Great Canadian Gaming Corporation
TSX : GC

Great Canadian Gaming Corporation

March 10, 2008 16:10 ET

Great Canadian Gaming Achieves Record Revenues and EBITDA in 2007

Expanded Scope of Operations and Operating Efficiency Enhancements Drive Revenue Increase of 3%, EBITDA Increase of 13%

RICHMOND, BRITISH COLUMBIA--(Marketwire - March 10, 2008) - Great Canadian Gaming Corporation (TSX:GC) ("the Company") announces its financial results for the quarter ended December 31, 2007.

2007 AND FOURTH QUARTER HIGHLIGHTS

- Full year EBITDA growth of 13% on 3% increase in revenues; 4Q EBITDA of $27.9 million represents 10% increase over 4Q 2006 on a 3% rise in revenues

- EBITDA as a percentage of revenues for 2007 rises 240 basis points year over year to 27.9%; EBITDA as a percentage of revenues for 4Q rises 180 basis points to 27.7%

- Net earnings improved by $54.4 million and $24.5 million, respectively, from 2006 full year and 4Q levels



(Amounts presented in $millions, except for share information)

Fourth Quarter % Twelve Months of %
2007 2006 Chg 2007 2006 Chg
-------------------------------------------------------------------------
Revenues $ 100.7 $ 98.1 3% $ 397.2 $ 385.2 3%
EBITDA (1) $ 27.9 $ 25.4 10% $ 111.0 $ 98.2 13%
Human resources as a %
of Revenues before
promotional allowances 43.6% 44.9% 44.1% 45.2%
EBITDA as a % of
Revenues 27.7% 25.9% 27.9% 25.5%
Net earnings (loss)(2) $ 13.0 $ (11.5) $ 35.8 $ (18.6)

Earnings(loss) per
common share:
Basic $ 0.15 $ (0.13) $ 0.42 $ (0.22)
Diluted $ 0.15 $ (0.13) $ 0.41 $ (0.22)
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Total assets $ 957.4 $ 940.7 2%
Long-term debt,
excluding current
portion $ 329.4 $ 390.3 (16%)
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(1) EBITDA is a non-GAAP measure and is defined in the Disclaimer section
of this press release.

(2) The net earnings (loss) include several unusual items that affect the
comparability of net earnings (loss) over the periods presented. As a
result of these items, in aggregate the 2007 fourth quarter and full
year periods were higher by $8.2 million and $13.8 million,
respectively, while the 2006 fourth quarter and full year periods
decreased by $14.5 million and $32.1 million, respectively.


Great Canadian Gaming recorded its highest ever levels of revenues and EBITDA in 2007. Revenues of $397.2 million and EBITDA of $111.0 million represent 3% and 13% improvements over 2006 levels, respectively. As a result of the Company's successful implementation of operating efficiency initiatives during 2007 and the second half of 2006, the record results translated into a year-over-year improvement of 240 basis points in EBITDA as a percentage of revenues to 27.9%.

Great Canadian's record operating results were led by Boulevard Casino, where revenues and EBITDA rose by 15% and 27%, respectively. These increases were driven by new marketing initiatives, expanded hospitality offerings, and the patronage generated by the property's Red Robinson Show Theatre. The latter was particularly instrumental in driving a nearly 21% year-over-year increase in slot coin-in at the property.

The Company's River Rock Casino Resort achieved a 3% rise in revenues and a 8% increase in EBITDA from 2006 levels. These increases were driven by an improved mix of slot and table games, increased entertainment and hospitality offerings, and more effective marketing programs.

BC Racinos also produced at record levels for 2007, generating full-year revenues of $46.8 million and EBITDA of $12.0 million, improvements of 11% and 46%, respectively. These gains reflect the introduction of table games and the strong slot performance at Fraser Downs, the November 2007 installation of 150 slot machines at Hastings Racecourse, and a 9% year-over-year improvement in racing revenues.

For the quarter ended December 31, 2007, Great Canadian recorded improvements in both revenues, which rose by 3% to $100.7 million, and EBITDA, which improved by 10% to $27.9 million, when compared to the fourth quarter of 2006. These improvements reflect solid year-over-year gains at Boulevard and River Rock as well as from the Vancouver Island casinos and BC racinos, partially offset by a decline at the Nova Scotia casinos and lesser contributing properties. The Company's EBITDA as a percentage of revenues improved by 180 basis points to 27.7% compared to 25.9% in the fourth quarter of 2006. This was primarily due to both revenue growth and efficiency initiatives implemented across the property portfolio, and was partially offset by the fourth quarter results of the Nova Scotia casinos.

"2007 was a year that saw Great Canadian achieve record operating results while simultaneously moving to ensure our continued future growth," stated Ross J. McLeod, Chairman and CEO. "We completed several strategic gaming and service expansions, announced plans for additional developments, continued to enhance our operating efficiency, and established a financial structure that provides flexibility for the pursuit of further value-creating opportunities.

"Our record revenues and EBITDA were led by Boulevard Casino and River Rock Casino Resort, both of which continue to benefit from impressive levels of patronage. These can be attributed to revitalized marketing efforts, hospitality upgrades, and the continued success of our show theatres. Our effectiveness in executing against ongoing operating efficiency initiatives allowed us to achieve year-over-year combined EBITDA growth for these two flagship properties of nearly 15% while EBITDA as a percentage of revenues increased by 280 basis points.

"In addition to the operating improvements at Boulevard and River Rock, the Company benefited in the second half of 2007 from the introduction of new gaming supply at both Fraser Downs and Hastings Racecourse. The initial contributions from these expansions provide an example of the significant growth Great Canadian is poised to realize given our strong pipeline of development initiatives.

"Last month, we announced our plans to develop a new five storey, 191 room hotel at River Rock that will feature 360 additional parking spaces and 21,000 square feet of commercial space. This expansion will complement both the 1,200 stall parking garage already under construction and the 5,300 square foot conference centre that opened in July 2007. By the commencement of the 2010 Vancouver Olympic Games, River Rock will have established itself as a world-class, full-service entertainment complex.

"The River Rock and Hastings expansions represent only a portion of our robust development pipeline. In September 2007, we began formally planning for the redevelopment of the View Royal Casino. This redevelopment, which remains subject to local government and BCLC approvals, will add approximately 37,000 square feet of floor area and 380 parking spaces. The increased capacity will allow the property to accommodate additional gaming supply, a simulcast facility, and improved hospitality offerings. Also in British Columbia, we purchased Ridge Meadows Bingo Association, which operates a 525-seat gaming hall located in downtown Maple Ridge. Our intention is to upgrade this facility into a Community Gaming Centre, subject to BCLC and local approvals.

"Finally, in July, Great Canadian reached an agreement with OLG for plans to both expand our Georgian Downs facility to accommodate 1,000 slot machines and explore possibilities for that facility's long-term redevelopment. We plan to spend approximately $30.3 million over 18 months, in addition to the approximately $45.7 million committed by OLG, for improvements to the slot floor, food and beverage and back-of-house areas. In addition, the OLG has extended our siteholder agreement and guaranteed the Company's 10% slot machine revenue share through to November 30, 2021.

"These development projects will allow us to improve the overall quality of our property portfolio through significant increases in gaming supply, upgrades to hospitality offerings, and the introduction of new parking capacity. The capital structure we put in place last February allows us to proactively work with our provincial crown corporation partners to improve our properties and ensure that we deliver the highest quality entertainment destinations to our guests."

Mr. McLeod concluded, "In 2008 and beyond, Great Canadian is poised to further build on 2007's record results and strong operational foundation. We will look to drive shareholder value as we implement additional programs to drive revenues, continue to execute against our operating efficiency initiatives, and further develop what is one of the most robust expansion pipelines for regional gaming facilities in North America."

Development and Expansion Projects

The following table outlines Great Canadian's current pipeline of facility expansion and redevelopment projects:



($ in millions)

---------------------------------------------------------------------------
Scope of Planned or
Project/Gaming Estimated Estimated
Property Positions Completion Date Total Budget
---------------------------------------------------------------------------
River Rock 1,200 stall parking Initial 600 stalls $ 118
Casino garage; 5 story, 191 by 3Q '08
Resort room hotel featuring Remaining 600 stalls
360 additional parking by 4Q '09
spaces, 21,000 sq ft New hotel by early
of commercial space 2010
---------------------------------------------------------------------------
Georgian 550 slot machine By 2Q '09 Maximum of
Downs expansion $30.3 (OLG also
plans to spend
approximately
$45.7 for
facility
upgrades)
---------------------------------------------------------------------------
Hastings Installation of 600 150 machines $ 40
Racecourse slots and new food, installed in 4Q '07;
beverage and Remainder of
entertainment redevelopment
facilities completed in early
2009
---------------------------------------------------------------------------
View Royal 37,000 sq ft for 2Q '09 subject to $ 50
slots, poker and approvals
Racebook; F&B upgrade;
entertainment lounge;
back-of house space;
380 additional parking
spaces
---------------------------------------------------------------------------


The Company will host a conference call for investors and analysts today, Monday, March 10, 2008 at 5:00 PM Eastern Time, or 2:00 PM Pacific Time, to review the financial results for the period ended December 31, 2007. To participate in the conference call, please dial 416-695-6272, or toll free at 1-800-766-6630. 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 March 17, 2008 by dialing 416-695-5800, or toll free at 1-800-408-3053 (Passcode: 3254022). 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. We operate ten casinos, a thoroughbred racetrack that offers slot machines, four standardbred racetracks (two offer slot machines and one offers both slot machines and table games), a community gaming centre, a hotel and conference centre, two show theatres and various associated food and beverage and entertainment facilities. As of December 31, 2007 the Company had approximately 5,500 employees. 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 10, 2008) or www.sedar.com (available on March 11, 2008) for detailed financial information and analysis.

The financials results on the following pages are unaudited and prepared by management.

Amounts are in millions, except for share information.



Consolidated Results of Operations
(Expressed in millions, except for share information)
-------------------------------------------------------------------------

Fourth Quarter % Twelve Months of %
2007 2006 Chg 2007 2006 Chg
-------------------------------------------------------------------------
Gaming revenues $ 70.5 $ 69.8 1% $ 283.0 $ 277.0 2%
Racetrack revenues 7.3 7.5 (3%) 30.7 30.4 1%
Facility Development
Commission 6.0 4.8 25% 22.9 19.0 21%
Hospitality and
other revenues 19.6 18.4 7% 70.9 68.4 4%
-------------------------------------------------------------------------
103.4 100.5 3% 407.5 394.8 3%
Less: Promotional
allowances (2.7) (2.4) 13% (10.3) (9.6) 7%
-------------------------------------------------------------------------
Revenues 100.7 98.1 3% 397.2 385.2 3%
-------------------------------------------------------------------------

Human resources 45.1 45.1 0% 179.6 178.6 1%
Property, marketing
and administration 27.7 27.6 0% 106.6 108.4 (2%)
-------------------------------------------------------------------------
72.8 72.7 0% 286.2 287.0 0%
-------------------------------------------------------------------------

EBITDA 27.9 25.4 10% 111.0 98.2 13%
-------------------------------------------------------------------------

Human resources as a % of
Revenues before
promotional allowances 43.6% 44.9% 44.1% 45.2%
EBITDA as a % of
Revenues 27.7% 25.9% 27.9% 25.5%

Amortization 11.8 10.1 17% 40.1 40.2 0%
Stock-based compensation 1.8 1.3 38% 7.0 6.3 11%
Restructuring costs 0.4 7.0 (94%) 1.0 10.0 (90%)
Interest and financing
costs, net 5.9 6.6 (11%) 24.8 51.0 (51%)
Other expenses 0.1 10.4 (99%) 1.7 13.3 (87%)
Income taxes (recovery) (5.1) 1.5 0.6 (4.0)
-------------------------------------------------------------------------
Net earnings (loss) $ 13.0 $ (11.5) $ 35.8 $ (18.6)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Earnings (loss) per
common share:
Basic $ 0.15 $ (0.13) $ 0.42 $ (0.22)
Diluted $ 0.15 $ (0.13) $ 0.41 $ (0.22)
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Weighted average number
of common shares (in
thousands):
Basic 85,410 86,133 86,227 84,471
Diluted 86,662 86,133 86,786 84,471
-------------------------------------------------------------------------
-------------------------------------------------------------------------



GREAT CANADIAN GAMING CORPORATION
Consolidated Statements of Financial Position
(Expressed in millions, except for share information)
As at December 31,
--------------------------------------------------------------------------

2007 2006
-----------------------

ASSETS

CURRENT
Cash and cash equivalents $ 107.1 $ 56.8
Restricted cash 3.6 2.6
Accounts receivable 13.3 13.3
Income taxes receivable - 9.9
Due from Nova Scotia Gaming
Corporation, current 15.3 17.1
Prepaids, deposits and other assets 12.0 12.9
--------------------------------------------------------------------------
151.3 112.6
Property, plant and equipment 567.3 565.8
Intangible assets 191.5 202.0
Goodwill 37.0 30.6
Due from Nova Scotia Gaming Corporation 1.9 17.7
Future income taxes 3.4 10.7
Other assets 5.0 1.3
--------------------------------------------------------------------------
$ 957.4 $ 940.7
--------------------------------------------------------------------------
--------------------------------------------------------------------------

LIABILITIES

CURRENT
Accounts payable and accrued liabilities $ 69.5 $ 62.0
Income taxes payable 3.6 -
Long-term debt, deferred credit and
other liabilities, current 8.8 3.7
--------------------------------------------------------------------------
81.9 65.7
Long-term debt 329.4 390.3
Derivative liabilities 62.8 -
Deferred credit, other liabilities and
non-controlling interests 2.0 3.3
Future income taxes 71.1 86.5
--------------------------------------------------------------------------
547.2 545.8
--------------------------------------------------------------------------

SHAREHOLDERS' EQUITY

Share capital and contributed surplus 341.3 335.9
Accumulated other comprehensive loss (9.1) (5.3)
Retained earnings 78.0 64.3
--------------------------------------------------------------------------
410.2 394.9
--------------------------------------------------------------------------
$ 957.4 $ 940.7
--------------------------------------------------------------------------
--------------------------------------------------------------------------



GREAT CANADIAN GAMING CORPORATION
Consolidated Statements of Earnings (Loss)
(Expressed in millions, except for share information)
For the years ended December 31,
--------------------------------------------------------------------------

2007 2006
-----------------------

REVENUES $ 397.2 $ 385.2

EXPENSES
Human resources 179.6 178.6
Property, marketing and administration 106.6 108.4
Amortization 40.1 40.2
Stock-based compensation 7.0 6.3
Restructuring costs 1.0 10.0
--------------------------------------------------------------------------
334.3 343.5
--------------------------------------------------------------------------

62.9 41.7

Interest and financing costs, net 24.8 51.0
Goodwill impairment - 9.9
Foreign exchange loss 0.3 1.3
--------------------------------------------------------------------------
25.1 62.2
--------------------------------------------------------------------------

EARNINGS (LOSS) BEFORE INCOME TAXES 37.8 (20.5)

Income taxes (recovery) 0.6 (4.0)
--------------------------------------------------------------------------

EARNINGS (LOSS) BEFORE NON-CONTROLLING INTERESTS 37.2 (16.5)

Non-controlling interests 1.4 2.1
--------------------------------------------------------------------------

NET EARNINGS (LOSS) $ 35.8 $ (18.6)
--------------------------------------------------------------------------
--------------------------------------------------------------------------

EARNINGS (LOSS) PER COMMON SHARE
Basic $ 0.42 $ (0.22)
Diluted $ 0.41 $ (0.22)
--------------------------------------------------------------------------
--------------------------------------------------------------------------

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
Basic 86,226,888 84,471,204
Diluted 86,785,571 84,471,204
--------------------------------------------------------------------------
--------------------------------------------------------------------------



GREAT CANADIAN GAMING CORPORATION
Adjusted Net Earnings
(Expressed in millions, except for share information)
-------------------------------------------------------------------------

Fourth quarter % Twelve months of %
2007 2006 Chg 2007 2006 Chg
-------------------------------------------------------------------------
Net earnings (loss) $ 13.0 $ (11.5) $ 35.8 $ (18.6)

Unusual items,
net of tax
Series A & B
redemption costs - - - 20.4
Goodwill impairment
charge on Hastings - 9.9 - 9.9
Restructuring charges 0.3 4.6 0.7 7.0
Future income tax
recoveries due to
decreases in enacted
statutory tax rates (10.5) - (11.5) (5.2)
Other future tax
changes 2.0 - (3.0) -
-------------------------------------------------------------------------
Adjusted net
earnings (1) $ 4.8 $ 3.0 60% $ 22.0 $ 13.5 63%
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) A non-GAAP measure


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 2007, 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 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 costs, goodwill impairment, foreign exchange loss and non-controlling interests. EBITDA is derived from the consolidated statement of earnings (loss) and can also be computed as revenues, less human resources expenses and property, marketing, and administration expenses.

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
    (604) 279-8605 (FAX)
    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: GC@jcir.com
    or
    Great Canadian Gaming Corporation - Media Enquiries
    Mr. Howard Blank
    Vice-President, Media & Entertainment
    (604) 512-6066
    Website: www.gcgaming.com