Dover Downs Gaming & Entertainment, Inc. Reports Results for the Fourth Quarter and Year Ended December 31, 2011

Thu Jan 26, 2012 8:30am EST

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Dover Downs Gaming & Entertainment, Inc. Reports Results for the Fourth Quarter and Year Ended December 31, 2011

Dover Downs Gaming & Entertainment, Inc. (NYSE:DDE) today reported results for the fourth quarter and year ended December 31, 2011.

The Company’s revenues were $61,619,000 compared with $57,941,000 for the fourth quarter of 2010. As a result of better weather compared to 2010, gaming revenue increased 4.0% compared to the fourth quarter of last year from higher slot win and table game revenue for the quarter.

Gaming profits were higher compared to the fourth quarter of last year as a result of the revenue increases and from various cost cutting programs implemented during the year.

Other operating revenues improved to $6,600,000 from $5,026,000 due to increased rooms and food and beverage business attributable to the timing of Dover Motorsports’ fall NASCAR race weekend held in October this year vs. September last year and from increased convention business. Occupancy levels in the Dover Downs Hotel were approximately 87% for the fourth quarter of 2011 compared with approximately 83% for the fourth quarter of 2010.

Net earnings were $2,120,000, or $.07 per diluted share, compared with $501,000, or $.02 per diluted share for the fourth quarter of 2010.

Net earnings for the year declined 20% to $5,359,000, or $.17 per diluted share compared with $6,743,000 or $.21 per diluted share for 2010.

Denis McGlynn, the Company's President and Chief Executive Officer, stated: "Compared to last year, casinos in our region benefited from mild weather in the fourth quarter this year, especially in December. Additionally, our non-gaming activity was strong in the fourth quarter, in large part due to the October NASCAR race. Our year end results emphasize that increasing competitive challenges and high taxes will require us to continue to find efficiencies – a formidable task considering that we are in a customer centric business that necessitates continued investment in our facility and in our promotions and marketing initiatives."

The Company announced yesterday that its Board of Directors declared a quarterly dividend of $.03 per share payable on March 10, 2012 to shareholders of record at the close of business on February 10, 2012.

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.

Owned by Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE), Dover Downs Hotel & Casino® is a premier gaming and entertainment resort destination in the Mid-Atlantic region. Gaming operations consist of approximately 2,500 slots and a full complement of table games including poker. The AAA-rated Four Diamond hotel is Delaware’s largest with 500 luxurious rooms/suites and amenities including a full-service spa/salon, concert hall and 35,000 sq. ft. of multi-use event space. Live, world-class harness racing is featured November through April, and horse racing is simulcast year-round. Professional football parlay betting is accepted during the season. Additional property amenities include multiple restaurants from fine dining to casual fare, bars/lounges and retail shops. For more information, please visit www.doverdowns.com.

     
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,
2011 2010 2011 2010
Revenues:
Gaming (1) $ 55,019 $ 52,915 $ 217,415 $ 217,267
Other operating (2)   6,600   5,026   22,527   20,882
  61,619   57,941   239,942   238,149
Expenses:
Gaming 48,468 47,796 193,392 188,293
Other operating 4,785 3,838 16,510 16,127
General and administrative 1,434 1,577 6,288 6,922
Depreciation   2,797   3,110   11,665   12,059
  57,484   56,321   227,855   223,401
 
Operating earnings 4,135 1,620 12,087 14,748
 
Loss on extinguishment of debt - - 45 -
Interest expense   625   835   2,872   3,254
 
Earnings before income taxes 3,510 785 9,170 11,494
 
Income taxes   1,390   284   3,811   4,751
 
Net earnings $ 2,120 $ 501 $ 5,359 $ 6,743
 
Net earnings per common share:
- Basic $ 0.07 $ 0.02 $ 0.17 $ 0.21
- Diluted $ 0.07 $ 0.02 $ 0.17 $ 0.21
 
Weighted average shares outstanding:
- Basic 31,646 31,558 31,645 31,555
- Diluted 31,646 31,558 31,645 31,555
 
_________________________
(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)
 
 
December 31, December 31,
2011 2010
ASSETS
 
Current assets:
Cash $ 18,634 $ 18,819
Accounts receivable 3,982 3,098
Due from State of Delaware 9,440 9,829
Inventories 1,860 1,989
Prepaid expenses and other 3,659 2,551
Receivable from Dover Motorsports, Inc. - 18
Income taxes receivable - 617
Deferred income taxes   1,317     1,349  
Total current assets 38,892 38,270
 
Property and equipment, net 176,415 186,227
Other assets   877     789  
Total assets $ 216,184   $ 225,286  
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 4,035 $ 3,742
Purses due horsemen 9,004 9,829
Accrued liabilities 11,912 12,286
Payable to Dover Motorsports, Inc. 11 -
Income taxes payable 444 -
Deferred revenue   254     307  
Total current liabilities 25,660 26,164
 
Revolving line of credit 69,000 78,600
Liability for pension benefits 5,570 4,949
Other liabilities 147 598
Deferred income taxes   3,301     4,224  
Total liabilities   103,678     114,535  
 
Stockholders’ equity:
Common stock 1,576 1,564
Class A common stock 1,660 1,660
Additional paid-in capital 3,464 2,721
Retained earnings 108,090 106,432
Accumulated other comprehensive loss   (2,284 )   (1,626 )
Total stockholders’ equity   112,506     110,751  
Total liabilities and stockholders’ equity $ 216,184   $ 225,286  
 
   
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
 
Years Ended
December 31,
2011 2010
 
Operating activities:
Net earnings $ 5,359 $ 6,743

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation 11,665 12,059
Amortization of credit facility origination fees 90 72
Stock-based compensation 905 1,192
Deferred income taxes (389 ) (85 )
Loss on extinguishment of debt 45 -
Changes in assets and liabilities:
Accounts receivable (884 ) (462 )
Due from State of Delaware 389 1,240
Inventories 129 (168 )
Prepaid expenses and other (995 ) (392 )
Accounts payable 604 664
Purses due horsemen (825 ) (390 )
Accrued liabilities (374 ) 3,498
Payable to/receivable from Dover Motorsports, Inc. 29 (13 )
Income taxes payable/receivable 869 (187 )
Deferred revenue (53 ) 1
Other liabilities   (913 )   (278 )
Net cash provided by operating activities   15,651     23,494  
 
Investing activities:
Capital expenditures (1,853 ) (5,576 )
Proceeds from sale of available-for-sale securities 214 65
Purchase of available-for-sale securities   (291 )   (67 )
Net cash used in investing activities   (1,930 )   (5,578 )
 
Financing activities:
Borrowings from revolving line of credit 180,683 116,300
Repayments of revolving line of credit (190,283 ) (132,825 )
Dividends paid (3,888 ) (3,870 )
Repurchase of common stock (150 ) (117 )
Credit facility fees   (268 )   -  
Net cash used in financing activities   (13,906 )   (20,512 )
 
Net decrease in cash (185 ) (2,596 )
Cash, beginning of period   18,819     21,415  
Cash, end of period $ 18,634   $ 18,819  
 

Dover Downs Gaming & Entertainment, Inc.
Timothy R. Horne - Sr. Vice President-Finance
302-857-3292