Nevada Gold & Casinos, Inc. Announces Fourth Quarter and Fiscal 2007 Results
HOUSTON, July 30, 2007 -- Nevada Gold & Casinos, Inc. (AMEX:UWN) today announced financial results for the fourth quarter and fiscal year ended April 29, 2007. For the fourth quarter of fiscal 2007, net revenues decreased to $1.0 million compared to $3.2 million in the fourth quarter ended April 30, 2006. Income before income tax expense for the fourth quarter of fiscal 2007 was $4.0 million compared to a loss before income tax expense of $2.7 million in the fourth quarter of fiscal 2006. The net loss for the fourth quarter of fiscal 2007 was $1.9 million compared to net loss of $1.7 million in the fourth quarter of fiscal 2006. The net loss per diluted common share was $0.14, compared to net loss per diluted common share of $0.13 in the prior year period.
The net loss in the fourth quarter of fiscal 2007 included the following significant items:
-- A $7.8 million net gain due to the buyout of the development and
loan agreement by the River Rock Entertainment Authority ("RREA");
-- No credit enhancement fees due to the RREA buy-out transaction
compared to $1.6 million in the fourth quarter of fiscal 2006;
-- Severance costs of $0.9 million related to executive departures
and personnel reductions;
-- Losses from American Racing totaling $1.0 million compared to a
$0.6 million loss a year ago;
-- $0.3 million write-off of notes receivable, project development
costs and impairment of equity investments compared to $1.9 million
a year ago;
-- $1.3 million of income tax expense, primarily due to the buyout
noted above, compared to a $1.0 tax benefit a year ago; and
-- A $4.5 million non-cash write-down of the Company's deferred tax
asset account.
Excluding the impact of these significant items, the Company would have recorded a loss before income tax expense of $1.6 million compared to a loss of $1.8 million in the fourth quarter of last year.
Robert Sturges, CEO of Nevada Gold & Casinos, Inc., commented, "We continue to make progress in implementing initiatives designed to better position the company for long term growth. We sold our interest in American Racing in June, as we believe that redeploying cash from this transaction into attractive acquisition opportunities made more strategic sense than attempting to compete and operate profitably while burdened with the highest gaming tax rate in the country. Our recently announced $15 million secured credit facility also positions us to pursue acquisitions. Since October 2006, when the new management group was assembled, we have reduced total debt by approximately $8 million or 13%. We remain committed and are making progress disposing other non-core assets and reducing costs. Taken together, we believe these initiatives will ultimately lead to improved financial results and enhanced shareholder value."
FINANCIAL RESULTS
For the fourth quarter of fiscal 2007, net revenues decreased to $1.0 million compared to $3.2 million in the fourth quarter of fiscal 2006. The revenue decrease is attributable to the elimination of credit enhancement fees in the fourth quarter as the result of the RREA buyout of future credit enhancement fees from the Dry Creek Casino, LLC of which the Company was a 69% owner.
Operating expenses decreased to $4.4 million from $5.9 million. Operating expenses in the fourth quarter of fiscal 2006 include a $1.6 million write-off of notes receivable related to Native American gaming projects. During the fourth quarter of fiscal 2007, the Company recorded expenses of $900,000 for severance costs related to headcount reductions made at the corporate offices. This resulted in a net year over year improvement, excluding non-recurring items noted above, of $800,000.
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 $1.4 million for the fourth quarter ended April 29, 2007, compared to $1.8 million a year ago. The Company's equity in earnings from American Racing was a loss of $1.0 million during the fourth quarter of fiscal 2007 compared to a loss of $0.6 million a year ago.
As noted above, the Company also recorded a $7.8 million net gain related to the termination of its development and loan agreement with the RREA during the fourth quarter of fiscal 2007. Other significant one-time items included a non-cash write-down of the Company's deferred tax asset account totaling $4.5 million. In addition, the Company recorded $1.3 of income taxes in the fourth quarter of fiscal 2007 primarily due to the gain noted above compared to a $1.0 tax benefit a year ago.
The net loss for the fourth quarter of fiscal 2007 was $1.9 million compared to a net loss of $1.7 million in the fourth quarter of fiscal 2006. The net loss per diluted common share was $0.14, compared to net loss per diluted common share of $0.13 in the prior year period. Diluted weighted average common shares outstanding in the fourth quarter were 12.9 million compared to 13.0 million in the prior year period.
Recent Events
On May 24, 2007, the Company announced that it obtained a commitment letter for a senior secured credit facility consisting of a term loan facility in an amount of up to $15,000,000. The term loan facility will be structured as a $15,000,000 acquisition line to be drawn for a to-be-determined acquisition or acquisitions acceptable to the Company and the lender, based on standard legal and financial due diligence. The senior secured facility shall terminate on the second anniversary of the closing date.
On June 14, 2007, the Company completed the sale of its 22.8% membership interest in American Racing and Entertainment, LLC to its partners, Southern Tier Acquisition II LLC and Oneida Entertainment, LLC. The Company will receive three payments totaling $4.3 million for its membership interest in American Racing, which owns the Tioga Downs Racetrack in Nichols, New York and the Vernon Downs Racetrack in Vernon, New York. The transaction also included the July 12, 2007 release of a certificate of deposit of approximately $1.1 million pledged by Nevada Gold on behalf of American Racing. In connection with the sale, Nevada Gold has terminated its existing Management Agreements with both Vernon Downs and Tioga Downs and received approximately $110,000 in management fees due. In addition, Nevada Gold has been indemnified by the buyers for guarantees of approximately $11million of debt or other obligations of American Racing and Entertainment, LLC.
Earnings Conference Call and Webcast
The Company will discuss fourth quarter financial results via the earnings conference call to be held at 9:00 a.m. ET, tomorrow, July 31st at www.nevadagold.com, Investor Relations, Events. If you are unable to participate during the live webcast, the conference call replay will be available by dialing (888) 203-1112 or (719) 457-0820 for international callers. The replay access code is 6705948. In addition, the call will be archived on the Company's website through August 7th, 2007.
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 and California. 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 also works with Native American tribes in a variety of capacities. Native American projects consist of 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 the Buena Vista Rancheria of Me-Wuk Indians. For more information, visit www.nevadagold.com.
Nevada Gold & Casinos, Inc.
Consolidated Statements of Operations
24
Fiscal Years Ended Days Ended
------------------------------------- ------------
April 29, April 30, March 31, April 24,
2007 2006 2005 2005
Revenues: ----------- ----------- ----------- -----------
Casino $ 6,253,491 $ 5,653,340 $ -- $ --
Food and beverage 1,295,157 1,471,816 -- --
Other 153,305 126,078 67,610 4,507
Credit enhancement
fee 5,920,125 7,348,651 5,660,909 702,305
----------- ----------- ----------- -----------
Gross revenues 13,622,078 14,599,885 5,728,519 706,812
Less promotional
allowances (1,294,458) (1,450,664) -- --
----------- ----------- ----------- -----------
Net revenues 12,327,620 13,149,221 5,728,519 706,812
Operating expenses:
Casino 1,655,837 2,566,306 -- --
Food and beverage 721,360 863,703 -- --
Marketing and
administrative 3,094,554 1,935,257 -- --
Facility 323,906 276,304 -- --
Corporate expense 7,203,198 5,778,507 4,223,019 302,086
Legal expenses 1,489,967 1,668,311 609,278 106,896
Depreciation and
amortization 918,609 1,018,699 169,135 18,509
Write-off of notes
receivable related
to Native American
gaming projects
and other notes
receivable 3,235,297 1,574,452 120,000 --
Impairment of
equity investment 125,000 -- -- --
Write-off of
project
development cost 495,982 286,653 180,850 --
Other 85,296 126,266 63,344 345
----------- ----------- ----------- -----------
Total operating
expenses 19,349,006 16,094,458 5,365,626 427,836
----------- ----------- ----------- -----------
Operating income
(loss) (7,021,386) (2,945,237) 362,893 278,976
Non-operating
income (expenses):
Earnings (loss)
from
unconsolidated
affiliates (3,405,539) 6,917,818 7,648,802 --
Gain on sale of
marketable
securities
and assets 42,226 167,948 34,672 --
Gain on
termination of
development
contract 245,499 -- -- --
Gain on
termination of
development and
loan agreement 10,801,076 -- -- --
Interest income
(expense), net (3,553,052) (2,248,550) (367,460) (38,733)
Minority interest (4,301,050) (1,308,867) (837,849) (106,420)
----------- ----------- ----------- -----------
Income (loss)
before income tax
expense (7,192,226) 583,112 6,841,058 133,823
Income tax expense
Current 170,347 -- -- --
Deferred and
change in
valuation
allowance 1,592,827 211,251 2,682,794 51,814
----------- ----------- ----------- -----------
Total income tax
expense 1,763,174 211,251 2,682,794 51,814
----------- ----------- ----------- -----------
Net income (loss) $(8,955,400) $ 371,861 4,158,264 82,009
=========== =========== =========== ===========
Per share
information:
Net income (loss)
per common share -
basic $ (0.69) $ 0.03 $ 0.33 $ 0.01
=========== =========== =========== ===========
Net income (loss)
per common share -
diluted $ (0.69) $ 0.03 $ 0.29 $ 0.01
=========== =========== =========== ===========
Basic weighted
average number of
shares
outstanding 12,937,222 12,975,697 12,788,269 12,755,203
=========== =========== =========== ===========
Diluted weighted
average number of
shares
outstanding 12,937,222 13,243,750 14,672,777 14,247,762
=========== =========== =========== ===========
Nevada Gold & Casinos, Inc.
Consolidated Balance Sheets
April 29, April 30,
2007 2006
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,803,560 $ 4,296,154
Restricted cash 1,050,000 --
Accounts receivable 397,145 1,287,982
Accounts receivable - affiliates 124,685 152,194
Prepaid expenses 474,933 234,381
Notes receivable - development
projects, current portion 1,357,904 --
Other current assets 55,055 194,151
------------ ------------
Total current assets 6,263,282 6,164,862
------------ ------------
Investments in unconsolidated
affiliates 35,201,419 35,691,747
Investments in unconsolidated
affiliates held for sale 400,489 --
Investments in development projects 323,202 6,876,527
Investments in development projects
held for sale 3,914,765 --
Notes receivable - affiliates 3,521,066 3,637,099
Notes receivable - development
projects, net of current portion 18,012,737 22,667,272
Goodwill 5,462,918 5,462,918
Property and equipment, net of
accumulated depreciation of
$1,281,191 and $622,876 at April
29, 2007 and April 30, 2006,
respectively 2,063,026 2,580,093
Deferred tax asset -- 1,460,722
Other assets 4,868,442 3,601,850
------------ ------------
Total assets $ 80,031,346 $ 88,143,090
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 1,540,781 $ 1,550,405
Accrued interest payable 21,211 41,737
Other accrued liabilities 378,937 358,159
Guaranty liabilities 4,610,000 --
Long-term debt, current portion 2,066,518 3,779,345
------------ ------------
Total current liabilities 8,617,447 5,729,646
------------ ------------
Long-term debt, net of current
portion and discount 55,021,031 56,687,315
Deferred income 8,591 406,632
Other liabilities 742,991 157,633
------------ ------------
Total liabilities 64,390,060 62,981,226
------------ ------------
Commitments and contingencies -- --
Minority interest -- 278,674
Stockholders' equity:
Common stock, $0.12 par value per
share; 25,000,000 shares
authorized; 13,935,330 and
13,912,330 shares issued and
12,939,130 and 12,970,330 shares
outstanding at April 29, 2007 and
April 30, 2006, respectively 1,672,240 1,669,479
Additional paid-in capital 18,484,448 18,122,632
Retained earnings 5,694,088 14,873,589
Treasury stock, 996,200 and 942,000
shares at April 29, 2007 and
April 30, 2006, respectively, at
cost (10,216,950) (9,781,669)
Accumulated other comprehensive
income (loss) 7,460 (841)
------------ ------------
Total stockholders' equity 15,641,286 24,883,190
------------ ------------
Total liabilities and stockholders'
equity $ 80,031,346 $ 88,143,090
============ ============
CONTACT: Nevada Gold & Casinos, Inc.
Robert B. Sturges
(713) 621-2245
Integrated Corporate Relations
Don Duffy
(203) 682-8200
