Exhibit 99.1
FOR IMMEDIATE RELEASE | | For further information, call: |
| | Timothy R. Horne - Sr. Vice President-Finance |
Dover, Delaware, January 24, 2008 | | (302) 857-3292 |
DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS
RESULTS FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2007 AND
STOCK REPURCHASES
Dover Downs Gaming & Entertainment, Inc. (NYSE-Symbol: DDE) today reported results for the three months and year ended December 31, 2007.
Net earnings per diluted share for the quarter ended December 31, 2007 were $.17 compared with $.19 per diluted share for the same period in 2006.
The Company’s revenues increased to $59,301,000 compared with $58,667,000 for the fourth quarter of 2006. Gaming revenues, which include video lottery win and harness racing commissions, were essentially flat compared with the fourth quarter of 2006, primarily from a slightly higher video lottery win offset by a decline in horse racing revenues.
Other revenues increased from the opening of the Company’s hotel expansion and from increased cash food and beverage business.
General and administrative expenses for the quarter increased $308,000, but include $211,000 of losses on disposals of assets related to the renovation of the Company’s original hotel tower.
Net earnings for the quarter were $5,365,000 compared with net earnings of $6,081,000 for the fourth quarter of 2006. Depreciation expense for the quarter increased by $440,000, primarily because the Company’s hotel expansion was operational for the fourth quarter. Higher debt levels as a result of the expansion combined with the fact that the capitalization of interest was also limited as a result of the hotel opening, led to an increase in interest expense of $344,000 for the quarter compared to last year.
For the year ended December 31, 2007, net earnings per diluted share improved to $.80 from $.77 last year. Net earnings improved 3% to $26,085,000 compared to net earnings of $25,328,000 in 2006.
Denis McGlynn, President and CEO of Dover Downs Gaming & Entertainment, Inc. stated, “This was a challenging quarter for just about every casino operator in the region due to competitive and economic conditions. By comparison we did better than most, and we remain confident that our ongoing property expansion plans will be well received by our customers.”
Construction continues on the “Colonnade,” the Phase VI casino expansion that will add approximately 70,000 square feet of additional space to house 500 additional slot machines, three new restaurants, retail shops, an upscale nightclub, a coffee shop and a new casino grand entrance. The $56 million expansion is expected to open in August of 2008.
Also during the quarter, the Company repurchased 916,900 shares of common stock at an average price of $10.72 per share, not including nominal brokerage commissions.
The Company announced yesterday that its Board of Directors declared a regular quarterly dividend of $.05 per share. The dividend is payable on March 10, 2008 to shareholders of record at the close of business on February 10, 2008.
* * *
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 97,000 square-foot video lottery casino complex featuring the latest in slot machine offerings such as multi-player electronic table games with virtual dealers; the Dover Downs Hotel and Conference Center – a 500 room AAA Four-Diamond hotel 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 STATEMENTS OF EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
| | Three Months Ended
December 31, | | Years Ended
December 31, | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
Revenues: | | | | | | | | | |
Gaming (1) | | $ | 54,620 | | $ | 54,615 | | $ | 224,760 | | $ | 220,412 | |
Other operating (2) | | 4,681 | | 4,052 | | 17,606 | | 16,039 | |
| | 59,301 | | 58,667 | | 242,366 | | 236,451 | |
Expenses: | | | | | | | | | |
Gaming | | 41,261 | | 40,801 | | 166,040 | | 163,288 | |
Other operating | | 3,960 | | 3,613 | | 15,268 | | 14,202 | |
General and administrative | | 1,676 | | 1,368 | | 6,319 | | 5,905 | |
Depreciation | | 2,310 | | 1,870 | | 7,843 | | 7,146 | |
| | 49,207 | | 47,652 | | 195,470 | | 190,541 | |
| | | | | | | | | |
Operating earnings | | 10,094 | | 11,015 | | 46,896 | | 45,910 | |
| | | | | | | | | |
Interest expense | | 1,042 | | 698 | | 2,741 | | 2,943 | |
| | | | | | | | | |
Earnings before income taxes | | 9,052 | | 10,317 | | 44,155 | | 42,967 | |
| | | | | | | | | |
Income taxes | | 3,687 | | 4,236 | | 18,070 | | 17,639 | |
| | | | | | | | | |
Net earnings | | $ | 5,365 | | $ | 6,081 | | $ | 26,085 | | $ | 25,328 | |
| | | | | | | | | |
Net earnings per common share: | | | | | | | | | |
- Basic | | $ | 0.17 | | $ | 0.19 | | $ | 0.81 | | $ | 0.78 | |
- Diluted | | $ | 0.17 | | $ | 0.19 | | $ | 0.80 | | $ | 0.77 | |
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
- Basic | | 31,967 | | 32,172 | | 32,239 | | 32,353 | |
- Diluted | | 32,296 | | 32,692 | | 32,611 | | 32,921 | |
(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 SHEETS
In Thousands
(Unaudited)
| | December 31,
2007 | | December 31,
2006 | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash | | $ | 22,456 | | $ | 20,020 | |
Accounts receivable | | 4,560 | | 4,325 | |
Due from State of Delaware | | 10,530 | | 10,972 | |
Inventories | | 1,858 | | 1,765 | |
Prepaid expenses and other | | 2,251 | | 1,838 | |
Prepaid income taxes | | — | | 128 | |
Deferred income taxes | | 1,227 | | 1,247 | |
Total current assets | | 42,882 | | 40,295 | |
| | | | | |
Property and equipment, net | | 182,298 | | 132,732 | |
Total assets | | $ | 225,180 | | $ | 173,027 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 18,282 | | $ | 8,173 | |
Purses due horsemen | | 9,689 | | 8,899 | |
Accrued liabilities | | 7,040 | | 11,198 | |
Payable to Dover Motorsports, Inc. | | 18 | | 9 | |
Income taxes payable | | 341 | | — | |
Deferred revenue | | 98 | | 37 | |
Total current liabilities | | 35,468 | | 28,316 | |
| | | | | |
Revolving line of credit | | 92,425 | | 59,425 | |
Liability for pension benefits | | 2,510 | | 2,640 | |
Deferred income taxes | | 5,178 | | 5,387 | |
Total liabilities | | 135,581 | | 95,768 | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock | | 1,474 | | 1,542 | |
Class A common stock | | 1,700 | | 1,700 | |
Additional paid-in capital | | 63 | | 769 | |
Retained earnings | | 86,640 | | 73,736 | |
Accumulated other comprehensive loss | | (278 | ) | (488 | ) |
Total stockholders’ equity | | 89,599 | | 77,259 | |
Total liabilities and stockholders’ equity | | $ | 225,180 | | $ | 173,027 | |
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
| | Years Ended December 31, | |
| | 2007 | | 2006 | |
| | | | | |
Operating activities: | | | | | |
Net earnings | | $ | 26,085 | | $ | 25,328 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | | |
Depreciation | | 7,843 | | 7,146 | |
Amortization of credit facility origination fees | | 40 | | 44 | |
Stock-based compensation | | 895 | | 732 | |
Deferred income taxes | | (333 | ) | (218 | ) |
Cumulative effect of accounting change | | — | | (1,541 | ) |
Changes in assets and liabilities: | | | | | |
Accounts receivable | | (235 | ) | (520 | ) |
Due from State of Delaware | | 442 | | (1,872 | ) |
Inventories | | (93 | ) | 190 | |
Prepaid expenses and other | | (453 | ) | 118 | |
Accounts payable | | 4,835 | | 79 | |
Purses due horsemen | | 790 | | 567 | |
Accrued liabilities | | (4,158 | ) | 269 | |
Payable to/receivable from Dover Motorsports, Inc. | | 9 | | 24 | |
Income taxes payable/prepaid income taxes | | 469 | | (3,480 | ) |
Deferred revenue | | 61 | | (75 | ) |
Other liabilities | | 223 | | — | |
Net cash provided by operating activities | | 36,420 | | 26,791 | |
| | | | | |
Investing activities: | | | | | |
Capital expenditures | | (52,134 | ) | (22,065 | ) |
Net cash used in investing activities | | (52,134 | ) | (22,065 | ) |
| | | | | |
Financing activities: | | | | | |
Borrowings from revolving line of credit | | 177,255 | | 196,010 | |
Repayments of revolving line of credit | | (144,255 | ) | (160,660 | ) |
Dividends paid | | (6,036 | ) | (5,510 | ) |
Repurchase of common stock | | (9,990 | ) | (35,052 | ) |
Proceeds from stock options exercised | | 1,114 | | 470 | |
Excess tax benefit on stock awards | | 62 | | 50 | |
Net cash provided by (used in) financing activities | | 18,150 | | (4,692 | ) |
| | | | | |
Net increase in cash | | 2,436 | | 34 | |
Cash, beginning of period | | 20,020 | | 19,986 | |
Cash, end of period | | $ | 22,456 | | $ | 20,020 | |
