Form 8-K DOVER DOWNS GAMING & For: Apr 28

 

United States

Securities And Exchange Commission

Washington, D.C. 20549

 

Form 8-K

 

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): April 28, 2016

 

Dover Downs Gaming & Entertainment, Inc.

(Exact name of registrant as specified in its charter)

 

Commission File Number 1-16791

 

 

 

Registrant’s telephone number, including area code (302) 674-4600

 

N/A

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 2.02 Results of Operations and Financial Condition and Item 7.01 Regulation FD Disclosure.

 

The following information is furnished pursuant to Item 2.02 Results of Operations and Financial Condition and Item 7.01 Regulation FD Disclosure.

 

On April 28, 2016, we issued a press release announcing our financial results for the first quarter ended March 31, 2016.  A copy of our press release is attached hereto as Exhibit 99.1 and hereby incorporated by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(d)                                 Exhibits

 

99.1                        Press Release dated April 28, 2016

99.2                        Reconciliation of Net Loss to EBITDA

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, we have duly caused this report to be signed on our behalf by the undersigned hereunto duly authorized.

 

 

	Dover Downs Gaming & Entertainment, Inc.
	/s/ Denis McGlynn
	Denis McGlynn
	President and Chief Executive Officer

 

Dated:           April 28, 2016

 

2

 

EXHIBIT INDEX

 

Exhibit
Number		Description
99.1		Press Release dated April 28, 2016, issued by Dover Downs Gaming & Entertainment, Inc.
99.2		Reconciliation of Net Loss to EBITDA

 

3

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE		For further information, call:
		Timothy R. Horne - Sr. Vice President-Finance
Dover, Delaware, April 28, 2016		(302) 857-3292

 

DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS

RESULTS FOR THE FIRST QUARTER ENDED MARCH 31, 2016

 

Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE) today reported results for the three months ended March 31, 2016.

 

Net loss was ($239,000), or ($.01) per diluted share, compared with net loss of ($352,000), or ($.01) per diluted share for the first quarter of 2015.

 

The Company’s revenues for the first quarter of 2016 were $44,717,000 compared with $44,338,000 for the first quarter of 2015.

 

Gaming revenues of $39,358,000 were up 1.5% compared to the first quarter of last year, primarily from higher table game revenue.

 

Other operating revenues were $5,359,000 compared to $5,562,000 last year.  Occupancy levels in the Dover Downs Hotel were approximately 74% for the first quarter of 2016 compared with approximately 76% for the first quarter of 2015.

 

General and administrative expenses of $1,328,000 were lower than last year, primarily from employee separation costs during the first quarter of last year.

 

Depreciation expense of $1,887,000 was down compared to $2,152,000 last year.

 

Interest expense decreased to $229,000 during the quarter as a result of lower rates and lower outstanding borrowings.

 

Denis McGlynn, the Company’s President and Chief Executive Officer, stated:  “We point out in our recently filed Annual Report to Stockholders that our fate remains in the hands of our state legislature.  Recommendations of the legislatively appointed Gaming and Lottery Study Commission need to be enacted for the health of our industry and for thousands of employees whose livelihood depends — directly and indirectly — on having Delaware’s casinos able to compete effectively in the regional marketplace.  It is imperative that we re-invest in our facilities and amenities.  And if we cannot spend the marketing and promotional dollars that will bring repeat customers into Delaware, they will go to neighboring jurisdictions.  Last year, Senate Bill 30 did not advance due to unrelated state budget issues.  This year, Senate Bill 183 — which phases in required changes to the revenue sharing model over the next four years — represents what industry experts believe to be the best possible strategic and long-term restructuring model for all stakeholders.  It is time for us to enact a long-term solution and we are working diligently with our state legislators toward that end.”

 

 

* * *

 

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 OPERATIONS

In Thousands, Except Per Share Amounts

(Unaudited)

 

		Three Months Ended
		March 31,
		2016			2015
Revenues:
Gaming (1)		$	39,358		$	38,776
Other operating (2)		5,359			5,562
		44,717			44,338
Expenses:
Gaming		37,495			36,762
Other operating		3,973			3,887
General and administrative		1,328			1,496
Depreciation		1,887			2,152
		44,683			44,297
Operating earnings		34			41
Interest expense		(229		)	(348		)
Loss before income taxes		(195		)	(307		)
Income tax expense		(44		)	(45		)
Net loss		$	(239	)	$	(352	)
Net loss per common share:
- Basic		$	(0.01	)	$	(0.01	)
- Diluted		$	(0.01	)	$	(0.01	)
Weighted average shares outstanding:
- Basic		32,199			32,083
- Diluted		32,199			32,083

 

(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,
		2016			2015
ASSETS
Current assets:
Cash		$	11,077		$	10,496
Accounts receivable		3,055			2,926
Due from State of Delaware		2,663			7,952
Inventories		1,938			1,912
Prepaid expenses and other		1,983			2,530
Receivable from Dover Motorsports, Inc.		10			—
Income taxes receivable		225			254
Deferred income taxes		1,433			1,308
Total current assets		22,384			27,378
Property and equipment, net		144,750			145,425
Other assets		638			672
Deferred income taxes		297			482
Total assets		$	168,069		$	173,957
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	3,875		$	3,380
Purses due horsemen		2,750			7,473
Accrued liabilities		7,690			8,538
Payable to Dover Motorsports, Inc.		—			44
Deferred revenue		503			408
Revolving line of credit		31,000			31,500
Total current liabilities		45,818			51,343
Liability for pension benefits		7,423			7,606
Total liabilities		53,241			58,949
Stockholders’ equity:
Common stock		1,814			1,799
Class A common stock		1,487			1,487
Additional paid-in capital		5,446			5,424
Retained earnings		110,263			110,502
Accumulated other comprehensive loss		(4,182		)	(4,204		)
Total stockholders’ equity		114,828			115,008
Total liabilities and stockholders’ equity		$	168,069		$	173,957

 

 

DOVER DOWNS GAMING & ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

In Thousands

(Unaudited)

 

		Three Months Ended
		March 31,
		2016			2015
Operating activities:
Net loss		$	(239	)	$	(352	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		1,887			2,152
Amortization of credit facility origination fees		26			27
Stock-based compensation		103			105
Deferred income taxes		46			(31		)
Changes in assets and liabilities:
Accounts receivable		(129		)	(616		)
Due from State of Delaware		5,289			4,603
Inventories		(26		)	140
Prepaid expenses and other		559			121
Receivable from/payable to Dover Motorsports, Inc.		(54		)	11
Income taxes receivable		28			78
Accounts payable		562			(579		)
Purses due horsemen		(4,723		)	(4,940		)
Accrued liabilities		(848		)	2,437
Deferred revenue		95			203
Liability for pension benefits		(149		)	(109		)
Net cash provided by operating activities		2,427			3,250
Investing activities:
Capital expenditures		(1,279		)	(472		)
Purchase of available-for-sale securities		(1		)	—
Net cash used in investing activities		(1,280		)	(472		)
Financing activities:
Borrowings from revolving line of credit		15,450			14,820
Repayments of revolving line of credit		(15,950		)	(15,830		)
Repurchase of common stock		(66		)	(65		)
Net cash used in financing activities		(566		)	(1,075		)
Net increase in cash		581			1,703
Cash, beginning of period		10,496			10,079
Cash, end of period		$	11,077		$	11,782

 

Exhibit 99.2

 

DOVER DOWNS GAMING & ENTERTAINMENT, INC.

SUPPLEMENTAL DATA

RECONCILIATION OF NET LOSS TO EBITDA

In Thousands

(Unaudited)

 

		Three Months Ended March 31,
		2016			2015
Reconciliation of net loss to EBITDA:
Net loss		$	(239	)	$	(352	)
Income tax expense		44			45
Loss before income taxes		(195		)	(307		)
Interest expense		229			348
Depreciation		1,887			2,152
EBITDA		$	1,921		$	2,193

 

We define EBITDA as earnings before interest, taxes, depreciation and amortization.  EBITDA is a supplemental non-GAAP financial measure commonly used by management and industry analysts to evaluate our operations. We believe that EBITDA provides useful information to investors regarding our ability to service debt.  EBITDA should not be construed as an alternative to net earnings (loss) (as an indicator of our operating performance) as determined in accordance with accounting principles generally accepted in the United States of America. Not all companies calculate EBITDA in the same manner, and EBITDA as presented by Dover Downs Gaming & Entertainment, Inc. may not be comparable to similarly titled measures presented by other companies.