Dover Downs Gaming & Entertainment, Inc. Reports Results For The Second Quarter Ended June 30, 2007

DOVER, Del., July 26 /PRNewswire-FirstCall/ -- Dover Downs Gaming & Entertainment, Inc. today reported results for the three months ended June 30, 2007.

Net earnings improved 5.2% to $6,404,000 compared with $6,090,000 for the second quarter of 2006.

Net earnings per diluted share were $.20 compared with $.19 per diluted share in 2006, a 5.3% improvement as a result of the aforementioned increase in net earnings.

The Company's revenues increased to $57,868,000 compared with $56,831,000 for the second quarter of 2006. Gaming revenues, which include video lottery win and harness racing commissions, increased 1.3%, entirely from increased video lottery win compared with the second quarter of 2006.

Occupancy levels in the Dover Downs Hotel and Conference Center remained strong, averaging approximately 98% for the second quarter. Construction continues on the previously announced expansion to the Dover Downs Hotel, which is expected to be complete by the end of September. The expansion will more than double the number of hotel rooms to 500, including eleven spa suites, and the luxurious Toppers Spa Salon at the Dover Downs Hotel.

Denis McGlynn, President and CEO of Dover Downs Gaming & Entertainment, Inc. stated, "We are pleased with our results for the second quarter, especially given the very competitive operating environment. We were able to grow our slot win during a quarter in which not many established properties in our region experienced growth."

The Company announced yesterday that its Board of Directors declared a regular quarterly dividend of $.045 per share. The dividend is payable on September 10, 2007 to shareholders of record at the close of business on August 10, 2007.

The Company began construction on "The Colonnade", its Phase VI casino expansion, in June of 2007. The expansion will add approximately 70,000 square feet of casino, restaurant and retail space, and is expected to be complete in August 2008.

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 -- a 97,000-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 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, 2007 2006 2007 2006 Revenues: Gaming (1) $53,303 $52,634 $110,275 $108,121 Other operating (2) 4,565 4,197 8,224 7,982 57,868 56,831 118,499 116,103 Expenses: Gaming 39,292 38,662 81,143 80,109 Other operating 4,001 3,746 7,281 7,091 General and administrative 1,534 1,548 3,104 3,187 Depreciation 1,735 1,739 3,477 3,476 46,562 45,695 95,005 93,863 Operating earnings 11,306 11,136 23,494 22,240 Interest expense 451 797 975 1,441 Earnings before income taxes 10,855 10,339 22,519 20,799 Income taxes 4,451 4,249 9,234 8,546 Net earnings $6,404 $6,090 $13,285 $12,253 Net earnings per common share: - Basic $0.20 $0.19 $0.41 $0.38 - Diluted $0.20 $0.19 $0.41 $0.37 Weighted average shares outstanding: - Basic 32,341 32,141 32,321 32,540 - Diluted 32,783 32,846 32,716 33,134 (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) 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, 2007 2006 ASSETS Current assets: Cash $17,756 $20,020 Accounts receivable 2,553 4,325 Due from State of Delaware 5,634 10,972 Inventories 1,749 1,765 Prepaid expenses and other 2,433 1,838 Receivable from Dover Motorsports, Inc. 38 - Prepaid income taxes 331 128 Deferred income taxes 1,346 1,247 Total current assets 31,840 40,295 Property and equipment, net 159,509 132,732 Total assets $191,349 $173,027 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $11,009 $8,173 Purses due horsemen 4,567 8,899 Accrued liabilities 9,014 11,198 Payable to Dover Motorsports, Inc. - 9 Deferred revenue 112 37 Total current liabilities 24,702 28,316 Revolving line of credit 69,875 59,425 Liability for pension benefits 2,565 2,640 Deferred income taxes 5,174 5,387 Total liabilities 102,316 95,768 Stockholders' equity: Common stock 1,564 1,542 Class A common stock 1,700 1,700 Additional paid-in capital 2,175 769 Retained earnings 84,082 73,736 Accumulated other comprehensive loss (488) (488) Total stockholders' equity 89,033 77,259 Total liabilities and stockholders' equity $191,349 $173,027 DOVER DOWNS GAMING & ENTERTAINMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS In Thousands (Unaudited) Six Months Ended June 30, 2007 2006 Operating activities: Net earnings $13,285 $12,253 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 3,477 3,476 Amortization of credit facility origination fees 18 22 Stock-based compensation 454 401 Deferred income taxes (312) (71) Changes in assets and liabilities: Accounts receivable 1,772 2,640 Due from State of Delaware 5,338 4,397 Inventories 16 10 Prepaid expenses and other (613) (493) Receivable from/payable to Dover Motorsports, Inc. (47) 14 Prepaid income taxes/income taxes payable (203) (3,891) Accounts payable (566) 625 Purses due horsemen (4,332) (3,938) Accrued liabilities (2,184) (4,204) Deferred revenue 75 35 Other liabilities (75) - Net cash provided by operating activities 16,103 11,276 Investing activities: Capital expenditures (26,852) (5,855) Net cash used in investing activities (26,852) (5,855) Financing activities: Borrowings from revolving line of credit 93,605 147,325 Repayments of revolving line of credit (83,155) (115,300) Dividends paid (2,939) (2,591) Repurchase of common stock (119) (35,042) Proceeds from stock options exercised 1,030 349 Excess tax benefit on stock awards 63 50 Net cash provided by (used in) financing activities 8,485 (5,209) Net (decrease) increase in cash (2,264) 212 Cash, beginning of period 20,020 19,986 Cash, end of period $17,756 $20,198