Exhibit 99.1
FOR IMMEDIATE RELEASE |
| For further information, call: |
|
| Timothy R. Horne - Sr. Vice President-Finance |
Dover, Delaware, April 27, 2006 |
| (302) 857-3292 |
DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS RESULTS
FOR THE FIRST QUARTER ENDED MARCH 31, 2006
Dover Downs Gaming & Entertainment, Inc. (NYSE-Symbol: DDE) today reported results for the three months ended March 31, 2006.
Net earnings improved 24.2% to $6,185,000 compared with $4,979,000 for the first quarter of 2005.
Net earnings per diluted share were $.28 compared with $.21 per diluted share in 2005, a 33.3% improvement as a result of the aforementioned increase in net earnings and the impact of the shares repurchased in a self tender completed during the quarter.
The Company’s revenues increased to $59,272,000 compared with $52,091,000 for the first quarter of 2005. Gaming revenues, which include video lottery win and harness racing commissions, increased 13.1% or $6,442,000 compared with the first quarter of 2005, primarily as a result of increased video lottery win.
Slot win improved by 12.7% during the quarter as compared to the comparable period in the prior year. Favorable winter weather and continued improvements in marketing programs were the primary reasons for the increase. Occupancy levels in the Dover Downs Hotel remained strong, averaging more than 96% for the first quarter.
Denis McGlynn, President and CEO of Dover Downs Gaming & Entertainment, Inc. stated, “We are very happy with our ability to continue to grow our business on all fronts and look forward to the benefits of our recently announced facility and operational expansions.”
The Company has recently announced an approximate $52 million expansion plan that will more than double the number of hotel rooms and add a luxurious 8,000 square-foot spa to the Dover Downs Hotel & Casino. By the fall of 2007, the Company expects to have added 268 luxury rooms to the Dover Downs Hotel & Casino, bringing the total number of rooms to 500. Eleven of these rooms will be specially designed spa suites featuring either hot tubs, pool tables or fireplaces plus wet bars and plasma screen TVs.
Pursuant to recently approved legislation allowing the Company to expand its operating hours, add additional slot machines and provide free promotional play, the Company is in the process of renovating a portion of the harness racing grandstands to accommodate 200 additional slot machines. The new casino space is expected to open in July 2006.
As previously announced, the Company completed a self tender of approximately 10% of its outstanding shares during the quarter at a price of $14.50.
The Company announced yesterday that its Board of Directors has approved a three-for-two split of both classes of the Company’s outstanding common stock. The split will be effected by issuing one additional share of common stock for every two shares of common stock held. The additional shares of common stock will be distributed on June 15, 2006 to holders of record at the close of business on May 10, 2006. No fractional shares will be issued, but will be paid to shareholders in cash.
“The Board approval of this stock split is a response to our strong earnings and stock price performance,” stated Denis McGlynn. “It is our belief that this will expand our shareholder base and improve the liquidity of our common stock.”
The Company also announced that its Board of Directors declared a regular quarterly dividend of $.06 per share on the shares outstanding prior to the stock split. The dividend is payable on June 10, 2006 to shareholders of record at the close of business on May 10, 2006.
* * *
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 — 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 |
| ||||
|
| March 31, |
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|
| 2006 |
| 2005 |
| ||
Revenues: |
|
|
|
|
| ||
Gaming (1) |
| $ | 55,487 |
| $ | 49,045 |
|
Other operating (2) |
| 3,785 |
| 3,046 |
| ||
|
| 59,272 |
| 52,091 |
| ||
Expenses: |
|
|
|
|
| ||
Gaming |
| 41,408 |
| 37,301 |
| ||
Other operating |
| 3,345 |
| 2,995 |
| ||
General and administrative |
| 1,639 |
| 1,254 |
| ||
Depreciation |
| 1,737 |
| 1,717 |
| ||
|
| 48,129 |
| 43,267 |
| ||
|
|
|
|
|
| ||
Operating earnings |
| 11,143 |
| 8,824 |
| ||
|
|
|
|
|
| ||
Interest expense |
| 644 |
| 427 |
| ||
|
|
|
|
|
| ||
Earnings before income taxes |
| 10,499 |
| 8,397 |
| ||
|
|
|
|
|
| ||
Income taxes |
| 4,314 |
| 3,418 |
| ||
|
|
|
|
|
| ||
Net earnings |
| $ | 6,185 |
| $ | 4,979 |
|
|
|
|
|
|
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Net earnings per common share: |
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|
|
|
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- Basic |
| $ | 0.28 |
| $ | 0.21 |
|
- Diluted |
| $ | 0.28 |
| $ | 0.21 |
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|
|
|
|
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Average shares outstanding: |
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|
|
|
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- Basic |
| 21,963 |
| 23,787 |
| ||
- Diluted |
| 22,284 |
| 23,947 |
|
(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. |
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
|
| March 31, |
| December 31, |
| ||
|
| 2006 |
| 2005 |
| ||
ASSETS |
|
|
|
|
| ||
|
|
|
|
|
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Current assets: |
|
|
|
|
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Cash |
| $ | 19,456 |
| $ | 19,986 |
|
Accounts receivable |
| 2,710 |
| 3,805 |
| ||
Due from State of Delaware |
| 2,407 |
| 9,100 |
| ||
Inventories |
| 1,884 |
| 1,955 |
| ||
Prepaid expenses and other |
| 1,535 |
| 2,000 |
| ||
Receivable from Dover Motorsports, Inc. |
| 11 |
| 15 |
| ||
Deferred income taxes |
| 2,040 |
| 2,067 |
| ||
Total current assets |
| 30,043 |
| 38,928 |
| ||
|
|
|
|
|
| ||
Property and equipment, net |
| 117,353 |
| 114,533 |
| ||
Total assets |
| $ | 147,396 |
| $ | 153,461 |
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|
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|
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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|
|
|
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Current liabilities: |
|
|
|
|
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Accounts payable |
| $ | 7,485 |
| $ | 4,814 |
|
Purses due horsemen |
| 2,480 |
| 8,332 |
| ||
Accrued liabilities |
| 9,231 |
| 12,748 |
| ||
Income taxes payable |
| 5,650 |
| 3,706 |
| ||
Deferred revenue |
| 93 |
| 112 |
| ||
Total current liabilities |
| 24,939 |
| 29,712 |
| ||
|
|
|
|
|
| ||
Notes payable to banks |
| 52,775 |
| 24,075 |
| ||
Deferred income taxes |
| 6,296 |
| 6,404 |
| ||
|
|
|
|
|
| ||
Stockholders’ equity: |
|
|
|
|
| ||
Common stock |
| 968 |
| 1,064 |
| ||
Class A common stock |
| 1,190 |
| 1,326 |
| ||
Additional paid-in capital |
| 879 |
| 36,461 |
| ||
Retained earnings |
| 60,349 |
| 55,459 |
| ||
Deferred compensation |
| — |
| (1,040 | ) | ||
Total stockholders’ equity |
| 63,386 |
| 93,270 |
| ||
Total liabilities and stockholders’ equity |
| $ | 147,396 |
| $ | 153,461 |
|
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
|
| Three Months Ended March 31, |
| ||||
|
| 2006 |
| 2005 |
| ||
|
|
|
|
|
| ||
Operating activities: |
|
|
|
|
| ||
Net earnings |
| $ | 6,185 |
| $ | 4,979 |
|
Adjustments to reconcile net earnings to net cash |
|
|
|
|
| ||
Depreciation |
| 1,737 |
| 1,717 |
| ||
Amortization of credit facility origination fees |
| 11 |
| 13 |
| ||
Stock-based compensation |
| 196 |
| 60 |
| ||
Deferred income taxes |
| (81 | ) | (132 | ) | ||
Changes in assets and liabilities: |
|
|
|
|
| ||
Accounts receivable |
| 1,095 |
| 541 |
| ||
Due from State of Delaware |
| 6,693 |
| 7,697 |
| ||
Inventories |
| 71 |
| 106 |
| ||
Prepaid expenses and other |
| 454 |
| 526 |
| ||
Receivable from Dover Motorsports, Inc. |
| 4 |
| (15 | ) | ||
Accounts payable |
| 436 |
| (1,058 | ) | ||
Purses due horsemen |
| (5,852 | ) | (6,711 | ) | ||
Accrued liabilities |
| (3,517 | ) | (2,152 | ) | ||
Income taxes payable |
| 1,944 |
| 3,405 |
| ||
Deferred revenue |
| (19 | ) | 208 |
| ||
Net cash provided by operating activities |
| 9,357 |
| 9,184 |
| ||
|
|
|
|
|
| ||
Investing activities: |
|
|
|
|
| ||
Capital expenditures |
| (2,322 | ) | (1,498 | ) | ||
Net cash used in investing activities |
| (2,322 | ) | (1,498 | ) | ||
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|
|
|
|
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Financing activities: |
|
|
|
|
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Borrowings from notes payable to banks |
| 93,210 |
| 41,975 |
| ||
Repayments of notes payable to banks |
| (64,510 | ) | (47,925 | ) | ||
Dividends paid |
| (1,295 | ) | (1,435 | ) | ||
Repurchase of common stock |
| (34,986 | ) | — |
| ||
Proceeds from stock options exercised |
| 16 |
| — |
| ||
Other |
| — |
| (21 | ) | ||
Net cash used in financing activities |
| (7,565 | ) | (7,406 | ) | ||
|
|
|
|
|
| ||
Net (decrease) increase in cash |
| (530 | ) | 280 |
| ||
Cash, beginning of period |
| 19,986 |
| 17,688 |
| ||
Cash, end of period |
| $ | 19,456 |
| $ | 17,968 |
|