Great Canadian Gaming Corporation
TSX : GCD

Great Canadian Gaming Corporation

March 19, 2007 17:34 ET

Great Canadian Fourth Quarter EBITDA Rises 71% to $25.4 Million on 10% Revenue Gain

Full Year 2006 Revenue Rises 31% Reflecting Expanded Scope of Operations

RICHMOND, BRITISH COLUMBIA--(CCNMatthews - March 19, 2007) - Great Canadian Gaming Corporation (TSX:GCD) (the "Company") announces its financial results for the three and twelve month periods ended December 31, 2006.

2006 FOURTH QUARTER HIGHLIGHTS

- Revenue growth of 10% in the fourth quarter of 2006 compared to the fourth quarter of 2005 reflects both expansions and improvements at existing businesses

- EBITDA growth of 71% in the fourth quarter of 2006 compared to the fourth quarter of 2005 is attributable to the Company's continued focus on improving operating efficiency

- Additional cost savings and strategic efficiencies implemented, including the internalization of hospitality functions and further head office reductions

- Secured development site for new parking facility at River Rock to support both current demand and future growth opportunities



In CAD 000's, Three Months Ended Twelve Months Ended
except per ------------------------------------- -----------------------
share % % %
information Dec 31, Sept 30, Cha- Dec 31, Cha- Dec 31, Dec 31, Cha-
See Note (1) 2006 2006 nge 2005 nge 2006 2005 nge
------------------------------------- -----------------------
------------------------------------- -----------------------
Revenues $ 98,071 $100,220 (2%) $89,524 10% $385,253 $294,444 31%
EBITDA (2) $ 25,434 $ 26,985 (6%) $14,857 71% $ 98,237 $ 76,570 28%
Net income
(loss) $(11,534)$(14,112) (18%) $(9,095) 27% $(18,643)$ 15,670

Earnings
(loss) per
common share:

Basic $ (0.13)$ (0.16) $ (0.11) $ (0.22)$ 0.20
Diluted $ (0.13)$ (0.16) $ (0.11) $ (0.22)$ 0.20

Notes:
(1) The unaudited summary of 2005 three and twelve month financial results
above reflects the retrospective application of the change in
accounting policy for the FDC received from the British Columbia
Lottery Corporation ("BCLC"). FDC is recorded as revenues when earned
(when it is payable by BCLC to the Company), subject to the Company
making sufficient improvement or development expenditures, approved
by BCLC, on its BC gaming properties.

A reconciliation of reported financial results for previously reported
2005 three and twelve month periods noted in the table above
summarizing the effect of the change in the accounting policy is
provided beginning on page 11 of this press release.

(2) "EBITDA", a non-GAAP measure as defined by the Company, means earnings
before interest and financing costs (net of interest income), taxes,
depreciation and amortization, stock-based compensation, restructuring
costs, impairment of investments and long-lived assets, goodwill
impairment, foreign exchange gain (loss) and non-controlling interests.
EBITDA is derived from the consolidated statement of income (loss) and
can also be computed as revenues, less human resources, general and
administration, marketing and promotion, occupancy costs and operating
supplies. See additional comments in the Disclaimer.


In 2006, three significant unusual events contributed to an overall net loss of $18.6 million for the year:

- In the third quarter, a $20.4 million after-tax ($30.9 million pre-tax) financing charge associated with the redemption of our Series A and Series B Senior Secured Notes;

- In the fourth quarter, a $9.9 million ($9.9 million pre-tax) goodwill impairment charge related to our investment in Hastings Entertainment Inc.;

- In the the fourth quarter, a $3.7 million after-tax ($5.6 million pre-tax) restructuring charge for the buyout of hospitality services previously contracted to Mayfield Consulting Canada Incorporated. In total, restructuring charges were $7.0 million after-tax ($10.0 million pre-tax) for the year.

The following table adjusts our reported amounts to account for these three significant unusual events. The table displays a reconciliation of Net income (loss) to Adjusted net income and Diluted earnings (loss) per share to Adjusted diluted earnings per share for the years ended December 31, 2006 and December 31, 2005.



Twelve Months Ended
In CAD 000's, except -----------------------------
per share information Dec 31, Dec 31,
2006 2005
-----------------------------

Net income (loss) $ (18,643) $ 15,670
Cost associated with Notes redemption 20,360 -
Restructuring cost 6,963 -
Goodwill impairment 9,929 -
-----------------------------
Adjusted net income (1) $ 18,608 $ 15,670
-----------------------------
-----------------------------

Earnings (loss) per common share:
Diluted $ (0.22) $ 0.20
Cost associated with Notes redemption 0.24 -
Restructuring cost 0.08 -
Goodwill impairment 0.12 -
-----------------------------
Adjusted diluted (1) $ 0.22 $ 0.20
-----------------------------
-----------------------------

Notes:

(1) "Adjusted net income" and "Adjusted diluted earnings per share" are
non-GAAP measures. See additional comments in the Disclaimer.


Great Canadian showed strong improvements in 2006 as revenues increased by 31% to $385.3 million, EBITDA increased by 28% to $98.2 million, and adjusted net income increased by 19% to $18.6 million over 2005. The revenues increase was driven primarily by a full year's benefit of acquisitions and expansions opened during 2005, and growth in existing operations. The EBITDA increase resulted primarily from the same acquisitions, expansions, and growth, and a continued focus on the creation of operational efficiencies. Operating results in 2005 were also negatively impacted by significant pre-opening and start-up costs.

"Great Canadian's operating results for the fourth quarter and second half of 2006 demonstrate the solid progress of our revenue growth and cost containment strategies," stated Ross J. McLeod, Chairman and CEO. "While weather and hold percentage volatility impacted results when compared to the third quarter of 2006, our performance when compared to the prior year remains very encouraging. These results highlight the initial success of the operating efficiency initiatives begun in early 2006. We believe the fourth quarter performance clearly indicates that the Company is positioned to generate improving returns throughout 2007."

"The EBITDA decline of $1.6 million in the fourth quarter of 2006 when compared to the third quarter of 2006 is partially attributable to the severe weather that plagued Greater Vancouver for much of November and December. We believe the weather resulted in reduced patronage and play during these months. This was particularly evident at River Rock, and stands in sharp contrast to its historical seasonality. Hold percentage volatility was also a factor in the quarter. River Rock is home to the majority of our high limit play, and its table games hold percentage decreased to 24.1% from a high 26.5% in the third quarter of 2006. However, River Rock's table games hold percentage of 26.8% in the first two months of 2007 is promising. This improvement from fourth quarter of 2006 levels reflects the recent placement of six additional high-limit baccarat tables. This capacity, which replaces other lower limit tables, should help to both grow revenue and lessen the hold percentage volatility experienced at the property."

"Great Canadian made further progress during the fourth quarter on cost reduction initiatives. We bought out our hospitality services, and commenced in-house management of these operations. We are very confident in our internal hospitality team, and anticipate measurable improvements from our hospitality operations over the balance of this year. In November, we further restructured our head office staff in Vancouver and Nova Scotia, affecting 43 positions. Better management of human resource expenses at both the head office and site levels remains a priority. We will continue to implement strategies to align human resources costs with revenue growth."

"The Company is also capitalizing on opportunities to effect revenue growth from within our current property portfolio. The British Columbia Lottery Corporation has granted us permission to host both slot and blackjack tournaments, providing our gaming product in this province with another level of depth and promotion. High limit play also remains a focus, and we are exploring opportunities to improve access to cash for our guests that wager at higher levels. In addition, we are further refining our marketing strategies, including better utilization of our player management systems, with the goal of generating enhanced customer targeting and cost efficiencies."

"The Company continues to have opportunities to further grow revenue and increase market penetration at several of our properties through expansion initiatives. We will soon begin construction on a new 1,200 stall parking facility adjacent to River Rock. As that property has grown in popularity, its parking capacity is often constrained during peak periods. This new parking facility will allow us to meet the current demand, and put in place the capacity to accommodate the property's future development. The Company also continues to review opportunities at several of our other properties where current revenue metrics indicate that expanded or newly developed facilities are warranted."

"Leading these initiatives are our senior management team: Chief Operating Officer Vincent Trudel and Chief Financial Officer Milton Woensdregt. Both Vincent's proven history in managing gaming, restaurant, hotel, and entertainment offerings and Milton's track record of success in highly regulated environments will be integral in leading Great Canadian to its target EBITDA margin range of 29-34%."

"Reflecting our ongoing focus and commitment to generate appropriate returns with projects aimed at driving growth across all of our operations, we recently improved our capital structure and financial flexibility. Last month we completed our new debt structure of approximately CDN $600 million, composed of an approximately $200 million Senior Secured Term Loan B, $200 million in Senior Subordinated Notes, and an undrawn $200 million Senior Secured Revolving Credit Facility. This new structure provides the Company with both a very attractive cost of capital and the financial flexibility to pursue appropriate growth strategies, including the further development and expansion of our existing properties."

Mr. McLeod concluded, "With our strengthened senior management team, focus on driving further operating margin improvements, enhanced access to capital, and solid organic growth prospects, we expect further operating improvements in each coming quarter, and continued progress towards our stated EBITDA margin goal. I am confident 2007, Great Canadian's Silver Anniversary, will be our most successful year ever."

The Company will host a conference call for investors and analysts today, Monday, March 19, 2007 at 6:00 PM Eastern Daylight Time, or 3:00 PM Pacific Daylight Time, to review the financial results for the period ended December 31, 2006. To participate in the conference call, please dial 416-695-9745 or toll free at 877-888-4605. Questions will be reserved for institutional investors and analysts. Interested parties may also access the call on the Internet at www.gcgaming.com; please allow 15 minutes to register and install any necessary software. Following completion of the call, a replay will be available until November 23, 2007 by dialing 416-695-5275, or toll free at 888-509-0081 (Passcode: 641456). A replay of the call will also be available at www.gcgaming.com.

ABOUT GREAT CANADIAN GAMING CORPORATION

Great Canadian is a multi-jurisdictional gaming and entertainment operator with facilities in British Columbia, Ontario, Nova Scotia and Washington State. Great Canadian operates eleven casinos, a thoroughbred racetrack, four standardbred racetracks (three of which offer slot machines), a community gaming centre, a hotel, two show theatres, and various food and beverage facilities. 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 at www.gcgaming.com (available on March 19, 2007) or www.sedar.com (available on March 20, 2007) for detailed financial information and analysis.

The financials results on the following pages are unaudited and prepared by management. Amounts are in thousands, except per share information.



Operating Results
Table Drop and Table Hold Summary
(In thousands)
Three Months Ended Year Ended
---------------------------------------- -----------------------
Decem- Septem- Decem- Decem- Decem-
ber ber % ber % ber ber %
31, 30, Cha- 31, Cha- 31, 31, Cha-
2006 2006 nge 2005 nge 2006 2005 nge
--------------------------------------- ------------------------
--------------------------------------- ------------------------

River Rock
Casino
Resort
Table
Drop $121,968 $122,680 (1%) $106,983 14% $476,960 $451,621 6%
Table
Hold % 24.1% 26.5% 26.7% 24.9% 25.9%
Slot
Win $ 27,124 $ 28,785 (6%) $ 26,444 3% $109,673 $ 99,169 11%

Boulevard
Casino
Table
Drop $ 51,400 $ 51,909 (1%) $ 43,861 17% $214,057 $169,317 26%
Table
Hold % 25.2% 22.2% 22.6% 22.2% 22.1%
Slot
Win $ 28,855 $ 28,759 0% $ 23,315 24% $114,954 $ 79,531 45%

Other BC
Casinos
Table
Drop $ 46,452 $ 46,124 1% $ 45,425 2% $183,921 $176,348 4%
Table
Hold % 22.2% 20.3% 21.6% 21.6% 22.4%
Slot
Win $ 29,180 $ 30,120 (3%) $ 27,377 7% $117,531 $106,315 11%

Casino Nova
Scotia
Table
Drop $ 16,924 $ 19,401 (13%) $ 17,331 (2%) $ 68,315 $ 37,910 80%
Table
Hold % 19.4% 19.1% 19.7% 19.1% 18.0%
Slot
Win $ 18,925 $ 21,910 (14%) $ 17,199 10% $ 76,333 $ 37,734 102%

Great
American
Casinos
(US dollars)
Table
Drop $ 24,306 $ 21,914 11% $ 22,743 7% $ 90,216 $ 88,543 2%
Table
Hold % 24.9% 24.1% 23.9% 24.7% 24.4%


Consolidated Results of Operations
(In thousands, except for share and per share information)

Three Months Ended Year Ended
--------------------------------------- -------------------------
Decem- Septem- Decem-
ber ber ber December
31, 30, % 31, % 31, 31, %
2006 2006 Chg 2005 Chg 2006 2005 Chg
--------------------------------------- -------------------------
--------------------------------------- -------------------------
Gaming
reven-
ues $ 69,914 $ 72,372 (3%) $63,689 10% $277,042 $219,102 26%
Racetrack
revenues 7,536 8,307 (9%) 7,181 5% 30,386 22,601 34%
Facility
Development
Commiss-
ion 4,811 4,913 (2%) 4,213 14% 19,054 16,340 17%
Food and
beverage
revenues 14,303 13,458 6% 13,679 5% 53,137 35,976 48%
Hotel
revenues 2,430 2,763 (12%) 1,766 38% 9,320 2,165 330%
Other
non-gaming
revenues 1,639 1,017 61% 1,344 22% 5,832 4,903 19%
--------------------------------------------------------------------------
100,633 102,830 (2%) 91,872 10% 394,771 301,087 31%
Less:
promot-
ional
allowan-
ces (2,562) (2,610) (2%) (2,348) 9% (9,518) (6,643) 43%
--------------------------------------------------------------------------
Revenues 98,071 100,220 (2%) 89,524 10% 385,253 294,444 31%
--------------------------------------------------------------------------
Human
resour-
ces 45,077 45,625 (1%) 45,445 (1%) 178,609 142,537 25%
General
and
administ-
ration 8,109 8,021 1% 9,126 (11%) 32,596 21,872 49%
Operating
Supplies 7,273 7,012 4% 7,425 (2%) 27,399 20,457 34%
Occupancy
costs 8,618 8,218 5% 7,100 21% 33,698 19,474 73%
Marketing
and
promotion 3,560 4,359 (18%) 5,571 (36%) 14,714 13,534 9%
--------------------------------------------------------------------------
72,637 73,235 (1%) 74,667 (3%) 287,016 217,874 32%
--------------------------------------------------------------------------
EBITDA
(1) 25,434 26,985 (6%) 14,857 71% 98,237 76,570 28%
--------------------------------------------------------------------------
EBITDA
% of
revenues 25.9% 26.9% 16.6% 25.5% 26.0%
Amortiza-
tion 9,515 9,502 0% 9,439 1% 37,101 22,616 64%
Stock-based
compensa-
tion 1,349 1,291 4% 1,988 (32%) 6,333 5,312 19%
Restruc-
turing
costs 7,003 427 N/M(2) - N/M(2) 10,026 - N/M(2)
--------------------------------------------------------------------------
7,567 15,765 (52%) 3,430 121% 44,777 48,642 (8%)
--------------------------------------------------------------------------
Interest
and
financing
costs,
net 6,587 34,874 (81%) 3,861 71% 51,022 9,388 443%
Impairment
of
investments
and
long-lived
assets 611 201 204% 8,177 (93%) 3,098 8,200 (62%)
Goodwill
impair-
ment 9,929 - N/M(2) - N/M(2) 9,929 - N/M(2)
Other
expenses 460 535 (14%) 568 (19%) 3,401 990 244%
Income
taxes 1,514 (5,733) N/M(2) (81) N/M(2) (4,030) 14,394 N/M(2)
--------------------------------------------------------------------------
Net
income
(loss) $(11,534) $(14,112) (18%) $(9,095) 27% $(18,643) $15,670 N/M(2)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Earnings
(loss)
per
common
share:
Basic $ (0.13) $ (0.16) $ (0.11) $ (0.22) $ 0.20
Dilu-
ted $ (0.13) $ (0.16) $ (0.11) $ (0.22) $ 0.20
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Weighted
average
number of
common
shares:
Bas-
ic 86,133,261 86,087,373 79,406,692 84,471,204 76,626,504
Dilu-
ted 86,133,261 86,087,373 79,406,692 84,471,204 78,402,986
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(1) "EBITDA" is a non-GAAP measure. Please see Disclaimer.
(2) Not meaningful.


GREAT CANADIAN GAMING CORPORATION
Consolidated Balance Sheets
(In thousands, except for share and per share information)
As at December 31,
--------------------------------------------------------------------------

2006 2005
-----------------------------
ASSETS
CURRENT
Cash and cash equivalents $ 56,773 $ 69,812
Restricted cash 2,556 6,598
Accounts receivable 13,353 13,098
Income taxes receivable 9,907 4,533
Due from Nova Scotia Gaming Corporation,
current 17,057 15,353
Prepaids, deposits and other assets 12,912 9,037
Future income taxes 1,257 1,875
--------------------------------------------------------------------------
113,815 120,306
Due from Nova Scotia Gaming Corporation 17,733 28,607
Property, plant and equipment 565,824 518,807
Promissory notes receivable and other
assets 1,280 8,544
Intangible assets 202,045 209,887
Goodwill 30,552 37,498
Future income taxes 9,435 -
--------------------------------------------------------------------------
$ 940,684 $ 923,649
--------------------------------------------------------------------------
--------------------------------------------------------------------------

LIABILITIES

CURRENT
Gaming revenues payable $ 11,525 $ 10,030
Accounts payable and accrued liabilities 50,483 56,854
Income taxes payable - 3,694
Deferred credit and other liabilities,
current 2,470 -
Long-term debt, current 1,216 3,252
Future income taxes 7,553 -
--------------------------------------------------------------------------
73,247 73,830
Long-term debt 390,324 438,279
Deferred credit and other liabilities 3,278 5,385
Future income taxes 78,969 81,874
--------------------------------------------------------------------------
545,818 599,368
--------------------------------------------------------------------------

Non-controlling interests 41 733
--------------------------------------------------------------------------

SHAREHOLDERS' EQUITY

Share capital and other equity 335,833 247,727
Cumulative foreign currency translation (5,349) (7,163)
Retained earnings 64,341 82,984
--------------------------------------------------------------------------
394,825 323,548
--------------------------------------------------------------------------
$ 940,684 $ 923,649
--------------------------------------------------------------------------
--------------------------------------------------------------------------


GREAT CANADIAN GAMING CORPORATION
Consolidated Statements of Income (Loss)
(In thousands, except for share and per share information)
For the years ended December 31,
--------------------------------------------------------------------------

Twelve months ended December 31,
2006 2005
-----------------------------
REVENUES $ 385,253 $ 294,444

EXPENSES
Human resources 178,609 142,537
General and administration 32,596 21,872
Operating supplies 27,399 20,457
Occupancy costs 33,698 19,474
Marketing and promotion 14,714 13,534
Amortization 37,101 22,616
Stock-based compensation 6,333 5,312
Restructuring costs 10,026 -
--------------------------------------------------------------------------
340,476 245,802
--------------------------------------------------------------------------

44,777 48,642

Interest and financing costs, net (51,022) (9,388)
Impairment of investments and long-lived
assets (3,098) (8,200)
Goodwill impairment (9,929) -
Foreign exchange (loss) gain (1,332) 203
--------------------------------------------------------------------------
INCOME (LOSS) BEFORE INCOME TAXES (20,604) 31,257

Income tax (recovery) expense (4,030) 14,394
--------------------------------------------------------------------------

INCOME (LOSS) BEFORE NON-CONTROLLING
INTERESTS (16,574) 16,863

Non-controlling interests 2,069 1,193
--------------------------------------------------------------------------
NET INCOME (LOSS) $ (18,643) $ 15,670
--------------------------------------------------------------------------
--------------------------------------------------------------------------

EARNINGS (LOSS) PER COMMON SHARE
Basic $ (0.22) $ 0.20
Diluted $ (0.22) $ 0.20
--------------------------------------------------------------------------
--------------------------------------------------------------------------

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
Basic 84,471,204 76,626,504
Diluted 84,471,204 78,402,986
--------------------------------------------------------------------------
--------------------------------------------------------------------------


GREAT CANADIAN GAMING CORPORATION
Consolidated Statements of Cash Flows
(In thousands, except for share and per share information)
For years ended December 31,
--------------------------------------------------------------------------

2006 2005
-----------------------------
Cash Flows from Operating Activities
Net income (loss) $ (18,643) $ 15,670
Adjustments to reconcile net income
to net cash provided by operating
activities:
Amortization 37,101 22,616
Impairment of investments and long-lived
assets 3,098 8,638
Goodwill impairment 9,929 -
Non-cash interest and financing costs 8,945 1,672
Stock-based compensation and non-cash
restructuring costs 7,381 5,312
Foreign exchange (gain) loss 1,332 (203)
Non-controlling interest and others (245) 2,396
Future income taxes (4,011) (2,896)
Changes in non-cash operating working
capital (13,763) 1,343
--------------------------------------------------------------------------
Net cash provided by operating activities 31,124 54,548
--------------------------------------------------------------------------
Cash Flows from Investing Activities
Restricted cash 4,042 909
Investment in and advances to equity
investees (9) (1,056)
Funds received from Nova Scotia Gaming
Corporation 23,650 6,260
Funds advanced to Nova Scotia Gaming
Corporation to purchase plant and
equipment (15,197) -
Purchase of property, plant and equipment,
net of related accounts payable (82,696) (194,329)
Proceeds from disposal of property, plant
and equipment - 5,947
Consolidation of cash of Georgian Downs - 1,286
Acquisitions and related contingent
payments, net of cash acquired (1,100) (182,104)
River Rock prepaid lease - (9,262)
Promissory notes 163 (28,568)
--------------------------------------------------------------------------
Net cash used in investing activities (71,147) (400,917)
--------------------------------------------------------------------------

Cash Flows from Financing Activities
Proceeds from long-term debt 396,816 419,252
Repayment of long-term debt (446,807) (177,346)
Deferred financing costs (4,073) (4,449)
Bond forward - 1,731
Common shares issued for cash, net of
issuance costs 80,569 138,137
--------------------------------------------------------------------------
Net cash provided by financing activities 26,505 377,325
--------------------------------------------------------------------------

--------------------------------------------------------------------------
Effect of foreign exchange on cash and
cash equivalents 479 (90)
--------------------------------------------------------------------------

Net Cash (Outflow) Inflow (13,039) 30,866
Cash and cash equivalents, Beginning of
the period 69,812 38,946
--------------------------------------------------------------------------
Cash and cash equivalents, End of the
period $ 56,773 $ 69,812
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Supplemental Disclosure
Interest received $ 4,745 $ 2,424
Interest and Series A and B Notes
prepayment fees paid $ 57,580 $ 16,054
Income taxes paid $ 9,234 $ 18,634

Non-Cash Investing and Financing
Activities
Conversion of promissory note to preferred
shares $ - $ 6,917
--------------------------------------------------------------------------
--------------------------------------------------------------------------


Change in Accounting Policy

Effective September 30, 2006, the Company changed its accounting policy for the Facility Development Commission ("FDC") and now records FDC as "Revenues" in the Statement of income (loss) as it is earned (when it is payable by BCLC to the Company), limited to the extent that sufficient Approved Amounts exist. Approved Amounts is a defined term in the Company's operating agreements with BCLC, and generally consists of approved capital or operating expenditures related to the development or improvement of gaming properties. Approved Amounts to be recovered through future FDC receipts are disclosed in the notes to the Company's consolidated financial statements.

The Company has elected to adopt the new accounting policy as it believes it more accurately reflects the nature of the current compensation arrangements with BCLC, provides better information on the cash flows of the Company and portrays "Property, plant and equipment" on the balance sheet at amortized historical cost. The new accounting policy has been applied on a retrospective basis to prior periods, with the opening balance of retained earnings and other financial information presented as if the new accounting policy had always been applied.

Previously, the FDC was accounted for as a form of government assistance upon approval by the BCLC of the Approved Amounts. Approved Amounts were recorded at the time of BCLC's approval as "Due from Provincial Gaming Corporations" on the balance sheet and reduced the cost of the related asset or operating expense. The "Due from Provincial Gaming Corporations" was then recorded on a discounted basis using a discount rate that management believed to be the market rate of interest for a similar instrument with similar terms and conditions. The FDC received reduced the "Due from Provincial Gaming Corporations" receivable. The "Accretive income" recognized on the consolidated Statement of income (loss) increased the "Due from Provincial Gaming Corporations" receivable.

The table below summarizes the effect of the change in accounting policy on previously reported results for the three- and twelve-month periods ended December 31, 2005. Further information on the change in accounting policy can be found in the annual consolidated financial statements and management's discussion and analysis available at the Company's website, www.gcgaming.com, and at www.sedar.com.



--------------------------------------------------------------------------
(in thousands,
except per share Three Months Ended Twelve Months Ended
data) December 31, 2005 December 31, 2005
--------------------------------------------- -------------------------
Reflecting Reflecting
Accounting As Previously Accounting As Previously
Policy Reported Policy Reported
Change Change
--------------------------------------------- -------------------------
Revenues $ 89,524 $ 85,559 $ 294,444 $ 278,104
--------------------------------------------- -------------------------
EBITDA $ 14,857 $ 9,603 $ 76,570 $ 65,363
--------------------------------------------- -------------------------
Net income (loss) ($ 9,095) ($ 9,165) $ 15,670 $ 19,579
--------------------------------------------- -------------------------
Diluted earnings
(Loss) per share ($ 0.11) ($ 0.12) $ 0.20 $ 0.25
--------------------------------------------- -------------------------


DISCLAIMER

This news release contains forward-looking statements which reflect management's current expectations regarding the Company's objectives, plans, goals, strategies, future growth, results of operations, performance and business prospects and opportunities. These forward-looking statements are not guarantees, but only predictions. Although the Company believes that these statements are based on information and assumptions which are current, reasonable and complete, these statements are necessarily subject to a number of factors that could cause actual results to vary significantly from current expectations. Such differences may be caused by factors which include, but are not limited to, limited terms of operational service agreements with gaming regulators, pending and proposed legislative or regulatory developments, competition from established competitors and new entrants in the gaming business, dependence on key personnel, no assurance that systems, procedures and controls will be adequate to support expanding operations, potential undisclosed liabilities and capital expenditures associated with acquisitions, negative connotations linked to the gaming industry, First Nations claims with respect to public lands on which we conduct our operations, impact of legal proceedings, impact of smoking bans, ongoing requirements to comply with financial covenants associated with credit facilities, interest and exchange rate fluctuations, non-realization of cost reductions and synergies, acceptance and demand for new products and services, fluctuations in operating results and general economic conditions. The Company cautions that this list of factors is not exhaustive. These factors and other risks and uncertainties are discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time, including in the "Risks Factors" section of the Company's Annual Information Form for fiscal 2006, or as identified in the Company's disclosure record on www.sedar.com. The forward-looking statements included in this news release and are expressly qualified in their entirety by this cautionary statement. Readers should not place undue reliance on the forward-looking statements, which reflect management's plans, estimates, projections, and views only as of the date hereof. The Company does not undertaker to publicly update these forward-looking statements to reflect subsequent events or circumstances.

The Company has included non-generally accepted accounting principles ("non-GAAP") measures in this news release. "EBITDA", a non-GAAP measure, means earnings before interest and financing costs (net of interest income), taxes, depreciation and amortization, stock-based compensation, restructuring costs, impairment of investments and long-lived assets, goodwill impairment, foreign exchange gain (loss) and non-controlling interests. EBITDA is derived from the consolidated statement of income and can also be computed as revenues, less human resources, general and administration, marketing and promotion, occupancy costs and operating supplies. EBITDA margin is computed as EBITDA as a percentage of revenues. "Adjusted net income" and "Adjusted diluted earnings per share" are also non-GAAP measures. Adjusted net income is Net income (loss) from the statement of income adjusted for the elimination the cost associated with the redemption of the Series A and Series B Senior Secured Notes, goodwill impairment charge related to Hastings Entertainment Inc. and restructuring charges all on an after tax basis. Adjusted diluted earnings per share is Diluted loss per share from the statement of income adjusted for the elimination of the after tax costs associated with the redemption of the Notes, goodwill impairment charge related to Hastings Entertainment Inc. and restructuring charges.

Readers are cautioned that these non-GAAP definitions are not recognized measures under Canadian GAAP, do not have standardized meanings prescribed by GAAP, and should not be construed to be alternatives to net income determined in accordance with GAAP 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. 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

Milton Woensdregt, CA Chief Financial Officer

Contact Information

  • Great Canadian Gaming Corporation - Investor Enquiries
    Mr. Thomas Bell
    Vice-President, Corporate Development & Investor Relations
    (604) 303-1000
    or
    Jaffoni & Collins Incorporated - Investor Enquiries
    Mr. Richard Land
    (212) 835-8500
    or
    Jaffoni & Collins Incorporated - Investor Enquiries
    Mr. David Jacoby
    (212) 835-8500
    Email: GCD@jcir.com
    or
    Great Canadian Gaming Corporation - Media Enquiries
    Mr. Howard Blank
    Vice-President, Media & Entertainment
    (604) 512-6066
    Website: www.gcgaming.com