Exhibit 99.1
FOR IMMEDIATE RELEASE | | For further information, call: |
| | Timothy R. Horne - Sr. Vice President-Finance |
Dover, Delaware, July 29, 2010 | | (302) 857-3292 |
DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS
RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2010
Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE) today reported results for the three months ended June 30, 2010.
The Company’s revenues for the second quarter of 2010 were $58,458,000 compared with $58,530,000 for the second quarter of 2009.
Gaming revenues were down 1.1% compared to the second quarter of 2009. The Company commenced table game operations on June 25, 2010 with 40 tables including blackjack, craps and roulette. The 12 table Crown Royal poker room opened on July 14, 2010.
Other operating revenues increased 9.9% from higher cash hotel and food and beverage revenues. Occupancy levels in the Dover Downs Hotel were approximately 85% for the second quarter of 2010 compared with approximately 83% for the second quarter of 2009.
Gaming expenses were higher from significantly increased gaming taxes and fees that became effective on May 28, 2009. The impact of these tax increases was approximately $2.3 million or approximately $.04 per diluted share for the second quarter of 2010. The impact of these increases in their first full year after enactment was approximately $14 million or approximately $.25 per diluted share. Table game related expenses, which primarily consisted of training and start-up costs, were approximately $700,000 for the quarter.
Interest expense increased $248,000 during the quarter as a result of higher interest rates.
The effective income tax rate remained consistent at 41.3% for the second quarter of 2010 compared to 41.0% in the second quarter last year. The Company expects the effective income tax rate to approximate 42% for the year.
Net earnings were $2,277,000, or $.07 per diluted share, compared with $3,938,000, or $.12 per diluted share for the second quarter of 2009.
Denis McGlynn, the Company’s President and Chief Executive Officer, stated: “With continued difficult economic conditions and clearly slower economic growth in the second quarter, we are pleased to have overall revenues consistent with last year. Our team did a fantastic job getting table games up and running and transforming us into a full service casino operation.”
The Company announced yesterday that its Board of Directors declared a quarterly dividend of $.03 per share payable on September 10, 2010 to shareholders of record at the close of business on August 10, 2010.
* * *
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 Casino — a 165,000-square foot casino complex featuring popular table games, the latest in slot machine offerings, multi-player electronic table games, the Crown Royal poker room, and a Race & Sports Book operation; the Dover Downs Hotel and Conference Center — a 500 room AAA Four Diamond hotel with conference, banquet, fine dining, spa, retail, 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 | | Six Months Ended | |
| | June 30, | | June 30, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
Revenues: | | | | | | | | | |
Gaming (1) | | $ | 52,722 | | $ | 53,310 | | $ | 104,418 | | $ | 108,213 | |
Other operating (2) | | 5,736 | | 5,220 | | 10,090 | | 9,397 | |
| | 58,458 | | 58,530 | | 114,508 | | 117,610 | |
Expenses: | | | | | | | | | |
Gaming | | 44,829 | | 42,463 | | 88,801 | | 85,616 | |
Other operating | | 4,347 | | 3,908 | | 7,799 | | 7,251 | |
General and administrative | | 1,706 | | 1,778 | | 3,433 | | 3,508 | |
Depreciation | | 2,823 | | 3,073 | | 5,846 | | 6,021 | |
| | 53,705 | | 51,222 | | 105,879 | | 102,396 | |
| | | | | | | | | |
Operating earnings | | 4,753 | | 7,308 | | 8,629 | | 15,214 | |
| | | | | | | | | |
Interest expense | | 876 | | 628 | | 1,559 | | 1,265 | |
| | | | | | | | | |
Earnings before income taxes | | 3,877 | | 6,680 | | 7,070 | | 13,949 | |
| | | | | | | | | |
Income taxes | | 1,600 | | 2,742 | | 3,120 | | 5,718 | |
| | | | | | | | | |
Net earnings | | $ | 2,277 | | $ | 3,938 | | $ | 3,950 | | $ | 8,231 | |
| | | | | | | | | |
Net earnings per common share: | | | | | | | | | |
- Basic | | $ | 0.07 | | $ | 0.12 | | $ | 0.12 | | $ | 0.26 | |
- Diluted | | $ | 0.07 | | $ | 0.12 | | $ | 0.12 | | $ | 0.26 | |
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
- Basic | | 31,555 | | 31,493 | | 31,551 | | 31,489 | |
- Diluted | | 31,555 | | 31,493 | | 31,551 | | 31,489 | |
(1) Gaming revenues from the Company’s slot machine and table game 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, | |
| | 2010 | | 2009 | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash | | $ | 15,933 | | $ | 21,415 | |
Accounts receivable | | 3,058 | | 2,636 | |
Due from State of Delaware | | 5,734 | | 11,069 | |
Inventories | | 2,206 | | 2,170 | |
Prepaid expenses and other | | 2,049 | | 2,151 | |
Receivable from Dover Motorsports, Inc. | | 8 | | 5 | |
Income taxes receivable | | — | | 129 | |
Deferred income taxes | | 1,244 | | 1,209 | |
Total current assets | | 30,232 | | 40,784 | |
| | | | | |
Property and equipment, net | | 190,458 | | 192,360 | |
Other assets | | 849 | | 863 | |
Total assets | | $ | 221,539 | | $ | 234,007 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 4,463 | | $ | 3,078 | |
Purses due horsemen | | 5,757 | | 10,219 | |
Accrued liabilities | | 7,309 | | 8,788 | |
Income taxes payable | | 1 | | — | |
Deferred revenue | | 221 | | 306 | |
Total current liabilities | | 17,751 | | 22,391 | |
| | | | | |
Revolving line of credit | | 85,025 | | 95,125 | |
Liability for pension benefits | | 4,941 | | 4,900 | |
Other liabilities | | 626 | | 186 | |
Deferred income taxes | | 3,698 | | 4,166 | |
Total liabilities | | 112,041 | | 126,768 | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock | | 1,564 | | 1,546 | |
Class A common stock | | 1,660 | | 1,660 | |
Additional paid-in capital | | 2,138 | | 1,664 | |
Retained earnings | | 105,573 | | 103,559 | |
Accumulated other comprehensive loss | | (1,437 | ) | (1,190 | ) |
Total stockholders’ equity | | 109,498 | | 107,239 | |
Total liabilities and stockholders’ equity | | $ | 221,539 | | $ | 234,007 | |
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
| | Six Months Ended | |
| | June 30, | |
| | 2010 | | 2009 | |
| | | | | |
Operating activities: | | | | | |
Net earnings | | $ | 3,950 | | $ | 8,231 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | | |
Depreciation | | 5,846 | | 6,021 | |
Amortization of credit facility origination fees | | 34 | | 18 | |
Stock-based compensation | | 609 | | 478 | |
Deferred income taxes | | (572 | ) | (124 | ) |
Changes in assets and liabilities: | | | | | |
Accounts receivable | | (422 | ) | 408 | |
Due from State of Delaware | | 5,335 | | 4,267 | |
Inventories | | (36 | ) | (58 | ) |
Prepaid expenses and other | | 79 | | (527 | ) |
Receivable from/payable to Dover Motorsports, Inc. | | (3 | ) | (2 | ) |
Accounts payable | | (361 | ) | (510 | ) |
Purses due horsemen | | (4,462 | ) | (3,987 | ) |
Accrued liabilities | | (1,479 | ) | 640 | |
Income taxes payable/receivable | | 369 | | (887 | ) |
Deferred revenue | | (85 | ) | 21 | |
Other liabilities | | 68 | | 267 | |
Net cash provided by operating activities | | 8,870 | | 14,256 | |
| | | | | |
Investing activities: | | | | | |
Capital expenditures | | (2,198 | ) | (2,081 | ) |
Proceeds from sale of available-for-sale securities | | 41 | | — | |
Purchase of available-for-sale securities | | (42 | ) | — | |
Net cash used in investing activities | | (2,199 | ) | (2,081 | ) |
| | | | | |
Financing activities: | | | | | |
Borrowings from revolving line of credit | | 49,985 | | 89,775 | |
Repayments of revolving line of credit | | (60,085 | ) | (97,475 | ) |
Dividends paid | | (1,936 | ) | (3,208 | ) |
Repurchase of common stock | | (117 | ) | (59 | ) |
Net cash used in financing activities | | (12,153 | ) | (10,967 | ) |
| | | | | |
Net (decrease) increase in cash | | (5,482 | ) | 1,208 | |
Cash, beginning of period | | 21,415 | | 17,889 | |
Cash, end of period | | $ | 15,933 | | $ | 19,097 | |
