Exhibit 99.1
FOR IMMEDIATE RELEASE | | For further information, call: |
| | Timothy R. Horne - Sr. Vice President-Finance |
Dover, Delaware, October 28, 2010 | | (302) 857-3292 |
DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS RESULTS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2010
Dover Downs Gaming & Entertainment, Inc. (NYSE-DDE) today reported results for the three months ended September 30, 2010.
Gaming revenues were up 8.6% compared to the third quarter of 2009. Slightly lower slot win was offset by table game revenue for the quarter, and to a lesser extent, slightly higher harness racing and sports wagering commissions. This was the first full quarter with live table games at the facility. The Company commenced table game operations on June 25, 2010.
Other operating revenues were up 24.2% compared to the third quarter of 2009 from higher cash food and beverage and rooms revenues for the quarter.
General and administrative costs were $1,912,000 compared with $1,679,000 in the third quarter of last year. The increase was primarily from costs related to the proposed merger with Dover Motorsports, Inc. that was terminated in October.
Interest expense increased $291,000 during the quarter with lower average outstanding borrowings offset by higher interest rates.
Net earnings were $2,292,000, or $.07 per diluted share compared with $1,231,000 or $.04 per diluted share for the third quarter of 2009. The Company recorded a non-cash impairment charge in the third quarter of 2009 related to the decision to cancel a previously planned property expansion project. Excluding the impact of that charge, net earnings were $2,523,000 or $.08 per diluted share for the third quarter of 2009.
Denis McGlynn, President and CEO of Dover Downs Gaming & Entertainment, Inc. stated, “This quarter saw the successful operational implementation of table games at our facility. Competition is fierce in this market and our focus is on growing this new revenue stream by taking advantage of the complete entertainment destination we have created in Dover.”
The Company announced yesterday that its Board of Directors declared a regular quarterly dividend of $.03 per share. The dividend is payable on December 10, 2010 to shareholders of record at the close of business on November 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 | | Nine Months Ended | |
| | September 30, | | September 30, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
Revenues: | | | | | | | | | |
Gaming (1) | | $ | 59,934 | | $ | 55,172 | | $ | 164,352 | | $ | 163,385 | |
Other operating (2) | | 5,766 | | 4,642 | | 15,856 | | 14,039 | |
| | 65,700 | | 59,814 | | 180,208 | | 177,424 | |
Expenses: | | | | | | | | | |
Gaming | | 51,696 | | 46,815 | | 140,497 | | 132,431 | |
Other operating | | 4,490 | | 3,613 | | 12,289 | | 10,864 | |
General and administrative | | 1,912 | | 1,679 | | 5,345 | | 5,187 | |
Impairment charge | | — | | 2,177 | | — | | 2,177 | |
Depreciation | | 3,103 | | 2,898 | | 8,949 | | 8,919 | |
| | 61,201 | | 57,182 | | 167,080 | | 159,578 | |
| | | | | | | | | |
Operating earnings | | 4,499 | | 2,632 | | 13,128 | | 17,846 | |
| | | | | | | | | |
Interest expense | | 860 | | 569 | | 2,419 | | 1,834 | |
| | | | | | | | | |
Earnings before income taxes | | 3,639 | | 2,063 | | 10,709 | | 16,012 | |
| | | | | | | | | |
Income taxes | | 1,347 | | 832 | | 4,467 | | 6,550 | |
| | | | | | | | | |
Net earnings | | $ | 2,292 | | $ | 1,231 | | $ | 6,242 | | $ | 9,462 | |
| | | | | | | | | |
Net earnings per common share: | | | | | | | | | |
- Basic | | $ | 0.07 | | $ | 0.04 | | $ | 0.19 | | $ | 0.30 | |
- Diluted | | $ | 0.07 | | $ | 0.04 | | $ | 0.19 | | $ | 0.30 | |
| | | | | | | | | |
Weighted average shares outstanding: | | | | | | | | | |
- Basic | | 31,558 | | 31,496 | | 31,554 | | 31,491 | |
- Diluted | | 31,558 | | 31,496 | | 31,554 | | 31,491 | |
(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.
RECONCILIATION OF GAAP EARNINGS TO ADJUSTED EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
| | Three Months Ended | | Nine Months Ended | |
| | September 30, | | September 30, | |
| | 2010 | | 2009 | | 2010 | | 2009 | |
| | | | | | | | | |
GAAP earnings before income tax expense | | $ | 3,639 | | $ | 2,063 | | $ | 10,709 | | $ | 16,012 | |
| | | | | | | | | |
Non-cash impairment charges (1) | | — | | 2,177 | | — | | 2,177 | |
| | | | | | | | | |
Adjusted earnings before income tax expense | | $ | 3,639 | | $ | 4,240 | | $ | 10,709 | | $ | 18,189 | |
| | | | | | | | | |
GAAP net earnings | | $ | 2,292 | | $ | 1,231 | | $ | 6,242 | | $ | 9,462 | |
| | | | | | | | | |
Non-cash impairment charges, net of income taxes (1) | | — | | 1,292 | | — | | 1,292 | |
| | | | | | | | | |
Adjusted net earnings | | $ | 2,292 | | $ | 2,523 | | $ | 6,242 | | $ | 10,754 | |
| | | | | | | | | |
GAAP net earnings per common share - diluted | | $ | 0.07 | | $ | 0.04 | | $ | 0.19 | | $ | 0.30 | |
| | | | | | | | | |
Non-cash impairment charges, net of income taxes (1) | | — | | 0.04 | | — | | 0.04 | |
| | | | | | | | | |
Adjusted net earnings per common share - diluted | | $ | 0.07 | | $ | 0.08 | | $ | 0.19 | | $ | 0.34 | |
(1) We had previously completed architectural and engineering work related to a Phase 7 casino expansion that would have included, among other things, a new sports book facility and a parking garage. Given the court decision to limit the extent of sports wagering and the higher gaming tax rates that were legislated, we decided not to proceed with this project. As a result, $2,177,000 of previously capitalized costs were written off during the third quarter of 2009.
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEETS
In Thousands
(Unaudited)
| | September 30, | | December 31, | |
| | 2010 | | 2009 | |
ASSETS | | | | | |
| | | | | |
Current assets: | | | | | |
Cash | | $ | 16,931 | | $ | 21,415 | |
Accounts receivable | | 1,924 | | 2,636 | |
Due from State of Delaware | | 11,767 | | 11,069 | |
Inventories | | 2,155 | | 2,170 | |
Prepaid expenses and other | | 3,028 | | 2,151 | |
Receivable from Dover Motorsports, Inc. | | 40 | | 5 | |
Prepaid income taxes | | 838 | | 129 | |
Deferred income taxes | | 1,313 | | 1,209 | |
Total current assets | | 37,996 | | 40,784 | |
| | | | | |
Property and equipment, net | | 188,608 | | 192,360 | |
Other assets | | 819 | | 863 | |
Total assets | | $ | 227,423 | | $ | 234,007 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
Current liabilities: | | | | | |
Accounts payable | | $ | 3,930 | | $ | 3,078 | |
Purses due horsemen | | 11,784 | | 10,219 | |
Accrued liabilities | | 8,975 | | 8,788 | |
Deferred revenue | | 260 | | 306 | |
Total current liabilities | | 24,949 | | 22,391 | |
| | | | | |
Revolving line of credit | | 82,100 | | 95,125 | |
Liability for pension benefits | | 4,360 | | 4,900 | |
Other liabilities | | 730 | | 186 | |
Deferred income taxes | | 4,219 | | 4,166 | |
Total liabilities | | 116,358 | | 126,768 | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock | | 1,564 | | 1,546 | |
Class A common stock | | 1,660 | | 1,660 | |
Additional paid-in capital | | 2,430 | | 1,664 | |
Retained earnings | | 106,898 | | 103,559 | |
Accumulated other comprehensive loss | | (1,487 | ) | (1,190 | ) |
Total stockholders’ equity | | 111,065 | | 107,239 | |
Total liabilities and stockholders’ equity | | $ | 227,423 | | $ | 234,007 | |
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
| | Nine Months Ended | |
| | September 30, | |
| | 2010 | | 2009 | |
| | | | | |
Operating activities: | | | | | |
Net earnings | | $ | 6,242 | | $ | 9,462 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | | | |
Depreciation | | 8,949 | | 8,919 | |
Amortization of credit facility origination fees | | 53 | | 28 | |
Stock-based compensation | | 901 | | 714 | |
Deferred income taxes | | (385 | ) | 70 | |
Impairment charge | | — | | 2,177 | |
Changes in assets and liabilities: | | | | | |
Accounts receivable | | 712 | | (21 | ) |
Due from State of Delaware | | (698 | ) | (1,609 | ) |
Inventories | | (334 | ) | (233 | ) |
Prepaid expenses and other | | (881 | ) | (746 | ) |
Receivable from/payable to Dover Motorsports, Inc. | | (35 | ) | (46 | ) |
Prepaid income taxes/income taxes payable | | (172 | ) | (1,294 | ) |
Accounts payable | | 560 | | 48 | |
Purses due horsemen | | 1,565 | | 1,888 | |
Accrued liabilities | | 187 | | (1,027 | ) |
Deferred revenue | | (46 | ) | 164 | |
Other liabilities | | (499 | ) | 388 | |
Net cash provided by operating activities | | 16,119 | | 18,882 | |
| | | | | |
Investing activities: | | | | | |
Capital expenditures | | (4,556 | ) | (4,123 | ) |
Proceeds from sale of available-for-sale securities | | 46 | | 102 | |
Purchase of available-for-sale securities | | (48 | ) | (104 | ) |
Net cash used in investing activities | | (4,558 | ) | (4,125 | ) |
| | | | | |
Financing activities: | | | | | |
Borrowings from revolving line of credit | | 90,585 | | 120,675 | |
Repayments of revolving line of credit | | (103,610 | ) | (130,925 | ) |
Dividends paid | | (2,903 | ) | (4,811 | ) |
Repurchase of common stock | | (117 | ) | (59 | ) |
Net cash used in financing activities | | (16,045 | ) | (15,120 | ) |
| | | | | |
Net decrease in cash | | (4,484 | ) | (363 | ) |
Cash, beginning of period | | 21,415 | | 17,889 | |
Cash, end of period | | $ | 16,931 | | $ | 17,526 | |
