Exhibit 99.1
FOR IMMEDIATE RELEASE | | For further information, call: |
| | Timothy R. Horne, Sr. Vice President-Finance |
Dover, Delaware, January 26, 2006 | | (302) 857-3292 |
DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS RESULTS
FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2005
Dover Downs Gaming & Entertainment, Inc. (NYSE-Symbol: DDE) today reported results for the three months and year ended December 31, 2005.
The Company reported earnings per share for the fourth quarter of 2005 of $.39 per diluted share compared with $.10 per diluted share for the fourth quarter of 2004. The results for the fourth quarter of 2005 include a $5,837,000 or $.15 per diluted share gain on the sale of a commercial real estate property in December of 2005. As previously disclosed, the fourth quarter of 2004 results included a one-time, net non-recurring charge of $2,250,000, or $.05 per diluted share, related to a change in policy for reward points earned by customers.
On a pro-forma basis, excluding the aforementioned gain in 2005 and change in policy in 2004, earnings per diluted share increased 60% to $.24 per diluted share for the fourth quarter of 2005 compared with $.15 per diluted share for the fourth quarter of 2004.
The Company’s net earnings were $9,222,000 for the fourth quarter of 2005 compared with $2,507,000 for the fourth quarter of 2004. On a pro-forma basis, net earnings improved 49.8% to $5,761,000 for the fourth quarter of 2005 compared with $3,845,000 for the fourth quarter of 2004.
Revenues for the fourth quarter of 2005 increased to $54,015,000 compared with pro-forma revenues of $51,712,000 for the fourth quarter of 2004. Gaming revenues, which include video lottery win and harness racing commissions, increased 3.3% or $1,612,000 for the fourth quarter.
For the year ended December 31, 2005, net earnings were $26,040,000 or $1.09 per diluted share compared with $16,381,000 or $.62 per diluted share for the year ended December 31, 2004. On the pro-forma basis described above, net earnings were $22,579,000 or $.94 per diluted share for the year ended December 31, 2005 compared with $17,719,000 or $.67 per diluted share for the year ended December 31, 2004.
Legislation has been proposed in the State of Delaware which would allow the Company to expand its operating hours, add additional slot machines and provide free promotional play through its recently enhanced slots marketing system. The legislation has the support of the Governor’s office and has been passed by the House of Representatives and the Senate. It is currently awaiting the Governor’s signature. The legislation proposes to increase the number of allowable slot machines for each of the three licensed facilities in Delaware from 2,500 to 4,000. Each slot machine in excess of 2,500 would require payment of an annual fee of $1,100 per machine for the first 500 machines added, $700 per machine for the next 500 machines added, and $300 per machine for the last 500 machines added.
Denis McGlynn, President and CEO of Dover Downs Gaming & Entertainment, Inc. stated, “We are very pleased with the results for the fourth quarter and for 2005 as a whole. Having celebrated our 10th anniversary of casino gaming in Delaware during the quarter, it is nice to continue to create revenue growth as well as to improve operating efficiencies. With improved marketing systems, the elimination of our management agreement and more than 75% of our slot machines cash-less, we were able to improve margins significantly. These results, along with the legislation currently under consideration should provide us with momentum as we begin 2006.”
The Company announced yesterday that its Board of Directors declared a regular quarterly dividend of $.06 per share. The dividend is payable on March 10, 2006 to shareholders of record at the close of business on February 10, 2006.
The Company previously announced that on January 19, 2006 it successfully completed a self-tender of 1,063,937 shares of its common stock and 1,325,000 shares of its Class A common stock at a price of $14.50 per share. The repurchase represented approximately 10% of the Company’s outstanding shares.
* * *
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 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 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
December 31, | | Years Ended
December 31, | |
| | 2005 | | 2004 | | 2005 | | 2004 | |
Revenues: | | | | | | | | | |
Gaming (1) | | $ | 50,244 | | $ | 48,632 | | $ | 202,372 | | $ | 193,922 | |
Other operating(2) | | 3,771 | | 3,080 | | 14,480 | | 13,822 | |
| | 54,015 | | 51,712 | | 216,852 | | 207,744 | |
| | | | | | | | | |
Less - non-recurring gaming charge (3) | | — | | 448 | | — | | 448 | |
| | 54,015 | | 51,264 | | 216,852 | | 207,296 | |
Expenses: | | | | | | | | | |
Gaming | | 37,565 | | 38,702 | | 151,973 | | 152,725 | |
Non-recurring gaming charge (3) | | — | | 1,802 | | — | | 1,802 | |
Other operating | | 3,278 | | 3,291 | | 13,167 | | 13,013 | |
General and administrative | | 1,229 | | 1,293 | | 4,765 | | 4,603 | |
Depreciation | | 1,758 | | 1,710 | | 6,998 | | 6,791 | |
| | 43,830 | | 46,798 | | 176,903 | | 178,934 | |
| | | | | | | | | |
Operating earnings | | 10,185 | | 4,466 | | 39,949 | | 28,362 | |
| | | | | | | | | |
Gain on sale of shopping center (4) | | 5,837 | | — | | 5,837 | | — | |
Interest expense | | (475 | ) | (250 | ) | (1,875 | ) | (762 | ) |
| | | | | | | | | |
Earnings before income taxes | | 15,547 | | 4,216 | | 43,911 | | 27,600 | |
| | | | | | | | | |
Income taxes | | 6,325 | | 1,709 | | 17,871 | | 11,219 | |
| | | | | | | | | |
Net earnings | | $ | 9,222 | | $ | 2,507 | | $ | 26,040 | | $ | 16,381 | |
| | | | | | | | | |
Net earnings per common share: | | | | | | | | | |
- Basic | | $ | 0.39 | | $ | 0.10 | | $ | 1.09 | | $ | 0.62 | |
- Diluted | | $ | 0.39 | | $ | 0.10 | | $ | 1.09 | | $ | 0.62 | |
| | | | | | | | | |
Average shares outstanding: | | | | | | | | | |
- Basic | | 23,787 | | 25,927 | | 23,787 | | 26,339 | |
- Diluted | | 23,950 | | 26,004 | | 23,953 | | 26,414 | |
(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) Other operating revenues do not include the retail amount of promotional allowances which are provided to customers on a complimentary basis.
(3) Effective December 2004, the Company changed how its customers can use their reward points. As a result, the Company recorded a net, non-recurring charge in the fourth quarter of 2004 to record the points outstanding at the date of the change.All reward points earned by customers are now expensed in the period earned.
(4) On December 28, 2005, the Company’s wholly-owned subsidiary, Dover Downs, Inc., closed on the sale of a shopping center it owned in Dover, Delaware. The shopping center consisted of approximately 7.7 acres of real property with a one-story building of approximately 95,700 square feet. The sales price was $12,450,000 and the Company recognized a gain on the sale of $5,837,000 ($3,461,000 after income taxes), or $.15 per diluted share.
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
RECONCILIATION OF GAAP NET EARNINGS TO PRO-FORMA NET EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
| | Three Months Ended
December 31, | | Years Ended
December 31, | |
| | 2005 | | 2004 | | 2005 | | 2004 | |
| | | | | | | | | |
GAAP net earnings | | $ | 9,222 | | $ | 2,507 | | $ | 26,040 | | $ | 16,381 | |
| | | | | | | | | |
Gain on sale of shopping center, net of income taxes (1) | | (3,461 | ) | — | | (3,461 | ) | — | |
| | | | | | | | | |
Non-recurring charge for points, net of income taxes (2) | | — | | 1,338 | | — | | 1,338 | |
| | | | | | | | | |
Pro forma net earnings | | $ | 5,761 | | $ | 3,845 | | $ | 22,579 | | $ | 17,719 | |
| | | | | | | | | |
GAAP net earnings per common share - diluted | | $ | 0.39 | | $ | 0.10 | | $ | 1.09 | | $ | 0.62 | |
| | | | | | | | | |
Gain on sale of shopping center, net of income taxes (1) | | (0.15 | ) | — | | (0.15 | ) | — | |
| | | | | | | | | |
Non-recurring charge for points, net of income taxes (2) | | — | | 0.05 | | — | | 0.05 | |
| | | | | | | | | |
Pro forma net earnings per diluted share | | $ | 0.24 | | $ | 0.15 | | $ | 0.94 | | $ | 0.67 | |
(1) On December 28, 2005, the Company’s wholly-owned subsidiary, Dover Downs, Inc., closed on the sale of a shopping center it owned in Dover, Delaware. The shopping center consisted of approximately 7.7 acres of real property with a one-story building of approximately 95,700 square feet. The sales price was $12,450,000 and the Company recognized a gain on the sale of $5,837,000 ($3,461,000 after income taxes), or $.15 per diluted share.
(2) Effective December 2004, the Company changed how its customers can use their reward points. As a result, the Company recorded a net, non-recurring charge in the fourth quarter of 2004 to record the points outstanding at the date of the change. All reward points earned by customers are now expensed in the period earned.
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
| | December 31,
2005 | | December 31,
2004 | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash | | $ | 19,986 | | $ | 17,688 | |
Accounts receivable | | 3,805 | | 2,919 | |
Due from State of Delaware | | 9,100 | | 10,080 | |
Inventories | | 1,955 | | 2,147 | |
Prepaid expenses and other | | 2,000 | | 2,220 | |
Receivable from Dover Motorsports, Inc. | | 15 | | 2 | |
Deferred income taxes | | 2,067 | | 2,168 | |
Total current assets | | 38,928 | | 37,224 | |
| | | | | |
Property and equipment, net | | 114,533 | | 123,076 | |
Total assets | | $ | 153,461 | | $ | 160,300 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 4,814 | | $ | 6,801 | |
Purses due horsemen | | 8,332 | | 9,082 | |
Accrued liabilities | | 12,748 | | 11,990 | |
Income taxes payable | | 3,706 | | 651 | |
Deferred revenue | | 112 | | 195 | |
Total current liabilities | | 29,712 | | 28,719 | |
| | | | | |
Notes payable to banks | | 24,075 | | 51,950 | |
Deferred income taxes | | 6,404 | | 6,861 | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock | | 1,064 | | 936 | |
Class A common stock | | 1,326 | | 1,448 | |
Additional paid-in capital | | 36,461 | | 35,764 | |
Retained earnings | | 55,459 | | 35,156 | |
Deferred compensation | | (1,040 | ) | (534 | ) |
Total stockholders’ equity | | 93,270 | | 72,770 | |
Total liabilities and stockholders’ equity | | $ | 153,461 | | $ | 160,300 | |
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
| | Years Ended Deceember 31, | |
| | 2005 | | 2004 | |
| | | | | |
Operating activities: | | | | | |
Net earnings | | $ | 26,040 | | $ | 16,381 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | | |
Depreciation | | 6,998 | | 6,791 | |
Amortization of credit facility origination fees | | 41 | | 62 | |
Amortization of deferred compensation | | 214 | | 67 | |
Deferred income taxes | | (356 | ) | 165 | |
Gain on sale of shopping center | | (5,837 | ) | — | |
Changes in assets and liabilities: | | | | | |
Accounts receivable | | (886 | ) | (1,005 | ) |
Due from State of Delaware | | 980 | | (1,410 | ) |
Inventories | | 192 | | (346 | ) |
Prepaid expenses and other | | (40 | ) | 132 | |
Receivable from/payable to Dover Motorsports, Inc. | | (13 | ) | (98 | ) |
Accounts payable | | (792 | ) | (909 | ) |
Purses due horsemen | | (750 | ) | 1,125 | |
Accrued liabilities | | 758 | | 5,975 | |
Income taxes payable | | 3,055 | | 943 | |
Deferred revenue | | (83 | ) | (66 | ) |
Net cash provided by operating activities | | 29,521 | | 27,807 | |
| | | | | |
Investing activities: | | | | | |
Capital expenditures | | (5,512 | ) | (6,329 | ) |
Proceeds from sale of shopping center, net of transaction costs | | 11,918 | | — | |
Net cash provided by (used in) investing activities | | 6,406 | | (6,329 | ) |
| | | | | |
Financing activities: | | | | | |
Borrowings from notes payable to banks | | 169,109 | | 226,905 | |
Repayments of notes payable to banks | | (196,984 | ) | (206,180 | ) |
Dividends paid | | (5,737 | ) | (6,098 | ) |
Repurchase of common stock | | — | | (32,555 | ) |
Proceeds from stock options exercised | | 4 | | — | |
Other | | (21 | ) | — | |
Net cash used in financing activities | | (33,629 | ) | (17,928 | ) |
| | | | | |
Net increase in cash | | 2,298 | | 3,550 | |
Cash, beginning of year | | 17,688 | | 14,138 | |
Cash, end of year | | $ | 19,986 | | $ | 17,688 | |
