Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE) today reported results for the fourth quarter and year ended December 31, 2010.

The Company’s revenues were $57,941,000 compared with $55,375,000 for the fourth quarter of 2009. Gaming revenue increased 4.8% compared to the fourth quarter of last year. Lower slot win was offset by table game revenue for the quarter.

Gaming profits were lower compared to the fourth quarter of last year as a result of the lower slot win and from the high gaming taxes, license fees and costs associated with table game operations.

Other operating revenues increased 2.5%. Occupancy levels in the Dover Downs Hotel were approximately 83% for the fourth quarter of 2010 compared with approximately 77% for the fourth quarter of 2009.

Interest expense increased $293,000 during the quarter with lower average outstanding borrowings offset by higher interest rates.

Net earnings were $501,000, or $.02 per diluted share, compared with $1,815,000, or $.06 per diluted share for the fourth quarter of 2009.

Net earnings for the year were $6,743,000, or $.21 per diluted share compared with $11,277,000 or $.35 per diluted share for 2009.

Denis McGlynn, the Company's President and Chief Executive Officer, stated: "As the regional gaming environment becomes more crowded and increasingly competitive, our customer service, gaming offerings and entertainment options remain second to none. We have invested heavily in what we will need to attract and retain the more discriminating gaming customers in Delaware and surrounding states. We have also launched new initiatives focused on increasing our market share through programs that introduce Dover to more table game customers."

The Company announced yesterday that its Board of Directors declared a quarterly dividend of $.03 per share payable on March 10, 2011 to shareholders of record at the close of business on February 10, 2011.

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 Years Ended
December 31, December 31,
2010 2009 2010 2009
Revenues:
Gaming (1) $ 52,915 $ 50,470 $ 217,267 $ 213,855
Other operating (2)   5,026   4,905   20,882   18,944
  57,941   55,375   238,149   232,799
Expenses:
Gaming 47,796 43,354 188,293 175,785
Other operating 3,838 3,894 16,127 14,758
General and administrative 1,577 1,491 6,922 6,678
Impairment charge - - - 2,177
Depreciation   3,110   3,020   12,059   11,939
  56,321   51,759   223,401   211,337
 
Operating earnings 1,620 3,616 14,748 21,462
 
Interest expense   835   542   3,254   2,376
 
Earnings before income taxes 785 3,074 11,494 19,086
 
Income taxes   284   1,259   4,751   7,809
 
Net earnings $ 501 $ 1,815 $ 6,743 $ 11,277
 
Net earnings per common share:
- Basic $ 0.02 $ 0.06 $ 0.21 $ 0.35
- Diluted $ 0.02 $ 0.06 $ 0.21 $ 0.35
 
Weighted average shares outstanding:
- Basic 31,558 31,496 31,555 31,492
- Diluted 31,558 31,496 31,555 31,492
 
_________________________
(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)
 
 
Years Ended
December 31,
2010 2009
 
GAAP earnings before income tax expense $ 11,494 $ 19,086
 
Non-cash impairment charges (1)   -   2,177
 
Adjusted earnings before income tax expense $ 11,494 $ 21,263
 
GAAP net earnings $ 6,743 $ 11,277
 
Non-cash impairment charges, net of income taxes (1)   -   1,292
 
Adjusted net earnings $ 6,743 $ 12,569
 
GAAP net earnings per common share - diluted $ 0.21 $ 0.35
 
Non-cash impairment charges, net of income taxes (1)   -   0.04
 
Adjusted net earnings per common share - diluted $ 0.21 $ 0.39
 
_________________________
(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)
 
 
December 31, December 31,
2010 2009
ASSETS
 
Current assets:
Cash $ 18,819 $ 21,415
Accounts receivable 3,098 2,636
Due from State of Delaware 9,829 11,069
Inventories 1,989 2,170
Prepaid expenses and other 2,551 2,151
Receivable from Dover Motorsports, Inc. 18 5
Income taxes receivable 617 129
Deferred income taxes   1,349     1,209  
Total current assets 38,270 40,784
 
Property and equipment, net 186,227 192,360
Other assets   789     863  
Total assets $ 225,286   $ 234,007  
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 3,742 $ 3,078
Purses due horsemen 9,829 10,219
Accrued liabilities 12,286 8,788
Deferred revenue   307     306  
Total current liabilities 26,164 22,391
 
Revolving line of credit 78,600 95,125
Liability for pension benefits 4,949 4,900
Other liabilities 598 186
Deferred income taxes   4,224     4,166  
Total liabilities   114,535     126,768  
 
Stockholders’ equity:
Common stock 1,564 1,546
Class A common stock 1,660 1,660
Additional paid-in capital 2,721 1,664
Retained earnings 106,432 103,559
Accumulated other comprehensive loss   (1,626 )   (1,190 )
Total stockholders’ equity   110,751     107,239  
Total liabilities and stockholders’ equity $ 225,286   $ 234,007  
 
   
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
 
Years Ended
December 31,
2010 2009
 
Operating activities:
Net earnings $ 6,743 $ 11,277

Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation 12,059 11,939
Amortization of credit facility origination fees 72 39
Stock-based compensation 1,192 952
Deferred income taxes (85 ) 187
Impairment charge - 2,177
Changes in assets and liabilities:
Accounts receivable (462 ) 25
Due from State of Delaware 1,240 (199 )
Inventories (168 ) (145 )
Prepaid expenses and other (392 ) 42
Receivable from/payable to Dover Motorsports, Inc. (13 ) (16 )
Income taxes receivable/payable (187 ) (653 )
Accounts payable 664 (184 )
Purses due horsemen (390 ) 33
Accrued liabilities 3,498 1,369
Deferred revenue 1 94
Other liabilities   (278 )   800  
Net cash provided by operating activities   23,494     27,737  
 
Investing activities:
Capital expenditures (5,576 ) (4,535 )
Proceeds from sale of available-for-sale securities 65 102
Purchase of available-for-sale securities   (67 )   (104 )
Net cash used in investing activities   (5,578 )   (4,537 )
 
Financing activities:
Borrowings from revolving line of credit 116,300 157,875
Repayments of revolving line of credit (132,825 ) (171,075 )
Dividends paid (3,870 ) (6,415 )
Repurchase of common stock   (117 )   (59 )
Net cash used in financing activities   (20,512 )   (19,674 )
 
Net (decrease) increase in cash (2,596 ) 3,526
Cash, beginning of year   21,415     17,889  
Cash, end of year $ 18,819   $ 21,415  
 

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