Great Canadian Gaming Announces 2009 Second Quarter Results



    OPERATIONAL EFFICIENCY IMPROVEMENTS DRIVE 9% EBITDA INCREASE

    RICHMOND, BC, Aug. 10 /CNW/ - Great Canadian Gaming Corporation (TSX:GC)
("the Company") announces its financial results for the three month period
ended June 30, 2009 ("second quarter of 2009").

    
    2009 SECOND QUARTER HIGHLIGHTS
    (Amounts presented in $millions, except for per share information)

    -   Expense reductions of $10.2 million drive EBITDA increase of 9%

    -   Revenues decrease by 8%, primarily due to the weakened economy

    -   Redevelopment projects near completion in both BC and Ontario


                               Second Quarter              First Half
                                2009     2008  % Chg     2009     2008  % Chg
    -------------------------------------------------------------------------
    Revenues                 $  93.8  $ 101.6   (8%)  $ 189.9  $ 201.9   (6%)
    EBITDA(1)                $  30.1  $  27.7    9%   $  59.4  $  54.6    9%
    Human resources as a %
     of Revenues before
     Promotional allowances    41.6%    43.2%           41.2%    43.5%
    EBITDA as a %
     of Revenues               32.1%    27.3%           31.3%    27.0%

    Net earnings(2)          $   6.2  $   4.1   51%   $   4.2  $   9.5  (56%)

    Net earnings per
     common share:
    Basic                    $  0.08  $  0.05         $  0.05  $  0.11
    Diluted                  $  0.07  $  0.05         $  0.05  $  0.11
    -------------------------------------------------------------------------

    Total assets                                     $1,030.5  $ 960.1
    Long-term debt,
     excluding current
     portion                                          $ 423.0  $ 347.7
    Derivative
     liabilities                                      $  20.9  $  61.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) EBITDA is a non-GAAP measure and is defined in the Disclaimer section
        of this press release.

    (2) The net earnings include several items of note that affect the
        comparability of net earnings over the periods presented. As a result
        of these items of note, in aggregate the 2009 second quarter and
        first half net earnings in 2009 were $2.1 higher and $5.3 lower,
        respectively, than the second quarter and first half of 2008.
        Descriptions of these items of note are shown under the "Adjusted Net
        Earnings" table at the end of this press release. Excluding these
        items of note, the Company's net earnings increased $1.8 (or 39%) in
        the second quarter and $2.4 (or 28%) in the first half of 2009, when
        compared to the second quarter and first half of 2008.
    

    For the second quarter of 2009, Great Canadian Gaming Corporation
recorded EBITDA of $30.1, a 9% increase from the second quarter of 2008,
despite revenues declining to $93.8, an 8% decrease from the second quarter of
2008.
    The revenues decrease was primarily due to the weakened economy, which
reduced both gaming and hospitality revenues at the majority of the Company's
properties. Declines in gaming revenues were most pronounced at the River Rock
Casino Resort ("River Rock") and Boulevard Casino, where slot win decreased by
12% and 11%, respectively. In addition, River Rock recorded an unusually low
table hold percentage. Hospitality revenues were also impacted by construction
disruption at both River Rock and View Royal Casino. These revenues declines
were partially offset by growth at the Company's Great American Casinos, which
benefited from a favourable foreign currency exchange rate.
    The EBITDA increase reflects the benefit of the Company's comprehensive
expense reduction initiatives, which reduced operating expenses by $10.2 when
compared to the second quarter of 2008. These initiatives generated EBITDA
improvements at the majority of the Company's properties during the second
quarter of 2009.
    The Company's EBITDA as a percentage of revenues for the second quarter
of 2009 was 32.1%, a 4.8 percentage point improvement from the second quarter
of 2008. This was primarily due to the expense reduction initiatives, which
more than offset the decline in revenues.
    These initiatives reduced operating expenses for the second quarter of
2009 by $10.2 million, when compared to the second quarter of 2008, and
generated $0.7 in associated restructuring expenses. The initiatives included
adjustments to staffing levels, thorough reviews of all discretionary
spending, streamlined marketing efforts, and reduced corporate costs.
    "I continue to be very pleased with Great Canadian's financial results
for 2009," stated Ross McLeod, Great Canadian's Chairman and Chief Executive
Officer. "These results reveal the full impact of our various expense
reduction initiatives, which have generated significant and sustainable
improvement to our cost structure. In the second quarter, these improvements
allowed us to once again achieve an EBITDA increase, despite a revenues
decline. However, the full benefit of our efforts will only become apparent
once our revenues resume an upward trend.
    "Great Canadian is favourably positioned to benefit from an economic
recovery, as three of our redevelopment projects are rapidly approaching
completion. These redevelopments, and the conclusion of any disruption caused
by their construction, should serve as positive catalysts for both our
visitation and volume of play. Two of these projects provide additional gaming
capacity to underserved markets: View Royal, which will add 120 new slot
machines on August 18, and Georgian Downs, which will add 400 new slot
machines on August 26. We're excited about our patrons' reactions to these new
entertainment options.
    "The third project, River Rock's redevelopment and the opening of its
Canada Line station, represents a milestone in Great Canadian's history. On
August 17, the Canada Line will commence operation. By the end of September,
we'll finish construction on the associated parking garage. And in November,
River Rock's own renovations will be complete. In 2004, when we first opened
this facility, it redefined expectations for gaming in British Columbia.
Before the end of 2009, River Rock will raise that bar again.
    "I'm confident that the completion of these three projects will assist in
the rejuvenation of our markets. This is a difficult economy, and we are more
cognizant than ever of the challenges it presents. These projects, in
combination with our expense reduction initiatives, will allow Great Canadian
to confront those challenges while maintaining our strong balance sheet."
    Mr. McLeod concluded, "Great Canadian's conservative strategy towards
both cost and capital management continues to meet with success. In the
future, while our economic reality will change, this strategy will not. Our
company has been galvanized by its recent optimization, and I look forward to
translating our improvements into shareholder value."

    
    Development Projects

    The following table summarizes Great Canadian's current major facility
redevelopment projects:

    -------------------------------------------------------------------------
                                                        Spend (Accrual Basis)
                                                                         Est.
                                                                         for
                                                                  In  remain-
                                                                sec-     ing
                                                           To    ond     six
                                          Est.     Est.  June  quar-  months
    Prop-            Development   Completion    Total    30,    ter      of
     erty                Project         Date   Budget   2009   2009    2009
    -------------------------------------------------------------------------
               Hotel footings and  600 stalls
                  infrastructure;   completed
              1,200 stall parking          in
             garage; 21,000 sq ft   September
             of commercial space;        '08,
             320 hotel and casino     balance
                   parking spaces          in
                          ($90.0)   September
                                          '09
            ---------------------------------
             New gaming capacity;        Some
                     upgraded VIP    upgraded
             facilities; enhanced         VIP
            F&B offerings; atrium  facilities
    River      renovation ($34.0)   completed
    Rock                              January   $169.0 $113.2 $ 11.0  $ 10.8
    Casino                               '09,
    Resort                            balance
                                           in
                                     November
                                          '09
            ---------------------------------
                  Additional new      Pending
                gaming capacity;     revision
             additional upgraded
                  VIP facilities
                         ($17.0)
            ---------------------------------
              5 storey, 191 room      Pending
             hotel tower ($28.0)     revision
    -------------------------------------------------------------------------
               560 stall parking      Parking
              garage; new gaming       garage
                capacity ($25.0)    completed
                                           in
                                     December
    View                             '08, new
    Royal                              gaming   $ 50.0 $ 24.2 $  0.8  $  0.8
    Casino                           capacity
                                    in August
                                          '09
            ---------------------------------
              Further new gaming      Pending
               capacity; amenity     revision
                upgrades ($25.0)
    -------------------------------------------------------------------------
    Hast-
    ings     Installation of 600    All slots
    Race-      slot machines and    installed   $ 40.0 $ 31.5 $  0.2  $  0.3
    course      amenity upgrades     in Q3/08
    -------------------------------------------------------------------------
            550 slot machines of      400 new
             new gaming capacity  slots to be
    Geor-     and infrastructure    installed
    gian                 upgrade    in Q3/09,   $ 33.6 $ 22.0 $  6.9  $  8.7
    Downs                             balance
                                     in Q2/10
    -------------------------------------------------------------------------
    

    The Company will host a conference call for investors and analysts today,
August 10, 2009, at 2:00 PM Pacific Time to review the financial results for
the period ended June 30, 2009. To participate in the conference call, please
dial 416-644-3421, or toll free at 800-731-5319. 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 August 17, 2009 by dialing 416-640-1917, or
toll free at 877-289-8525 (Passcode: 21311511 followed by the number sign). 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 bingo hall, a hotel and conference centre, two show theatres
and various associated food and beverage and entertainment facilities. As of
June 30, 2009, 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 Annual Financial Statements and
Management's Discussion and Analysis at www.gcgaming.com (available on August
10, 2009) or www.sedar.com (available on August 11, 2009) for detailed
financial information and analysis.

    
        The financial results on the following pages are unaudited and
        prepared by management. Amounts are in $millions, except for per
                             share information.



    Consolidated Results of Operations
    (Dollar amounts expressed in millions, except for per share information)
    -------------------------------------------------------------------------

                               Second Quarter    %          First Half    %
                                2009     2008   Chg      2009     2008   Chg
    ------------------------------------------------ ------------------------
    Gaming revenues          $  65.7  $  69.3   (5%)  $ 134.3  $ 141.0   (5%)
    Racetrack revenues           7.8      8.6   (9%)     14.7     15.7   (6%)
    Facility Development
     Commission                  7.2      7.4   (3%)     14.7     15.1   (3%)
    Hospitality and other
     revenues                   15.8     19.0  (17%)     31.8     35.5  (10%)
    ------------------------------------------------ ------------------------
                                96.5    104.3   (7%)    195.5    207.3   (6%)
    Less: Promotional
     allowances                 (2.7)    (2.7)   0%      (5.6)    (5.4)   4%
    ------------------------------------------------ ------------------------
    Revenues                    93.8    101.6   (8%)    189.9    201.9   (6%)
    ------------------------------------------------ ------------------------

    Human resources             40.1     45.1  (11%)     80.6     90.2  (11%)
    Property, marketing
     and administration         23.6     28.8  (18%)     49.9     57.1  (13%)
    ------------------------------------------------ ------------------------
                                63.7     73.9  (14%)    130.5    147.3  (11%)
    ------------------------------------------------ ------------------------

    EBITDA                      30.1     27.7    9%      59.4     54.6    9%
    ------------------------------------------------ ------------------------

    Human resources as a
     % of Revenues before
     Promotional allowances    41.6%    43.2%           41.2%    43.5%
    EBITDA as a % of Revenues  32.1%    27.3%           31.3%    27.0%

    Amortization                11.6     10.6            23.2     20.6
    Stock-based compensation     1.4      1.9             3.1      4.0
    Restructuring and other      0.7      1.4            12.1      1.7
    Interest and financing
     costs, net                  7.3      6.6            14.2     14.1
    Other expenses               0.1      0.2             1.4      0.3
    Income taxes                 2.8      2.9             1.2      4.4
    ------------------------------------------------ ------------------------
    Net earnings             $   6.2  $   4.1         $   4.2  $   9.5
    ------------------------------------------------ ------------------------
    ------------------------------------------------ ------------------------

    Net earnings per common
     share:
      Basic                  $  0.08  $  0.05         $  0.05  $  0.11
      Diluted                $  0.07  $  0.05         $  0.05  $  0.11
    ------------------------------------------------ ------------------------
    ------------------------------------------------ ------------------------

    Weighted average number
     of common shares
     (in thousands):
      Basic                   82,090   83,357          82,088   83,784
      Diluted                 82,943   83,443          82,164   83,924
    ------------------------------------------------ ------------------------
    ------------------------------------------------ ------------------------



    GREAT CANADIAN GAMING CORPORATION
    Interim Consolidated Statements of Financial Position
    (Unaudited - Prepared by Management)
    (Dollar amounts expressed in millions, except for per share information)
    -------------------------------------------------------------------------

                                                       June 30,  December 31,
                                                          2009          2008
                                                   --------------------------
    ASSETS

    CURRENT
      Cash and cash equivalents                     $     40.2    $     43.6
      Restricted cash                                     13.2          10.6
      Accounts receivable                                  9.1          14.2
      Income taxes receivable                              1.5           1.1
      Due from Nova Scotia Gaming Corporation              2.9           3.7
      Prepaids, deposits and other assets                 11.1           9.1
    -------------------------------------------------------------------------
                                                          78.0          82.3
    Property, plant and equipment                        734.2         704.0
    Intangible assets                                    174.4         180.5
    Goodwill                                              38.7          39.0
    Future income taxes                                    2.8           8.6
    Other assets                                           2.4           9.6
    -------------------------------------------------------------------------
                                                    $  1,030.5    $  1,024.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES

    CURRENT
      Accounts payable and accrued liabilities      $     83.6    $     74.8
      Long-term debt, deferred credits and other
       liabilities, current                                2.2           2.3
    -------------------------------------------------------------------------
                                                          85.8          77.1
    Long-term debt                                       423.0         440.0
    Derivative liabilities                                20.9          23.4
    Deferred credits and other liabilities                24.7          22.4
    Future income taxes                                   66.4          68.4
    -------------------------------------------------------------------------
                                                         620.8         631.3
    -------------------------------------------------------------------------
    SHAREHOLDERS' EQUITY

    Share capital and contributed surplus                344.8         341.7
    Accumulated other comprehensive loss                 (13.0)        (22.7)
    Retained earnings                                     77.9          73.7
    -------------------------------------------------------------------------
                                                         409.7         392.7
    -------------------------------------------------------------------------
                                                    $  1,030.5    $  1,024.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    GREAT CANADIAN GAMING CORPORATION
    Interim Consolidated Statements of Earnings
    (Unaudited - Prepared by Management)
    (Dollar amounts expressed in millions, except for per share information)
    -------------------------------------------------------------------------

                             Three months ending            Six months ended
                                         June 30,                    June 30,
                              2009          2008          2009          2008
                       --------------------------- --------------------------

    REVENUES            $     93.8    $    101.6    $    189.9    $    201.9

    EXPENSES
      Human resources         40.1          45.1          80.6          90.2
      Property, marketing
       and administration     23.6          28.8          49.9          57.1
      Amortization            11.6          10.6          23.2          20.6
      Stock-based
       compensation            1.4           1.9           3.1           4.0
      Restructuring
       and other               0.7           1.4          12.1           1.7
    -------------------------------------------------------------------------
                              77.4          87.8         168.9         173.6
    -------------------------------------------------------------------------

    EARNINGS FROM
     OPERATIONS               16.4          13.8          21.0          28.3

      Interest and
       financing costs,
       net                     7.3           6.6          14.2          14.1
      Foreign exchange
       (gain) loss            (0.1)         (0.2)          0.9          (0.4)
    -------------------------------------------------------------------------
                               7.2           6.4          15.1          13.7
    -------------------------------------------------------------------------

    EARNINGS BEFORE
     INCOME TAXES              9.2           7.4           5.9          14.6

      Income taxes             2.8           2.9           1.2           4.4
    -------------------------------------------------------------------------

    EARNINGS BEFORE
     NON-CONTROLLING
     INTERESTS                 6.4           4.5           4.7          10.2

      Non-controlling
       interests               0.2           0.4           0.5           0.7
    -------------------------------------------------------------------------

    NET EARNINGS        $      6.2    $      4.1    $      4.2    $      9.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    NET EARNINGS PER
     COMMON SHARE
      Basic             $     0.08    $     0.05    $     0.05    $     0.11
      Diluted           $     0.07    $     0.05    $     0.05    $     0.11
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    WEIGHTED AVERAGE
     NUMBER OF COMMON
     SHARES
      Basic             82,090,372    83,356,802    82,088,460    83,784,475
      Diluted           82,942,606    83,442,883    82,164,389    83,923,520
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    Net earnings increased $2.1 in the second quarter and decreased $5.3 in
the first half of 2009, when compared to the second quarter and first half of
2008. This was primarily due to restructuring expenses associated with the
expense reduction initiatives. The current and prior periods' net earnings
included some items of note, the after-tax effects of which are summarized in
the following table:

    
                               Second Quarter    %          First Half    %
                                2009     2008   Chg      2009     2008   Chg
    ------------------------------------------------ ------------------------
    Net earnings             $   6.2  $   4.1         $   4.2  $   9.5
      Items of note, net
       of tax
        Restructuring and
         other expenses          0.5      0.9             8.5      1.1
        Future income tax
         recoveries due to
         decreases in
         enacted statutory
         tax rates              (0.3)       -            (1.7)    (1.2)
        FDC catch-up
         payments                  -     (0.4)              -     (0.8)
    ------------------------------------------------ ------------------------
    Adjusted net
     earnings(1)             $   6.4  $   4.6   39%   $  11.0  $   8.6   28%
    ------------------------------------------------ ------------------------
    ------------------------------------------------ ------------------------
    (1) A non-GAAP measure
    

    After adjusting for the above items of note, the Company's adjusted net
earnings increased by 39% in the second quarter of 2009, when compared to the
second quarter of 2008. The adjusted net earnings for the first half of 2009
compared to the first half of 2008 increased by 28%.

    DISCLAIMER

    This news release contains certain "forward-looking information" 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.
All information that addresses expectations or projections about the future,
including information about the Company's strategy for growth, expected future
expenditures, costs, operating and financial results and expected impact of
future commitments, is forward-looking information. Such information is not a
guarantee of future performance and involves a number of risks and
uncertainties. Although forward-looking information is based on information
and assumptions which the Company believes are current, reasonable and
complete, these statements are subject to a number of factors that could cause
actual results to vary materially from those expressed or implied by its
forward-looking information. Such factors may include, but are not limited to:
terms of operational service agreements with lottery corporations; pending,
proposed or unanticipated regulatory or policy changes; 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 some Crown
land on which we conduct our operations; future or current legal proceedings;
construction disruptions; financial covenants associated with credit
facilities and long-term debt; credit, liquidity and market risks associated
with our financial instruments; interest and exchange rate fluctuations;
non-realization of cost reductions and synergies; demand for new products and
services; fluctuations in operating results; and economic uncertainty and
financial market volatility. These factors and other risks and uncertainties
are discussed in the Company's continuous disclosure documents filed with the
Canadian securities regulatory authorities from time to time, including in the
"Risk Factors" section of the Company's Annual Information Form for fiscal
2008, and as identified in the Company's disclosure record on SEDAR at
www.sedar.com. The forward-looking information in documents incorporated by
reference speak only as of the date of those documents. Readers are cautioned
not to place undue reliance on the forward-looking information, as there can
be no assurance that the plans, intentions, or expectations upon which they
are based will occur. The Company undertakes no obligation to publicly revise
forward-looking information to reflect subsequent events or circumstances. The
forward-looking information contained herein is made as of the date hereof and
is expressly qualified in its entirety by cautionary statements in this news
release.
    The Company has included non-generally accepted accounting principles
("non-GAAP") measures in this news release. EBITDA as defined by the Company
means Earnings Before Interest and financing costs (net of interest income),
Income Taxes, Depreciation and Amortization, stock-based compensation,
restructuring and other costs, foreign exchange gain (loss), and
non-controlling interests. EBITDA is derived from the consolidated statements
of earnings, and can be computed as revenues less human resources expenses and
property, marketing and administration expenses.
    To arrive at adjusted net earnings, the Company removes items of note,
net of income taxes, from net (loss) earnings. The items of note relate to
items that management may reasonably quantify and which it does not believe
are indicative of underlying business performance. Items of note may vary from
time to time and in this press release include: restructuring and other
expenses, future income tax recoveries due to changes in statutory tax rates,
and Facility Development Commission ("FDC") catch-up payments. We believe
adjusted net earnings provides the reader with a better understanding of the
Company's underlying business performance.
    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 earnings
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 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 Milton Woensdregt"

    -----------------------
    Milton Woensdregt, CA
    Chief Financial Officer

    GREAT CANADIAN GAMING CORPORATION (TSX:GC)
    Suite No.350 - 13775 Commerce Parkway
    Richmond, BC
    V6V 2V4
    (604) 303-1000
    Website: www.gcgaming.com
    





For further information:

For further information: For investor enquiries: Mr. Nathan Sellyn,
Director, Corporate Development & Investor Relations, (604) 306-0015,
nsellyn@gcgaming.com; For media enquiries: Mr. Howard Blank, Vice-President,
Media, Entertainment & Responsible Gaming, (604) 512-6066


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