Exhibit 99.1
FOR IMMEDIATE RELEASE | For further information, call: |
| Timothy R. Horne, Sr. Vice President-Finance |
Dover, Delaware, October 28, 2004 | (302) 857-3292 |
DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS IMPROVED
RESULTS FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2004
Dover Downs Gaming & Entertainment, Inc. (NYSE-Symbol: DDE) today reported results for the three months ended September 30, 2004.
The Company’s gross revenues increased 8.9% to $60,169,000 for the third quarter of 2004 compared with $55,256,000 for the third quarter of 2003. Gaming revenues, which include video lottery win and harness racing commissions increased $3,917,000 or 8.3% for the third quarter of 2004 compared with the third quarter of 2003. Record occupancy levels of almost 97% for the quarter were achieved in the Dover Downs Hotel and Conference Center.
Net earnings were $4,982,000 or $.19 per diluted share for the third quarter of 2004 compared with $4,782,000 or $.18 per diluted share for the third quarter of 2003.
For the nine months ended September 30, 2004, net earnings improved 5.3% to $13,874,000 from $13,174,000 for the same period last year. This growth was attained despite an increased gaming tax rate during the first six months of 2004, which added $447,000, or approximately $.01 per share to gaming expenses during the nine months ended September 30, 2004.
The Company continues to equip its slot machines with ticket-in-ticket-out technology. There are approximately 350 slot machines with this technology today, and the Company anticipates that approximately 1,000 slot machines will be ticket-in-ticket-out by the end of the year.
For the second year in a row, AAA has awarded Dover Downs Hotel and Conference Center its Four-Diamond rating, making it one of only three hotels in the State of Delaware receiving this level of recognition.
The Company’s financial position remained strong. $8,350,000 of debt was paid down during the quarter, leaving outstanding debt of $24,000,000 at September 30, 2004.
The Company also purchased and retired 50,400 shares of its $.10 par value common stock during the quarter.
The Company announced yesterday that its Board of Directors declared a quarterly dividend of $.06 per share. The dividend is payable on December 10, 2004 to shareholders of record at the close of business on November 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
September 30, | | Nine Months Ended
September 30, | |
| | 2004 | | 2003 | | 2004 | | 2003 | |
Revenues: | | | | | | | | | |
Gaming (1) | | $ | 51,022 | | $ | 47,105 | | $ | 145,290 | | $ | 132,954 | |
Other operating | | 9,147 | | 8,151 | | 25,895 | | 23,235 | |
Gross revenues | | 60,169 | | 55,256 | | 171,185 | | 156,189 | |
Less - promotional allowances | | 5,224 | | 4,957 | | 15,153 | | 13,649 | |
| | 54,945 | | 50,299 | | 156,032 | | 142,540 | |
| | | | | | | | | |
Expenses: | | | | | | | | | |
Gaming | | 39,458 | | 36,982 | | 114,023 | | 104,514 | |
Other operating | | 4,150 | | 2,601 | | 9,722 | | 7,605 | |
General and administrative | | 1,065 | | 928 | | 3,310 | | 2,997 | |
Depreciation | | 1,691 | | 1,532 | | 5,081 | | 4,557 | |
| | 46,364 | | 42,043 | | 132,136 | | 119,673 | |
| | | | | | | | | |
Operating earnings | | 8,581 | | 8,256 | | 23,896 | | 22,867 | |
| | | | | | | | | |
Interest expense | | 183 | | 196 | | 512 | | 663 | |
| | | | | | | | | |
Earnings before income taxes | | 8,398 | | 8,060 | | 23,384 | | 22,204 | |
| | | | | | | | | |
Income taxes | | 3,416 | | 3,278 | | 9,510 | | 9,030 | |
| | | | | | | | | |
Net earnings | | $ | 4,982 | | $ | 4,782 | | $ | 13,874 | | $ | 13,174 | |
| | | | | | | | | |
Net earnings per common share: | | | | | | | | | |
- Basic | | $ | 0.19 | | $ | 0.18 | | $ | 0.52 | | $ | 0.50 | |
- Diluted | | $ | 0.19 | | $ | 0.18 | | $ | 0.52 | | $ | 0.50 | |
| | | | | | | | | |
Average shares outstanding: | | | | | | | | | |
- Basic | | 26,475 | | 26,478 | | 26,477 | | 26,522 | |
- Diluted | | 26,523 | | 26,509 | | 26,552 | | 26,549 | |
(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)
| | September 30,
2004 | | December 31,
2003 | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash and cash equivalents | | $ | 14,957 | | $ | 14,138 | |
Accounts receivable | | 984 | | 1,914 | |
Due from State of Delaware | | 10,216 | | 8,670 | |
Inventories | | 2,107 | | 1,801 | |
Prepaid expenses and other | | 2,869 | | 2,414 | |
Prepaid income taxes | | 140 | | — | |
Deferred income taxes | | 983 | | 878 | |
Total current assets | | 32,256 | | 29,815 | |
| | | | | |
Property and equipment, net | | 123,942 | | 122,344 | |
Total assets | | $ | 156,198 | | $ | 152,159 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 5,297 | | $ | 6,516 | |
Purses due horsemen | | 9,833 | | 7,957 | |
Accrued liabilities | | 6,176 | | 6,015 | |
Payable to Dover Motorsports, Inc. | | 105 | | 96 | |
Income taxes payable | | — | | 53 | |
Deferred revenue | | 251 | | 261 | |
Total current liabilities | | 21,662 | | 20,898 | |
| | | | | |
Notes payable to banks | | 24,000 | | 31,225 | |
Deferred income taxes | | 6,659 | | 5,061 | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock | | 1,040 | | 1,033 | |
Class A common stock | | 1,608 | | 1,615 | |
Additional paid-in capital | | 67,550 | | 67,454 | |
Retained earnings | | 34,238 | | 24,873 | |
Deferred compensation | | (559 | ) | — | |
Total stockholders’ equity | | 103,877 | | 94,975 | |
Total liabilities and stockholders’ equity | | $ | 156,198 | | $ | 152,159 | |
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
| | Nine Months Ended September 30, | |
| | 2004 | | 2003 | |
Operating activities: | | | | | |
Net earnings | | $ | 13,874 | | $ | 13,174 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | | |
Depreciation | | 5,081 | | 4,557 | |
Amortization of credit facility origination fees | | 46 | | 21 | |
Amortization of deferred compensation | | 42 | | — | |
Deferred income taxes | | 1,163 | | 756 | |
Changes in assets and liabilities: | | | | | |
Accounts receivable | | 930 | | 867 | |
Due from State of Delaware | | (1,546 | ) | (685 | ) |
Inventories | | (306 | ) | (262 | ) |
Prepaid expenses and other | | (501 | ) | (1,372 | ) |
Prepaid income taxes/income taxes payable | | 137 | | 1,392 | |
Accounts payable | | (2,860 | ) | 781 | |
Purses due horsemen | | 1,876 | | 593 | |
Accrued liabilities | | 161 | | (551 | ) |
Payable to/receivable from Dover Motorsports, Inc. | | 9 | | 582 | |
Deferred revenue | | (10 | ) | 94 | |
Net cash provided by operating activities | | 18,096 | | 19,947 | |
| | | | | |
Investing activities: | | | | | |
Capital expenditures | | (5,038 | ) | (2,672 | ) |
Net cash used in investing activities | | (5,038 | ) | (2,672 | ) |
| | | | | |
Financing activities: | | | | | |
Borrowings from revolving debt | | 146,855 | | 120,545 | |
Repayments of revolving debt | | (154,080 | ) | (131,935 | ) |
Dividends paid | | (4,509 | ) | (3,981 | ) |
Repurchase of common stock | | (505 | ) | (1,523 | ) |
Net cash used in financing activities | | (12,239 | ) | (16,894 | ) |
| | | | | |
Net increase in cash and cash equivalents | | 819 | | 381 | |
Cash and cash equivalents, beginning of period | | 14,138 | | 12,836 | |
Cash and cash equivalents, end of period | | $ | 14,957 | | $ | 13,217 | |
