Dover Downs Gaming & Entertainment, Inc. Reports Loss for the First Quarter Ended March 31, 2015, Table Games Cutbacks Announced
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E-mailDOVER, Del.--(BUSINESS WIRE)-- Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE) today reported results for the three months ended March 31, 2015 and announced a cutback in table game operations.
The Company’s revenues for the first quarter of 2015 were $44,338,000 compared with $45,477,000 for the first quarter of 2014.
Gaming revenues of $38,776,000 were down 2.5% compared to the first quarter of last year, primarily from lower slot machine revenue and lower harness racing commissions.
Other operating revenues were $5,562,000 compared to $5,695,000 last year. Occupancy levels in the Dover Downs Hotel were approximately 76% for the first quarter of 2015 compared with approximately 80% for the first quarter of 2014.
General and administrative expenses of $1,496,000 were higher than last year, primarily from employee separation costs.
Depreciation expense of $2,152,000 was down compared to $2,295,000 last year.
Interest expense decreased to $348,000 during the quarter as a result of lower fees and lower outstanding borrowings.
Net loss was ($352,000), or ($.01) per diluted share, compared with net loss of ($1,053,000), or ($.03) per diluted share for the first quarter of 2014.
Denis McGlynn, the Company's President and Chief Executive Officer, stated: "Unfortunately, this was yet another disappointing reporting period for the Company as we continue to experience competitive challenges and operate under the current unbalanced and outdated gaming revenue sharing formula under state law.
In 2014, prior to mandated payments to the state and horsemen, the company generated a healthy operating profit but, after taking these payments into account and despite expense reductions and the elimination of 21 positions through attrition, the company experienced a net loss for the year.
During this first quarter we reduced our headcount by an additional 10 employees and created additional efficiencies wherever possible, but were unable once again to overcome our mandated payments to others.
In light of our first quarter net loss and in order to comply with our fiduciary responsibility to our shareholders, we are announcing today the curtailment of our unprofitable table games operation. Effective May 18th we will cease table game operations Mondays through Thursdays between the hours of 2 a.m. and 8 a.m. This action, which we have delayed as long as we can, will eliminate an additional 24 positions and reduce our exposure to table game losses which, we expect, will help to improve performance going forward. This further cutback is not a pleasant one to make, but unfortunately, in light of our position we must make it.”
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 OPERATIONS | ||||||||
| In Thousands, Except Per Share Amounts | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2015 | 2014 | |||||||
| Revenues: | ||||||||
| Gaming (1) | $ | 38,776 | $ | 39,782 | ||||
| Other operating (2) | 5,562 | 5,695 | ||||||
| 44,338 | 45,477 | |||||||
| Expenses: | ||||||||
| Gaming | 36,762 | 38,354 | ||||||
| Other operating | 3,887 | 4,396 | ||||||
| General and administrative | 1,496 | 1,393 | ||||||
| Depreciation | 2,152 | 2,295 | ||||||
| 44,297 | 46,438 | |||||||
| Operating earnings (loss) | 41 | (961 | ) | |||||
| Interest expense | (348 | ) | (460 | ) | ||||
| Loss before income taxes | (307 | ) | (1,421 | ) | ||||
| Income tax (expense) benefit | (45 | ) | 368 | |||||
| Net loss | $ | (352 | ) | $ | (1,053 | ) | ||
| Net loss per common share: | ||||||||
| - Basic | $ | (0.01 | ) | $ | (0.03 | ) | ||
| - Diluted | $ | (0.01 | ) | $ | (0.03 | ) | ||
| Weighted average shares outstanding: | ||||||||
| - Basic | 32,083 | 31,959 | ||||||
| - Diluted | 32,083 | 31,959 | ||||||
| _________________________ | ||
| (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) | ||||||||
| March 31, | December 31, | |||||||
| 2015 | 2014 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 11,782 | $ | 10,079 | ||||
| Accounts receivable | 4,454 | 3,838 | ||||||
| Due from State of Delaware | 2,655 | 7,258 | ||||||
| Inventories | 1,643 | 1,783 | ||||||
| Prepaid expenses and other | 2,209 | 2,324 | ||||||
| Receivable from Dover Motorsports, Inc. | 11 | 22 | ||||||
| Income taxes receivable | - | 6 | ||||||
| Deferred income taxes | 1,284 | 1,243 | ||||||
| Total current assets | 24,038 | 26,553 | ||||||
| Property and equipment, net | 150,427 | 152,107 | ||||||
| Other assets | 725 | 752 | ||||||
| Deferred income taxes | 376 | 404 | ||||||
| Total assets | $ | 175,566 | $ | 179,816 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,396 | $ | 3,975 | ||||
| Purses due horsemen | 1,977 | 6,917 | ||||||
| Accrued liabilities | 10,633 | 8,196 | ||||||
| Income taxes payable | 71 | - | ||||||
| Deferred revenue | 592 | 389 | ||||||
| Revolving line of credit | 38,000 | 39,010 | ||||||
| Total current liabilities | 54,669 | 58,487 | ||||||
| Liability for pension benefits | 8,833 | 8,980 | ||||||
| Total liabilities | 63,502 | 67,467 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 1,799 | 1,788 | ||||||
| Class A common stock | 1,487 | 1,487 | ||||||
| Additional paid-in capital | 5,154 | 5,125 | ||||||
| Retained earnings | 108,277 | 108,629 | ||||||
| Accumulated other comprehensive loss | (4,653 | ) | (4,680 | ) | ||||
| Total stockholders’ equity | 112,064 | 112,349 | ||||||
| Total liabilities and stockholders’ equity | $ | 175,566 | $ | 179,816 | ||||
| DOVER DOWNS GAMING & ENTERTAINMENT, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| In Thousands | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2015 | 2014 | |||||||
| Operating activities: | ||||||||
| Net loss | $ | (352 | ) | $ | (1,053 | ) | ||
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |
||||||||
| Depreciation | 2,152 | 2,295 | ||||||
| Amortization of credit facility origination fees | 27 | 48 | ||||||
| Stock-based compensation | 105 | 162 | ||||||
| Deferred income taxes | (31 | ) | 14 | |||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (616 | ) | (459 | ) | ||||
| Due from State of Delaware | 4,603 | 5,327 | ||||||
| Inventories | 140 | 196 | ||||||
| Prepaid expenses and other | 121 | 187 | ||||||
| Receivable from/payable to Dover Motorsports, Inc. | 11 | (4 | ) | |||||
| Accounts payable | (579 | ) | (437 | ) | ||||
| Purses due horsemen | (4,940 | ) | (5,779 | ) | ||||
| Accrued liabilities | 2,437 | (51 | ) | |||||
| Income taxes payable/receivable | 78 | (383 | ) | |||||
| Deferred revenue | 203 | (36 | ) | |||||
| Liability for pension benefits | (109 | ) | (141 | ) | ||||
| Net cash provided by (used in) operating activities | 3,250 | (114 | ) | |||||
| Investing activities: | ||||||||
| Capital expenditures | (472 | ) | (210 | ) | ||||
| Net cash used in investing activities | (472 | ) | (210 | ) | ||||
| Financing activities: | ||||||||
| Borrowings from revolving line of credit | 14,820 | 25,690 | ||||||
| Repayments of revolving line of credit | (15,830 | ) | (27,730 | ) | ||||
| Repurchase of common stock | (65 | ) | (104 | ) | ||||
| Net cash used in financing activities | (1,075 | ) | (2,144 | ) | ||||
| Net increase (decrease) in cash | 1,703 | (2,468 | ) | |||||
| Cash, beginning of period | 10,079 | 12,950 | ||||||
| Cash, end of period | $ | 11,782 | $ | 10,482 | ||||
Dover Downs Gaming & Entertainment, Inc.
Timothy R. Horne - Sr.
Vice President-Finance
302-857-3292
Source: Dover Downs Gaming & Entertainment, Inc.
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