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Press release from CNW Group

Great Canadian Gaming announces fourth quarter and annual 2012 results

Wednesday, March 06, 2013

Great Canadian Gaming announces fourth quarter and annual 2012 results16:10 EST Wednesday, March 06, 2013RICHMOND, BC, March 6, 2013 /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 2012") and twelve month period ("2012") ended December 31, 2012.FOURTH QUARTER AND TWELVE MONTHS HIGHLIGHTS(Amounts presented in millions of Canadian dollars, except for per share information)Revenues of $102.8 million in the fourth quarter, and $408.7 million for the year, a 7% and 5% increase, respectively, when compared to the prior yearEBITDA(1) increased by $6.5 million, or 21%, in the fourth quarter, and $8.7 million, or 6%, for the yearNet earnings of $2.5 million in the fourth quarter and net loss of $27.6 million for the yearAdjusted net earnings(1) of $8.8 million in the fourth quarter and $45.0 million for the year  Fourth Quarter Twelve Months of   2012  2011  % Chg   2012  2011  % ChgRevenues  $   102.8  $95.7  7%   $   408.7  $     388.2  5%EBITDA (1)  $37.5  $31.0  21%   $147.6  $138.9  6%                    EBITDA as a % of Revenues  36.5%      32.4%      36.1%  35.8%                       Net earnings (loss)  $2.5  $2.3  9%   $(27.6)  $26.2                       Net earnings (loss) per common share                     Basic  $0.04  $0.03      $(0.36)  $0.32     Diluted  $0.03  $0.03      $(0.36)  $0.31                       Adjusted net earnings (1)  $8.8  $5.6  57%   $45.0  $33.2  36%                    Total assets            $862.7  $976.1  (12%)Long-term debt & Derivative liabilities, excluding current portion           $439.9  $398.9  10%(1)EBITDA and adjusted net earnings are non-IFRS measures as described in the Disclaimer section of this press release.  Areconciliation between net earnings (loss) and adjusted net earnings is included on page 6 of this press release.For the fourth quarter of 2012, revenues were $102.8 million, a $7.1 million, or 7%, increase from the fourth quarter of 2011.  EBITDA was $37.5 million, a $6.5 million, or 21%, increase from the fourth quarter of 2011.The increase in consolidated revenues was primarily due to the growth at the River Rock Casino Resort ("River Rock") when compared to the prior year, the commencement of slot operations at the new Chances Chilliwack, which opened on November 1, 2012, and $1.7 million of non-recurring accelerated Facility Development Commission ("FDC") revenues related to the previous bingo operations at its predecessor Chilliwack Bingo.  This improvement was partially offset by revenue decreases at Great American Casinos, BC Racinos, and some of our other properties.The $6.5 million increase in EBITDA in the fourth quarter of 2012 was primarily due to increased revenues.Net earnings increased by $0.2 million in the fourth quarter of 2012, primarily due to the growth in EBITDA, which was mostly offset by the non-cash impairment charge of $6.9 million related to land in Ontario that was written down to its estimated recoverable amount.For 2012, the Company generated a net loss of $27.6 million, compared to net earnings of $26.2 million in 2011. During 2012, the Company recognized non-cash impairment charges of $64.3 million associated with Georgian Downs, Flamboro Downs, and land in Ontario, a non-recurring expense of $11.0 million related to the settlement of a long-standing legal dispute, and non-recurring expenses of $14.4 million associated with the debt refinancing and settlement of the related derivative liabilities."Great Canadian's financial results during the fourth quarter of 2012 reflect the positive contributions of River Rock," stated Mr. Rod N. Baker, Great Canadian's President and Chief Executive Officer.  "River Rock continues to benefit from both strong gaming volumes and growth associated with 'The Hotel at River Rock', which opened in October of 2011."The successful opening of Chances Chilliwack highlights the Company's disciplined approach in its strategic expansions.  The commencement of slot operations at Chances Chilliwack generated new gaming revenues during the fourth quarter and we are optimistic about the future performance of this facility."Although the results of both River Rock and Chances Chilliwack are encouraging, we continue to experience adverse local market conditions at some of our properties. We also face significant uncertainty regarding the future of our Ontario racing properties and are continuing discussions with the Ontario Lottery and Gaming Corporation to negotiate leases that would facilitate the continued operation of these properties beyond March 31, 2013.  Based on recent discussions, if leases are agreed, the Company expects these properties' EBITDA will decline as compared to the levels realized in 2012.  If leases are not agreed, the Company may need to record additional impairments against the remaining $64.5 million of long-lived assets at these properties."Mr. Baker concluded, "Despite the challenges in 2012, the Company has maintained a strong financial position and is prepared to take advantage of new growth opportunities, such as the development of the permanent community gaming centre in Maple Ridge, the repositioning of our Boulevard Casino, and those that may arise from the modernization of gaming in Ontario or in other markets."Great Canadian will host a conference call for investors and analysts today, March 6, 2013, at 2:00 PM Pacific Time to review the financial results for the period ended December 31, 2012. To participate in the conference call, please dial 647-427-7450, or toll free at 888-231-8191 (Passcode: 75983886).  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 operates gaming, entertainment and hospitality facilities in British Columbia, Ontario, Nova Scotia and Washington State.  The Company's 17 gaming properties consist of ten casinos, including one with a Four Diamond hotel resort, four horse racetrack casinos, and three community gaming centres. As of December 31, 2012, 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 6, 2013) or www.sedar.com (available on March 7, 2013) 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 CORPORATIONConsolidated Results of Operations (Unaudited - Expressed in millions of Canadian dollars, except for per share information)  Fourth Quarter  Twelve Months of   2012  2011  % Chg  2012  2011  % ChgGaming revenues  $71.4   $68.4  4%  $294.9   $281.9  5%Facility Development Commission  10.7   8.5  26%  35.2   32.1  10%Hospitality and other revenues  21.9   18.9  16%  82.6   70.4  17%Racetrack revenues  3.5   4.5  (22%)  15.8   19.5  (19%)   107.5   100.3  7%  428.5   403.9  6%Less: Promotional allowances  (4.7)  (4.6)  2%  (19.8)  (15.7)  26%Revenues  102.8   95.7  7%  408.7   388.2  5%                   Human resources  40.8   39.1  4%  163.8   154.9  6%Property, marketing and administration  24.5   25.6  (4%)  97.3   94.4  3%   65.3   64.7  1%  261.1   249.3  5%                   EBITDA  37.5   31.0  21%  147.6   138.9  6%                   Human resources as a % of Revenues  before Promotional allowances  38.0%  39.0%     38.2%  38.4%   EBITDA as a % of Revenues   36.5%  32.4%     36.1%  35.8%                      Amortization  12.9   14.8     51.6   58.5   Share-based compensation  0.2   0.6     3.6   4.9   Impairment of long-lived assets  6.9   4.4     61.1   4.4   Impairment of goodwill  -   -     3.2   -   Interest and financing costs, net  8.4   7.7     37.0   29.5   Litigation settlement  -   -     11.0   -   Equity investment loss and other  2.4   0.9     5.1   1.6   Foreign exchange loss and other  (0.2)  (0.9)     6.8   3.2   Income taxes  4.4   1.2     (4.2)  10.6   Net earnings (loss)   $2.5   $2.3  9%  $(27.6)  $26.2                      Net earnings (loss) per common share                    Basic  $0.04   $0.03     $(0.36)  $0.32     Diluted  $0.03   $0.03     $(0.36)  $0.31                      Weighted average number of common shares (in thousands)                    Basic  70,346   82,161     76,814   82,670     Diluted  71,605   83,651     76,814   84,210    GREAT CANADIAN GAMING CORPORATIONConsolidated Statements of Financial Position (Unaudited - Expressed in millions of Canadian dollars)                December 31,  December 31,       2012  2011             Assets                   Current         Cash and cash equivalents    $116.2   $134.7   Restricted cash  4.9   7.1   Accounts receivable  7.7   8.9   Prepaids, deposits and other assets  6.1   6.6       134.9   157.3  Property, plant and equipment  621.3   663.6  Intangible assets  73.3   119.7  Goodwill  20.1   23.5  Deferred tax assets  9.9   9.1  Other assets  3.2   2.9         $862.7   $976.1             Liabilities                   Current         Accounts payable and accrued liabilities    $60.4   $59.0   Income taxes payable  0.5   0.8   Other liabilities  2.9   5.1       63.8   64.9  Long-term debt  439.9   332.6  Derivative liabilities  -   66.3  Deferred credits, provisions and other liabilities   25.4   23.7  Deferred tax liabilities  53.3   66.2       582.4   553.7             Shareholders' equity                   Share capital and contributed surplus  313.5   356.5  Accumulated other comprehensive loss  (1.0)  (6.5)  (Deficit) retained earnings  (32.2)  72.4       280.3   422.4         $862.7   $976.1              GREAT CANADIAN GAMING CORPORATIONAdjusted Net Earnings(Unaudited - 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 table:   Fourth Quarter Twelve Months of   2012 2011 % Chg 2012 2011 % ChgNet earnings (loss) $2.5   $2.3    $  (27.6)   $ 26.2   Items of note                 Impairment of long-lived assets and goodwill 6.9   4.4    64.3   4.4    Litigation settlement -   -    11.0   -    Net losses on cross-currency interest rate and  principal swaps settled in 2012 and amended in 2011 -   -    8.1   5.0    Subordinated Notes redemption costs -   -    3.9   -    Previously deferred transaction costs associated with   the Term Loan B and Subordinated Notes -   -    2.4   -    Equity investment loss 0.9   -    3.5   -    Non-recurring severance costs -   -    1.8   -    One-time non-recurring accelerated FDC revenues  at Chances Chilliwack (1.7)  -    (1.7)  -    Income tax expense (recovery) on the above items of note 0.2   (1.1)    (20.7)  (2.4)  Adjusted net earnings (1) $8.8   $5.6 57%  $45.0  $33.2 36%(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 57% in the fourth quarter and by 36% in the year, when compared to the prior periods in 2011.  These increases were primarily due to both the growth in EBITDA and the lower amortization expense.DISCLAIMERThis 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 its 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 and their profitability, 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 service agreements with lottery corporations; changes to gaming laws that may impact our operational service agreements; pending, proposed or unanticipated regulatory or policy changes; the Company's ability to obtain and renew required business licenses, leases, and operational services agreements; 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; and economic uncertainty and financial market volatility. 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 2012, 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 and 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, equity investment loss and other, litigation settlement, impairment of long-lived assets and goodwill, and foreign exchange 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.  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 impairments of long-lived assets and goodwill, litigation settlement, net losses on cross-currency interest rate and principal swaps settled in 2012 and amended in 2011, subordinated notes redemption costs, previously deferred transaction costs associated with the Term Loan B and subordinated notes, equity investment loss, non-recurring severance costs, non-recurring accelerated FDC revenues at Chances Chilliwack, and income taxes recovery 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 OFGREAT CANADIAN GAMING CORPORATION"Original Signed By Rod N. Baker"_____________________Rod N. BakerPresident and Chief Executive Officer    SOURCE: Great Canadian Gaming CorporationFor further information: GREAT CANADIAN GAMING CORPORATION [TSX:GC]  Suite #350 - 13775 Commerce Parkway Richmond, BC V6V 2V4 (604) 303-1000 Website: www.gcgaming.com For investor enquiries: ir@gcgaming.com or Ms. Tanya Ruskowski Executive Assistant to the President and Chief Executive Officer and the Chief Financial Officer (604) 303-1000 For media enquiries: Mr. Howard Blank Vice-President, Communications, Entertainment & Responsible Gaming (604) 512-6066