Dover Downs Gaming & Entertainment, Inc. Reports Results for the Fourth Quarter and Year Ended December 31, 2016

DOVER, Del.--()--Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE) today reported results for the fourth quarter and year ended December 31, 2016.

The Company’s total revenues were $44,241,000 for the fourth quarter of 2016 compared with $46,111,000 for the fourth quarter of 2015.

Gaming revenues of $37,515,000 were down 4.0% compared to the fourth quarter of last year, primarily the result of lower table game and sports betting hold percentages.

Other operating revenues were $6,726,000 compared to $7,035,000 for the fourth quarter of last year. The decrease was primarily from lower rooms and food and beverage revenues, and partially related to the fact that a portion of Dover International Speedway’s NASCAR weekend was held during the third quarter of this year compared to the fourth quarter of last year. Additionally, convention rooms and related revenues were slightly lower this year. Occupancy levels in the Dover Downs Hotel were approximately 81% and 84% for the fourth quarters of 2016 and 2015, respectively.

General and administrative expenses were up to $1,524,000 for the fourth quarter compared to $1,334,000 last year, from higher employee related costs.

Interest expense decreased to $202,000 during the quarter as a result of lower average outstanding borrowings offset by slightly higher interest rates compared to last year.

Net loss was ($291,000), or ($.01) per diluted share, compared with net earnings of $768,000, or $.02 per diluted share for the fourth quarter of 2015.

For the year as a whole, total revenues were $182,292,000 for 2016 compared with $182,946,000 for 2015.

Gaming revenues were fairly consistent from year to year, however, marketing and promotional costs were higher given the increasingly competitive nature of the regional gaming market.

Other operating revenues for the year were almost identical to 2015, while other operating expenses increased primarily from higher health care costs compared to last year. Occupancy levels in the Dover Downs Hotel were approximately 84% for both annual periods.

Net earnings were $786,000, or $.02 per diluted share, compared with $1,873,000, or $.06 per diluted share for 2015.

Denis McGlynn, the Company's President and Chief Executive Officer, stated: “Our results for the fourth quarter and for the year reflect the continuing challenges the company, and our fellow Delaware casinos face with the formula for gaming revenue distribution within the state.

“In 2016, Dover Downs generated $77 million for the state and the horsemen, while the company carried more than $180 million in expenses and was left with less than one half of one percent profit margin.

“Exacerbating the state’s unbalanced gaming revenue sharing formula is the astounding increase in health care costs most employers are dealing with.

“The Delaware Gaming Industry has generated $3.8 billion that has gone directly to the State’s General Fund over the years and has become an employer of 4,500 mostly Delaware citizens.

It’s our hope that a restructuring of the relationship with the State will be undertaken during the current legislative session to protect this valuable contribution of revenue and employment for the State.”

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 2,300 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 (LOSS) EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
 
 
Three Months Ended Years Ended
December 31, December 31,
2016 2015 2016 2015
Revenues:
Gaming (1) $ 37,515 $ 39,076 $ 157,226 $ 157,922
Other operating (2)   6,726     7,035     25,066     25,024  
  44,241     46,111     182,292     182,946  
Expenses:
Gaming 36,326 36,891 149,577 148,595
Other operating 4,722 4,645 17,316 16,602
General and administrative 1,524 1,334 5,375 5,499
Depreciation   1,944     2,022     7,743     8,375  
  44,516     44,892     180,011     179,071  
 
Operating (loss) earnings (275 ) 1,219 2,281 3,875
 
Interest expense   (202 )   (223 )   (863 )   (1,160 )
 
(Loss) earnings before income taxes (477 ) 996 1,418 2,715
 
Income tax benefit (expense)   186     (228 )   (632 )   (842 )
 
Net (loss) earnings $ (291 ) $ 768   $ 786   $ 1,873  
 
Net (loss) earnings per common share:
- Basic $ (0.01 ) $ 0.02   $ 0.02   $ 0.06  
- Diluted $ (0.01 ) $ 0.02   $ 0.02   $ 0.06  
 
Weighted average shares outstanding:
- Basic 32,202 32,086 32,201 32,085
- Diluted 32,202 32,086 32,201 32,085
 
_________________________
(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,
2016 2015
ASSETS
 
Current assets:
Cash $ 11,677 $ 10,496
Accounts receivable 3,507 2,926
Due from State of Delaware 7,285 7,952
Inventories 1,910 1,912
Prepaid expenses and other 2,365 2,530
Receivable from Dover Motorsports, Inc. 7 -
Income taxes receivable 221 254
Deferred income taxes   -     1,308  
Total current assets 26,972 27,378
 
Property and equipment, net 140,714 145,425
Other assets 594 672
Deferred income taxes   2,020     482  
Total assets $ 170,300   $ 173,957  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 3,749 $ 3,380
Purses due horsemen 7,649 7,473
Accrued liabilities 9,732 8,538
Payable to Dover Motorsports, Inc. - 44
Deferred revenue 361 408
Revolving line of credit   25,250     31,500  
Total current liabilities 46,741 51,343
 
Liability for pension benefits   7,897     7,606  
Total liabilities   54,638     58,949  
 
Stockholders’ equity:
Common stock 1,814 1,799
Class A common stock 1,487 1,487
Additional paid-in capital 5,669 5,424
Retained earnings 111,288 110,502
Accumulated other comprehensive loss   (4,596 )   (4,204 )
Total stockholders’ equity   115,662     115,008  
Total liabilities and stockholders’ equity $ 170,300   $ 173,957  
 
   
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
 
Years Ended
December 31,
2016 2015
 
Operating activities:
Net earnings $ 786 $ 1,873

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

Depreciation 7,743 8,375
Amortization of credit facility origination fees 89 111
Stock-based compensation 326 375
Deferred income taxes (36 ) (508 )
Changes in assets and liabilities:
Accounts receivable (581 ) 912
Due from State of Delaware 667 (694 )
Inventories 2 (129 )
Prepaid expenses and other 204 (146 )
Receivable from/payable to Dover Motorsports, Inc. (51 ) 66
Income taxes receivable 99 (197 )
Accounts payable 149 (662 )
Purses due horsemen 176 556
Accrued liabilities 1,149 211
Deferred revenue (47 ) 19
Liability for pension benefits   (320 )   (443 )
Net cash provided by operating activities   10,355     9,719  
 
Investing activities:
Capital expenditures (2,812 ) (1,651 )
Purchase of available-for-sale securities (55 ) (16 )
Proceeds from sale of available-for-sale securities 49 8
Proceeds from sale of property and equipment   -     25  
Net cash used in investing activities   (2,818 )   (1,634 )
 
Financing activities:
Borrowings from revolving line of credit 46,850 52,060
Repayments of revolving line of credit (53,100 ) (59,570 )
Repurchase of common stock (66 ) (65 )
Credit facility fees   (40 )   (93 )
Net cash used in financing activities   (6,356 )   (7,668 )
 
Net increase in cash 1,181 417
Cash, beginning of year   10,496     10,079  
Cash, end of year $ 11,677   $ 10,496  
 

Contacts

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

Contacts

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