Great Canadian Gaming Announces Fourth Quarter and Annual 2011 Results

RICHMOND, BC, March 8, 2012 /CNW/ - Great Canadian Gaming Corporation [TSX:GC] ("Great Canadian" or "the Company") today announced its financial results for the three month period ("fourth quarter of 2011") and twelve month period ("2011") ended December 31, 2011.

2011 FOURTH QUARTER AND TWELVE MONTHS HIGHLIGHTS

(Amounts presented in millions of Canadian dollars, except for per share information)

• 2% decrease in revenues and 12% decrease in EBITDA⁽¹⁾ in the fourth quarter of 2011
• 1% increase in both revenues and EBITDA for the full year
• Recorded non-cash long-lived asset impairment charges of $4.4 million related to Hastings Racecourse in the fourth quarter of 2011
• Shareholders' net earnings of $2.3 million in the fourth quarter of 2011
• Shareholders' net earnings of $26.2 million for the full year, an increase of $34.3, when compared to 2010

		Fourth Quarter						Twelve Months of
		2011		2010	% Chg			2011		2010	% Chg
Revenues	$	95.7	$	97.2	(2%)		$	388.2	$	383.5	1%
EBITDA ^(1)	$	30.9	$	35.0	(12%)		$	137.8	$	136.4	1%
EBITDA as a % of Revenues		32.3%		36.0%				35.5%		35.6%
Shareholders' net earnings (loss)	$	2.3	$	(29.5)			$	26.2	$	(8.1)
Shareholders' net earnings (loss) per common share:
Basic	$	0.03	$	(0.36)			$	0.32	$	(0.10)
Diluted	$	0.03	$	(0.36)			$	0.31	$	(0.10)
Total assets							$	976.1	$	946.2	3%
Long-term debt & Derivative liabilities,   excluding current portion							$	398.9	$	393.4	1%

⁽¹⁾  EBITDA is a non-IFRS measures as defined in the Disclaimer section of this press release.

For the fourth quarter of 2011, Great Canadian Gaming Corporation recorded revenues of $95.7 million, a $1.5 million decrease from the fourth quarter of 2010.  EBTIDA was $30.9 million, a $4.1 million decrease from the fourth quarter of 2010.

The decline in consolidated revenues was primarily due to the flat gaming revenues at River Rock Casino Resort ("River Rock") compared to the prior year period along with the decreased revenues at both Boulevard Casino ("Boulevard") and the Company's BC Racinos.

Since the fourth quarter of 2009, River Rock had achieved meaningful gaming revenue increases each quarter as compared to the prior year quarter.  As a result, River Rock's positive gaming revenues trend had helped to counterbalance the challenges at some of our other properties.  In the fourth quarter of 2011, this was not the case.  Specifically River Rock's table drop decreased 4 percent in the fourth quarter of 2011 when compared to the fourth quarter of 2010.  While River Rock's total revenues increased 2% in the fourth quarter, this was primarily due to the addition of lower margin hospitality revenues associated with the property's new hotel tower, branded "The Hotel at River Rock", which opened on October 17, 2011.

At Boulevard, we saw continued challenges from the uncertain local economy, ongoing disruption from the provincial highway construction near the facility, and proximate competition.  The Company is redeveloping Boulevard to provide its customers a hotel and conference space as well as improved connectivity to the property's existing amenities.   These enhancements are expected to reach completion by the end 2013.

Revenues at the BC Racinos continued to be negatively affected by an industry wide decline in horse racing revenues.  The consistent declines in racetrack revenues and the resulting uncertainty in Hastings Racecourse's ("Hastings") economic outlook, led to a $4.4 million non-cash impairment of Hastings' property, plant and equipment during the fourth quarter of 2011.

The decline in EBITDA in the fourth quarter of 2011 was primarily due to the decrease in revenues, increased human resources expense associated with staffing related adjustments to accommodate the increased visitation and gaming volumes at River Rock.  The resulting EBITDA as a percentage of revenues for the fourth quarter of 2011 was 32.3%, a 3.7 percentage point decrease from the fourth quarter of 2010.

Shareholders' net earnings (loss) increased by $31.8 million in the fourth quarter and by $34.3 million in the twelve months of 2011, when compared to the same periods of 2010.  These increases were primarily due to decreases in the impairment of long-lived assets and goodwill, and lower restructuring and other expenses that were partially offset by increased amortization and interest and financing costs, net of interest income.

"Great Canadian's financial results for the fourth quarter of 2011 reflect continued challenges within the Company's local markets" stated Rod N. Baker, Great Canadian's President and Chief Executive Officer.  "These challenges are most pronounced at the Boulevard Casino and the BC Racinos, but River Rock's gaming revenues this quarter are also a reminder that the volatility in our gaming business can create unpredicted variability in our financial results.

"In February 2012, the Drummond Commission released a report that recommended a reduction to the Government of Ontario's practice of providing subsidies to the horse racetracks in Ontario and an expansion of the availability of competing slot machines in the Province.   If these recommendations are implemented, they may have a negative effect on the profitability of our Georgian Downs and Flamboro Downs properties.  For 2011, these properties generated a combined $17.4 million or 13% of our consolidated EBITDA.  We will continue to monitor the developments that may stem from this report and will proactively manage the resulting impact on our Ontario properties as best we can.

"Despite the challenges encountered this quarter, the Company finished the year in a strong financial position, as evidenced by its improved cash balance and undrawn revolving credit facility that was increased to $350 million during the year."  Mr. Baker concluded, "The Company's continued stable financial position provides us flexibility to meet these challenges and to take advantage of future value-added opportunities."

Great Canadian will host a conference call for investors and analysts today, March 8, 2012, at 2:00 PM Pacific Time to review the financial results for the period ended December 31, 2011. To participate in the conference call, please dial 647-427-7450, or toll free at 888-231-8191 (Passcode: 46626171). Questions will be reserved for institutional investors and analysts. Interested parties may also access the call via the Investor Relations section of the Company's website, www.gcgaming.com; please allow 15 minutes to register and install any necessary software. A replay of the call will also be available at www.gcgaming.com.

ABOUT GREAT CANADIAN GAMING CORPORATION

Great Canadian Gaming Corporation is a multi-jurisdictional gaming and entertainment operator with operations in British Columbia, Ontario and Nova Scotia, and Washington State. The Company operates ten casinos, a thoroughbred racetrack that offers slot machines, three standardbred racetracks (two offer slot machines and one offers both slot machines and table games), two community gaming centres, a bingo hall, a resort with two hotels, a conference centre and a marina, two show theatres and various associated food and beverage and entertainment facilities. As of December 31, 2011, the Company had approximately 4,000 employees in Canada and 600 in Washington State. Further information is available on the Company's website, www.gcgaming.com.

Please refer to the Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") at www.gcgaming.com (available on March 8, 2012) or www.sedar.com (available on March 9, 2012) for detailed financial information and analysis.

The financial results on the following pages are unaudited and prepared by management. Expressed in millions of Canadian dollars, except for per share information.

GREAT CANADIAN GAMING CORPORATION Consolidated Results of Operations (Expressed in millions of Canadian dollars, except for per share information)
	Fourth Quarter						Twelve Months of
		2011		2010	% Chg			2011		2010	% Chg
Gaming revenues	$	68.4	$	69.1	(1%)		$	281.9	$	274.9	3%
Facility Development Commission		8.5		8.1	5%			32.1		30.2	6%
Hospitality and other revenues		18.9		18.0	5%			70.4		67.5	4%
Racetrack revenues		4.5		5.4	(17%)			19.5		23.3	(16%)
		100.3		100.6	0%			403.9		395.9	2%
Less: Promotional allowances		(4.6)		(3.4)	35%			(15.7)		(12.4)	27%
Revenues		95.7		97.2	(2%)			388.2		383.5	1%
Human resources		39.1		37.7	4%			154.9		153.2	1%
Property, marketing and administration		25.7		24.5	5%			95.5		93.9	2%
		64.8		62.2	4%			250.4		247.1	1%
EBITDA		30.9		35.0	(12%)			137.8		136.4	1%
Human resources as a % of Revenues   before Promotional allowances		39.0%		37.5%				38.4%		38.7%
EBITDA as a % of Revenues		32.3%		36.0%				35.5%		35.6%
Amortization		14.8		13.5				58.5		53.7
Stock-based compensation		0.6		0.8				4.9		4.8
Restructuring and other		0.8		2.1				0.5		3.4
Interest and financing costs, net		7.7		6.1				29.5		28.0
Impairment of long-lived assets		4.4		31.9				4.4		35.1
Impairment of goodwill		-		14.2				-		14.2
Other expenses		(0.9)		(0.1)				3.2		0.3
Income taxes		1.2		(4.0)				10.6		5.0
Shareholders' net earnings (loss)	$	2.3	$	(29.5)			$	26.2	$	(8.1)
Shareholders' net earnings (loss) per common share:
Basic	$	0.03	$	(0.36)			$	0.32	$	(0.10)
Diluted	$	0.03	$	(0.36)			$	0.31	$	(0.10)
Weighted average number of   common shares (in thousands):
Basic		82,161		82,801				82,670		82,641
Diluted		83,651		82,801				84,210		82,641

 

GREAT CANADIAN GAMING CORPORATION Consolidated Statements of Financial Position (Expressed in millions of Canadian dollars) As at December 31,
								2011				2010
ASSETS
CURRENT
	Cash and cash equivalents						$	134.7			$	50.9
	Short-term investments							-				53.0
	Restricted cash							7.1				1.6
	Accounts receivable							8.9				9.3
	Prepaids, deposits and other assets							6.6				5.9
								157.3				120.7
Property, plant and equipment								663.6				663.0
Intangible assets								119.7				129.4
Goodwill								23.5				23.3
Deferred tax assets								9.1				7.8
Other assets								2.9				2.0
							$	976.1			$	946.2
LIABILITIES
CURRENT
	Accounts payable and accrued liabilities						$	59.0			$	51.3
	Income taxes payable							0.8				5.4
	Other liabilities							5.1				4.1
								64.9				60.8
Long-term debt								332.6				325.8
Derivative liabilities								66.3				67.6
Deferred credits, provisions and other liabilities								23.7				25.9
Deferred tax liabilities								66.2				65.0
								553.7				545.1
SHAREHOLDERS' EQUITY
Share capital and contributed surplus								356.5				354.9
Accumulated other comprehensive loss								(6.5)				(4.9)
Retained earnings								72.4				51.1
								422.4				401.1
							$	976.1			$	946.2

 

DISCLAIMER

This news release contains certain "forward-looking information" or statements within the meaning of applicable securities legislation.  Forward-looking information is based on the Company's current expectations, estimates, projections and assumptions that were made by the Company in light of its historical trends and other factors.  All information or statements, other than statements of historical fact, are forward-looking information including statements that address expectations, estimates or projections about the future, the Company's strategy for growth, expected future expenditures, costs, operating and financial results and expected impact of future commitments.  Such forward-looking information is not a guarantee of future performance and may involve a number of risks and uncertainties.  Although forward-looking information is based on information and assumptions that the Company believes are current, reasonable and complete, they are subject to a number of factors that could cause actual results to vary materially from those expressed or implied by such forward-looking information. Such factors may include, but are not limited to: terms of operational service agreements with lottery corporations; changes to gaming laws that may impact our operational service agreements; pending, proposed or unanticipated regulatory or policy changes; unanticipated fines, sanctions and suspensions imposed on the Company by its regulators; impact of global liquidity and credit availability; adverse tourism trends and further decreases in levels of travel, leisure and consumer spending; competition from established competitors and new entrants in the gaming business; dependence on key personnel; the risk that systems, procedures and controls may not be adequate to meet regulatory requirements or to support current and expanding operations; potential undisclosed liabilities and capital expenditures associated with acquisitions; negative connotations linked to the gaming industry; First Nations claims with respect to some Crown land on which we conduct our operations; future or current legal proceedings; construction disruptions; financial covenants associated with credit facilities and long-term debt; credit, liquidity and market risks associated with our financial instruments; interest and exchange rate fluctuations; non-realization of cost reductions and synergies; demand for new products and services; fluctuations in operating results; and economic uncertainty and financial market volatility. These factors and other risks and uncertainties are discussed in the Company's continuous disclosure documents filed with the Canadian securities regulatory authorities from time to time, including in the "Risk Factors" section of the Company's Annual Information Form for fiscal 2011, and as identified in the Company's disclosure record on SEDAR at www.sedar.com. The forward-looking information in documents incorporated by reference speak only as of the date of those documents. Readers are cautioned not to place undue reliance on the forward-looking information, as there can be no assurance that the plans, intentions, or expectations upon which they are based will occur. The Company undertakes no obligation to publicly revise forward-looking information to reflect subsequent events or circumstances except as required by law. The forward-looking information contained herein is made as of the date hereof and is expressly qualified in its entirety by cautionary statements in this news release.

The Company has included non-International Financial Reporting Standards ("non-IFRS") measures in this news release. EBITDA as defined by the Company means Earnings Before Interest and financing costs (net of interest income), Income Taxes, Depreciation and Amortization, stock-based compensation, restructuring and other costs, impairment of long-lived assets, impairment of goodwill, foreign exchange loss and other, and non-controlling interests. EBITDA is derived from the consolidated statements of earnings (loss), and can be computed as revenues less human resources expenses and property, marketing and administration expenses.

Readers are cautioned that these non-IFRS definitions are not recognized measures under International Financial Reporting Standards ("IFRS"), do not have standardized meanings prescribed by IFRS, and should not be construed to be alternatives to net earnings determined in accordance with IFRS or as indicators of performance or liquidity or cash flows. The Company's method of calculating these measures may differ from methods used by other entities and accordingly our measures may not be comparable to similarly titled measures used by other entities or in other jurisdictions. The Company uses these measures because it believes they provide useful information to both management and investors with respect to the operating and financial performance of the Company.

ON BEHALF OF

GREAT CANADIAN GAMING CORPORATION

"Original Signed By Rod N. Baker"
_____________________
Rod N. Baker
President and Chief Executive Officer 

GREAT CANADIAN GAMING CORPORATION [TSX:GC] 
Suite #350 - 13775 Commerce Parkway
Richmond, BC
V6V 2V4
[phone]
Website: www.gcgaming.com

For investor enquiries:
[email protected]
or
Ms. Tanya Ruskowski
Executive Assistant to the President and Chief Executive Officer and the Interim Chief Financial Officer
[phone]

For media enquiries:
Mr. Howard Blank
Vice-President, Communications, Entertainment & Responsible Gaming
[phone]