Exhibit 99.1
FOR IMMEDIATE RELEASE | | For further information, call: |
| | Timothy R. Horne - Sr. Vice President-Finance |
Dover, Delaware, July 24, 2008 | | (302) 857-3292 |
DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS RESULTS
FOR THE SECOND QUARTER ENDED JUNE 30, 2008
Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE) today reported results for the three months ended June 30, 2008.
The Company’s revenues increased 3.6% to $59,971,000 compared with $57,868,000 for the second quarter of 2007. Gaming revenues improved 2.5% compared to the second quarter of 2007, primarily the result of increased slot win. Other operating revenues improved 16.7% from higher room revenue resulting from the Company’s expanded hotel and from higher food and beverage revenues. Occupancy levels in the Dover Downs Hotel were approximately 81% for the second quarter of 2008.
Gaming expenses were higher from the increased revenue, as well as from certain one time expenses incurred during the quarter due to special legislation enacted in June 2007 applicable to the State of Delaware’s fiscal year ended June 2008 only. These non-recurring gaming expenses were approximately $550,000 in the quarter and related to a guaranteed tax that the Company was obligated to pay and a tax on promotional slot play in excess of a legislative limit for the period.
Interest expense increased $180,000 to $631,000 during the quarter, primarily from borrowings related to share buybacks. In addition, interest related to the Dover Downs Hotel expansion ceased being capitalized upon its opening in October of 2007. Depreciation expense increased $744,000, primarily related to the expansion of the Dover Downs Hotel.
Net earnings were $5,698,000 compared with $6,404,000 for the second quarter of 2007. Net earnings per diluted share were $.18 for the quarter compared with $.20 per diluted share in 2007.
Denis McGlynn, President and CEO of Dover Downs Gaming & Entertainment, Inc. stated, “We are pleased with our results for the second quarter, especially given the tenuous economic environment. We were able to grow our slot win and overall revenues during a challenging quarter, and believe our recent expansion projects will continue to help us grow.”
The Company’s Phase VI casino expansion, The Colonnade, was partially opened to the public on July 10 with Doc Magrogan’s Oyster House, Sweet Perks Too, the Dover Downs’ Fire & Ice Lounge and more than 500 slot machines debuting. Two more restaurants and four retail outlets are scheduled to open in late summer.
The Company announced yesterday that its Board of Directors declared a regular quarterly dividend of $.05 per share. The dividend is payable on September 10, 2008 to shareholders of record at the close of business on August 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 165,000-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 STATEMENTS OF EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
| | Three Months Ended
June 30, | | Six Months Ended
June 30, | |
| | 2008 | | 2007 | | 2008 | | 2007 | |
Revenues: | | | | | | | | | |
Gaming (1) | | $ | 54,643 | | $ | 53,303 | | $ | 110,643 | | $ | 110,275 | |
Other operating (2) | | 5,328 | | 4,565 | | 9,117 | | 8,224 | |
| | 59,971 | | 57,868 | | 119,760 | | 118,499 | |
Expenses: | | | | | | | | | |
Gaming | | 41,443 | | 39,292 | | 83,854 | | 81,143 | |
Other operating | | 4,182 | | 4,001 | | 7,481 | | 7,281 | |
General and administrative | | 1,596 | | 1,534 | | 3,360 | | 3,104 | |
Depreciation | | 2,479 | | 1,735 | | 4,860 | | 3,477 | |
| | 49,700 | | 46,562 | | 99,555 | | 95,005 | |
| | | | | | | | | |
Operating earnings | | 10,271 | | 11,306 | | 20,205 | | 23,494 | |
| | | | | | | | | |
Interest expense | | 631 | | 451 | | 1,566 | | 975 | |
| | | | | | | | | |
Earnings before income taxes | | 9,640 | | 10,855 | | 18,639 | | 22,519 | |
| | | | | | | | | |
Income taxes | | 3,942 | | 4,451 | | 7,620 | | 9,234 | |
| | | | | | | | | |
Net earnings | | $ | 5,698 | | $ | 6,404 | | $ | 11,019 | | $ | 13,285 | |
| | | | | | | | | |
Net earnings per common share: | | | | | | | | | |
- Basic | | $ | 0.18 | | $ | 0.20 | | $ | 0.35 | | $ | 0.41 | |
- Diluted | | $ | 0.18 | | $ | 0.20 | | $ | 0.35 | | $ | 0.41 | |
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
- Basic | | 31,434 | | 32,341 | | 31,430 | | 32,321 | |
- Diluted | | 31,585 | | 32,783 | | 31,626 | | 32,716 | |
(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)
| | June 30, | | December 31, | |
| | 2008 | | 2007 | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash | | $ | 19,678 | | $ | 22,456 | |
Accounts receivable | | 2,758 | | 4,560 | |
Due from State of Delaware | | 5,690 | | 10,530 | |
Inventories | | 2,049 | | 1,858 | |
Prepaid expenses and other | | 2,485 | | 2,251 | |
Receivable from Dover Motorsports, Inc. | | 1 | | — | |
Prepaid income taxes | | 219 | | — | |
Deferred income taxes | | 1,193 | | 1,227 | |
Total current assets | | 34,073 | | 42,882 | |
| | | | | |
Property and equipment, net | | 202,185 | | 182,298 | |
Other assets | | 127 | | — | |
Total assets | | $ | 236,385 | | $ | 225,180 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 11,906 | | $ | 13,382 | |
Purses due horsemen | | 4,622 | | 9,689 | |
Accrued liabilities | | 9,498 | | 11,940 | |
Payable to Dover Motorsports, Inc. | | — | | 18 | |
Income taxes payable | | — | | 341 | |
Deferred revenue | | 363 | | 98 | |
Total current liabilities | | 26,389 | | 35,468 | |
| | | | | |
Revolving line of credit | | 105,000 | | 92,425 | |
Liability for pension benefits | | 2,447 | | 2,510 | |
Deferred income taxes | | 5,226 | | 5,178 | |
Total liabilities | | 139,062 | | 135,581 | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock | | 1,481 | | 1,474 | |
Class A common stock | | 1,700 | | 1,700 | |
Additional paid-in capital | | 462 | | 63 | |
Retained earnings | | 93,953 | | 86,640 | |
Accumulated other comprehensive loss | | (273 | ) | (278 | ) |
Total stockholders’ equity | | 97,323 | | 89,599 | |
Total liabilities and stockholders’ equity | | $ | 236,385 | | $ | 225,180 | |
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
| | Six Months Ended June 30, | |
| | 2008 | | 2007 | |
| | | | | |
Operating activities: | | | | | |
Net earnings | | $ | 11,019 | | $ | 13,285 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | | |
Depreciation | | 4,860 | | 3,477 | |
Amortization of credit facility origination fees | | 18 | | 18 | |
Stock-based compensation | | 527 | | 454 | |
Deferred income taxes | | 87 | | (312 | ) |
Changes in assets and liabilities: | | | | | |
Accounts receivable | | 1,802 | | 1,772 | |
Due from State of Delaware | | 4,840 | | 5,338 | |
Inventories | | (191 | ) | 16 | |
Prepaid expenses and other | | (279 | ) | (613 | ) |
Receivable from/payable to Dover Motorsports, Inc. | | (19 | ) | (47 | ) |
Prepaid income taxes/income taxes payable | | (560 | ) | (203 | ) |
Accounts payable | | 246 | | (566 | ) |
Purses due horsemen | | (5,067 | ) | (4,332 | ) |
Accrued liabilities | | (2,442 | ) | (2,184 | ) |
Deferred revenue | | 265 | | 75 | |
Other liabilities | | (63 | ) | (75 | ) |
Net cash provided by operating activities | | 15,043 | | 16,103 | |
| | | | | |
Investing activities: | | | | | |
Capital expenditures | | (26,469 | ) | (26,852 | ) |
Purchase of available-for-sale securities | | (100 | ) | — | |
Net cash used in investing activities | | (26,569 | ) | (26,852 | ) |
| | | | | |
Financing activities: | | | | | |
Borrowings from revolving line of credit | | 94,215 | | 93,605 | |
Repayments of revolving line of credit | | (81,640 | ) | (83,155 | ) |
Dividends paid | | (3,178 | ) | (2,939 | ) |
Repurchase of common stock | | (1,040 | ) | (119 | ) |
Proceeds from stock options exercised | | 366 | | 1,030 | |
Excess tax benefit on stock awards | | 25 | | 63 | |
Net cash provided by financing activities | | 8,748 | | 8,485 | |
| | | | | |
Net decrease in cash | | (2,778 | ) | (2,264 | ) |
Cash, beginning of period | | 22,456 | | 20,020 | |
Cash, end of period | | $ | 19,678 | | $ | 17,756 | |
