DDE Dover Downs Gaming & Entertainment

Dover Downs Gaming & Entertainment, Inc. (NYSE: DDE) today reported results for the three months ended September 30, 2016.

Gaming revenues of $41,295,000 were down 1.7% compared to the third quarter of 2015. The revenue decrease was primarily attributable to lower slot machine revenue.

Other operating revenues of $5,815,000 were up compared to the third quarter of 2015 from higher food and beverage and rooms revenue. Occupancy levels in the Dover Downs Hotel were 91.4% for the third quarter of this year.

General and administrative costs were down to $1,228,000 for the third quarter compared to $1,331,000 last year.

Depreciation and interest expense were lower during the quarter from limited capital spending and lower average outstanding borrowings.

Net earnings were $520,000, or $.02 per diluted share compared with $826,000 or $.03 per diluted share for the third quarter of 2015.

Denis McGlynn, the Company's President and Chief Executive Officer, stated: "We continue to do our best with what little the State allows us to retain from gaming revenues and, despite these limitations, we continue to enjoy excellent customer service ratings and employee morale.

“We use an outside contractor to measure customer service and our ratings far exceed our competitors. Our employees play an enormous role in our success in this area, and, despite our current operating environment, we were named a 'Top 10 Workplace in Delaware' for the 8th consecutive year.

“With more competition entering the market, we’ll need a restructured gaming revenue sharing formula to allow us to reinvest in our property, and we’ll be resuming our efforts in this regard.”

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 EARNINGS In Thousands, Except Per Share Amounts (Unaudited)           Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 Revenues: Gaming (1) $ 41,295 $ 42,012 $ 119,711 $ 118,846 Other operating (2)   5,815     5,184     18,340     17,989     47,110     47,196     138,051     136,835   Expenses: Gaming 39,015 39,068 113,251 111,704 Other operating 3,895 3,551 12,594 11,957 General and administrative 1,228 1,331 3,851 4,165 Depreciation   1,959     2,030     5,799     6,353     46,097     45,980     135,495     134,179     Operating earnings 1,013 1,216 2,556 2,656   Interest expense   (214 )   (259 )   (661 )   (937 )   Earnings before income taxes 799 957 1,895 1,719   Income tax expense   (279 )   (131 )   (818 )   (614 )   Net earnings $ 520   $ 826   $ 1,077   $ 1,105     Net earnings per common share: - Basic $ 0.02   $ 0.03   $ 0.03   $ 0.03   - Diluted $ 0.02   $ 0.03   $ 0.03   $ 0.03     Weighted average shares outstanding: - Basic 32,202 32,086 32,201 32,085 - Diluted 32,202 32,086 32,201 32,085   _________________________

(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)       September 30, December 31, 2016 2015 ASSETS   Current assets: Cash $ 11,264 $ 10,496 Accounts receivable 2,024 2,926 Due from State of Delaware 8,373 7,952 Inventories 2,150 1,912 Prepaid expenses and other 3,377 2,530 Receivable from Dover Motorsports, Inc. 44 - Income taxes receivable 125 254 Deferred income taxes   -     1,308   Total current assets 27,357 27,378   Property and equipment, net 142,377 145,425 Other assets 619 672 Deferred income taxes   1,627     482   Total assets $ 171,980   $ 173,957     LIABILITIES AND STOCKHOLDERS’ EQUITY   Current liabilities: Accounts payable $ 4,450 $ 3,380 Purses due horsemen 8,410 7,473 Accrued liabilities 7,699 8,538 Payable to Dover Motorsports, Inc. - 44 Deferred revenue 374 408 Revolving line of credit   27,500     31,500   Total current liabilities 48,433 51,343   Liability for pension benefits   7,210     7,606   Total liabilities   55,643     58,949     Stockholders’ equity: Common stock 1,814 1,799 Class A common stock 1,487 1,487 Additional paid-in capital 5,595 5,424 Retained earnings 111,579 110,502 Accumulated other comprehensive loss   (4,138 )   (4,204 ) Total stockholders’ equity   116,337     115,008   Total liabilities and stockholders’ equity $ 171,980   $ 173,957       DOVER DOWNS GAMING & ENTERTAINMENT, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS In Thousands (Unaudited)     Nine Months Ended September 30, 2016 2015   Operating activities: Net earnings $ 1,077 $ 1,105

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation 5,799 6,353 Amortization of credit facility origination fees 77 85 Stock-based compensation 252 285 Deferred income taxes 54 (571 ) Changes in assets and liabilities: Accounts receivable 902 1,045 Due from State of Delaware (421 ) (1,500 ) Inventories (238 ) (152 ) Prepaid expenses and other (820 ) (1,269 ) Receivable from/payable to Dover Motorsports, Inc. (88 ) 11 Income taxes receivable/payable 194 (104 ) Accounts payable 788 (674 ) Purses due horsemen 937 1,844 Accrued liabilities (839 ) (798 ) Deferred revenue (34 ) 112 Liability for pension benefits   (294 )   (435 ) Net cash provided by operating activities   7,346     5,337     Investing activities: Capital expenditures (2,469 ) (1,118 ) Purchase of available-for-sale securities (47 ) (8 ) Proceeds from sale of available-for-sale securities   44     5   Net cash used in investing activities   (2,472 )   (1,121 )   Financing activities: Borrowings from revolving line of credit 37,880 46,130 Repayments of revolving line of credit (41,880 ) (51,480 ) Repurchase of common stock (66 ) (65 ) Credit facility fees   (40 )   (93 ) Net cash used in financing activities   (4,106 )   (5,508 )   Net increase (decrease) in cash 768 (1,292 ) Cash, beginning of period   10,496     10,079   Cash, end of period $ 11,264   $ 8,787    

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Dover Downs Gaming & Entertainment, Inc.Timothy R. Horne - Sr. Vice President-Finance302-857-3292