Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2014 |
Summary of Significant Accounting Policies | ' |
Basis of consolidation and presentation | ' |
Basis of consolidation and presentation—The consolidated financial statements include the accounts of Dover Downs Gaming & Entertainment, Inc. and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated. |
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Accounts receivable | ' |
Accounts receivable—Accounts receivable are stated at their estimated collectible amount and primarily consist of casino, hotel and other receivables which arise in the normal course of business. We issue credit in the form of “markers” to approved casino customers who are investigated as to their credit worthiness. |
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Investments | ' |
Investments—Investments, which consist of mutual funds, are classified as available-for-sale and reported at fair-value in other assets in our consolidated balance sheets. Changes in fair value are reported in other comprehensive income (loss). See NOTE 6 — Stockholders’ Equity and NOTE 7 — Fair Value Measurements for further discussion. |
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Property and equipment | ' |
Property and equipment—Property and equipment is stated at cost. Depreciation is provided for financial reporting purposes using the straight-line method over the asset’s estimated useful life. Accumulated depreciation was $120,272,000 and $115,790,000 as of June 30, 2014 and December 31, 2013, respectively. |
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We perform reviews for impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. An impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its fair value. Generally, fair value will be determined using valuation techniques such as the present value of future cash flows. |
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Income taxes | ' |
Income taxes—Deferred income taxes are provided on all differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements based upon enacted statutory tax rates in effect at the balance sheet date. Tax years after 2009 remain open to examination for federal and state income tax purposes. |
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Point loyalty program | ' |
Point loyalty program—We currently have a point loyalty program for our customers which allows them to earn points based on the volume of their gaming activity. All reward points earned by customers are expensed in the period they are earned. The estimated amount of points redeemable for cash is recorded as a reduction of gaming revenue and the estimated amount of points redeemable for services and merchandise is recorded as gaming expense. In determining the amount of the liability, which was $1,899,000 and $1,930,000, respectively, at June 30, 2014 and December 31, 2013, we estimate a redemption rate, a cost of rewards to be offered and the mix of cash, goods and services for which reward points will be redeemed. We use historical data to estimate those amounts. |
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Revenue and expense recognition | ' |
Revenue and expense recognition—Gaming revenues represent (i) the net win from slot machine, table games, internet gaming and sports wagering and (ii) commissions from pari-mutuel wagering. Other operating revenues consist of hotel rooms revenue, food and beverage sales and other miscellaneous income. Revenues do not include the retail amount of hotel rooms, food and beverage and other miscellaneous goods and services provided without charge to customers as promotional items of $4,603,000 and $9,073,000, and $4,963,000 and $9,968,000 for the three and six-month periods ended June 30, 2014 and 2013, respectively. The estimated direct cost of providing these items has been charged to the casino through interdepartmental allocations and is included in gaming expenses in the consolidated statements of earnings. |
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For the casino operations, the difference between the amount wagered by bettors and the amount paid out to bettors is referred to as the win. The win is included in the amount recorded in our consolidated financial statements as gaming revenue. The Delaware State Lottery Office sweeps the win from the casino operations, collects the State’s share of the win and the amount due to the vendors under contract with the State who provide the slot machines and associated computer systems, collects the amount allocable to purses for harness horse racing and remits the remainder to us as our commission for acting as a Licensed Agent. Gaming expenses include the amounts collected by the State (i) for the State’s share of the win, (ii) for remittance to the providers of the slot machines and associated computer systems, and (iii) for harness horse racing purses. We recognize revenues from sports wagering commissions when the event occurs. We recognize revenues from pari-mutuel commissions earned from live harness horse racing and importing of simulcast signals from other race tracks when the race occurs. Revenues from hotel rooms, food and beverage sales and other miscellaneous income are recognized at the time the service is provided. Amounts received in advance for hotel rooms, convention bookings and advance ticket sales are recorded as deferred revenue until the services are provided to the customer, at which point revenue is recognized. |
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Advertising costs | ' |
Advertising costs—The cost of general advertising is charged to operations as incurred. Advertising expenses were $494,000 and $1,042,000, and $513,000 and $1,023,000 for the three and six-month periods ended June 30, 2014 and 2013, respectively. |
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Net earnings (loss) per common share | ' |
Net earnings (loss) per common share—Nonvested share-based payment awards that include rights to dividends or dividend equivalents, whether paid or unpaid, are considered participating securities, and the two-class method of computing basic and diluted net earnings (loss) per common share (“EPS”) is applied for all periods presented. The following table sets forth the computation of EPS (in thousands, except per share amounts): |
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| | Three Months Ended | | Six Months Ended | |
June 30, | June 30, |
| | 2014 | | 2013 | | 2014 | | 2013 | |
Net earnings (loss) per common share — basic: | | | | | | | | | |
Net earnings (loss) | | $ | 164 | | $ | 491 | | $ | (889 | ) | $ | 208 | |
Allocation to nonvested restricted stock awards | | 4 | | 11 | | — | | 5 | |
Net earnings (loss) available to common stockholders | | $ | 160 | | $ | 480 | | $ | (889 | ) | $ | 203 | |
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Weighted-average shares outstanding | | 31,962 | | 31,849 | | 31,961 | | 31,848 | |
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Net earnings (loss) per common share — basic | | $ | 0.01 | | $ | 0.02 | | $ | (0.03 | ) | $ | 0.01 | |
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Net earnings (loss) per common share — diluted: | | | | | | | | | |
Net earnings (loss) | | $ | 164 | | $ | 491 | | $ | (889 | ) | $ | 208 | |
Allocation to nonvested restricted stock awards | | 4 | | 11 | | — | | 5 | |
Net earnings (loss) available to common stockholders | | $ | 160 | | $ | 480 | | $ | (889 | ) | $ | 203 | |
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Weighted-average shares and dilutive shares outstanding | | 31,962 | | 31,849 | | 31,961 | | 31,848 | |
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Net earnings (loss) per common share — diluted | | $ | 0.01 | | $ | 0.02 | | $ | (0.03 | ) | $ | 0.01 | |
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There were no options outstanding during the three and six-month periods ended June 30, 2014 or 2013. |
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Accounting for stock-based compensation | ' |
Accounting for stock-based compensation—We recorded total stock-based compensation expense for our restricted stock awards of $139,000 and $301,000, and $171,000 and $367,000 as general and administrative expenses for the three and six-month periods ended June 30, 2014 and 2013, respectively. We recorded income tax benefit (expense) of $57,000 and ($62,000), and $69,000 and ($59,000) for the three and six-month periods ended June 30, 2014 and 2013, respectively, related to our restricted stock awards. |
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Use of estimates | ' |
Use of estimates—The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the reported amounts of assets and liabilities, disclosures about contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on our best estimates and judgment. We evaluate our estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which we believe to be reasonable under the circumstances. We adjust such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets and declines in consumer spending have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ from these estimates. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the consolidated financial statements in future periods. |
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