Dover Downs Gaming & Entertainment, Inc. Reports Results for the Second Quarter Ended June 30, 2014

DOVER, Del.--()--Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE) today reported results for the three months ended June 30, 2014.

Net earnings were $164,000 compared with $491,000 for the second quarter of 2013. Earnings per diluted share were $.01 compared with $.02 per diluted share for the second quarter of 2013.

The Company’s revenues for the second quarter of 2014 were $46,206,000 compared with $50,048,000 for the second quarter of 2013. Gaming revenues were $39,284,000 compared to $43,177,000 for the second quarter of last year. The decline is primarily attributable to the competitive environment in the mid-Atlantic gaming market.

Other operating revenues increased to $6,922,000 compared to $6,871,000 for the second quarter of 2013. Occupancy levels in the Dover Downs Hotel were approximately 88% for the second quarter of 2014.

General and administrative and depreciation expenses were down slightly compared to the second quarter of 2013, while interest expense was slightly higher.

Regarding the June 2014 gaming legislation which provides that the State’s share of slot revenues shall be calculated after the payment of a portion of equipment vendor costs beginning on July 1, 2014, Denis McGlynn, the Company's President and Chief Executive Officer, stated: "We are grateful for the consideration given by our elected officials to the challenges facing the Delaware gaming industry. Most people now recognize that the current revenue sharing arrangement no longer works in this hyper-competitive region. While the difficult fiscal situation the legislature was dealing with this year limited the changes made to the current model, we are hopeful that the Lottery and Gaming Study Commission will consider longer term solutions when they reconvene later this year.”

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 41,500 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 (LOSS)
In Thousands, Except Per Share Amounts
(Unaudited)
       
 
Three Months Ended Six Months Ended
June 30, June 30,
2014 2013 2014 2013
Revenues:
Gaming (1) $ 39,284 $ 43,177 $ 79,066 $ 88,480
Other operating (2)   6,922     6,871     12,617     12,086  
  46,206     50,048     91,683     100,566  
Expenses:
Gaming 37,012 40,236 75,366 82,425
Other operating 4,657 4,614 9,053 8,632
General and administrative 1,423 1,427 2,816 2,956
Depreciation   2,273     2,524     4,568     5,033  
  45,365     48,801     91,803     99,046  
 
Operating earnings (loss) 841 1,247 (120 ) 1,520
 
Interest expense   (440 )   (405 )   (900 )   (807 )
 
Earnings (loss) before income taxes 401 842 (1,020 ) 713
 
Income tax (expense) benefit   (237 )   (351 )   131     (505 )
 
Net earnings (loss) $ 164   $ 491   $ (889 ) $ 208  
 
Net earnings (loss) per common share:
- Basic $ 0.01   $ 0.02   $ (0.03 ) $ 0.01  
- Diluted $ 0.01   $ 0.02   $ (0.03 ) $ 0.01  
 
Weighted average shares outstanding:
- Basic 31,962 31,849 31,961 31,848
- Diluted 31,962 31,849 31,961 31,848
 
_________________________
(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)
   
 
June 30, December 31,
2014 2013
ASSETS
 
Current assets:
Cash $ 10,365 $ 12,950
Accounts receivable 3,772 4,248
Due from State of Delaware 4,485 8,225
Inventories 1,819 1,957
Prepaid expenses and other 3,441 2,432
Receivable from Dover Motorsports, Inc. 39 -
Income taxes receivable 132 138
Deferred income taxes   1,333     1,268  
Total current assets 25,386 31,218
 
Property and equipment, net 156,539 160,570
Other assets   814     932  
Total assets $ 182,739   $ 192,720  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 2,918 $ 4,480
Purses due horsemen 4,530 7,978
Accrued liabilities 10,008 10,513
Payable to Dover Motorsports, Inc. - 4
Deferred revenue 326 463
Revolving line of credit   43,710     47,040  
Total current liabilities 61,492 70,478
 
Liability for pension benefits 3,136 3,353
Deferred income taxes   2,631     2,725  
Total liabilities   67,259     76,556  
 
Stockholders’ equity:
Common stock 1,788 1,774
Class A common stock 1,487 1,487
Additional paid-in capital 4,846 4,663
Retained earnings 108,446 109,335
Accumulated other comprehensive loss   (1,087 )   (1,095 )
Total stockholders’ equity   115,480     116,164  
Total liabilities and stockholders’ equity $ 182,739   $ 192,720  
 
   
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
 
Six Months Ended
June 30,
2014 2013
 
Operating activities:
Net (loss) earnings $ (889 ) $ 208

Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:

Depreciation 4,568 5,033
Amortization of credit facility origination fees 91 97
Stock-based compensation 301 367
Deferred income taxes (163 ) (98 )
Gain from insurance settlement - (22 )
Changes in assets and liabilities:
Accounts receivable 476 602
Due from State of Delaware 3,740 4,741
Inventories 138 (36 )
Prepaid expenses and other (987 ) (521 )
Receivable from/payable to Dover Motorsports, Inc. (43 ) 57
Income taxes receivable/payable 5 147
Accounts payable (1,562 ) (533 )
Purses due horsemen (3,448 ) (4,857 )
Accrued liabilities (505 ) (694 )
Deferred revenue (137 ) 31
Other liabilities   (214 )   (50 )
Net cash provided by operating activities   1,371     4,472  
 
Investing activities:
Capital expenditures (521 ) (976 )
Insurance settlement proceeds - 74
Purchase of available-for-sale securities (15 ) (13 )
Proceeds from sale of available-for-sale securities   14     12  
Net cash used in investing activities   (522 )   (903 )
 
Financing activities:
Borrowings from revolving line of credit 58,510 48,270
Repayments of revolving line of credit (61,840 ) (51,770 )
Repurchase of common stock (104 ) (144 )
Credit facility fees   -     (70 )
Net cash used in financing activities   (3,434 )   (3,714 )
 
Net decrease in cash (2,585 ) (145 )
Cash, beginning of period   12,950     14,993  
Cash, end of period $ 10,365   $ 14,848  
 

Contacts

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

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Contacts

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