & Hotel in Cripple Creek, Colorado

The Company acquired Century Casino St. Albert (“CSA” or “St. Albert”) in October 2016. See Note 3 for additional information related to the acquisition of CSA.

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 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.

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% is owned by unaffiliated shareholders and is reported as a non-controlling financial interest. The casino and racetrack at CDR opened in April 2015.

In March 2015, CCE converted CAD 11.0 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 financial 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 betting network in southern Alberta in May 2015.

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

The Company operates 13 ship-based casinos through concession agreements with four cruise lines. In June 2016, the Company began operating the ship-based casino onboard the Mein Schiff 5, a new 2,500 passenger ship, and TUI Discovery, a 2,067 passenger cruise ship. 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 operating in the third quarter of 2017.

Under a concession agreement with Diamond Cruise International Co., Ltd. (“Diamond”), the Company began operating the ship-based casino onboard Glory Sea, a 1,200 passenger cruise ship, in July 2016. Glory Sea operates in the Chinese cruise market with four-day trips between China, South Korea and Japan. In connection with the operation of the ship-based casino onboard Glory Sea, the Company also entered into a Cooperation Agreement with Dynamic Partners International, Ltd. (“Dynamic”) in July 2016. Under this agreement, Dynamic markets and promotes the casino to VIP players along with facilitating the concession agreement with Diamond, for which the Company pays Dynamic a portion of the net profit from the casino onboard Glory Sea.

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 amount on its 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 through the second quarter of 2017.

The Company has a management agreement to direct the operation of the casino at the Hilton Aruba Caribbean Resort & Casino from which the Company receives a monthly management fee. The management agreement expires in December 2017 and the Company does not anticipate renewal of this agreement.

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 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.

Corrections of Prior Period Balances

Subsequent to the issuance of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, the Company identified the following errors in its historical financial statements for the years ended December 31, 2015 and 2014.

The Company identified an error within its consolidated statement of cash flows for the year ended December 31, 2014. The Company overstated the change in purchases of property and equipment on account by $1.8 million when calculating the change in accounts payable and purchases of property and equipment in the preparation of its 2014 consolidated statement of cash flows. The error resulted in the understatement of net cash provided by operating activities and net cash used in investing activities by the same amount. As a result of this error, total capital expenditures disclosed in Note 13 “Segment and Geographic Information” for the year ended December 31, 2014 were understated by $1.8 million. The Company also overstated property and equipment purchased on account by $0.4 million in non-cash investing activities for the year ended December 31, 2014.

Additionally, the Company erroneously recognized pari-mutuel revenue totaling $0.7 million in its consolidated statement of earnings for the year ended December 31, 2015 and a corresponding account receivable on its balance sheet as of December 31, 2015. This error also affected the Company’s taxes payable and specific components of equity as of December 31, 2015 and its income tax expense, net earnings attributable to non-controlling interests, foreign currency translation adjustments, and consolidated statements of comprehensive income (loss), equity, cash flows and Note 13 “Segment and Geographic Information” for the year then ended.

The prior period amounts within the Company’s consolidated financial statements have been revised to reflect the correct balances. The information below presents the impact of these corrections on the Company’s 2015 and 2014 consolidated financial statements as previously reported.


Consolidated Statement of Cash Flows for the year ended December 31, 2014:
Amounts in thousands	As Previously Reported		Correction		As Corrected
Cash Flows from Operating Activities:
Changes in Operating Assets and Liabilities:
Accounts payable	$	(961)	$	1,759	$	798
Net cash provided by operating activities		7,322		1,759		9,081

Cash Flows in Investing Activities:
Purchases of property and equipment		(16,097)		(1,759)		(17,856)
Net cash used in investing activities	$	(16,506)	$	(1,759)	$	(18,265)

Non-Cash Investing Activities:
Purchase of property and equipment on account	$	1,961	$	(416)	$	1,545


Note 13. Segment and Geographic Information for the year ended December 31, 2014:
Amounts in thousands	As Previously Reported		Correction		As Corrected
Capital Expenditures
Canada	$	11,190	$	495	$	11,685
United States		834		934		1,768
Poland		2,742		294		3,036
Corporate and Other		1,331		36		1,367
Consolidated	$	16,097	$	1,759	$	17,856


Consolidated Balance Sheet as of December 31, 2015:
Amounts in thousands	As Previously Reported		Correction		As Corrected
Receivables, net	$	3,279	$	(659)	$	2,620
Total Current Assets		34,540		(659)		33,881
Total Assets	$	187,083	$	(659)	$	186,424

Taxes payable	$	4,371	$	(171)	$	4,200
Total Current Liabilities		23,300		(171)		23,129
Total Liabilities		59,808		(171)		59,637

Retained earnings		57,558		(387)		57,171
Accumulated other comprehensive loss		(12,704)		21		(12,683)
Total Century Casinos, Inc. shareholders' equity		122,416		(366)		122,050
Non-controlling interest		4,859		(122)		4,737
Total Equity		127,275		(488)		126,787
Total Liabilities and Equity	$	187,083	$	(659)	$	186,424


Consolidated Statement of Earnings for the year ended December 31, 2015:
Amounts in thousands, except for per share information	As Previously Reported		Correction		As Corrected
Operating Revenue:
Other	$	8,898	$	(697)	$	8,201
Gross revenue		142,880		(697)		142,183
Net operating revenue		134,431		(697)		133,734
Earnings from operations		16,493		(697)		15,796
Earnings before income taxes		15,342		(697)		14,645
Income tax expense		(1,835)		181		(1,654)
Net earnings (loss)		13,507		(516)		12,991
Net (earnings) loss attributable to non-controlling interests		(1,600)		129		(1,471)
Net earnings attributable to Century Casinos, Inc. shareholders	$	11,907	$	(387)	$	11,520

Earnings per share attributable to Century Casinos, Inc. shareholders:
Basic and Diluted	$	0.49	$	(0.02)	$	0.47


Consolidated Statement of Comprehensive Income (Loss) for the year ended December 31, 2015:
Amounts in thousands	As Previously Reported		Correction		As Corrected
Net earnings (loss)	$	13,507	$	(516)	$	12,991

Other comprehensive (loss) income
Foreign currency translation adjustments		(9,881)		28		(9,853)
Other comprehensive loss		(9,881)		28		(9,853)
Comprehensive income (loss)	$	3,626	$	(488)	$	3,138

Comprehensive income (loss) attributable to non-controlling interests
Net (earnings) loss attributable to non-controlling interests		(1,600)		129		(1,471)
Foreign currency translation adjustments		948		(7)		941
Comprehensive income (loss) attributable to Century Casinos, Inc. shareholders	$	2,974	$	(366)	$	2,608


Consolidated Statement of Equity for the year ended December 31, 2015:
Amounts in thousands	As Previously Reported		Correction		As Corrected
Accumulated other comprehensive income (loss)
Foreign currency translation adjustment	$	(8,933)	$	21	$	(8,912)
Accumulated other comprehensive income (loss) balance at December 31, 2015		(12,704)		21		(12,683)

Retained earnings
Net earnings		11,907		(387)		11,520
Retained earnings balance at December 31, 2015		57,558		(387)		57,171

Total Century Casinos shareholders' equity
Net earnings		11,907		(387)		11,520
Foreign currency translation adjustment		(8,933)		21		(8,912)
Total Century Casinos shareholders' equity balance at December 31, 2015		122,416		(366)		122,050

Non-controlling interest
Net earnings		1,600		(129)		1,471
Foreign currency translation adjustment		(948)		7		(941)
Non-controlling interest balance at December 31, 2015		4,859		(122)		4,737

Total equity
Net earnings		13,507		(516)		12,991
Foreign currency translation adjustment		(9,881)		28		(9,853)
Total equity balance at December 31, 2015	$	127,275	$	(488)	$	126,787


Consolidated Statement of Cash Flows for the year ended December 31, 2015:
Amounts in thousands	As Previously Reported		Correction		As Corrected
Cash Flows from Operating Activities:
Net earnings (loss)	$	13,507	$	(516)	$	12,991
Changes in Operating Assets and Liabilities:
Receivables, net		(1,798)		659		(1,139)
Taxes payable		(554)		(171)		(725)
Net cash provided by operating activities		19,674		(28)		19,646
Effect of Exchange Rate Changes on Cash	$	(1,292)	$	28	$	(1,264)


Note 13: Segment and Geographic Information for the year ended December 31, 2015:
Amounts in thousands	As Previously Reported		Correction		As Corrected
Canada
Net operating revenue	$	45,900	$	(697)	$	45,203
Earnings before income taxes		10,081		(697)		9,384
Net earnings (loss) attributable to Century Casinos, Inc. shareholders		7,819		(387)		7,432
Income taxes (benefit)		2,110		(181)		1,929
Non-controlling interest		152		(129)		23
Adjusted EBITDA	$	15,384	$	(697)	$	14,687

Consolidated results in Note 13 “Segment and Geographic Information” for the year ended December 31, 2015 have been updated as presented in the Consolidated Statement of Earnings table above. Consolidated Adjusted EBITDA for the year ended December 31, 2015 was corrected by $0.7 million, adjusting the previously reported Consolidated Adjusted EBITDA of $23.5 million to $22.8 million.