Exhibit 99.1
FOR IMMEDIATE RELEASE | For further information, call: |
| Timothy R. Horne - Sr. Vice President-Finance |
Dover, Delaware, February 2, 2009 | (302) 857-3292 |
DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS RESULTS
FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2008
Dover Downs Gaming & Entertainment, Inc. (NYSE-DDE) today reported results for the fourth quarter and year ended December 31, 2008.
The Company’s revenues decreased 6.5% to $55,443,000 compared with $59,301,000 for the fourth quarter of 2007. Gaming revenues declined 7.3% while other operating revenues improved by 2.2% as a result of the Company’s expanded hotel complex. Occupancy levels in the 500 room Dover Downs Hotel were approximately 75% for the fourth quarter of 2008.
Gaming expenses were higher from increased gaming taxes and slot machine fees that resulted from legislation passed in June of 2008 that became effective on July 1, 2008. These increases represented approximately $700,000 during the quarter. The Company also incurred approximately $500,000 in other operating expenses during the quarter related to the termination of two restaurant leases on our property. Additionally, depreciation expense increased $794,000 compared to the fourth quarter of 2007 due primarily to the casino expansion completed earlier in the year.
Net earnings were $3,496,000 compared with $5,365,000 for the fourth quarter of 2007.
Net earnings per diluted share for the quarter ended December 31, 2008 were $.11 compared with $.17 per diluted share for the same period in 2007.
Denis McGlynn, President and CEO of Dover Downs Gaming & Entertainment, Inc. stated, “It is now well known that the decline in consumer spending accelerated during the fourth quarter. And though our facility was not immune to this, our continued expansions along with our commitment to keeping our property new and exciting and delivering exceptional customer service helped us grow our market share during a challenging quarter”.
For the year ended December 31, 2008, the Company’s revenues decreased 1.3% to $239,132,000 compared with $242,366,000 for 2007. Gaming revenues declined 2.2% while other operating revenues improved by 9.4% as a result of the Company’s expanded hotel complex. Occupancy levels in the 500 room Dover Downs Hotel remained strong at approximately 82% for the year ended December 31, 2008.
Gaming expenses were higher due to the aforementioned increase in gaming taxes and slot machine fees, as well as from certain one-time expenses related to a guaranteed tax and a tax on promotional slot play incurred due to special legislation enacted in June 2007 applicable to the State of Delaware’s fiscal year ended June 2008 only. These increases were approximately $2,100,000 for the year. Other operating expenses increased as a result of the higher other operating revenues and also included approximately $500,000 related to the termination of two restaurant leases. Additionally, depreciation expense increased $3,006,000 compared to 2007.
Net earnings were $19,511,000 for 2008 compared with $26,085,000 for 2007.
Net earnings per diluted share for 2008 were $.62 compared with $.80 per diluted share for 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 165,000-square foot video lottery casino complex featuring the latest in slot machine offerings, including 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 | | Years Ended | |
| | December 31, | | December 31, | |
| | 2008 | | 2007 | | 2008 | | 2007 | |
Revenues: | | | | | | | | | |
Gaming (1) | | $ | 50,659 | | $ | 54,620 | | $ | 219,878 | | $ | 224,760 | |
Other operating (2) | | 4,784 | | 4,681 | | 19,254 | | 17,606 | |
| | 55,443 | | 59,301 | | 239,132 | | 242,366 | |
Expenses: | | | | | | | | | |
Gaming | | 39,773 | | 41,261 | | 169,360 | | 166,040 | |
Other operating | | 4,339 | | 3,960 | | 16,101 | | 15,268 | |
General and administrative | | 1,385 | | 1,676 | | 6,317 | | 6,319 | |
Depreciation | | 3,104 | | 2,310 | | 10,849 | | 7,843 | |
| | 48,601 | | 49,207 | | 202,627 | | 195,470 | |
| | | | | | | | | |
Operating earnings | | 6,842 | | 10,094 | | 36,505 | | 46,896 | |
| | | | | | | | | |
Interest expense | | 943 | | 1,042 | | 3,484 | | 2,741 | |
| | | | | | | | | |
Earnings before income taxes | | 5,899 | | 9,052 | | 33,021 | | 44,155 | |
| | | | | | | | | |
Income taxes | | 2,403 | | 3,687 | | 13,510 | | 18,070 | |
| | | | | | | | | |
Net earnings | | $ | 3,496 | | $ | 5,365 | | $ | 19,511 | | $ | 26,085 | |
| | | | | | | | | |
Net earnings per common share: | | | | | | | | | |
- Basic | | $ | 0.11 | | $ | 0.17 | | $ | 0.62 | | $ | 0.81 | |
- Diluted | | $ | 0.11 | | $ | 0.17 | | $ | 0.62 | | $ | 0.80 | |
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
- Basic | | 31,443 | | 31,967 | | 31,436 | | 32,239 | |
- Diluted | | 31,467 | | 32,296 | | 31,570 | | 32,611 | |
(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, | | December 31, | |
| | 2008 | | 2007 | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash | | $ | 17,889 | | $ | 22,456 | |
Accounts receivable | | 2,661 | | 4,560 | |
Due from State of Delaware | | 10,870 | | 10,530 | |
Inventories | | 2,025 | | 1,858 | |
Prepaid expenses and other | | 2,029 | | 1,902 | |
Deferred income taxes | | 1,317 | | 1,227 | |
Total current assets | | 36,791 | | 42,533 | |
| | | | | |
Property and equipment, net | | 203,522 | | 182,298 | |
Other assets | | 1,019 | | 349 | |
Total assets | | $ | 241,332 | | $ | 225,180 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 4,679 | | $ | 13,382 | |
Purses due horsemen | | 9,395 | | 9,689 | |
Accrued liabilities | | 7,419 | | 11,940 | |
Payable to Dover Motorsports, Inc. | | 11 | | 18 | |
Income taxes payable | | 619 | | 341 | |
Deferred revenue | | 212 | | 98 | |
Total current liabilities | | 22,335 | | 35,468 | |
| | | | | |
Revolving line of credit | | 108,325 | | 92,425 | |
Liability for pension benefits | | 6,099 | | 2,510 | |
Deferred income taxes | | 3,488 | | 5,178 | |
Total liabilities | | 140,247 | | 135,581 | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock | | 1,521 | | 1,474 | |
Class A common stock | | 1,660 | | 1,700 | |
Additional paid-in capital | | 933 | | 63 | |
Retained earnings | | 99,263 | | 86,640 | |
Accumulated other comprehensive loss | | (2,292 | ) | (278 | ) |
Total stockholders’ equity | | 101,085 | | 89,599 | |
Total liabilities and stockholders’ equity | | $ | 241,332 | | $ | 225,180 | |
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
| | Years Ended | |
| | December 31, | |
| | 2008 | | 2007 | |
| | | | | |
Operating activities: | | | | | |
Net earnings | | $ | 19,511 | | $ | 26,085 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | | |
Depreciation | | 10,849 | | 7,843 | |
Amortization of credit facility origination fees | | 40 | | 40 | |
Stock-based compensation | | 998 | | 895 | |
Deferred income taxes | | (401 | ) | (333 | ) |
Changes in assets and liabilities: | | | | | |
Accounts receivable | | 1,899 | | (235 | ) |
Due from State of Delaware | | (340 | ) | 442 | |
Inventories | | (167 | ) | (93 | ) |
Prepaid expenses and other | | (768 | ) | (453 | ) |
Accounts payable | | (610 | ) | (65 | ) |
Purses due horsemen | | (294 | ) | 790 | |
Accrued liabilities | | (4,521 | ) | 742 | |
Payable to/receivable from Dover Motorsports, Inc. | | (7 | ) | 9 | |
Income taxes payable/prepaid income taxes | | 278 | | 469 | |
Deferred revenue | | 114 | | 61 | |
Other liabilities | | 227 | | 223 | |
Net cash provided by operating activities | | 26,808 | | 36,420 | |
| | | | | |
Investing activities: | | | | | |
Capital expenditures | | (40,166 | ) | (52,134 | ) |
Purchase of available-for-sale securities | | (100 | ) | — | |
Net cash used in investing activities | | (40,266 | ) | (52,134 | ) |
| | | | | |
Financing activities: | | | | | |
Borrowings from revolving line of credit | | 186,725 | | 177,255 | |
Repayments of revolving line of credit | | (170,825 | ) | (144,255 | ) |
Dividends paid | | (6,360 | ) | (6,036 | ) |
Repurchase of common stock | | (1,040 | ) | (9,990 | ) |
Proceeds from stock options exercised | | 366 | | 1,114 | |
Excess tax benefit on stock awards | | 25 | | 62 | |
Net cash provided by financing activities | | 8,891 | | 18,150 | |
| | | | | |
Net (decrease) increase in cash | | (4,567 | ) | 2,436 | |
Cash, beginning of year | | 22,456 | | 20,020 | |
Cash, end of year | | $ | 17,889 | | $ | 22,456 | |
