Exhibit 99.1
FOR IMMEDIATE RELEASE | | For further information, call: |
| | Timothy R. Horne, Sr. Vice President-Finance |
Dover, Delaware, January 29, 2004 | | (302) 857-3292 |
DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS RESULTS
FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2003
Dover Downs Gaming & Entertainment, Inc. (NYSE-Symbol: DDE) today reported results for the three months and year ended December 31, 2003.
The Company’s gross revenues were $51,310,000 compared with $51,604,000 for the fourth quarter of 2002. A 5% decrease in gaming revenues, which include video lottery win and harness racing commissions, was offset by an increase in other revenues of $1,911,000, primarily related to higher occupancy levels at the Dover Downs Hotel and Conference Center and business interruption insurance proceeds. Occupancy levels for the Dover Downs Hotel and Conference Center remained strong, averaging more than 94% for the quarter.
Net earnings for the fourth quarter of 2003 were $4,063,000 or $.15 per diluted share compared with $4,238,000 or $.16 per diluted share for the fourth quarter of 2002.
For the year ended December 31, 2003, gross revenues decreased 5.6% to $207,499,000 compared with $219,806,000 for 2002. The revenue decline consisted of a 9.7% decrease in gaming revenues, primarily as a result of the Delaware Clean Indoor Air Act (the “Act”), offset by an increase in other revenues of $6,393,000, primarily related to the Dover Downs Hotel and Conference Center.
Net earnings were $17,237,000 or $.65 per diluted share compared with $21,442,000 or $ .80 per diluted share for 2002.
November 27, 2003 marked the first anniversary of the Act, which prohibits smoking in virtually all public buildings in Delaware. During the first year of the smoking ban, the Company’s slot win declined approximately 11.3% compared to the previous year. In December 2003, slot win increased for the first time in 2003 by approximately 7%.
To promote continued growth in gaming revenues, the Company embarked on two significant capital projects. Construction and renovations have begun to allow for the addition of 500 slot machines by the end of the first quarter of 2004. As part of the construction, several climate-controlled smoking areas are being built. The Company is also installing a new slot data system for the entire casino floor. In addition to providing the ability to promote and market the casino more efficiently, the system will allow for the conversion to ticket in/ticket out gaming.
Denis McGlynn, President and Chief Executive Officer of Dover Downs Gaming & Entertainment, Inc., noted, “We are pleased at the return to growth in December 2003. Our continued focus on our most profitable customers through the use of the Dover Downs Hotel and Conference Center should continue to benefit the Company as we expand our casino and capitalize on our improved marketing data systems.”
The Company’s financial position remains very strong. Operating cash flows for 2003 were $24,178,000, and the outstanding balance on the Company’s revolving credit facility was reduced from $40,890,000 at December 31, 2002 to $31,225,000 at December 31, 2003.
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.
* * *
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.
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DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENT OF EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
| | Three Months Ended
December 31, | | Year Ended
December 31, | |
| | 2003 | | 2002 | | 2003 | | 2002 | |
| | | | | | | | | |
Revenues: | | | | | | | | | |
Gaming (1) | | $ | 42,069 | | $ | 44,274 | | $ | 175,023 | | $ | 193,723 | |
Other operating | | 9,241 | | 7,330 | | 32,476 | | 26,083 | |
Gross revenues | | 51,310 | | 51,604 | | 207,499 | | 219,806 | |
Less - promotional allowances | | 5,018 | | 4,002 | | 18,667 | | 13,331 | |
| | 46,292 | | 47,602 | | 188,832 | | 206,475 | |
| | | | | | | | | |
Expenses: | | | | | | | | | |
Gaming | | 33,909 | | 35,478 | | 138,423 | | 148,817 | |
Other operating | | 2,294 | | 1,826 | | 9,899 | | 10,351 | |
Depreciation | | 1,730 | | 1,417 | | 6,287 | | 5,176 | |
General and administrative | | 1,320 | | 1,415 | | 4,317 | | 5,061 | |
| | 39,253 | | 40,136 | | 158,926 | | 169,405 | |
| | | | | | | | | |
Operating earnings | | 7,039 | | 7,466 | | 29,906 | | 37,070 | |
| | | | | | | | | |
Interest expense | | 179 | | 296 | | 842 | | 903 | |
| | | | | | | | | |
Earnings before income taxes | | 6,860 | | 7,170 | | 29,064 | | 36,167 | |
| | | | | | | | | |
Income taxes | | 2,797 | | 2,932 | | 11,827 | | 14,725 | |
| | | | | | | | | |
Net earnings | | 4,063 | | 4,238 | | 17,237 | | 21,442 | |
| | | | | | | | | |
Minimum pension liability | | 95 | | (127 | ) | 127 | | (127 | ) |
| | | | | | | | | |
Comprehensive earnings | | $ | 4,158 | | $ | 4,111 | | $ | 17,364 | | $ | 21,315 | |
| | | | | | | | | |
Earnings per common share (2): | | | | | | | | | |
• Basic | | $ | 0.15 | | $ | 0.16 | | $ | 0.65 | | $ | 0.80 | |
• Diluted | | $ | 0.15 | | $ | 0.16 | | $ | 0.65 | | $ | 0.80 | |
| | | | | | | | | |
Average shares outstanding (2): | | | | | | | | | |
• Basic | | 26,478 | | 26,648 | | 26,511 | | 26,643 | |
• Diluted | | 26,502 | | 26,670 | | 26,537 | | 26,725 | |
(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.
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DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
| | December 31,
2003 | | December 31,
2002 | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 14,138 | | $ | 12,836 | |
Accounts receivable | | 1,914 | | 2,991 | |
Due from State of Delaware | | 8,670 | | 9,624 | |
Inventories | | 1,801 | | 1,154 | |
Prepaid expenses and other | | 2,414 | | 1,462 | |
Receivable from Dover Motorsports, Inc. | | — | | 793 | |
Income taxes receivable | | — | | 859 | |
Deferred income taxes | | 878 | | 539 | |
Total current assets | | 29,815 | | 30,258 | |
| | | | | |
Property and equipment, net | | 122,344 | | 122,248 | |
Total assets | | $ | 152,159 | | $ | 152,506 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 6,516 | | $ | 7,091 | |
Purses due horsemen | | 7,957 | | 9,666 | |
Accrued liabilities | | 6,015 | | 6,253 | |
Payable to Dover Motorsports, Inc. | | 96 | | — | |
Income taxes payable | | 53 | | — | |
Deferred revenue | | 261 | | 131 | |
Total current liabilities | | 20,898 | | 23,141 | |
| | | | | |
Notes payable to banks | | 31,225 | | 40,890 | |
Deferred income taxes | | 5,061 | | 4,036 | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock | | 1,033 | | 1,050 | |
Class A common stock | | 1,615 | | 1,615 | |
Additional paid-in capital | | 67,454 | | 68,960 | |
Retained earnings | | 24,873 | | 12,941 | |
Accumulated other comprehensive loss | | — | | (127 | ) |
Total stockholders’ equity | | 94,975 | | 84,439 | |
Total liabilities and stockholders’ equity | | $ | 152,159 | | $ | 152,506 | |
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DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
| | Year Ended December 31, | |
| | 2003 | | 2002 | |
| | | | | |
Cash flows from operating activities: | | | | | |
Net earnings | | $ | 17,237 | | $ | 21,442 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | | |
Depreciation | | 6,287 | | 5,176 | |
Amortization of credit facility origination fees | | 31 | | 60 | |
Deferred income taxes | | 595 | | 2,642 | |
Changes in assets and liabilities: | | | | | |
Accounts receivable | | 1,077 | | 320 | |
Due from State of Delaware | | 954 | | (1,480 | ) |
Inventories | | (647 | ) | (288 | ) |
Prepaid expenses and other | | (1,068 | ) | 136 | |
Accounts payable | | (575 | ) | (3,870 | ) |
Purses due horsemen | | (1,709 | ) | 2,097 | |
Accrued liabilities | | 65 | | 2,632 | |
Payable to/receivable from Dover Motorsports, Inc. | | 889 | | (793 | ) |
Income taxes payable/receivable | | 912 | | (1,975 | ) |
Deferred revenue | | 130 | | 99 | |
Net cash provided by operating activities | | 24,178 | | 26,198 | |
| | | | | |
Cash flows from investing activities: | | | | | |
Capital expenditures | | (6,383 | ) | (20,652 | ) |
Net cash used in investing activities | | (6,383 | ) | (20,652 | ) |
| | | | | |
Cash flows from financing activities: | | | | | |
(Repayments of) borrowings from revolving debt, net | | (9,665 | ) | 40,890 | |
Repayment of debt to Dover Motorsports, Inc. | | — | | (45,000 | ) |
Credit facility origination fees | | — | | (137 | ) |
Dividends paid | | (5,305 | ) | (3,333 | ) |
Repurchase of common stock | | (1,523 | ) | — | |
Proceeds from stock options exercised | | — | | 73 | |
Change in payable to/receivable from Dover Motorsports, Inc. | | — | | 1,730 | |
Net cash used in financing activities | | (16,493 | ) | (5,777 | ) |
| | | | | |
Net increase (decrease) in cash and cash equivalents | | 1,302 | | (231 | ) |
Cash and cash equivalents, beginning of year | | 12,836 | | 13,067 | |
Cash and cash equivalents, end of year | | $ | 14,138 | | $ | 12,836 | |
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