Dover Downs Gaming & Entertainment, Inc. Reports Results for the First Quarter Ended March 31, 2014

Business Wire

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

Dover Downs Gaming & Entertainment, Inc. (DDE) today reported results for the three months ended March 31, 2014.

The Company’s revenues for the first quarter of 2014 were $45,477,000 compared with $50,518,000 for the first quarter of 2013.

Gaming revenues were down 12.2% compared to the first quarter of 2013, primarily as a result of increased competition in the region.

Other operating revenues were up 9.2% compared to last year to $5,695,000. Occupancy levels in the Dover Downs Hotel were approximately 80% for the first quarter of 2014 compared with approximately 84% for the first quarter of 2013, though cash sales were higher than last year. Strong convention business helped improve cash food and beverage sales.

General and administrative expenses of $1,393,000 and depreciation expense of $2,295,000 were both down compared to last year.

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

Net loss was ($1,053,000), or ($.03) per diluted share, compared with net loss of ($283,000), or ($.01) per diluted share for the first quarter of 2013.

Denis McGlynn, the Company’s President and Chief Executive Officer, stated: "The fact that the Company paid more than $16 million into the State’s General Fund, more than $4 million for horse racing purses and almost $2.7 million on slot vendor fees during a quarter in which we incurred a $1 million net loss is clear evidence that our current revenue sharing model is out of balance and needs to be reset. This is an issue we continue to pursue with the state and with our current loan agreement set to expire in June, we are hopeful of a speedy resolution during the current legislative session."

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 OPERATIONS
In Thousands, Except Per Share Amounts
(Unaudited)
     
 
Three Months Ended
March 31,
2014 2013
Revenues:
Gaming (1) $ 39,782 $ 45,303

Other operating (2)

  5,695     5,215  
  45,477     50,518  
Expenses:
Gaming 38,354 42,189
Other operating 4,396 4,018
General and administrative 1,393 1,529
Depreciation   2,295     2,509  
  46,438     50,245  
 
Operating (loss) earnings (961 ) 273
 
Interest expense   (460 )   (402 )
 
Loss before income taxes (1,421 ) (129 )
 
Income tax benefit (expense)   368     (154 )
 
Net loss $ (1,053 ) $ (283 )
 
Net loss per common share:
- Basic $ (0.03 ) $ (0.01 )
- Diluted $ (0.03 ) $ (0.01 )
 
Weighted average shares outstanding:
- Basic 31,959 31,846
- Diluted 31,959 31,846

 

(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

 

(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)
 
 
  March 31,   December 31,
2014 2013
ASSETS
 
Current assets:
Cash $ 10,482 $ 12,950
Accounts receivable 4,707 4,248
Due from State of Delaware 2,898 8,225
Inventories 1,761 1,957
Prepaid expenses and other 2,257 2,432
Income taxes receivable 519 138
Deferred income taxes   1,301     1,268  
Total current assets 23,925 31,218
 
Property and equipment, net 158,493 160,570
Other assets   868     932  
Total assets $ 183,286   $ 192,720  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
Current liabilities:
Accounts payable $ 4,043 $ 4,480
Purses due horsemen 2,199 7,978
Accrued liabilities 10,462 10,513
Payable to Dover Motorsports, Inc. - 4
Deferred revenue 427 463
Revolving line of credit   45,000     47,040  
Total current liabilities 62,131 70,478
 
Liability for pension benefits 3,210 3,353
Deferred income taxes   2,773     2,725  
Total liabilities   68,114     76,556  
 
Stockholders’ equity:
Common stock 1,788 1,774
Class A common stock 1,487 1,487
Additional paid-in capital 4,707 4,663
Retained earnings 108,282 109,335
Accumulated other comprehensive loss   (1,092 )   (1,095 )
Total stockholders’ equity   115,172     116,164  
Total liabilities and stockholders’ equity $ 183,286   $ 192,720  
 
 
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
 
  Three Months Ended
March 31,
2014   2013
 
Operating activities:
Net loss $ (1,053 ) $ (283 )

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

Depreciation 2,295 2,509
Amortization of credit facility origination fees 48 54
Stock-based compensation 162 196
Deferred income taxes 14 57
Changes in assets and liabilities:
Accounts receivable (459 ) 154
Due from State of Delaware 5,327 7,159
Inventories 196 (39 )
Prepaid expenses and other 187 386
Income taxes receivable/payable (383 ) 98
Accounts payable (437 ) 215
Purses due horsemen (5,779 ) (7,192 )
Accrued liabilities (51 ) (694 )
Payable to Dover Motorsports, Inc. (4 ) -
Deferred revenue (36 ) (110 )
Other liabilities   (141 )   (80 )

Net cash (used in) provided by operating activities

  (114 )   2,430  
 
Investing activities:
Capital expenditures   (210 )   (569 )
Net cash used in investing activities   (210 )   (569 )
 
Financing activities:
Borrowings from revolving line of credit 25,690 29,690
Repayments of revolving line of credit (27,730 ) (31,690 )
Repurchase of common stock (104 ) (144 )
Credit facility fees   -     (70 )
Net cash used in financing activities   (2,144 )   (2,214 )
 
Net decrease in cash (2,468 ) (353 )
Cash, beginning of period   12,950     14,993  
Cash, end of period $ 10,482   $ 14,640  
 

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

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