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): October 27, 2016
Dover Downs Gaming & Entertainment, Inc.
(Exact name of registrant as specified in its charter)
Commission File Number 1-16791
Delaware |
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51-0414140 |
(State or other jurisdiction of incorporation) |
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(IRS Employer Identification No.) |
1131 N. DuPont Highway |
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Dover, Delaware |
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19901 |
(Address of principal executive offices) |
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(Zip Code) |
Registrants 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 October 27, 2016, we issued a press release announcing our financial results for the third quarter ended September 30, 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 October 27, 2016
99.2 Reconciliation of Net Earnings to EBITDA
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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.
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Dover Downs Gaming & Entertainment, Inc. |
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/s/ Denis McGlynn |
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Denis McGlynn |
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President and Chief Executive Officer |
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Dated: October 27, 2016 |
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Exhibit 99.1
FOR IMMEDIATE RELEASE |
For further information, call: |
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Timothy R. Horne - Sr. Vice President-Finance |
Dover, Delaware, October 27, 2016 |
(302) 857-3292 |
DOVER DOWNS GAMING & ENTERTAINMENT, INC. REPORTS RESULTS
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2016
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 Companys 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, well need a restructured gaming revenue sharing formula to allow us to reinvest in our property, and well be resuming our efforts in this regard.
* * *
This release contains or may contain forward-looking statements based on managements beliefs and assumptions. Such statements are subject to various risks and uncertainties that could cause results to vary materially. Please refer to the Companys 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 Delawares 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. |
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CONSOLIDATED STATEMENTS OF EARNINGS |
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In Thousands, Except Per Share Amounts |
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(Unaudited) |
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
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2016 |
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2015 |
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2016 |
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2015 |
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Revenues: |
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Gaming (1) |
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$ |
41,295 |
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$ |
42,012 |
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$ |
119,711 |
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$ |
118,846 |
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Other operating (2) |
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5,815 |
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5,184 |
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18,340 |
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17,989 |
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47,110 |
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47,196 |
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138,051 |
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136,835 |
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Expenses: |
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Gaming |
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39,015 |
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39,068 |
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113,251 |
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111,704 |
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Other operating |
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3,895 |
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3,551 |
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12,594 |
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11,957 |
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General and administrative |
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1,228 |
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1,331 |
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3,851 |
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4,165 |
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Depreciation |
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1,959 |
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2,030 |
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5,799 |
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6,353 |
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46,097 |
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45,980 |
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135,495 |
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134,179 |
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Operating earnings |
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1,013 |
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1,216 |
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2,556 |
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2,656 |
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Interest expense |
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(214 |
) |
(259 |
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(661 |
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(937 |
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Earnings before income taxes |
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799 |
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957 |
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1,895 |
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1,719 |
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Income tax expense |
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(279 |
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(131 |
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(818 |
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(614 |
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Net earnings |
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$ |
520 |
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$ |
826 |
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$ |
1,077 |
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$ |
1,105 |
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Net earnings per common share: |
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- Basic |
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$ |
0.02 |
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$ |
0.03 |
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$ |
0.03 |
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$ |
0.03 |
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- Diluted |
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$ |
0.02 |
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$ |
0.03 |
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$ |
0.03 |
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$ |
0.03 |
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Weighted average shares outstanding: |
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- Basic |
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32,202 |
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32,086 |
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32,201 |
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32,085 |
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- Diluted |
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32,202 |
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32,086 |
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32,201 |
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32,085 |
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(1) Gaming revenues from the Companys 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)
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September 30, |
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December 31, |
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2016 |
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2015 |
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ASSETS |
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Current assets: |
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Cash |
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$ |
11,264 |
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$ |
10,496 |
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Accounts receivable |
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2,024 |
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2,926 |
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Due from State of Delaware |
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8,373 |
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7,952 |
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Inventories |
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2,150 |
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1,912 |
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Prepaid expenses and other |
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3,377 |
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2,530 |
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Receivable from Dover Motorsports, Inc. |
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44 |
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Income taxes receivable |
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125 |
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254 |
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Deferred income taxes |
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1,308 |
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Total current assets |
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27,357 |
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27,378 |
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Property and equipment, net |
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142,377 |
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145,425 |
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Other assets |
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619 |
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672 |
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Deferred income taxes |
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1,627 |
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482 |
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Total assets |
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$ |
171,980 |
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$ |
173,957 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
4,450 |
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$ |
3,380 |
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Purses due horsemen |
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8,410 |
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7,473 |
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Accrued liabilities |
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7,699 |
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8,538 |
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Payable to Dover Motorsports, Inc. |
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44 |
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Deferred revenue |
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374 |
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408 |
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Revolving line of credit |
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27,500 |
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31,500 |
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Total current liabilities |
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48,433 |
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51,343 |
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Liability for pension benefits |
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7,210 |
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7,606 |
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Total liabilities |
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55,643 |
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58,949 |
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Stockholders equity: |
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Common stock |
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1,814 |
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1,799 |
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Class A common stock |
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1,487 |
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1,487 |
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Additional paid-in capital |
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5,595 |
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5,424 |
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Retained earnings |
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111,579 |
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110,502 |
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Accumulated other comprehensive loss |
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(4,138 |
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(4,204 |
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Total stockholders equity |
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116,337 |
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115,008 |
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Total liabilities and stockholders equity |
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$ |
171,980 |
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$ |
173,957 |
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DOVER DOWNS GAMING & ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
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Nine Months Ended |
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September 30, |
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2016 |
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2015 |
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Operating activities: |
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Net earnings |
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$ |
1,077 |
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$ |
1,105 |
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Adjustments to reconcile net earnings to net cash provided by operating activities: |
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Depreciation |
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5,799 |
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6,353 |
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Amortization of credit facility origination fees |
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77 |
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85 |
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Stock-based compensation |
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252 |
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285 |
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Deferred income taxes |
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54 |
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(571 |
) | ||
Changes in assets and liabilities: |
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Accounts receivable |
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902 |
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1,045 |
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Due from State of Delaware |
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(421 |
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(1,500 |
) | ||
Inventories |
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(238 |
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(152 |
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Prepaid expenses and other |
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(820 |
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(1,269 |
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Receivable from/payable to Dover Motorsports, Inc. |
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(88 |
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11 |
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Income taxes receivable/payable |
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194 |
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(104 |
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Accounts payable |
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788 |
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(674 |
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Purses due horsemen |
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937 |
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1,844 |
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Accrued liabilities |
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(839 |
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(798 |
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Deferred revenue |
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(34 |
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112 |
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Liability for pension benefits |
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(294 |
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(435 |
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Net cash provided by operating activities |
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7,346 |
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5,337 |
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Investing activities: |
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Capital expenditures |
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(2,469 |
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(1,118 |
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Purchase of available-for-sale securities |
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(47 |
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(8 |
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Proceeds from sale of available-for-sale securities |
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44 |
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5 |
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Net cash used in investing activities |
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(2,472 |
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(1,121 |
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Financing activities: |
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Borrowings from revolving line of credit |
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37,880 |
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46,130 |
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Repayments of revolving line of credit |
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(41,880 |
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(51,480 |
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Repurchase of common stock |
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(66 |
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(65 |
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Credit facility fees |
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(40 |
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(93 |
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Net cash used in financing activities |
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(4,106 |
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(5,508 |
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Net increase (decrease) in cash |
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768 |
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(1,292 |
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Cash, beginning of period |
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10,496 |
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10,079 |
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Cash, end of period |
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$ |
11,264 |
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$ |
8,787 |
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Exhibit 99.2
DOVER DOWNS GAMING & ENTERTAINMENT, INC.
SUPPLEMENTAL DATA
RECONCILIATION OF NET EARNINGS TO EBITDA
In Thousands
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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2016 |
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2015 |
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2016 |
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2015 |
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Reconciliation of net earnings to EBITDA: |
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Net earnings |
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$ |
520 |
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$ |
826 |
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$ |
1,077 |
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$ |
1,105 |
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Income tax expense |
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279 |
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131 |
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818 |
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614 |
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Earnings before income taxes |
|
799 |
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957 |
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1,895 |
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1,719 |
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Interest expense |
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214 |
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259 |
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661 |
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937 |
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Depreciation |
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1,959 |
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2,030 |
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5,799 |
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6,353 |
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EBITDA |
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$ |
2,972 |
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$ |
3,246 |
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$ |
8,355 |
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$ |
9,009 |
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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 and we believe that EBITDA provides useful information to investors. EBITDA should not be construed as an alternative to net earnings (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.