Form 8-K DOVER DOWNS GAMING & For: Jul 30

 

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): July 30, 2015

 

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 July 30, 2015, we issued a press release announcing our financial results for the second quarter ended June 30, 2015.  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 July 30, 2015

99.2                        Reconciliation of Net Earnings (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:  July 30, 2015

 

2

 

EXHIBIT INDEX

 

Exhibit
Number		Description
99.1		Press Release dated July 30, 2015, issued by Dover Downs Gaming & Entertainment, Inc.
99.2		Reconciliation of Net Earnings (Loss) to EBITDA

 

3

Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE	For further information, call:
	Timothy R. Horne - Sr. Vice President-Finance
Dover, Delaware, July 30, 2015	(302) 857-3292

 

DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS

RESULTS FOR THE SECOND QUARTER ENDED JUNE 30, 2015

 

Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE) today reported results for the three months ended June 30, 2015.

 

Net earnings were $631,000 compared with $164,000 for the second quarter of 2014.  Earnings per diluted share were $.02 compared with $.01 for the second quarter of 2014.

 

The Company’s revenues for the second quarter of 2015 were $45,301,000 compared with $46,206,000 for the second quarter of 2014.  Gaming revenues were $38,058,000 compared to $39,284,000 for the second quarter of last year.  The decline is primarily attributable to the competitive environment in the mid-Atlantic gaming market and a lower table game hold percentage in the second quarter of this year.

 

Other operating revenues increased to $7,243,000 compared to $6,922,000 for the second quarter of 2014 from higher cash rooms revenue and revenue associated with the Company taking over certain retail operations in the casino.  Occupancy levels in the Dover Downs Hotel were approximately 85% for the second quarter of 2015 compared with 88% during the second quarter last year.

 

General and administrative, depreciation and interest expenses were each down slightly compared to the second quarter of 2014.

 

“Historically, the spring and summer months are stronger months for the company and that held true during our second quarter,” said Denis McGlynn President/CEO.  “We benefitted from growth in hotel rooms revenue and a decision to take on-site retail operations in-house.  Unfortunately, we also had to engage in another round of expense reductions which included the elimination of 72 jobs so far this year.  We’re hopeful that the legislature will act on the recommendations of its own appointed study commission when the next session convenes in January and provide the gaming tax relief that was recommended.”

 

* * *

 

 

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 EARNINGS (LOSS)

In Thousands, Except Per Share Amounts

(Unaudited)

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2015			2014			2015			2014
Revenues:
Gaming (1)		$	38,058		$	39,284		$	76,834		$	79,066
Other operating (2)		7,243			6,922			12,805			12,617
		45,301			46,206			89,639			91,683
Expenses:
Gaming		35,874			37,012			72,636			75,366
Other operating		4,519			4,657			8,406			9,053
General and administrative		1,338			1,423			2,834			2,816
Depreciation		2,171			2,273			4,323			4,568
		43,902			45,365			88,199			91,803
Operating earnings (loss)		1,399			841			1,440			(120		)
Interest expense		(330		)	(440		)	(678		)	(900		)
Earnings (loss) before income taxes		1,069			401			762			(1,020		)
Income tax (expense) benefit		(438		)	(237		)	(483		)	131
Net earnings (loss)		$	631		$	164		$	279		$	(889	)
Net earnings (loss) per common share:
- Basic		$	0.02		$	0.01		$	0.01		$	(0.03	)
- Diluted		$	0.02		$	0.01		$	0.01		$	(0.03	)
Weighted average shares outstanding:
- Basic		32,086			31,962			32,084			31,961
- Diluted		32,086			31,962			32,084			31,961

 

(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)

 

		June 30,			December 31,
		2015			2014
ASSETS
Current assets:
Cash		$	11,224		$	10,079
Accounts receivable		3,361			3,838
Due from State of Delaware		4,618			7,258
Inventories		1,846			1,783
Prepaid expenses and other		3,074			2,324
Receivable from Dover Motorsports, Inc.		22			22
Income taxes receivable		—			6
Deferred income taxes		1,284			1,243
Total current assets		25,429			26,553
Property and equipment, net		148,699			152,107
Other assets		683			752
Deferred income taxes		658			404
Total assets		$	175,469		$	179,816
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	3,771		$	3,975
Purses due horsemen		4,621			6,917
Accrued liabilities		9,733			8,196
Income taxes payable		231			—
Deferred revenue		666			389
Revolving line of credit		34,900			39,010
Total current liabilities		53,922			58,487
Liability for pension benefits		8,742			8,980
Total liabilities		62,664			67,467
Stockholders’ equity:
Common stock		1,799			1,788
Class A common stock		1,487			1,487
Additional paid-in capital		5,244			5,125
Retained earnings		108,908			108,629
Accumulated other comprehensive loss		(4,633		)	(4,680		)
Total stockholders’ equity		112,805			112,349
Total liabilities and stockholders’ equity		$	175,469		$	179,816

 

 

DOVER DOWNS GAMING & ENTERTAINMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

In Thousands

(Unaudited)

 

		Six Months Ended
		June 30,
		2015			2014
Operating activities:
Net earnings (loss)		$	279		$	(889	)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation		4,323			4,568
Amortization of credit facility origination fees		54			91
Stock-based compensation		195			301
Deferred income taxes		(325		)	(163		)
Changes in assets and liabilities:
Accounts receivable		477			476
Due from State of Delaware		2,640			3,740
Inventories		(63		)	138
Prepaid expenses and other		(730		)	(987		)
Receivable from/payable to Dover Motorsports, Inc.		—			(43		)
Accounts payable		(204		)	(1,562		)
Purses due horsemen		(2,296		)	(3,448		)
Accrued liabilities		1,537			(505		)
Income taxes payable/receivable		236			5
Deferred revenue		277			(137		)
Liability for pension benefits		(163		)	(214		)
Net cash provided by operating activities		6,237			1,371
Investing activities:
Capital expenditures		(915		)	(521		)
Purchase of available-for-sale securities		(3		)	(15		)
Proceeds from sale of available-for-sale securities		1			14
Net cash used in investing activities		(917		)	(522		)
Financing activities:
Borrowings from revolving line of credit		36,450			58,510
Repayments of revolving line of credit		(40,560		)	(61,840		)
Repurchase of common stock		(65		)	(104		)
Net cash used in financing activities		(4,175		)	(3,434		)
Net increase (decrease) in cash		1,145			(2,585		)
Cash, beginning of period		10,079			12,950
Cash, end of period		$	11,224		$	10,365

 

Exhibit 99.2

 

DOVER DOWNS GAMING & ENTERTAINMENT, INC.

SUPPLEMENTAL DATA

RECONCILIATION OF NET EARNINGS (LOSS) TO EBITDA

In Thousands

(Unaudited)

 

		Three Months Ended June 30,						Six Months Ended June 30,
		2015			2014			2015			2014
Reconciliation of net earnings (loss) to EBITDA:
Net earnings (loss)		$	631		$	164		$	279		$	(889	)
Income tax expense (benefit)		438			237			483			(131		)
Earnings (loss) before income taxes		1,069			401			762			(1,020		)
Interest expense		330			440			678			900
Depreciation		2,171			2,273			4,323			4,568
EBITDA		$	3,570		$	3,114		$	5,763		$	4,448

 

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) or cash flows from operations (as a measure of liquidity) 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.