- Pays: $75 Million to State and Horsemen
- Loses: $1 Million for the Year
Dover Downs Gaming & Entertainment, Inc. DDE today reported results for the fourth quarter and year ended December 31, 2017.
The Company's total revenues were $44,377,000 for the fourth quarter of 2017 compared with $44,241,000 for the fourth quarter of 2016.
Gaming revenues of $37,966,000 were up 1.2% compared to the fourth quarter of last year, primarily the result of higher table game and sports betting hold percentages.
Other operating revenues were $6,411,000 compared to $6,726,000 for the fourth quarter of last year. Occupancy levels in the Dover Downs Hotel were approximately 80% and 81% for the fourth quarters of 2017 and 2016, respectively.
General and administrative expenses were down to $1,268,000 for the fourth quarter compared to $1,524,000 last year, from lower employee related costs.
Interest expense was consistent with last year as a result of lower average outstanding borrowings offset by slightly higher interest rates.
On December 22, 2017, the Tax Cuts and Jobs Act was signed into law. The fourth quarter of 2017 and full-year 2017 results reflect the impact of the new tax law, which resulted in an income tax expense of $662,000, or ($.02) per diluted share, primarily from revaluing the Company's net deferred tax assets to reflect the recently enacted 21% federal corporate tax rate.
Net loss for the fourth quarter was ($779,000), or ($.02) per diluted share, compared with net loss of ($291,000), or ($.01) per diluted share last year.
For the year as a whole, total revenues were $176,924,000 for 2017 compared with $182,292,000 for 2016.
Net loss was ($1,068,000), or ($.03) per diluted share, compared with net earnings of $786,000, or $.02 per diluted share for 2016.
Denis McGlynn, the Company's President and Chief Executive Officer, stated: "Once again the Company demonstrated substantial gaming operational profitability which once again was totally wiped out by an unfair and outdated gaming revenue sharing formula.
"Legislation has been introduced to implement a more fair and realistic formula and we hope the Delaware Legislature and Administration will act favorably on 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. DDE, Dover Downs Hotel & Casino® is a premier gaming and entertainment resort destination in the Mid-Atlantic region. Gaming operations consist of approximately 2,200 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 (LOSS) EARNINGS | ||||||||||||||||
| In Thousands, Except Per Share Amounts | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three Months Ended | Years Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues: | ||||||||||||||||
| Gaming (1) | $ | 37,966 | $ | 37,515 | $ | 152,534 | $ | 157,226 | ||||||||
| Other operating (2) | 6,411 | 6,726 | 24,390 | 25,066 | ||||||||||||
| 44,377 | 44,241 | 176,924 | 182,292 | |||||||||||||
| Expenses: | ||||||||||||||||
| Gaming | 36,507 | 36,326 | 146,209 | 149,577 | ||||||||||||
| Other operating | 4,597 | 4,722 | 17,140 | 17,316 | ||||||||||||
| General and administrative | 1,268 | 1,524 | 5,174 | 5,375 | ||||||||||||
| Depreciation | 2,040 | 1,944 | 8,168 | 7,743 | ||||||||||||
| 44,412 | 44,516 | 176,691 | 180,011 | |||||||||||||
| Operating (loss) earnings | (35 | ) | (275 | ) | 233 | 2,281 | ||||||||||
| Interest expense | (206 | ) | (202 | ) | (840 | ) | (863 | ) | ||||||||
| (Loss) earnings before income taxes | (241 | ) | (477 | ) | (607 | ) | 1,418 | |||||||||
| Income tax (expense) benefit | (538 | ) | 186 | (461 | ) | (632 | ) | |||||||||
| Net (loss) earnings | $ | (779 | ) | $ | (291 | ) | $ | (1,068 | ) | $ | 786 | |||||
| Net (loss) earnings per common share: | ||||||||||||||||
| - Basic | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | 0.02 | |||||
| - Diluted | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | 0.02 | |||||
| Weighted average shares outstanding: | ||||||||||||||||
| - Basic | 32,322 | 32,202 | 32,321 | 32,201 | ||||||||||||
| - Diluted | 32,322 | 32,202 | 32,321 | 32,201 | ||||||||||||
| _________________________ | ||
| (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. | |||||||||||||||
| RECONCILIATION OF GAAP NET (LOSS) EARNINGS TO ADJUSTED NET (LOSS) EARNINGS | |||||||||||||||
| In Thousands, Except Per Share Amounts | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Three Months Ended | Years Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| GAAP net (loss) earnings | $ | (779 | ) | $ | (291 | ) | $ | (1,068 | ) | $ | 786 | ||||
| Federal income tax reform (1) | 662 | - | 662 | - | |||||||||||
| Adjusted net (loss) earnings | $ | (117 | ) | $ | (291 | ) | $ | (406 | ) | $ | 786 | ||||
| GAAP net (loss) earnings per common share - basic and diluted | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | 0.02 | ||||
| Federal income tax reform (1) | 0.02 | - | 0.02 | - | |||||||||||
| Adjusted net (loss) earnings per common share - basic and diluted | $ | - | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.02 | |||||
|
|
|||||||||||||||
| _________________________ | ||
|
(1) |
The passage of the Tax Cuts and Jobs Act in December 2017 lowered our future federal income tax rate to 21% requiring us to revalue net deferred federal tax assets. |
|
|
The above financial information is presented using other than generally accepted accounting principles ("non-GAAP"), and is reconciled to comparable information presented using GAAP. Non-GAAP adjusted net (loss) earnings and adjusted net (loss) earnings per common share - basic and diluted are derived by adjusting amounts determined in accordance with GAAP for the aforementioned federal income tax reform. We believe such non-GAAP information is useful and meaningful to investors, and is used by investors and us to assess core operations. This non-GAAP financial information may not be comparable to similarly titled measures used by other entities and should not be considered as an alternative to net (loss) earnings or net (loss) earnings per common share - basic and diluted, which are determined in accordance with GAAP. |
||
| DOVER DOWNS GAMING & ENTERTAINMENT, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| In Thousands | ||||||||
| (Unaudited) | ||||||||
| December 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 10,714 | $ | 11,677 | ||||
| Accounts receivable | 3,557 | 3,507 | ||||||
| Due from State of Delaware | 5,720 | 7,285 | ||||||
| Inventories | 1,928 | 1,910 | ||||||
| Prepaid expenses and other | 2,840 | 2,365 | ||||||
| Receivable from Dover Motorsports, Inc. | 7 | 7 | ||||||
| Income taxes receivable | 318 | 221 | ||||||
| Total current assets | 25,084 | 26,972 | ||||||
| Property and equipment, net | 134,527 | 140,714 | ||||||
| Other assets | 564 | 594 | ||||||
| Deferred income taxes | 1,630 | 2,020 | ||||||
| Total assets | $ | 161,805 | $ | 170,300 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,769 | $ | 3,749 | ||||
| Purses due horsemen | 5,814 | 7,649 | ||||||
| Accrued liabilities | 9,811 | 9,854 | ||||||
| Deferred revenue | 316 | 361 | ||||||
| Revolving line of credit | 19,900 | 25,250 | ||||||
| Total current liabilities | 39,610 | 46,863 | ||||||
| Liability for pension benefits | 7,483 | 7,775 | ||||||
| Total liabilities | 47,093 | 54,638 | ||||||
| Stockholders' equity: | ||||||||
| Common stock | 1,827 | 1,814 | ||||||
| Class A common stock | 1,487 | 1,487 | ||||||
| Additional paid-in capital | 5,877 | 5,669 | ||||||
| Retained earnings | 110,220 | 111,288 | ||||||
| Accumulated other comprehensive loss | (4,699 | ) | (4,596 | ) | ||||
| Total stockholders' equity | 114,712 | 115,662 | ||||||
| Total liabilities and stockholders' equity | $ | 161,805 | $ | 170,300 | ||||
| DOVER DOWNS GAMING & ENTERTAINMENT, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| In Thousands | ||||||||
| (Unaudited) | ||||||||
| Years Ended | ||||||||
| December 31, | ||||||||
| 2017 | 2016 | |||||||
| Operating activities: | ||||||||
| Net (loss) earnings | $ | (1,068 | ) | $ | 786 | |||
|
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities: |
||||||||
| Depreciation | 8,168 | 7,743 | ||||||
| Amortization of credit facility origination fees | 57 | 89 | ||||||
| Stock-based compensation | 295 | 326 | ||||||
| Deferred income taxes | 457 | (36 | ) | |||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | (50 | ) | (581 | ) | ||||
| Due from State of Delaware | 1,565 | 667 | ||||||
| Inventories | (18 | ) | 2 | |||||
| Prepaid expenses and other | (446 | ) | 204 | |||||
| Receivable from/payable to Dover Motorsports, Inc. | - | (51 | ) | |||||
| Income taxes receivable | (96 | ) | 99 | |||||
| Accounts payable | 232 | 149 | ||||||
| Purses due horsemen | (1,835 | ) | 176 | |||||
| Accrued liabilities | (79 | ) | 1,174 | |||||
| Deferred revenue | (45 | ) | (47 | ) | ||||
| Liability for pension benefits | (437 | ) | (345 | ) | ||||
| Net cash provided by operating activities | 6,700 | 10,355 | ||||||
| Investing activities: | ||||||||
| Capital expenditures | (2,193 | ) | (2,812 | ) | ||||
| Purchase of available-for-sale securities | (59 | ) | (55 | ) | ||||
| Proceeds from sale of available-for-sale securities | 48 | 49 | ||||||
| Net cash used in investing activities | (2,204 | ) | (2,818 | ) | ||||
| Financing activities: | ||||||||
| Borrowings from revolving line of credit | 69,280 | 46,850 | ||||||
| Repayments of revolving line of credit | (74,630 | ) | (53,100 | ) | ||||
| Repurchase of common stock | (74 | ) | (66 | ) | ||||
| Credit facility fees | (35 | ) | (40 | ) | ||||
| Net cash used in financing activities | (5,459 | ) | (6,356 | ) | ||||
| Net (decrease) increase in cash | (963 | ) | 1,181 | |||||
| Cash, beginning of year | 11,677 | 10,496 | ||||||
| Cash, end of year | $ | 10,714 | $ | 11,677 | ||||
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