Exhibit 99.1
FOR IMMEDIATE RELEASE | | For further information, call: |
| | Timothy R. Horne - Sr. Vice President-Finance |
Dover, Delaware, January 25, 2007 | | (302) 857-3292 |
DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS
RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2006
Dover Downs Gaming & Entertainment, Inc. (NYSE-Symbol: DDE) today reported results for the three months and year ended December 31, 2006.
Net earnings per diluted share for the quarter ended December 31, 2006 improved 18.8% to $.19 compared with adjusted net earnings, as described below, of $.16 per diluted share for the same period in 2005. The improvement was a result of both an increase in net earnings and fewer shares outstanding due to the self-tender completed during the first quarter of 2006.
The Company’s revenues increased to $58,667,000 compared with $54,015,000 for the fourth quarter of 2005. Gaming revenues, which include video lottery win and harness racing commissions, increased 8.7% or $4,371,000, primarily from increased video lottery win compared with the fourth quarter of 2005.
General and administrative expenses for the quarter increased $139,000, or 11.3%, primarily from increased stock-based compensation expense.
Interest expense for the quarter increased $223,000 or 46.9% from higher outstanding borrowings related to the $35 million self-tender completed during the first quarter of 2006.
Net earnings improved 5.6% to $6,081,000 compared with adjusted net earnings of $5,761,000 for the fourth quarter of 2005.
For the year ended December 31, 2006, net earnings per diluted share improved 22.2% to $.77 from $.63 on the adjusted basis described below. Net earnings improved 12.2% to $25,328,000 compared to net earnings of $22,579,000 on the adjusted basis described below.
The adjusted results for the fourth quarter and year ended 2005 exclude a $5,837,000 or $.10 per diluted share gain on the sale of a commercial real estate property in December of 2005. Including the gain on sale in the fourth quarter of 2005, net earnings for the fourth quarter of 2005 were $9,222,000 or $.26 per diluted share, and were $26,040,000 or $.72 per diluted share for the year ended December 31, 2005.
Denis McGlynn, President and CEO of Dover Downs Gaming & Entertainment, Inc. stated, “We are pleased with our slot win growth of close to 9% for the fourth quarter and for the year as a whole, and are very enthusiastic about our expansion plans.”
Construction continues on the expansion to the Dover Downs Hotel, which will increase the total number of available rooms from 232 to 500. The project, which includes the addition of a full service spa, is on schedule and on budget and is expected to open in the fall of 2007.
The Company is finalizing a bid package for the Phase VI expansion of its casino which is expected to include additional casino space, as well as restaurant and retail offerings to add to the destination quality of the property. The Company expects to have final cost numbers by the end of the first quarter of 2007.
The Company announced yesterday that its Board of Directors declared a regular quarterly dividend of $.045 per share. The dividend is payable on March 10, 2007 to shareholders of record at the close of business on February 10, 2007.
* * *
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 95,000-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
December 31, | | Years Ended
December 31, | |
| | 2006 | | 2005 | | 2006 | | 2005 | |
Revenues: | | | | | | | | | |
Gaming (1) | | $ | 54,615 | | $ | 50,244 | | $ | 220,412 | | $ | 202,372 | |
Other operating (2) | | 4,052 | | 3,771 | | 16,039 | | 14,480 | |
| | 58,667 | | 54,015 | | 236,451 | | 216,852 | |
Expenses: | | | | | | | | | |
Gaming | | 40,801 | | 37,565 | | 163,288 | | 151,973 | |
Other operating | | 3,613 | | 3,278 | | 14,202 | | 13,167 | |
General and administrative | | 1,368 | | 1,229 | | 5,905 | | 4,765 | |
Depreciation | | 1,870 | | 1,758 | | 7,146 | | 6,998 | |
| | 47,652 | | 43,830 | | 190,541 | | 176,903 | |
| | | | | | | | | |
Gain on sale of shopping center | | — | | 5,837 | | — | | 5,837 | |
| | | | | | | | | |
Operating earnings | | 11,015 | | 16,022 | | 45,910 | | 45,786 | |
| | | | | | | | | |
Interest expense | | (698 | ) | (475 | ) | (2,943 | ) | (1,875 | ) |
| | | | | | | | | |
Earnings before income taxes | | 10,317 | | 15,547 | | 42,967 | | 43,911 | |
| | | | | | | | | |
Income taxes | | (4,236 | ) | (6,325 | ) | (17,639 | ) | (17,871 | ) |
| | | | | | | | | |
Net earnings | | $ | 6,081 | | $ | 9,222 | | $ | 25,328 | | $ | 26,040 | |
| | | | | | | | | |
Net earnings per common share (3): | | | | | | | | | |
— Basic | | $ | 0.19 | | $ | 0.26 | | $ | 0.78 | | $ | 0.73 | |
— Diluted | | $ | 0.19 | | $ | 0.26 | | $ | 0.77 | | $ | 0.72 | |
| | | | | | | | | |
Weighted average shares outstanding (3): | | | | | | | | | |
— Basic | | 32,172 | | 35,681 | | 32,353 | | 35,681 | |
— Diluted | | 32,692 | | 35,925 | | 32,921 | | 35,930 | |
| | | | | | | | | |
(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) All per share and share amounts reflect a three-for-two stock split, which was effective June 15, 2006.
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
RECONCILIATION OF GAAP NET EARNINGS TO ADJUSTED NET EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
| | Three Months Ended
December 31, | | Years Ended
December 31, | |
| | 2006 | | 2005 | | 2006 | | 2005 | |
| | | | | | | | | |
GAAP net earnings | | $ | 6,081 | | $ | 9,222 | | $ | 25,328 | | $ | 26,040 | |
| | | | | | | | | |
Gain on sale of shopping center, net of income taxes (1) | | — | | (3,461 | ) | — | | (3,461 | ) |
| | | | | | | | | |
Adjusted net earnings | | $ | 6,081 | | $ | 5,761 | | $ | 25,328 | | $ | 22,579 | |
| | | | | | | | | |
GAAP net earnings per common share - diluted | | $ | 0.19 | | $ | 0.26 | | $ | 0.77 | | $ | 0.72 | |
| | | | | | | | | |
Gain on sale of shopping center, net of income taxes (1) | | — | | (0.10 | ) | — | | (0.09 | ) |
| | | | | | | | | |
Adjusted net earnings per diluted share | | $ | 0.19 | | $ | 0.16 | | $ | 0.77 | | $ | 0.63 | |
(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).
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
| | December 31, | | December 31, | |
| | 2006 | | 2005 | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash | | $ | 20,020 | | $ | 19,986 | |
Accounts receivable | | 4,325 | | 3,805 | |
Due from State of Delaware | | 10,972 | | 9,100 | |
Inventories | | 1,765 | | 1,955 | |
Prepaid expenses and other | | 1,838 | | 2,000 | |
Prepaid income taxes | | 128 | | — | |
Receivable from Dover Motorsports, Inc. | | — | | 15 | |
Deferred income taxes | | 1,247 | | 2,067 | |
Total current assets | | 40,295 | | 38,928 | |
| | | | | |
Property and equipment, net | | 132,732 | | 114,533 | |
Total assets | | $ | 173,027 | | $ | 153,461 | |
| | | | | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 8,173 | | $ | 4,814 | |
Purses due horsemen | | 8,899 | | 8,332 | |
Accrued liabilities | | 11,198 | | 12,748 | |
Payable to Dover Motorsports, Inc. | | 9 | | — | |
Income taxes payable | | — | | 3,706 | |
Deferred revenue | | 37 | | 112 | |
Total current liabilities | | 28,316 | | 29,712 | |
| | | | | |
Notes payable to banks | | 59,425 | | 24,075 | |
Deferred income taxes | | 5,387 | | 6,404 | |
Liability for pension benefits | | 2,640 | | — | |
Total liabilities | | 95,768 | | 60,191 | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock | | 1,542 | | 1,064 | |
Class A common stock | | 1,700 | | 1,326 | |
Additional paid-in capital | | 769 | | 36,461 | |
Retained earnings | | 73,736 | | 55,459 | |
Accumulated other comprehensive loss | | (488 | ) | — | |
Deferred compensation | | — | | (1,040 | ) |
Total stockholders’ equity | | 77,259 | | 93,270 | |
Total liabilities and stockholders’ equity | | $ | 173,027 | | $ | 153,461 | |
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
| | Years Ended December 31, | |
| | 2006 | | 2005 | |
| | | | | |
Operating activities: | | | | | |
Net earnings | | $ | 25,328 | | $ | 26,040 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | | |
Depreciation | | 7,146 | | 6,998 | |
Amortization of credit facility origination fees | | 44 | | 41 | |
Stock-based compensation | | 732 | | 214 | |
Deferred income taxes | | 136 | | (356 | ) |
Cumulative effect of accounting change | | (1,541 | ) | — | |
Gain on sale of shopping center | | — | | (5,837 | ) |
Changes in assets and liabilities: | | | | | |
Accounts receivable | | (520 | ) | (886 | ) |
Due from State of Delaware | | (1,872 | ) | 980 | |
Inventories | | 190 | | 192 | |
Prepaid expenses and other | | 118 | | (40 | ) |
Prepaid income taxes/income taxes payable | | (3,834 | ) | 3,055 | |
Accounts payable | | 79 | | (792 | ) |
Purses due horsemen | | 567 | | (750 | ) |
Accrued liabilities | | 269 | | 758 | |
Payable to/receivable from Dover Motorsports, Inc. | | 24 | | (13 | ) |
Deferred revenue | | (75 | ) | (83 | ) |
Net cash provided by operating activities | | 26,791 | | 29,521 | |
| | | | | |
Investing activities: | | | | | |
Capital expenditures | | (22,065 | ) | (5,512 | ) |
Proceeds from sale of shopping center, net | | — | | 11,918 | |
Net cash (used in) provided by investing activities | | (22,065 | ) | 6,406 | |
| | | | | |
Financing activities: | | | | | |
Borrowings from notes payable to banks | | 196,010 | | 169,109 | |
Repayments of notes payable to banks | | (160,660 | ) | (196,984 | ) |
Dividends paid | | (5,510 | ) | (5,737 | ) |
Repurchase of common stock | | (35,052 | ) | — | |
Proceeds from stock options exercised | | 470 | | 4 | |
Excess tax benefit on nonvested stock | | 50 | | — | |
Other | | — | | (21 | ) |
Net cash used in financing activities | | (4,692 | ) | (33,629 | ) |
| | | | | |
Net increase in cash | | 34 | | 2,298 | |
Cash, beginning of year | | 19,986 | | 17,688 | |
Cash, end of year | | $ | 20,020 | | $ | 19,986 | |
