Great Canadian Gaming announces fourth quarter and annual 2013 results

RICHMOND, BC, March 5, 2014 /CNW/ - Great Canadian Gaming Corporation [TSX:GC] ("Great Canadian" or "the Company") today announced its financial results for the three month period ("fourth quarter 2013") and twelve month period ("2013") ended December 31, 2013.

FOURTH QUARTER AND FULL YEAR HIGHLIGHTS

• Revenues of $101.6 million in the fourth quarter and $407.3 million for the year, a 1% decrease when compared to the prior year fourth quarter and consistent with the prior year twelve month period
  
  
• EBITDA⁽¹⁾ of $35.2 million in the fourth quarter, and $150.6 million or a 2% increase for the year
  
  
• Net earnings of $7.2 million in the fourth quarter and $63.1 million for the year
  
  
• Adjusted net earnings⁽¹⁾ of $11.7 million in the fourth quarter and $46.9 million for the year
  
  
• On October 23, 2013, opened the permanent Chances Maple Ridge facility (formerly the 'Maple Ridge Community Gaming Centre,' a temporary facility)
  
  
• On December 20, 2013, re-launched Boulevard Casino as the Hard Rock Casino Vancouver

(Amounts presented in millions of Canadian dollars, except for per share information)
				Fourth Quarter											Twelve Months of
						2013				2012			% Chg			2013			2012			% Chg
Revenues				$		101.6		$		102.8			(1%)		$	407.3		$	408.7			0%
EBITDA ^(1)				$		35.2		$		37.5			(6%)		$	150.6		$	147.6			2%
EBITDA as a % of Revenues						34.6%				36.5%						37.0%			36.1%
Net earnings (loss)				$		7.2		$		2.5			188%		$	63.1		$	(27.6)
Net earnings (loss) per common share
Basic				$		0.11		$		0.04					$	0.92		$	(0.36)
Diluted				$		0.10		$		0.03					$	0.90		$	(0.36)
Adjusted net earnings ^(1)				$		11.7		$		9.0			30%		$	46.9		$	45.2			4%
															December 31, 2013			December 31, 2012				% Chg
Total assets															$	915.7		$	862.7			6%
Long-term debt															$	441.0		$	439.9			0%

^(1)	EBITDA and adjusted net earnings are non-IFRS measures as described in the disclaimer section of this press release.  A reconciliation between net earnings (loss) and adjusted net earnings is included on page 6.

Great Canadian recorded revenues of $101.6 million during the fourth quarter of 2013, a $1.2 million, or 1%, decrease from the fourth quarter of 2012.  This decrease is primarily attributed to both the decreased performance of the Ontario Racetracks and Boulevard Casino ("Boulevard") and Chances Chilliwack's receipt of $1.7 million in retroactive accelerated Facility Development Commission ("FDC") revenues during the fourth quarter of 2012.  These declines were partially offset by revenues increases at River Rock Casino Resort ("River Rock") and Great American Casinos.

Great Canadian generated EBITDA of $35.2 million during the fourth quarter of 2013, a $2.3 million, or 6%, decrease from the fourth quarter of 2012. This decrease was primarily due to the aforementioned revenue decreases. EBITDA was also impacted by $1.1 million in pre-opening expenses that the Company incurred for Hard Rock Casino Vancouver and Chances Maple Ridge during the fourth quarter of 2013, compared to $0.2 million of similar pre-opening expenses incurred for Chances Chilliwack during the fourth quarter of 2012. Excluding the effect of these pre-opening expenses and the prior year's $1.7 million of retroactive accelerated FDC revenues, the Company's EBITDA for the fourth quarter of 2013 would have increased 1% over the prior year period.

Great Canadian's net earnings increased by $4.7 million during the fourth quarter of 2013 when compared to the prior year, primarily due to both a $6.9 million non-cash impairment charge on long-lived assets and $1.8 million higher restructuring and other costs that were recognized during the fourth quarter of 2012, as well as a $1.3 million reduction in amortization in 2013. These items were partially offset by the reductions in both EBITDA and income taxes as well as a $5.9 million increase in share based compensation expense.

For 2013, Great Canadian generated net earnings of $63.1 million, compared to a net loss of $27.6 million in 2012. This increase was primarily due to the $28.5 million reversal of the prior year's $64.3 million of non-cash impairment charges associated with Georgian Downs and Flamboro Downs.

"Great Canadian's financial results for the fourth quarter of 2013 reflect positive contributions from River Rock and our Great American Casinos," stated Rod Baker, Great Canadian's President and Chief Executive Officer. "These contributions were partially offset by declines at both Boulevard and our Ontario Racetracks. Boulevard witnessed declines in both gaming and hospitality revenues as a result of multiple challenges. Foremost among these challenges were the considerable internal and external disruptions caused by the completion of the property's redevelopment and proximate highway construction, respectively.

"Fortunately, this disruption is now substantially complete. On December 20, 2013, we successfully re-launched Boulevard as Hard Rock Casino Vancouver. This repositioning marks an important milestone for Great Canadian. Hard Rock Casino Vancouver features seven new dining options, three live music spaces, and a collection of rock and roll memorabilia. We believe this rebranded property is well positioned to establish itself as one of Greater Vancouver's premier gaming and entertainment destinations, particularly upon conclusion of any disruption from the remaining highway roadwork. While we have experienced an extended period of declining performance in Coquitlam, we are optimistic that the Hard Rock Casino Vancouver's unique brand will reverse this trend.

"On October 23, 2013, we were proud to open 'Chances Maple Ridge', a newly constructed, community gaming and entertainment facility in Maple Ridge, BC.  Since the grand opening, Chances Maple Ridge has seen improvements in its gaming and hospitality revenues, a trend that we expect will continue for the property in the coming year.

"On November 29, 2013, Great Canadian signed definitive lease agreements with the Ontario Lottery and Gaming Corporation ("OLG") for the lease of the slot machine area at the Company's Ontario Racetracks.  The Company and OLG were previously operating under interim lease arrangements since April 1, 2013.  The Company has also been receiving horse racing transition funding from the Government of Ontario since April 1, 2013. However, the Ontario Racetracks no longer receive a fixed percentage of the OLG's slot revenues, and do not directly share in horse racing pari-mutuel wagering revenues. When compared to the prior year, these changes led to decreases in both revenues and EBITDA at the Ontario Racetracks. Despite these declines, Great Canadian is pleased to continue our relationship with the OLG, and looks forward to developing this relationship further as the gaming industry in Ontario continues its evolution.

"In Ontario and elsewhere, Great Canadian is financially prepared to take advantage of opportunities to both enhance our property portfolio and grow shareholder value. Our financial flexibility is evident in both our strong cash balance and our undrawn revolving credit facility. Until the point that greater clarity around these opportunities emerges, we continue to pursue other avenues for creating shareholder value. Last year, the Company devoted $46.6 million towards the repurchase and cancellation of 4.5 million common shares at an average price of $10.32. As a result of these cancellations, we increased the ownership percentage of our existing shareholders by 6.4% over the course of 2013."

Great Canadian will host a conference call for investors and analysts today, March 5, 2014, at 2:00 PM Pacific Time in order to review the financial results for the period ended December 31, 2013. To participate in the conference call, please dial 416-764-8688, or toll free at 888-390-0546 (Passcode: 91030874). 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. Investors using the website should allow 15 minutes for the registration and installation of 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 operates gaming, entertainment and hospitality facilities in British Columbia, Ontario, Nova Scotia, and Washington State.  The Company's 17 gaming properties consist of three community gaming centres, four racetracks, and ten casinos, including one with a Four Diamond hotel resort.  As of December 31, 2013, 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 5, 2014) or www.sedar.com (available on March 6, 2014) 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
					2013				2012			% Chg			2013				2012			% Chg
Gaming revenues				$	67.7			$	71.4			(5%)		$	280.6			$	294.9			(5%)
Facility Development Commission					8.2				10.7			(23%)			34.1				35.2			(3%)
Hospitality, lease and other revenues					27.1				21.9			24%			96.8				82.6			17%
Racetrack revenues					3.4				3.5			(3%)			14.3				15.8			(9%)
					106.4				107.5			(1%)			425.8				428.5			(1%)
Less: Promotional allowances					(4.8)				(4.7)			2%			(18.5)				(19.8)			(7%)
Revenues					101.6				102.8			(1%)			407.3				408.7			0%
Human resources					40.8				40.8			0%			160.5				163.8			(2%)
Property, marketing and administration					25.6				24.5			4%			96.2				97.3			(1%)
					66.4				65.3			2%			256.7				261.1			(2%)
EBITDA					35.2				37.5			(6%)			150.6				147.6			2%
Human resources as a % of Revenues before
Promotional allowances					38.3%				38.0%						37.7%				38.2%
EBITDA as a % of Revenues					34.6%				36.5%						37.0%				36.1%
Amortization					11.6				12.9						48.5				51.6
Share-based compensation					6.1				0.2						9.7				3.6
(Reversals of) impairments of long-lived assets					-				6.9						(28.5)				61.1
Impairment of goodwill					-				-						-				3.2
Interest and financing costs, net					8.0				8.4						32.8				37.0
Litigation settlement					-				-						-				11.0
Restructuring and other					0.6				2.4						2.0				5.1
Foreign exchange (gain) loss and other					(0.3)				(0.2)						(0.9)				6.8
Income taxes					2.0				4.4						23.9				(4.2)
Net earnings (loss)					$7.2				$2.5			188%		$	63.1			$	(27.6)
Net earnings (loss) per common share
Basic				$	0.11			$	0.04					$	0.92			$	(0.36)
Diluted				$	0.10			$	0.03					$	0.90			$	(0.36)
Weighted average number of common shares (in thousands)
Basic					67,327				70,346						68,560				76,814
Diluted					69,208				71,605						69,934				76,814

GREAT CANADIAN GAMING CORPORATION Consolidated Statements of Financial Position (Expressed in millions of Canadian dollars)
							December 31, 2013				December 31, 2012
Assets
Current
	Cash and cash equivalents						$	192.6			$	121.1
	Accounts receivable							7.2				7.7
	Income taxes receivable							3.7				-
	Prepaids, deposits and other assets							8.0				6.1
								211.5				134.9
Property, plant and equipment								596.3				621.3
Intangible assets								75.8				73.3
Goodwill								20.6				20.1
Deferred tax assets								8.8				9.9
Other assets								2.7				3.2
							$	915.7			$	862.7
Liabilities
Current
	Accounts payable and accrued liabilities						$	67.9			$	60.4
	Income taxes payable							-				0.5
	Other liabilities							2.6				2.9
								70.5				63.8
Long-term debt								441.0				439.9
Deferred credits, provisions and other liabilities								26.4				25.4
Deferred tax liabilities								70.3				53.3
								608.2				582.4
Shareholders' equity
Share capital and contributed surplus								305.1				313.5
Accumulated other comprehensive loss								0.4				(1.0)
Retained earnings (deficit)								2.0				(32.2)
								307.5				280.3
							$	915.7			$	862.7

GREAT CANADIAN GAMING CORPORATION Adjusted Net Earnings (Expressed in millions of Canadian dollars)
The current and prior periods' net earnings (loss) included some items of note, which are summarized in the following adjusted net earnings (loss) table:
						Fourth Quarter											Twelve Months of
								2013				2012			% Chg				2013				2012			% Chg
Net earnings (loss)						$		7.2		$		2.5			188%		$		63.1		$		(27.6)
	Items of note
		(Reversal of) impairment of long-lived   assets						-				6.9							(28.5)				64.3
		Special share-based award to employees						4.8				-							4.8				-
		Rebranding and pre-opening costs for Hard   Rock Casino Vancouver, Chances Maple   Ridge and Chances Chilliwack						1.1				0.2							1.7				0.2
		One-time non-recurring accelerated FDC   revenues at Chances Chilliwack						-				(1.7)							-				(1.7)
		Litigation settlement						-				-							-				11.0
		Equity investment loss						-				0.9							-				3.5
		FDC revenues previously deferred at Fraser   Downs						-				-							(0.7)				-
		Without prejudice dispute resolution   payments received from OLG						-				-							(0.7)				-
		Senior Subordinated Notes redemption   costs and previously deferred transaction   costs associated with Term Loan B and   Senior Subordinated Notes						-				-							-				6.3
		Settlement of derivative liabilities associated   with the cross-currency interest rate and   principal swaps						-				-							-				8.1
		Human resources severance costs						-				-							-				1.8
		Restructuring severance costs						0.2				-							1.3				-
		Income taxes on the above items of note						(1.6)				0.2							5.9				(20.7)
Adjusted net earnings ^(1)						$		11.7		$		9.0			30%		$		46.9		$		45.2			4%

^(1)	Adjusted net earnings is a non-IFRS measure as described in the disclaimer section of this press release.

After adjusting for the above items of note, the Company's adjusted net earnings increased by $2.7 million, or 30%, in the fourth quarter of 2013 and $1.7 million, or 4% for 2013 when compared to the prior year.

DISCLAIMER

This press 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 and objectives, expected future expenditures, costs, operating and financial results, expected impact of future commitments, the future ability of the Company to operate the Georgian Downs and Flamboro Downs facilities beyond the terms of the signed Ontario Lease Agreements and Ontario Racing Agreements, the terms and expected benefits of the normal course issuer bid, and expectations and implications of changes in legislation and government policies.  Forward-looking information may be identified by words such as "anticipate", "believe", "expect", or similar expressions.  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 unknown risks, uncertainties, and 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 services agreements with lottery corporations; changes to gaming laws that may impact the operational services agreements, pending, proposed or unanticipated regulatory or policy changes; the outcome of restructuring of gaming in Ontario, the Company's ability to obtain and renew required business licenses, leases, and operational services agreements; the future of horse racing in Ontario,  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 Company's ability to manage its capital projects and its expanding operations; 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 rights with respect to some 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; economic uncertainty and financial market volatility; technology dependence; and privacy breaches or data theft.  The Company cautions that this list of factors is not exhaustive.  Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended.  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 2013, and as identified in the Company's disclosure record on SEDAR at www.sedar.com.

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 forward-looking information contained herein is made as of the date hereof, is subject to change after such date, and is expressly qualified in its entirety by cautionary statements in this press release.  Forward-looking information is provided for the purpose of providing information about management's current expectations and plans and allowing investors and others to get a better understanding of the Company's operating environment.  The Company undertakes no obligation to publicly revise forward-looking information to reflect subsequent events or circumstances except as required by law.

The Company has included non-International Financial Reporting Standards ("non-IFRS") measures in this press release.  EBITDA, as defined by the Company, means earnings before interest and financing costs (net of interest income), income taxes, depreciation and amortization, share-based compensation, (reversals of) impairments of long-lived assets, impairment of goodwill, litigation settlement, restructuring and other, and foreign exchange (gain) loss and other.  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.  The Company believes EBITDA is a useful measure because it provides information to management about the operating and financial performance of the Company and its ability to generate operating cash flow to fund future working capital needs, service outstanding debt, and fund future capital expenditures. EBITDA is also used by the investors and analysts for the purpose of valuing the Company. Adjusted net earnings, as defined by the Company, means net earnings (loss) plus or minus items of note that management may reasonably quantify and that it believes will provide the reader with a better understanding of the Company's underlying business performance.  Items of note may vary from time to time and in this press release include (reversals of) impairments of long-lived assets, special share-based awards to employees, one-time non-recurring accelerated FDC revenues at Chances Chilliwack, rebranding and pre-opening costs at for Hard Rock Casino Vancouver, Chances Maple Ridge and Chances Chilliwack, litigation settlement, equity investment loss, FDC revenues previously deferred at Fraser Downs, without prejudice dispute resolution payments received from the OLG, senior subordinated notes redemption costs and previously deferred transaction costs associated with Term Loan B and Senior Subordinated Notes, settlement of derivative liabilities associated with the cross-currency interest rate and principal swaps, human resources severance costs, restructuring severance costs, and income taxes on the above items of note.

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

SOURCE: Great Canadian Gaming Corporation

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

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

For media enquiries: 
Mr. Chuck Keeling
Vice-President, Stakeholder Relations and Responsible Gaming
[phone]