Dover Downs Gaming & Entertainment Inactive
Filed: 24 Apr 03, 12:00am
Exhibit 99.1
DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS RESULTS
FOR THE FIRST QUARTER ENDED MARCH 31, 2003
Dover Downs Gaming & Entertainment, Inc. (NYSE-Symbol: DDE) today reported results for the three months ended March 31, 2003.
The Company’s gross revenues decreased 6.5% to $48,355,000 compared with $51,710,000 for the first quarter of 2002. The decrease in gaming revenues, which include video lottery win and harness racing commissions, was offset by an increase in other revenues of $2,226,000, primarily related to higher occupancy levels at the Dover Downs Hotel and Conference Center compared with the first quarter of 2002. The hotel opened with approximately 100 rooms on February 15, 2002 and added rooms throughout the quarter with the entire 232-room facility opened as of April 6, 2002.
Net earnings were $4,007,000 or $.15 per diluted share compared with $5,168,000 or $.19 per diluted share for the first quarter of 2002.
The Company noted that the approximate 13% decrease in slot win for the first quarter of 2003 compared with the first quarter of 2002 is consistent with the 13% decline experienced in December 2002. While severe weather and the current state of the economy have had an impact on operations, management believes the declines are primarily the result of the Delaware Clean Indoor Air Act, which has prohibited smoking in the casino since November 27, 2002.
Occupancy levels in the Dover Downs Hotel were strong throughout the quarter, as the Company continued to market the hotel principally to slots customers.
Denis McGlynn, President and CEO of Dover Downs Gaming & Entertainment, Inc. stated, “Operationally, we are happy with the success of our marketing strategies, our hotel statistics and the effort being put forth by our employees. The significant pressure being put on our business as a result of the Delaware Clean Indoor Air Act is something we will have to deal with for the foreseeable future. We are in the process of reviewing all of our operations to identify spending items that can be curtailed. Since November, staffing has been reduced by approximately 100 positions, and we will have more cutbacks in the near-term. It is unfortunate, but we will be doing whatever we can to preserve our margins in light of the impact this legislation has had on our business.”
The Company previously announced that it had purchased for cash and retired 120,245 shares of its $.10 par value common stock during the quarter.
Dover Downs Gaming & Entertainment, Inc. began trading on the New York Stock Exchange on April 1, 2002, the first day after the effective date of the tax-free spin-off by Dover Motorsports, Inc. of its gaming business. The Company’s results of operations for periods prior to April 1, 2002 are included in the financial statements of Dover Motorsports, Inc. as a discontinued operation, but have been presented separately for informational purposes.
* * *
This release contains or may contain forward-looking statements based on management’s beliefs and assumptions. Such statements are subject to various risks and uncertainties that could cause results to vary materially. Please refer to the Company’s SEC filings for a discussion of such factors.
Dover Downs Gaming & Entertainment, Inc. is a diversified gaming and entertainment company whose operations consist of Dover Downs Slots – an 80,000-square foot video lottery (slots) casino complex; the Dover Downs Hotel and Conference Center – featuring luxury accommodations with conference, banquet, fine dining, ballroom and concert hall facilities; and the Dover Downs Raceway – a harness racing track with pari-mutuel wagering on live and simulcast horse races.
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENT OF EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
|
| Three Months Ended March 31, |
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|
| 2003 |
| 2002 |
| ||
Revenues: |
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|
|
|
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Gaming (1) |
| $ | 41,557 |
| $ | 47,138 |
|
Other operating |
| 6,798 |
| 4,572 |
| ||
Gross revenues |
| 48,355 |
| 51,710 |
| ||
Less - promotional allowances |
| 4,156 |
| 1,930 |
| ||
|
| 44,199 |
| 49,780 |
| ||
|
|
|
|
|
| ||
Expenses: |
|
|
|
|
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Gaming |
| 32,521 |
| 36,135 |
| ||
Other operating |
| 2,254 |
| 2,934 |
| ||
Depreciation |
| 1,502 |
| 904 |
| ||
General and administrative |
| 954 |
| 1,097 |
| ||
|
| 37,231 |
| 41,070 |
| ||
|
|
|
|
|
| ||
Operating earnings |
| 6,968 |
| 8,710 |
| ||
|
|
|
|
|
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Interest expense, net |
| 214 |
| — |
| ||
|
|
|
|
|
| ||
Earnings before income taxes |
| 6,754 |
| 8,710 |
| ||
|
|
|
|
|
| ||
Income taxes |
| 2,747 |
| 3,542 |
| ||
|
|
|
|
|
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Net earnings |
| $ | 4,007 |
| $ | 5,168 |
|
|
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|
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Earnings per common share (2): |
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|
|
|
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- Basic |
| $ | 0.15 |
| $ | 0.19 |
|
- Diluted |
| $ | 0.15 |
| $ | 0.19 |
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|
|
|
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Average shares outstanding (2): |
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|
|
|
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- Basic |
| 26,579 |
| 26,637 |
| ||
- Diluted |
| 26,605 |
| 26,769 |
| ||
(1) Gaming revenues from the Company’s video lottery (slot) machine operations include the total win from such operations. The Delaware State Lottery Office collects the win and remits a portion thereof to the Company as its commission for acting as a Licensed Agent. The difference between total win and the amount remitted to the Company is reflected in gaming expenses.
(2) Earnings per common share amounts and average shares outstanding for periods prior to April 1, 2002, the day after the effective date of the spin-off from Dover Motorsports, Inc., are presented on a pro forma basis to reflect such spin-off.
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
|
| March 31, |
| December 31, |
| ||
ASSETS |
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| ||
|
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Current assets: |
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|
|
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Cash and cash equivalents |
| $ | 12,247 |
| $ | 10,874 |
|
Accounts receivable |
| 2,186 |
| 1,105 |
| ||
Due from State of Delaware |
| 4,122 |
| 9,624 |
| ||
Inventories |
| 1,177 |
| 1,154 |
| ||
Prepaid expenses and other |
| 839 |
| 1,462 |
| ||
Receivable from Dover Motorsports, Inc. |
| 1,490 |
| 793 |
| ||
Income taxes receivable |
| — |
| 859 |
| ||
Deferred income taxes |
| 543 |
| 539 |
| ||
Total current assets |
| 22,604 |
| 26,410 |
| ||
|
|
|
|
|
| ||
Property and equipment, net |
| 121,638 |
| 122,248 |
| ||
Total assets |
| $ | 144,242 |
| $ | 148,658 |
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|
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
|
|
|
|
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Accounts payable |
| $ | 3,497 |
| $ | 2,364 |
|
Purses due horsemen |
| 4,744 |
| 9,666 |
| ||
Accrued liabilities |
| 5,555 |
| 7,132 |
| ||
Income taxes payable |
| 2,383 |
| — |
| ||
Deferred revenue |
| 189 |
| 131 |
| ||
Total current liabilities |
| 16,368 |
| 19,293 |
| ||
|
|
|
|
|
| ||
Notes payable to banks |
| 37,700 |
| 40,890 |
| ||
Deferred income taxes |
| 4,232 |
| 4,036 |
| ||
|
|
|
|
|
| ||
Stockholders’ equity: |
|
|
|
|
| ||
Common stock |
| 1,038 |
| 1,050 |
| ||
Class A common stock |
| 1,615 |
| 1,615 |
| ||
Additional paid-in capital |
| 67,798 |
| 68,960 |
| ||
Retained earnings |
| 15,618 |
| 12,941 |
| ||
Accumulated other comprehensive loss |
| (127 | ) | (127 | ) | ||
Total stockholders’ equity |
| 85,942 |
| 84,439 |
| ||
Total liabilities and stockholders’ equity |
| $ | 144,242 |
| $ | 148,658 |
|
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
|
| Three Months Ended March 31, |
| ||||
|
| 2003 |
| 2002 |
| ||
Cash flows from operating activities: |
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|
|
|
| ||
Net earnings |
| $ | 4,007 |
| $ | 5,168 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
| ||
Depreciation |
| 1,502 |
| 904 |
| ||
Deferred income taxes |
| 192 |
| 166 |
| ||
Changes in assets and liabilities: |
|
|
|
|
| ||
Accounts receivable |
| (1,081 | ) | 401 |
| ||
Due from State of Delaware |
| 5,502 |
| 4,084 |
| ||
Inventories |
| (23 | ) | (412 | ) | ||
Prepaid expenses and other |
| 623 |
| 1,075 |
| ||
Receivable from Dover Motorsports, Inc. |
| (697 | ) | — |
| ||
Accounts payable |
| 1,133 |
| (2,772 | ) | ||
Purses due horsemen |
| (4,922 | ) | (4,797 | ) | ||
Accrued liabilities |
| (1,577 | ) | 1,747 |
| ||
Income taxes receivable/payable |
| 3,242 |
| 2,243 |
| ||
Deferred revenue |
| 58 |
| 10 |
| ||
Net cash provided by operating activities |
| 7,959 |
| 7,817 |
| ||
|
|
|
|
|
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Cash flows from investing activities: |
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|
|
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Capital expenditures |
| (892 | ) | (10,103 | ) | ||
Net cash used in investing activities |
| (892 | ) | (10,103 | ) | ||
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Cash flows from financing activities: |
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|
|
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Borrowings from revolving debt |
| 33,550 |
| — |
| ||
Repayments of revolving debt |
| (36,740 | ) | — |
| ||
Dividends paid |
| (1,330 | ) | — |
| ||
Repurchase of common stock |
| (1,174 | ) | — |
| ||
Change in payable to/receivable from Dover Motorsports, Inc. |
| — |
| 1,730 |
| ||
Net cash (used in) provided by financing activities |
| (5,694 | ) | 1,730 |
| ||
|
|
|
|
|
| ||
Net increase (decrease) in cash and cash equivalents |
| 1,373 |
| (556 | ) | ||
Cash and cash equivalents, beginning of period |
| 10,874 |
| 12,166 |
| ||
Cash and cash equivalents, end of period |
| $ | 12,247 |
| $ | 11,610 |
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