HOUSTON, Dec. 14, 2006 (PRIME NEWSWIRE) -- Nevada Gold & Casinos, Inc. (AMEX:UWN) today announced financial results for the second quarter ended October 29, 2006.
For the second quarter of fiscal 2007, net revenues increased to $4.1 million compared to $3.3 million in the second quarter of fiscal 2006. The net loss for the second quarter of fiscal 2007 was $3.8 million compared to net income of $1.1 million in the second quarter of fiscal 2006. The net loss per diluted common share was $0.29, compared to net income per diluted common share of $0.08 in the prior year period. Financial results for the second quarter of fiscal 2007 include a $0.17 per diluted share loss due to write offs of notes receivable and project development costs related to Native American gaming projects, and $0.10 per diluted share loss, or $2.1 million, before income tax, primarily due to pre-opening costs at Tioga Downs and Vernon Downs.
Robert Sturges, Chief Executive Officer of Nevada Gold & Casinos, Inc., commented, "We strongly believe we are taking the appropriate steps to improve the company's financial and operating performance. Our cost-saving initiatives, commitment to disposing non-core assets, focus on Native American consulting services and our decision to accelerate our transition to being an operations-focused company are all key components of our effort to best position the company to pursue its most attractive growth opportunities. Finally, we are committed to enhancing our liquidity and financial resources so that we can more aggressively pursue acquisitions that fit our parameters and will help drive future growth."
Financial Results
For the second quarter of fiscal 2007, net revenues increased to $4.1 million compared to $3.3 million in the second quarter of fiscal 2006. The revenue increase was primarily due to a $0.5 million increase in enhancement fees, a $0.2 million increase in net revenues from the Colorado Grande Casino-Cripple Creek, and approximately $0.1 million in management fees from American Racing.
Operating expenses increased to $7.2 million from $3.3 million. The increase reflects the write-off of a $3.1 million note receivable and related interest from the Muscogee Nation of Florida. The Company also wrote off the related investment of $0.4 million. Operating expenses were also impacted by higher operating costs related to Colorado Grande, as well as higher depreciation and amortization expense related to this property's renovation completed at the end of the second quarter of fiscal 2006. Corporate expense increased by $0.2 million primarily due to a non-recurring expense of approximately $0.1 million related to issuance of stock options that immediately vested. The increase in corporate expenses was offset by a reduction of legal expenses by $0.2 million.
The Company's equity in earnings from Isle of Capri-Black Hawk (IC-BH), the Company's joint venture with Isle of Capri Casinos, was $0.5 million for the second quarter ended October 29, 2006, compared to $2.1 million a year ago. The $1.5 million decrease in earnings year over year resulted in a $0.07 decrease in diluted earnings per share. IC-BH's second quarter adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), was $10.1 million in the second quarter of fiscal 2007 compared to $12.6 million in the prior year period. A reconciliation of EBITDA to operating income is provided in the attached financial statements.
The net loss for the second quarter of fiscal 2007 was $3.8 million compared to net income of $1.1 million in the second quarter of fiscal 2006. The net loss per diluted common share was $0.29, compared to net income per diluted common share of $0.08 in the prior year period. Diluted weighted average common shares outstanding in the second quarter were 12.9 million compared to 13.6 million in the prior year period.
Earnings Conference Call and Webcast
The Company will discuss second quarter financial results via a conference call to be held at 9:00 ET on Friday, December 15, 2006. To access the webcast, please visit www.nevadagold.com and click on 'Investor Relations' and then 'Events.' The dial-in number for the call is 800-819-9193; please call approximately 10 minutes in advance to ensure that you are connected prior to the presentation. A replay of the call will be available until December 22, 2006 by dialing 888-203-1112; password 8050064.
Forward-Looking Statements
This release contains forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We use words such as "anticipate," "believe," "expect," "future," "intend," "plan," and similar expressions to identify forward-looking statements. Forward-looking statements include, without limitation, our ability to increase income streams, to grow revenue and earnings, and to obtain additional Indian gaming and other projects. These statements are only predictions and are subject to certain risks, uncertainties and assumptions, which are identified and described in the Company's public filings with the Securities and Exchange Commission.
About Nevada Gold & Casinos
Nevada Gold & Casinos, Inc. (AMEX:UWN) of Houston, Texas is a developer, owner and operator of gaming facilities and lodging entertainment facilities in Colorado, California, and New York. The Company owns a 43% interest in the Isle of Capri-Black Hawk LLC, which owns Isle of Capri-Black Hawk and Colorado Central Station, both of which are in Black Hawk, Colorado. Colorado Grande Casino in Cripple Creek, Colorado is wholly owned and operated by Nevada Gold. The Company owns a 40% interest in the Tioga Downs Racetrack & Vernon Downs Racetrack in New York State and has a management contract for both facilities. The Company also works with Native American tribes in a variety of capacities. Native American projects consist of River Rock Casino in Sonoma County, California, a casino to be built in Pauma Valley, California for the La Jolla Band of Luisenyo Indians and a casino to be developed by Buena Vista Development Company, LLC in the city of Ione, California for Buena Vista Rancheria of Me-Wuk Indians. For more information, visit www.nevadagold.com.
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Nevada Gold & Casinos, Inc. Consolidated Balance Sheets October 29, April 30, 2006 2006 ------------ ------------ (unaudited) ASSETS Current assets: Cash and cash equivalents $ 1,011,591 $ 4,296,154 Restricted cash 1,050,000 -- Accounts receivable 905,617 940,177 Accounts receivable - affiliates 537,527 499,999 Other current assets 396,569 428,532 ------------ ------------ Total current assets 3,901,304 6,164,862 ------------ ------------ Investments in unconsolidated affiliates 38,039,887 35,691,747 Investments in development projects 6,577,799 6,876,527 Notes receivable - affiliates 3,637,099 3,637,099 Notes receivable - development projects 19,836,380 22,667,272 Goodwill 5,462,918 5,462,918 Property and equipment, net of accumulated depreciation of $931,588 and $622,876 at October 29, 2006 and April 30, 2006, respectively 2,420,667 2,580,093 Deferred tax asset 4,657,962 1,460,722 Other assets 4,144,843 3,601,850 ------------ ------------ Total assets $ 88,678,859 $ 88,143,090 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 1,099,937 $ 1,550,405 Accrued interest payable 433,897 41,737 Other accrued liabilities 300,802 358,159 Long-term debt, current portion 3,491,682 3,779,345 ------------ ------------ Total current liabilities 5,326,318 5,729,646 ------------ ------------ Long-term debt, net of current portion 58,580,622 56,687,315 Deferred income 16,227 406,632 Other liabilities 5,366,312 157,633 ------------ ------------ Total liabilities 69,289,479 62,981,226 ------------ ------------ Commitments and contingencies -- -- Minority interest 269,361 278,674 Stockholders' equity: Common stock, $0.12 par value per share; 25,000,000 shares authorized; 13,930,330 and 13,912,330 shares issued and 12,934,130 and 12,970,330 shares outstanding at October 29, 2006 and April 30, 2006, respectively 1,671,640 1,669,479 Additional paid-in capital 18,391,082 18,122,632 Retained earnings 9,264,396 14,873,589 Treasury stock, 996,200 and 942,000 shares at October 29, 2006 and April 30, 2006, respectively (10,216,950) (9,781,669) Accumulated other comprehensive income (loss) 9,851 (841) ------------ ------------ Total stockholders' equity 19,120,019 24,883,190 ------------ ------------ Total liabilities and stockholders' equity $ 88,678,859 $ 88,143,090 ============ ============ Nevada Gold & Casinos, Inc. Consolidated Statements of Operations (unaudited) Three Months Ended Six Months Ended ------------------------ ------------------------ October 29, October 23, October 29, October 23, 2006 2005 2006 2005 ----------- ----------- ----------- ----------- Revenues: Casino $ 1,744,965 $ 1,441,912 $ 3,191,108 $ 3,276,767 Food and beverage 378,585 478,321 754,318 979,211 Other 39,940 34,565 70,398 70,190 Management fee 97,144 -- 97,144 -- Credit enhancement fee 2,207,460 1,735,517 4,153,546 3,653,421 ----------- ----------- ----------- ----------- Gross revenues 4,468,094 3,690,315 8,266,514 7,979,589 Less promotional allowances (373,780) (389,043) (680,541) (932,658) ----------- ----------- ----------- ----------- Net revenues 4,094,314 3,301,272 7,585,973 7,046,931 Expenses: Casino 457,827 685,433 809,976 1,527,343 Food and beverage 248,378 248,946 480,971 473,721 Marketing and administrative 862,466 497,891 1,594,867 940,067 Facility 102,728 49,626 171,511 103,960 Corporate expense 1,512,288 1,308,066 3,287,926 2,611,030 Legal expense 147,346 340,562 953,216 474,924 Depreciation and amortization 274,350 126,732 536,502 215,827 Write-off of notes receivable related to Native American gaming projects 3,171,958 -- 3,171,958 -- Write-off of project develop- ment cost 373,100 -- 373,100 -- Other 29,812 27,091 52,409 46,746 ----------- ----------- ----------- ----------- Total operating expenses 7,180,253 3,284,347 11,432,436 6,393,618 ----------- ----------- ----------- ----------- Operating income (loss) (3,085,939) 16,925 (3,846,463) 653,313 Non-operating income (expenses): Earnings (loss) from unconsolidated affiliates (1,585,305) 2,512,602 (2,400,861) 5,258,764 Interest expense, net (910,146) (445,510) (1,772,253) (787,654) Gain on sale of marketable securities 36,797 -- 36,797 -- Minority interest (438,754) (327,564) (826,738) (617,976) ----------- ----------- ----------- ----------- Income (loss) before income tax (expense) benefit (5,983,347) 1,756,453 (8,809,518) 4,506,447 Income tax (expense) benefit 2,209,216 (635,237) 3,200,325 (1,634,360) ----------- ----------- ----------- ----------- Net income (loss) $(3,774,131) $ 1,121,216 $(5,609,193) $ 2,872,087 =========== =========== =========== =========== Per share information: Net income (loss) per common share - basic $ (0.29) $ 0.09 $ (0.43) $ 0.22 =========== =========== =========== =========== Net income (loss) per common share - diluted $ (0.29) $ 0.08 $ (0.43) $ 0.21 =========== =========== =========== =========== Basic weighted average number of shares outstanding 12,934,998 12,811,516 12,936,792 12,915,192 =========== =========== =========== =========== Diluted weighted average number of shares outstanding 12,934,998 13,580,681 12,936,792 13,785,696 =========== =========== =========== =========== Isle of Capri Black Hawk, L.L.C. Comparative Financial Highlights on Continuing (In thousands) Three Months Ended Six Months Ended ------------------------ ------------------------ October 29, October 23, October 29, October 23, 2006 2005 2006 2005 ----------- ----------- ----------- ----------- Net Revenue (a) $39,503 $39,632 $79,117 78,989 Adjusted EBITDA (b) 10,087 12,613 21,240 24,905 Adjusted EBITDA Margin % (c) 25.5% 31.8% 26.8% 31.5% Isle of Capri Black Hawk, L.L.C. Reconciliation of Adjusted EBITDA to Net Income (In thousands) Three Months Ended Six Months Ended ------------------------ ------------------------ October 29, October 23, October 29, October 23, 2006 2005 2006 2005 ----------- ----------- ----------- ----------- Adjusted EBITDA $ 10,087 $ 12,613 $ 21,240 $ 24,905 Depreciation and amortization 4,025 3,262 7,945 6,318 Interest expense, net 3,772 3,183 7,443 5,923 Management fee 1,789 1,842 3,534 3,681 Other Income -- 426 -- 1,016 Income tax benefit 772 73 1,444 197 ----------- ----------- ----------- ----------- Net income $ 1,273 $ 4,825 $ 3,762 $ 10,196 =========== =========== =========== =========== Net income margin % (d) 3.2% 12.2% 4.8% 12.9% =========== =========== =========== =========== (a) Net revenues are presented net of complimentaries, slot points expense and cash coupon redemptions. (b) EBITDA is "earnings before interest, income taxes, depreciation and amortization." Adjusted EBITDA for each property was calculated by adding preopening expense, management fees and non-cash items to EBITDA. Adjusted EBITDA is presented solely as a supplemental disclosure because management believes that it is 1) a widely used measure of operating performance in the gaming industry, and 2) a principal basis for valuation of gaming companies. Management uses property level Adjusted EBITDA as the primary measure of the properties' performance. Adjusted EBITDA should not be construed as an alternative to net income, as an indicator of the Company's operating performance; or as an alternative to any other measure determined in accordance with accounting principles generally accepted in the United States. The properties have significant uses of cash flows, including capital expenditures, interest payments, taxes and debt principal repayment, which are not reflected in Adjusted EBITDA. Also, other gaming companies that report Adjusted EBITDA information may calculate Adjusted EBITDA in a different manner than the Company. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by net revenue. Reconciliations of net income (loss) to Adjusted EBITDA are included in the financial schedules accompanying this release. (c) Adjusted EBITDA margin was calculated by dividing adjusted EBITDA by net revenue. (d) Net income margin was calculated by dividing net income by net revenue.