Dover Downs Gaming & Entertainment, Inc. Reports Results for the Fourth Quarter and the Year Ended December 31, 2002
DOVER, Del., Jan. 30 -- Dover Downs Gaming &
Entertainment, Inc. today reported results for the three months
and year ended December 31, 2002.
The Company's gross revenues increased 14.7% to $51,604,000 compared with
$44,996,000 for the fourth quarter of 2001. The revenue increase consists of
a $1,951,000 increase in gaming revenues, which include video lottery win and
harness racing commissions, and an increase in other revenues of $4,657,000,
primarily related to the Dover Downs Hotel and Conference Center.
Net earnings were $4,238,000 or $.16 per diluted share compared with
$4,654,000 or $.17 per diluted share for the fourth quarter of 2001.
The Company noted that hotel occupancy levels remained strong throughout
the quarter and that slot revenue had increased almost 13% in October and
November before declining approximately 13% in December. The Company believes
the December decline was primarily the result of the Delaware Clean Indoor Air
Act, which was effective for the entire month.
For the year ended December 31, 2002, gross revenues increased 17.2% to
$219,806,000 compared with $187,615,000 for 2001. The revenue increase
consists of an $18,658,000 increase in gaming revenues, which include video
lottery win and harness racing commissions, and an increase in other revenues
of $13,533,000, primarily related to the Dover Downs Hotel and Conference
Center.
Net earnings were $21,442,000 or $.80 per diluted share compared with
$21,095,000 or $.79 per diluted share for 2001.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
increased 8.8% compared with 2001 to $42,246,000. The Company noted that
EBITDA increased much more significantly in the second and third quarters of
the year and declined in the first quarter when the hotel was in its pre-
opening phase and in the fourth quarter when the Delaware Clean Indoor Air Act
affected results. An increase in depreciation expense of $2,965,000 also
impacted net earnings.
Denis McGlynn, President and CEO of Dover Downs Gaming & Entertainment,
Inc., stated, "We were happy with the growth trends we saw in both our revenue
and cash flows from April, when the Dover Downs Hotel and Conference Center
was completely opened, through November. December's operating results were
clearly impacted by the State smoking ban. House Bill 15, which proposes
amending the legislation to allow smoking in bars, casinos and other
properties where patrons must be at least 21 years of age, has been introduced
in the Delaware House of Representatives. Given the State's projected deficit
and how this legislation has impacted not only State revenues but other small
businesses as well, we are hopeful that the legislation will be amended."
Dover Downs Gaming & Entertainment, Inc. began trading on the New York
Stock Exchange on April 1, 2002, the first day after the effective date of the
tax-free spin-off by Dover Motorsports, Inc. of its gaming business. The
Company's results of operations for periods prior to April 1, 2002 are
included in the financial statements of Dover Motorsports, Inc. as a
discontinued operation, but have been presented separately for informational
purposes.
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 -- an
80,000-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 the Dover
Downs Raceway -- a harness racing track with pari-mutuel wagering on live and
simulcast horse races.
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENT OF EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
Three Months Ended Year Ended
December 31, December 31,
2002 2001(2) 2002 2001(2)
Revenues:
Gaming (1) $44,274 $42,323 $193,723 $175,065
Other operating 7,330 2,673 26,083 12,550
Gross revenues 51,604 44,996 219,806 187,615
Less: promotional
allowances 4,002 1,281 13,331 6,322
47,602 43,715 206,475 181,293
Expenses:
Gaming 35,478 32,484 148,817 132,587
Other operating 1,826 1,102 10,351 5,205
Depreciation 1,417 663 5,176 2,211
General and administration 1,415 1,215 5,061 4,676
40,136 35,464 169,405 144,679
Operating earnings 7,466 8,251 37,070 36,614
Interest expense, net 296 368 903 1,020
Earnings before income taxes 7,170 7,883 36,167 35,594
Income taxes 2,932 3,229 14,725 14,499
Net earnings $4,238 $4,654 $21,442 $21,095
Earnings per common share (3):
- Basic $.16 $.17 $.80 $.79
- Diluted $.16 $.17 $.80 $.79
Average shares outstanding (3):
- Basic 26,648 26,595 26,643 26,569
- Diluted 26,670 26,651 26,725 26,777
(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) Prior period amounts have been reclassified to conform to current
period presentation.
(3) Earnings per common share amounts and average shares outstanding for
periods prior to April 1, 2002, the day after the effective date of
the spin-off from Dover Motorsports, Inc., are presented on a pro
forma basis to reflect such spin-off.
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
December 31, December 31,
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $10,874 $12,166
Accounts receivable 2,511 1,450
Due from State of Delaware 9,624 8,144
Inventories 1,154 866
Prepaid expenses and other 1,462 1,436
Income taxes receivable 859 -
Deferred income taxes 539 423
Total current assets 27,023 24,485
Property and equipment, net 122,248 106,772
Total assets $149,271 $131,257
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,364 $6,949
Purses due horsemen 9,666 7,569
Accrued liabilities 7,745 3,779
Payable to Dover Motorsports, Inc. - 7,790
Income taxes payable - 1,539
Deferred revenue 131 32
Total current liabilities 19,906 27,658
Notes payable to banks 40,890 -
Deferred income taxes 4,036 946
Stockholders' equity:
Common stock 1,050 -
Class A common stock 1,615 -
Additional paid-in capital 68,960 -
Retained earnings 12,941 -
Minimum pension liability (127) -
Dover Motorsports, Inc. equity investment - 102,653
Total stockholders' equity 84,439 102,653
Total liabilities and
stockholders' equity $149,271 $131,257