Dover Downs Gaming & Entertainment, Inc. Reports Results for the Third Quarter Ended September 30, 2013

Business Wire

DOVER, Del.--(BUSINESS WIRE)--

Dover Downs Gaming & Entertainment, Inc. (DDE) today reported results for the three months ended September 30, 2013.

Gaming revenues of $43,736,000 were down 10.7% compared to the third quarter of 2012. The revenue decline was primarily attributable to increased competition in the region.

Other operating revenues of $6,337,000 were up 7.2% compared to the third quarter of 2012. The improvement was from increased food and beverage revenue and slightly higher cash room revenue. Occupancy levels in the Dover Downs Hotel were approximately 93% for the third quarter of 2013.

General and administrative costs of $1,354,000 for the third quarter were down 7.5% compared to last year.

Interest expense increased to $460,000 during the quarter as a result of higher interest rates and fees offsetting lower average outstanding borrowings.

Net earnings were $223,000, or $.01 per diluted share compared with $1,147,000 or $.04 per diluted share for the third quarter of 2012.

Denis McGlynn, the Company's President and Chief Executive Officer, stated: "We mentioned last quarter that the State had formed a Lottery & Gaming Study Commission to examine the Delaware gaming industry and to make recommendations to the State legislature regarding the division of gaming revenues among the State, casinos, vendors and horsemen. The State’s casinos have all had an opportunity to make presentations to this new Commission and we hope to have further input into the Commission’s fact gathering and deliberations. The Commission’s recommendations to the State legislature are expected to be made on or before January 31, 2014.”

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. (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
In Thousands, Except Per Share Amounts
(Unaudited)
 
 
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
Revenues:
Gaming (1) $ 43,736 $ 49,001 $ 132,216 $ 159,806
Other operating (2)   6,337   5,913   18,423   17,547
  50,073   54,914   150,639   177,353
Expenses:
Gaming 41,105 44,508 123,530 141,951
Other operating 4,407 4,111 13,039 12,350
General and administrative 1,354 1,464 4,310 4,528
Depreciation   2,378   2,523   7,411   7,769
  49,244   52,606   148,290   166,598
 
Operating earnings 829 2,308 2,349 10,755
 
Interest expense   460   405   1,267   1,417
 
Earnings before income taxes 369 1,903 1,082 9,338
 
Income tax expense   146   756   651   4,003
 
Net earnings $ 223 $ 1,147 $ 431 $ 5,335

 

Net earnings per common share:
- Basic $ 0.01 $ 0.04 $ 0.01 $ 0.16
- Diluted $ 0.01 $ 0.04 $ 0.01 $ 0.16
 
Weighted average shares outstanding:
- Basic 31,849 31,745 31,848 31,744
- Diluted 31,849 31,745 31,848 31,744
_________________________
(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)
 
 
September 30, December 31,
  2013     2012  
ASSETS
 
Current assets:
Cash $ 14,392 $ 14,993
Accounts receivable 3,688 4,093
Due from State of Delaware 9,301 9,708
Inventories 2,033 1,921
Prepaid expenses and other 3,890 3,207
Receivable from Dover Motorsports, Inc. 12 -
Income taxes receivable - 155
Deferred income taxes   1,294     1,284  
Total current assets 34,610 35,361
 
Property and equipment, net 162,632 168,963
Other assets   975     938  
Total assets $ 198,217   $ 205,262  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 3,187 $ 3,785
Purses due horsemen 9,310 9,833
Accrued liabilities 9,858 10,361
Income taxes payable 262 -
Deferred revenue 337 346
Revolving line of credit   52,500     -  
Total current liabilities 75,454 24,325
 
Revolving line of credit - 58,500
Liability for pension benefits 6,888 6,983
Deferred income taxes   1,551     1,994  
Total liabilities   83,893     91,802  
 
Stockholders’ equity:
Common stock 1,775 1,590
Class A common stock 1,487 1,660
Additional paid-in capital 4,505 4,136
Retained earnings 109,753 109,322
Accumulated other comprehensive loss   (3,196 )   (3,248 )
Total stockholders’ equity   114,324     113,460  
Total liabilities and stockholders’ equity $ 198,217   $ 205,262  
   
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
 
Nine Months Ended
September 30,
  2013     2012  
 
Operating activities:
Net earnings $ 431 $ 5,335

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

Depreciation 7,411 7,769
Amortization of credit facility origination fees 140 74
Stock-based compensation 525 600
Deferred income taxes (333 ) (126 )
Gain from insurance settlement (22 ) -
Changes in assets and liabilities:
Accounts receivable 405 849
Due from State of Delaware 407 (1,694 )
Inventories (112 ) (224 )
Prepaid expenses and other (799 ) (917 )
Receivable from/payable to Dover Motorsports, Inc. (12 ) (11 )
Income taxes receivable/payable 262 (327 )
Accounts payable (424 ) (1,499 )
Purses due horsemen (523 ) 2,136
Accrued liabilities (503 ) (1,783 )
Deferred revenue (9 ) 77
Other liabilities   (20 )   (375 )
Net cash provided by operating activities   6,824     9,884  
 
Investing activities:
Capital expenditures (1,283 ) (2,158 )
Insurance proceeds 74 -
Purchase of available-for-sale securities (27 ) -
Proceeds from sale of available-for-sale securities   25     -  
Net cash used in investing activities   (1,211 )   (2,158 )
 
Financing activities:
Borrowings from revolving line of credit 56,140 12,910
Repayments of revolving line of credit (62,140 ) (20,410 )
Dividends paid - (2,925 )
Repurchase of common stock (144 ) (107 )
Credit facility fees   (70 )   -  
Net cash used in financing activities   (6,214 )   (10,532 )
 
Net decrease in cash (601 ) (2,806 )
Cash, beginning of period   14,993     18,634  
Cash, end of period $ 14,392   $ 15,828  

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

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