Exhibit 99.1
FOR IMMEDIATE RELEASE | | For further information, call: |
| | Timothy R. Horne, Sr. Vice President-Finance |
Dover, Delaware, July 29, 2004 | | (302) 857-3292 |
DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS RESULTS
FOR THE SECOND QUARTER ENDED JUNE 30, 2004
Dover Downs Gaming & Entertainment, Inc. (NYSE-Symbol: DDE) today reported results for the three months ended June 30, 2004.
The Company’s gross revenues increased 5.4% to $55,419,000 for the second quarter of 2004 compared with $52,578,000 for the second quarter of 2003. Gaming revenues, which include video lottery win and harness racing commissions increased $2,667,000 or 6.0% for the second quarter of 2004 compared with the second quarter of 2003. Record occupancy levels of more than 95% for the quarter were achieved in the Dover Downs Hotel and Conference Center, as the Company continued to market the hotel principally to casino customers.
Net earnings were $4,458,000 or $.17 per diluted share for the second quarter of 2004 compared with $4,385,000 or $.17 per diluted share for the second quarter of 2003. For the six months ended June 30, 2004, net earnings improved 6.0% to $8,892,000 from $8,392,000 for the same period last year.
The Company noted that the quarter began with strong slot win growth in both April and May. However, June’s slot win was below the Company’s expectations and approximately the same as in June of 2003. The Company believes various factors such as higher gasoline prices, a general softness in the regional industry and a slightly lower hold percentage than normal contributed to June’s results, but noted that July’s slot win results to-date have been strong. Also impacting the quarterly and year-to-date results was the state gaming tax surcharge that began in late June of 2003. That gaming expense was $272,000 and $533,000, respectively for the three-month and six-month periods ended June 30, 2004 compared with $86,000 for both the three-month and six-month periods ended June 30, 2003.
The Company’s financial position remained strong, with outstanding debt of $32,350,000 at June 30, 2004. As the Company has completed its 500-slot machine expansion and substantially completed its new slot data system installation, it anticipates debt reductions to accelerate during the second half of 2004.
The Company announced yesterday that its Board of Directors declared a quarterly dividend of $.06 per share. The dividend is payable on September 10, 2004 to shareholders of record at the close of business on August 10, 2004.
* * *
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 – a 91,000-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 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
June 30, | | Six Months Ended
June 30, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
| | | | | | | | | |
Revenues: | | | | | | | | | |
Gaming (1) | | $ | 46,959 | | $ | 44,292 | | $ | 94,268 | | $ | 85,849 | |
Other operating | | 8,460 | | 8,286 | | 16,748 | | 15,084 | |
Gross revenues | | 55,419 | | 52,578 | | 111,016 | | 100,933 | |
Less - promotional allowances | | 4,892 | | 4,536 | | 9,929 | | 8,692 | |
| | 50,527 | | 48,042 | | 101,087 | | 92,241 | |
| | | | | | | | | |
Expenses: | | | | | | | | | |
Gaming | | 36,913 | | 35,011 | | 74,565 | | 67,532 | |
Other operating | | 3,131 | | 2,750 | | 5,572 | | 5,004 | |
General and administrative | | 1,098 | | 1,115 | | 2,245 | | 2,069 | |
Depreciation | | 1,699 | | 1,523 | | 3,390 | | 3,025 | |
| | 42,841 | | 40,399 | | 85,772 | | 77,630 | |
| | | | | | | | | |
Operating earnings | | 7,686 | | 7,643 | | 15,315 | | 14,611 | |
| | | | | | | | | |
Interest expense | | 176 | | 253 | | 329 | | 467 | |
| | | | | | | | | |
Earnings before income taxes | | 7,510 | | 7,390 | | 14,986 | | 14,144 | |
| | | | | | | | | |
Income taxes | | 3,052 | | 3,005 | | 6,094 | | 5,752 | |
| | | | | | | | | |
Net earnings | | $ | 4,458 | | $ | 4,385 | | $ | 8,892 | | $ | 8,392 | |
| | | | | | | | | |
Net earnings per common share: | | | | | | | | | |
• Basic | | $ | 0.17 | | $ | 0.17 | | $ | 0.34 | | $ | 0.32 | |
• Diluted | | $ | 0.17 | | $ | 0.17 | | $ | 0.33 | | $ | 0.32 | |
| | | | | | | | | |
Average shares outstanding: | | | | | | | | | |
• Basic | | 26,478 | | 26,510 | | 26,478 | | 26,544 | |
• Diluted | | 26,589 | | 26,535 | | 26,567 | | 26,570 | |
(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.
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
| | June 30,
2004 | | December 31,
2003 | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 16,969 | | $ | 14,138 | |
Accounts receivable | | 2,572 | | 1,914 | |
Due from State of Delaware | | 4,304 | | 8,670 | |
Inventories | | 1,723 | | 1,801 | |
Prepaid expenses and other | | 2,529 | | 2,414 | |
Receivable from Dover Motorsports, Inc. | | 22 | | — | |
Prepaid income taxes | | 487 | | — | |
Deferred income taxes | | 895 | | 878 | |
Total current assets | | 29,501 | | 29,815 | |
| | | | | |
Property and equipment, net | | 125,493 | | 122,344 | |
Total assets | | $ | 154,994 | | $ | 152,159 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 5,590 | | $ | 6,516 | |
Purses due horsemen | | 4,059 | | 7,957 | |
Accrued liabilities | | 4,908 | | 6,015 | |
Payable to Dover Motorsports, Inc. | | — | | 96 | |
Income taxes payable | | — | | 53 | |
Deferred revenue | | 355 | | 261 | |
Total current liabilities | | 14,912 | | 20,898 | |
| | | | | |
Notes payable to banks | | 32,350 | | 31,225 | |
Other long-term liabilities | | 299 | | — | |
Deferred income taxes | | 6,467 | | 5,061 | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock | | 1,045 | | 1,033 | |
Class A common stock | | 1,608 | | 1,615 | |
Additional paid-in capital | | 68,050 | | 67,454 | |
Retained earnings | | 30,848 | | 24,873 | |
Deferred compensation | | (585 | ) | — | |
Total stockholders’ equity | | 100,966 | | 94,975 | |
Total liabilities and stockholders’ equity | | $ | 154,994 | | $ | 152,159 | |
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
| | Six Months Ended June 30, | |
| | 2004 | | 2003 | |
| | | | | |
Operating activities: | | | | | |
Net earnings | | $ | 8,892 | | $ | 8,392 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | | |
Depreciation | | 3,390 | | 3,025 | |
Amortization of credit facility origination fees | | 31 | | — | |
Amortization of deferred compensation | | 16 | | — | |
Deferred income taxes | | 1,059 | | 522 | |
Changes in assets and liabilities: | | | | | |
Accounts receivable | | (658 | ) | 2,610 | |
Due from State of Delaware | | 4,366 | | 4,766 | |
Inventories | | 78 | | (199 | ) |
Prepaid expenses and other | | (146 | ) | (1,380 | ) |
Receivable from/payable to Dover Motorsports, Inc. | | (118 | ) | 155 | |
Prepaid income taxes/income taxes payable | | (210 | ) | 763 | |
Accounts payable | | (2,717 | ) | (1,800 | ) |
Purses due horsemen | | (3,898 | ) | (4,815 | ) |
Accrued liabilities | | (1,107 | ) | (2,542 | ) |
Deferred revenue | | 94 | | 10 | |
Net cash provided by operating activities | | 9,072 | | 9,507 | |
| | | | | |
Investing activities: | | | | | |
Capital expenditures | | (4,449 | ) | (1,988 | ) |
Net cash used in investing activities | | (4,449 | ) | (1,988 | ) |
| | | | | |
Financing activities: | | | | | |
Borrowings from revolving debt | | 96,930 | | 77,360 | |
Repayments of revolving debt | | (95,805 | ) | (80,625 | ) |
Dividends paid | | (2,917 | ) | (2,657 | ) |
Repurchase of common stock | | — | | (1,523 | ) |
Net cash used in financing activities | | (1,792 | ) | (7,445 | ) |
| | | | | |
Net increase in cash and cash equivalents | | 2,831 | | 74 | |
Cash and cash equivalents, beginning of period | | 14,138 | | 12,836 | |
Cash and cash equivalents, end of period | | $ | 16,969 | | $ | 12,910 | |
