Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 19, 2018 | Jun. 30, 2017 | |
Entity Registrant Name | DOVER DOWNS GAMING & ENTERTAINMENT INC | ||
Entity Central Index Key | 1,162,556 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 18,647,539 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Common Stock | Common Stock | |||
Entity Common Stock, Shares Outstanding | 18,413,587 | ||
Common Stock | Class A Common Stock | |||
Entity Common Stock, Shares Outstanding | 14,869,623 |
CONSOLIDATED STATEMENTS OF (LOS
CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS AND COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | |||
Gaming | $ 152,534 | $ 157,226 | $ 157,922 |
Other operating | 24,390 | 25,066 | 25,024 |
Total revenues | 176,924 | 182,292 | 182,946 |
Expenses: | |||
Gaming | 146,209 | 149,577 | 148,595 |
Other operating | 17,140 | 17,316 | 16,602 |
General and administrative | 5,174 | 5,375 | 5,499 |
Depreciation | 8,168 | 7,743 | 8,375 |
Total expenses | 176,691 | 180,011 | 179,071 |
Operating earnings | 233 | 2,281 | 3,875 |
Interest expense | (840) | (863) | (1,160) |
(Loss) earnings before income taxes | (607) | 1,418 | 2,715 |
Income tax expense | (461) | (632) | (842) |
Net (loss) earnings | (1,068) | 786 | 1,873 |
Unrealized gain (loss) on available-for-sale securities, net of income taxes | 6 | 3 | (6) |
Change in pension net actuarial loss and prior service cost, net of income taxes | (109) | (395) | 482 |
Comprehensive (loss) income | $ (1,171) | $ 394 | $ 2,349 |
Net (loss) earnings per common share (Note 3): | |||
Basic (in dollars per share) | $ (0.03) | $ 0.02 | $ 0.06 |
Diluted (in dollars per share) | $ (0.03) | $ 0.02 | $ 0.06 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
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 |
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 |
Commitments and contingencies (see Notes to the Consolidated Financial Statements) | ||
Stockholders' equity: | ||
Preferred stock, $0.10 par value; 1,000,000 shares authorized; shares issued and outstanding: none | ||
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 |
Common Stock | Common Stock | ||
Stockholders' equity: | ||
Common stock | 1,827 | 1,814 |
Total stockholders' equity | 1,827 | 1,814 |
Common Stock | Class A Common Stock | ||
Stockholders' equity: | ||
Common stock | 1,487 | 1,487 |
Total stockholders' equity | $ 1,487 | $ 1,487 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Preferred stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common Stock | Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 74,000,000 | 74,000,000 |
Common stock, shares issued | 18,272,809 | 18,144,992 |
Common stock, shares outstanding | 18,272,809 | 18,144,992 |
Common Stock | Class A Common Stock | ||
Common stock, par value (in dollars per share) | $ 0.10 | $ 0.10 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 14,869,623 | 14,869,623 |
Common stock, shares outstanding | 14,869,623 | 14,869,623 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating activities: | |||
Net (loss) earnings | $ (1,068) | $ 786 | $ 1,873 |
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities: | |||
Depreciation | 8,168 | 7,743 | 8,375 |
Amortization of credit facility origination fees | 57 | 89 | 111 |
Stock-based compensation | 295 | 326 | 375 |
Deferred income taxes | 457 | (36) | (508) |
Changes in assets and liabilities: | |||
Accounts receivable | (50) | (581) | 912 |
Due from State of Delaware | 1,565 | 667 | (694) |
Inventories | (18) | 2 | (129) |
Prepaid expenses and other | (446) | 204 | (146) |
Payable to/receivable from Dover Motorsports, Inc. | (51) | 66 | |
Income taxes receivable | (96) | 99 | (197) |
Accounts payable | 232 | 149 | (662) |
Purses due horsemen | (1,835) | 176 | 556 |
Accrued liabilities | (79) | 1,174 | 184 |
Deferred revenue | (45) | (47) | 19 |
Liability for pension benefits | (437) | (345) | (416) |
Net cash provided by operating activities | 6,700 | 10,355 | 9,719 |
Investing activities: | |||
Capital expenditures | (2,193) | (2,812) | (1,651) |
Purchase of available-for-sale securities | (59) | (55) | (16) |
Proceeds from sale of available-for-sale securities | 48 | 49 | 8 |
Proceeds from sale of property and equipment | 25 | ||
Net cash used in investing activities | (2,204) | (2,818) | (1,634) |
Financing activities: | |||
Borrowings from revolving line of credit | 69,280 | 46,850 | 52,060 |
Repayments of revolving line of credit | (74,630) | (53,100) | (59,570) |
Repurchase of common stock | (74) | (66) | (65) |
Credit facility fees | (35) | (40) | (93) |
Net cash used in financing activities | (5,459) | (6,356) | (7,668) |
Net (decrease) increase in cash | (963) | 1,181 | 417 |
Cash, beginning of period | 11,677 | 10,496 | 10,079 |
Cash, end of period | 10,714 | 11,677 | 10,496 |
Supplemental information: | |||
Interest paid | 780 | 778 | 1,108 |
Income tax payments, net of refunds received | 101 | 569 | 1,547 |
Change in accounts payable for capital expenditures | $ (212) | $ 220 | $ 67 |
Business Operations
Business Operations | 12 Months Ended |
Dec. 31, 2017 | |
Business Operations | |
Business Operations | NOTE 1—Business Operations References in this document to “we,” “us” and “our” mean Dover Downs Gaming & Entertainment, Inc. and/or its wholly owned subsidiaries, as appropriate. We are a premier gaming and entertainment resort destination whose operations consist of: · Dover Downs Casino — a 165,000-square foot casino complex featuring popular table games, including craps, roulette and card games such as blackjack, Spanish 21, baccarat, 3-card and pai gow poker, the latest in slot machine offerings, multi-player electronic table games, a poker room, a Race & Sports Book operation, the Dover Downs’ Fire & Ice Lounge, the Festival Buffet, Frankie’s Italian restaurant, as well as several bars, restaurants and six retail outlets; · Dover Downs Hotel and Conference Center — a 500 room AAA Four Diamond hotel with a fine dining restaurant, full-service spa/salon, conference, banquet, ballroom and concert hall facilities; and · Dover Downs Raceway — a harness racing track with pari-mutuel wagering on live and simulcast horse races. All of our gaming operations are located at our entertainment complex in Dover, the capital of the State of Delaware. Dover Downs Gaming & Entertainment, Inc. is a public holding company that has two wholly owned subsidiaries: Dover Downs, Inc. and Dover Downs Gaming Management Corp. Dover Downs, Inc. was incorporated in 1967 and began motorsports and harness racing operations in 1969. In June of 1994, legislation authorizing video lottery operations in the State of Delaware (the “State”) was adopted. Our casino operations began on December 29, 1995. As a result of several restructurings, Dover Downs, Inc. became a wholly owned subsidiary of Dover Motorsports, Inc. (formerly known as Dover Downs Entertainment, Inc.) (“DVD”), and became the operating entity for all of DVD’s gaming operations. Dover Downs Gaming & Entertainment, Inc. was incorporated in the State in December of 2001 as a wholly owned subsidiary of DVD. Effective March 31, 2002, DVD completed a tax-free spin-off of its gaming operations by contributing 100% of the issued and outstanding common stock of Dover Downs, Inc. to Dover Downs Gaming & Entertainment, Inc., and subsequently distributing 100% of our issued and outstanding common stock to DVD stockholders. Immediately following the spin-off, Dover Downs Gaming & Entertainment, Inc. became an independent publicly traded company. Dover Downs, Inc. is authorized to conduct video lottery, sports wagering, table game and internet gaming operations as one of three “Licensed Agents” under the Delaware State Lottery Code. Licensing, administration and control of gaming operations in Delaware is under the Delaware State Lottery Office and Delaware’s Department of Safety and Homeland Security, Division of Gaming Enforcement. Our license from the Delaware Harness Racing Commission (the “Commission”) to hold harness race meetings on our premises and to offer pari-mutuel wagering on live and simulcast horse races must be renewed on an annual basis. In order to maintain our gaming license, we are required to maintain our harness horse racing license. We have received an annual license from the Commission for the past 49 consecutive years and management believes that our relationship with the Commission remains good. Due to the nature of our business activities, we are subject to various federal, state and local regulations. As part of our license arrangements, we are subject to various taxes and fees which are subject to change by the Delaware legislature. In recent years, the mid-Atlantic region has experienced an unprecedented expansion in gaming venues and gaming offerings. This has had a significant adverse effect on our visitation numbers, our revenues and our profitability. Management has estimated that approximately 28% of our gaming win comes from Maryland patrons and approximately 60% of our Capital Club® member gaming win comes from out of state patrons. For the past several years, we have been engaged with the Delaware legislature, seeking to change the cost sharing structure that exists between video lottery agents, video lottery vendors, horsemen and the State, all in an effort to make the Delaware gaming industry more competitive in the regional marketplace. Several bills have been introduced to implement one or more of the recommendations of the gaming industry and the legislatively created Lottery & Gaming Study Commission, but not enacted. Without legislative relief, we may be unable to refinance or extend the maturity of our credit facility on favorable terms or may default on our obligations, we may be unable to allocate sufficient resources to marketing and promotions in order to compete effectively in the regional marketplace, we may be unable to allocate sufficient resources to maintain our facility, and we may be required to take other actions in order to manage expenses - especially with respect to operations that have operated at a loss, such as table games. Such actions could adversely affect our business, financial condition, operating results and cash flow. |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2017 | |
Going Concern | |
Going Concern | NOTE 2—Going Concern At December 31, 2017, we had a credit agreement with a bank group (see NOTE 6 — Credit Facility). The maximum borrowing limit under the facility was $35,000,000 as of December 31, 2017 and the facility expires September 30, 2018. At December 31, 2017, there was $19,900,000 outstanding under the facility. The credit facility is classified as a current liability as of December 31, 2017 in our consolidated balance sheets as the facility expires on September 30, 2018. We will seek to refinance or extend the maturity of this obligation prior to its expiration date; however, there is no assurance that we will be able to execute this refinancing or extension or, if we are able to refinance or extend this obligation, that the terms of such refinancing or extension would be as favorable as the terms of our existing credit facility. These factors raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. The report from our independent registered public accountants, KPMG LLP, dated March 1, 2018, includes an explanatory paragraph related to our ability to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | NOTE 3—Summary of Significant Accounting Policies 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. 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. 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 (loss) income. See NOTE 9 — Stockholders’ Equity and NOTE 10 — Fair Value Measurements for further discussion. Inventories— Inventories consisting primarily of food, beverage and operating supplies are stated at the lower of cost or net realizable value with cost being determined on the first-in, first-out basis. Property and equipment— Property and equipment is stated at cost. Depreciation is provided using the straight-line method over the following estimated useful lives: Facilities 10-40 years Furniture, fixtures and equipment 3-10 years 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. 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 2013 remain open to examination for federal and state income tax purposes. We recognize interest expense and penalties on uncertain income tax positions as a component of interest expense. No interest expense or penalties were recorded for uncertain income tax matters in 2017, 2016 or 2015. As of December 31, 2017 and 2016, we had no liabilities for uncertain income tax matters. 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 $1,700,000 and $1,652,000, respectively, at December 31, 2017 and 2016, 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. 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 $18,812,000, $18,784,000 and $18,003,000 for the years ended December 31, 2017, 2016 and 2015, 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 (loss) earnings. 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. Advertising costs— Advertising costs are charged to operations as incurred. Advertising expenses were $2,034,000, $2,161,000 and $2,135,000 in 2017, 2016 and 2015, respectively. Net (loss) earnings 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 (loss) earnings 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): 2017 2016 2015 Net (loss) earnings per common share — basic and diluted: Net (loss) earnings $ ) $ $ Allocation to nonvested restricted stock awards — Net (loss) earnings available to common stockholders $ ) $ $ Weighted-average shares outstanding Net (loss) earnings per common share — basic and diluted $ ) $ $ There were no options outstanding and we paid no dividends during 2017, 2016 or 2015. Accounting for stock-based compensation— We recorded total stock-based compensation expense for our restricted stock awards of $295,000, $326,000 and $375,000 as general and administrative expenses for the years ended December 31, 2017, 2016 and 2015, respectively. We recorded income tax benefit (expense) of $48,000, $14,000 and ($20,000) for the years ended December 31, 2017, 2016 and 2015, respectively, related to vesting of our restricted stock awards. 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. Volatility in credit and 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. Segment information —We account for operating segments based on those used for internal reporting to management. We report information under a single gaming and entertainment segment. Recent accounting pronouncements —In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which provides the option to reclassify certain income tax effects related to the Tax Cuts and Jobs Act passed in December of 2017 between accumulated other comprehensive income and retained earnings and also requires additional disclosures. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. Adoption of this ASU is to be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the tax laws or rates were recognized. We are currently analyzing the impact of this ASU and, at this time, we have not yet determined whether we will elect to make this optional reclassification. In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715) . ASU 2017-07 provides guidance on the presentation of the service cost component and the other components of net period pension cost in the consolidated statements of (loss) earnings. The standard is effective for annual and interim reporting periods beginning after December 15, 2017 and requires retrospective adoption. We adopted this ASU in the first quarter of 2018, which did not have a material impact to our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments , which provides guidance on how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We adopted this ASU in the first quarter of 2018. The adoption of this ASU did not have an impact on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , which is intended to simplify various aspects of the accounting for share-based payments, including treatment of excess tax benefits, forfeitures, consideration of minimum statutory tax withholding requirements and classification on the statement of cash flows. The update was effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. We adopted this ASU in the first quarter of 2017, which did not have a material impact to our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires that lessees recognize assets and liabilities for leases with lease terms greater than twelve months in the statement of financial position and also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The update is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within those fiscal years. Early adoption is permitted. We are currently analyzing the impact of this ASU and, at this time, we are unable to determine the impact on the new standard, if any, on our consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory , which requires companies to measure inventory at lower of cost and net realizable value, versus lower of cost or market. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The update was effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We adopted this ASU in the first quarter of 2017, which did not have an impact to our consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which supersedes nearly all existing revenue recognition guidance under accounting principles generally accepted in the United States of America. The FASB has issued several amendments to the standard, including clarification on accounting for and identifying performance obligations. The standard can be applied using the full retrospective method or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The new standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We will adopt this standard effective January 1, 2018 using the full retrospective method. We have almost completed our analysis of the new standard across all of our revenue streams to evaluate its impact. We expect the most significant effect on our consolidated financial statements will be related to the accounting for our point loyalty program and casino promotional allowances, which will impact the classification of revenues between gaming and other operating. Under our point loyalty program, customers earn points based on the volume of their gaming activity. All reward points earned by customers are expensed in the period earned. Prior to the adoption of ASU 2014-09, the estimated amount of points redeemable for cash was recorded as a reduction of gaming revenue and the estimated cost of points redeemable for services and merchandise was recorded as gaming expense. Our liability for unredeemed points was based on the estimated costs of services or merchandise to be provided and estimated redemption rates. Under the new standard, points awarded under our point loyalty program are considered a material right given to the customers based on their gaming play and the promise to provide points to customers is accounted for as a separate performance obligation. The new standard requires us to allocate the revenues associated with the customers’ gaming activity between gaming revenue and the value of the points earned after factoring in the likelihood of redemption. As a result, gaming revenues are reduced with a corresponding increase to other operating revenues or our point liability. The value of the unredeemed points will now be determined based on the estimated standalone selling price of the points earned. The revenue associated with the points earned is recognized in the period in which they are redeemed. As a result of applying the new standard, we expect to increase our point liability and reduce our retained earnings balance at January 1, 2016 by approximately $500,000. We will recast prior period results; however, the impact to our quarterly operating earnings for the years 2016 and 2017 is expected to be less than $50,000 and is not considered material. Prior to the adoption of ASU 2014-09, other operating revenues did 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. The estimated direct cost of providing these items was charged to the casino through interdepartmental allocations and included in gaming marketing expenses. The new standard requires the complimentary items to be considered a separate performance obligation, which requires us to allocate a portion of revenue from a gaming transaction to other operating revenue based on the estimated standalone selling prices of the promotional items provided. For example, when a casino customer is given a complimentary room, we are now required to allocate a portion of the casino revenue earned from the customer to rooms revenue based on the estimated standalone selling price of the room. As a result of applying the new standard, we expect a significant decrease in gaming revenue and expenses and a similar increase in other operating revenue and expenses. However, due to the complexity and nature of the gaming industry, the quantitative effects of these changes have not yet been determined and are still being analyzed. Reclassifications— Certain amounts in the prior year financial statements have been reclassified to conform to the current-year presentation. The impact of the reclassifications made to prior year amounts are not material and did not affect net earnings. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment | |
Property and Equipment | NOTE 4—Property and Equipment Property and equipment consists of the following as of December 31: 2017 2016 Land $ $ Casino facility Hotel facility Harness racing facilities General facilities Furniture, fixtures and equipment Construction in progress Less accumulated depreciation ) ) $ $ |
Accrued Liabilities
Accrued Liabilities | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Liabilities | |
Accrued Liabilities | NOTE 5—Accrued Liabilities Accrued liabilities consist of the following as of December 31: 2017 2016 Point loyalty program $ $ Payroll and related items Win due to Delaware State Lottery Office Other $ $ |
Credit Facility
Credit Facility | 12 Months Ended |
Dec. 31, 2017 | |
Credit Facility. | |
Credit Facility | NOTE 6—Credit Facility On July 25 2017, we modified our credit agreement with our bank group. The credit facility was modified to: extend the maturity date to September 30, 2018, and adjust the maximum borrowing limit from $35,000,000 to $32,500,000 as of March 31, 2018 and through the date of maturity. Interest is based upon LIBOR plus a margin that varies between 150 and 350 basis points (200 basis points at December 31, 2017) depending on the leverage ratio. The credit facility is secured by a mortgage on and security interest in all real and personal property owned by our wholly owned subsidiary Dover Downs, Inc. The credit facility contains certain covenants including maximum ratio of funded debt to earnings before interest, taxes, depreciation and amortization (the “leverage ratio”), and a minimum fixed charge coverage ratio. Material adverse changes in our results of operations could impact our ability to satisfy these requirements. In addition, the credit agreement includes a material adverse change clause and prohibits the payment of dividends. The credit facility provides for seasonal funding needs, capital improvements and other general corporate purposes. At December 31, 2017, there was $19,900,000 outstanding at an interest rate of 3.56% and $15,100,000 was available pursuant to the facility. Additionally, we were in compliance with all terms of the facility at December 31, 2017 and we expect to be in compliance with the financial covenants, and all other covenants, for all measurement periods through September 30, 2018, the expiration date of the facility. The credit facility is classified as a current liability as of December 31, 2017 in our consolidated balance sheets as the facility expires on September 30, 2018. We will seek to refinance or extend the maturity of this obligation prior to its expiration date; however, there is no assurance that we will be able to execute this refinancing or extension or, if we are able to refinance or extend this obligation, that the terms of such refinancing or extension would be as favorable as the terms of our existing credit facility. These factors raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements have been prepared assuming that we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. The report from our independent registered public accountants, KPMG LLP, dated March 1, 2018, includes an explanatory paragraph related to our ability to continue as a going concern. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Income Taxes | NOTE 7—Income Taxes The current and deferred income tax (expense) benefit is as follows: Years ended December 31, 2017 2016 2015 Current: Federal $ — $ ) $ ) State ) ) ) ) ) ) Deferred: Federal ) State ) Total income tax expense $ ) $ ) $ ) A reconciliation of the effective income tax rate with the applicable statutory federal income tax rate is as follows: Years ended December 31, 2017 2016 2015 Federal tax at statutory rate % % % State taxes, net of federal benefit % % % Non-deductible stock based compensation )% % % Federal tax credit for payroll tax on employee tips % )% )% Tax Cuts and Jobs Act )% — — Other )% % )% Effective income tax rate )% % % The components of deferred income tax assets and liabilities are as follows as of December 31: 2017 2016 Deferred income tax assets: Point loyalty program $ $ Accrued expenses Federal tax credits Other Total deferred income tax assets Deferred income tax liabilities: Depreciation — property and equipment ) ) Total deferred income tax liabilities ) ) Net deferred income tax assets $ $ Amounts recognized in the consolidated balance sheet: Noncurrent deferred income tax assets $ $ The passage of the Tax Cuts and Jobs Act in December of 2017 lowered our federal income tax rate to 21% beginning in 2018 requiring us to revalue our net deferred federal tax assets at December 31, 2017. This resulted in a $662,000 decrease in our net deferred income tax assets and a corresponding increase in deferred income tax expense. |
Pension Plans
Pension Plans | 12 Months Ended |
Dec. 31, 2017 | |
Pension Plans | |
Pension Plans | NOTE 8—Pension Plans We maintain a non-contributory, tax qualified defined benefit pension plan that has been frozen since July 2011. All of our full time employees were eligible to participate in this qualified pension plan. Benefits provided by our qualified pension plan were based on years of service and employees’ remuneration over their term of employment. Compensation earned by employees up to July 31, 2011 is used for purposes of calculating benefits under our pension plan with no future benefit accruals after this date. We also maintain a non-qualified, non-contributory defined benefit pension plan, the excess plan, for certain employees that has been frozen since July 2011. This excess plan provided benefits that would otherwise be provided under the qualified pension plan but for maximum benefit and compensation limits applicable under federal tax law. The cost associated with the excess plan is determined using the same actuarial methods and assumptions as those used for our qualified pension plan. The assets for the excess plan aggregate $344,000 and $304,000 as of December 31, 2017 and 2016, respectively, and are recorded in other assets in our consolidated balance sheets (see NOTE 10 — Fair Value Measurements). The following table sets forth the plans’ funded status and amounts recognized in our consolidated balance sheets as of December 31: 2017 2016 Change in benefit obligation: Benefit obligation at beginning of year $ $ Interest cost Actuarial loss Benefits paid ) ) Benefit obligation at end of year Change in plan assets: Fair value of plan assets at beginning of year Actual gain on plan assets Employer contribution Benefits paid ) ) Fair value of plan assets at end of year Unfunded status $ ) $ ) The following table presents the amounts recognized in our consolidated balance sheets as of December 31: 2017 2016 Accrued liabilities $ ) $ ) Liability for pension benefits ) ) $ ) $ ) Amounts recognized in accumulated other comprehensive loss that have not yet been recognized as components of net periodic pension benefit (expense) at December 31 are as follows: 2017 2016 Net actuarial loss, pre-tax $ $ The components of net periodic pension benefit for the years ended December 31, 2017, 2016 and 2015 are as follows: 2017 2016 2015 Interest cost $ $ $ Expected return on plan assets ) ) ) Recognized net actuarial loss $ ) $ ) $ ) For the year ending December 31, 2018, we expect to recognize the following amount as a component of net periodic benefit (expense) which is included in accumulated comprehensive loss as of December 31, 2017: Actuarial loss $ The principal assumptions used to determine the net periodic pension benefit for the years ended December 31, 2017, 2016 and 2015, and the actuarial value of the benefit obligation at December 31, 2017 and 2016 (the measurement dates) for our pension plans are as follows: Net Periodic Pension Cost Benefit Obligation 2017 2016 2015 2017 2016 Weighted-average discount rate % % % % % Weighted-average rate of compensation increase n/a n/a n/a n/a n/a Expected long-term rate of return on plan assets % % % n/a n/a Historically, we used a single weighted-average discount rate approach to determine the pension benefit obligation and the subsequent years’ interest cost component of the net periodic pension benefit. The weighted-average discount rate was determined by matching estimated benefit payment cash flows to a yield curve derived from long-term, high-quality corporate bond curves. This method represented the constant annual rate that would be required to discount all future benefit payments related to past service from the date of expected future payment to the measurement date. As of December 31, 2015, we elected to use a refined method, known as the spot rate approach, to determine the benefit obligation and the subsequent years’ interest cost component of the net periodic pension benefit. This method uses individual spot rates along the yield curve that correspond with the timing of each benefit payment and will provide a more precise measurement of the interest cost by improving the correlation between projected benefit cash flows and the corresponding spot yield curve rates. The change in method did not impact the December 31, 2015 benefit obligation, but resulted in a slight decrease in the interest component of the net periodic pension benefit in 2016. We accounted for this as a change in estimate on a prospective basis. For 2017, we assumed a long-term rate of return on plan assets of 8.0%. In developing the 8.0% expected long-term rate of return assumption, we reviewed asset class return expectations and long-term inflation assumptions and considered our historical compounded return, which was consistent with our long-term rate of return assumption. In determining the 2016 pension liability, we used the Society of Actuaries’ (“SOA”) RP-2014 mortality tables and the MP-2016 mortality improvement tables, which along with a lower discount rate, resulted in an increase in our benefit obligation and accumulated other comprehensive loss at December 31, 2016. For 2017, we adopted the updated MP-2017 mortality improvement tables. These new mortality tables, along with the lower discount rate, resulted in an increase in our benefit obligation and accumulated other comprehensive loss at December 31, 2017. Our investment goals are to achieve a combination of moderate growth of capital and income with moderate risk. Acceptable investment vehicles will include mutual funds, exchange-traded funds (ETFs), limited partnerships, and individual securities. Our target allocations for plan assets are 60% equities and 40% fixed income. Of the equity portion, 50% will be invested in passively managed securities using ETFs and the other 50% will be invested in actively managed investment vehicles. We address diversification by investing in mutual funds and ETFs which hold large, mid and small capitalization U.S. stocks, international (non-U.S.) equity, REITS, and real assets (consisting of inflation-linked bonds, real estate and natural resources). A sufficient percentage of investments will be readily marketable in order to be sold to fund benefit payment obligations as they become payable. The fair values of our pension assets as of December 31, 2017 by asset category are as follows (refer to NOTE 10 — Fair Value Measurements for a description of Level 1, Level 2 and Level 3 categories): Asset Category Total Level 1 Level 2 Level 3 Mutual funds/ETFs: Equity-large cap $ $ — — Equity-mid cap — — Equity-small cap — — Equity-international — — Fixed income — — Money market — — Total mutual funds/ETFs $ $ — — The fair values of our pension assets as of December 31, 2016 by asset category are as follows (refer to NOTE 10 — Fair Value Measurements for a description of Level 1, Level 2 and Level 3 categories): Asset Category Total Level 1 Level 2 Level 3 Corporate common stock $ $ $ — $ — Mutual funds/ETFs: Equity-large cap — — Equity-mid cap — — Equity-small cap — — Equity-international — — Fixed income — — Real estate — — Money market — — Total mutual funds/ETFs — — Grand total $ $ $ — $ — We expect to contribute approximately $490,000 to our defined benefit pension plans in 2018. Estimated future benefit payments are as follows: 2018 $ 2019 $ 2020 $ 2021 $ 2022 $ 2023-2027 $ We also maintain a non-elective, non-qualified supplemental executive retirement plan (“SERP”) which provides deferred compensation to certain highly compensated employees that approximates the value of benefits lost by the freezing of the pension plan which are not offset by our enhanced matching contribution in our 401(k) plan. The SERP is a discretionary defined contribution plan and contributions made to the SERP in any given year are not guaranteed and will be at the sole discretion of our Compensation and Stock Incentive Committee. During 2017, 2016 and 2015, we recorded expenses of $120,000, $124,000 and $99,000, respectively, related to the SERP. During 2017, 2016 and 2015, we contributed $122,000, $99,000 and $126,000 to the plan, respectively. The liability for SERP pension benefits was $120,000 and $122,000 as of December 31, 2017 and 2016, respectively, and is included in accrued liabilities in our consolidated balance sheets. We maintain a defined contribution 401(k) plan which permits participation by substantially all employees. Our matching contributions to the 401(k) plan were $842,000, $833,000 and $874,000 for the years ended December 31, 2017, 2016 and 2015, respectively. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity | |
Stockholders' Equity | NOTE 9—Stockholders’ Equity Changes in the components of stockholders’ equity are as follows (in thousands, except per share amounts): Common Class A Additional Retained Accumulated Balance at December 31, 2014 $ $ $ $ $ ) Net earnings — — — — Issuance of nonvested stock awards, net of forfeitures — ) — — Stock-based compensation — — — — Change in net actuarial loss and prior service cost, net of income tax expense of $318 — — — — Unrealized loss on available-for-sale securities, net of income tax benefit of $4 — — — — ) Repurchase and retirement of common stock ) — ) — — Balance at December 31, 2015 ) Net earnings — — — — Issuance of nonvested stock awards, net of forfeitures — ) — — Stock-based compensation — — — — Change in net actuarial loss and prior service cost, net of income tax benefit of $261 — — — — ) Unrealized gain on available-for-sale securities, net of income tax expense of $1 — — — — Repurchase and retirement of common stock ) — ) — — Balance at December 31, 2016 ) Net loss — — — ) — Issuance of nonvested stock awards, net of forfeitures — ) — — Stock-based compensation — — — — Change in net actuarial loss and prior service cost, net of income tax benefit of $72 — — — — ) Unrealized gain on available-for-sale securities, net of income tax expense of $4 — — — — Repurchase and retirement of common stock ) — ) — — Balance at December 31, 2017 $ $ $ $ $ ) As of December 31, 2017 and 2016, accumulated other comprehensive loss consists of the following: 2017 2016 Net actuarial loss and prior service cost not yet recognized in net periodic benefit cost, net of income tax benefit of $3,152,000 and $3,080,000, respectively $ ) $ ) Accumulated unrealized gain on available-for-sale securities, net of income tax expense of $23,000 and $19,000, respectively Accumulated other comprehensive loss $ ) $ ) We have 125,000,000 shares of authorized capital stock which consists of 74,000,000 shares of common stock, par value $.10 per share; 50,000,000 shares of Class A common stock, par value $.10 per share; and 1,000,000 shares of preferred stock, par value $.10 per share. The holders of common stock are entitled to one vote per share and the holders of our Class A common stock are entitled to 10 votes per share. There is no cumulative voting. Shares of Class A common stock are convertible at any time into our shares of common stock on a one-for-one basis at the option of the stockholder. Subject to rights of any preferred stockholder, holders of our common stock and Class A common stock are entitled to receive on a pro rata basis such dividends, if any, as may be declared from time to time by the Board of Directors out of funds legally available for that purpose. At the discretion of our Board of Directors, we may pay to the holders of common stock a cash dividend greater than the dividend, if any, paid to the holders of Class A common stock. Under Delaware law, a change of ownership of a Licensed Agent will automatically terminate its license 90 days after the change of ownership occurs, unless the Director of the Delaware State Lottery Office determines after application to issue a new license to the new owners. Change of ownership may occur if any new individual or entity acquires, directly or indirectly, 10% or more of the Licensed Agent or if more than 20% of the legal or beneficial interest in the Licensed Agent is transferred, whether by direct or indirect means. The Commission may require extensive background investigations of any new owner acquiring a 10% or greater interest in a Licensed Agent, including criminal background checks. Accordingly, we have a restrictive legend on our shares of common stock which require that (a) any holders of common stock found to be disqualified or unsuitable or not possessing the qualifications required by any appropriate gaming authority could be required to dispose of such stock and (b) any holder of common stock intending to acquire 10% or more of our outstanding common stock must first obtain prior written approval from the Delaware State Lottery Office. We adopted a stockholder rights plan in 2012. The rights are attached to and trade in tandem with our common stock and Class A common stock. Each right entitles the registered holder to purchase from us one share of common stock. The rights, unless earlier redeemed by our Board of Directors, will detach and trade separately from our common stock upon the occurrence of certain events such as the unsolicited acquisition by a third party of beneficial ownership of 10% or more of our outstanding combined common stock and Class A common stock or the announcement by a third party of the intent to commence a tender or exchange offer for 10% or more of our outstanding combined common stock and Class A common stock. After the rights have detached, the holders of such rights would generally have the ability to purchase such number of either shares of our common stock or stock of an acquirer of ours having a market value equal to twice the exercise price of the right being exercised, thereby causing substantial dilution to a person or group of persons attempting to acquire control of us. The rights may serve as a significant deterrent to unsolicited attempts to acquire control of us, including transactions involving a premium to the market price of our stock. This rights agreement expires on January 1, 2022, unless earlier redeemed. On January 23, 2013, our Board of Directors suspended the quarterly dividend. In addition, our credit facility prohibits the payment of dividends. See NOTE 6 — Credit Facility. On October 23, 2002, our Board of Directors authorized the repurchase of up to 3,000,000 shares of our outstanding common stock. The purchases may be made in the open market or in privately negotiated transactions as conditions warrant. The repurchase authorization has no expiration date, does not obligate us to acquire any specific number of shares and may be suspended at any time. No purchases of our equity securities were made pursuant to this authorization during 2017 or 2016. At December 31, 2017, we had remaining repurchase authority of 1,653,333 shares. At present we are not permitted to make such purchases under our credit facility. During the years ended December 31, 2017, 2016 and 2015, we purchased and retired 70,483, 67,555 and 73,453 shares of our outstanding common stock for $74,000, $66,000 and $65,000, respectively. These purchases were made from employees in connection with the vesting of restricted stock awards under our stock incentive plan and were not pursuant to the aforementioned repurchase authorization. Since the vesting of a restricted stock award is a taxable event to our employees for which income tax withholding is required, the plan allows employees to surrender to us some of the shares that would otherwise have transferred to the employee in satisfaction of their tax liability. The surrender of these shares is treated by us as a purchase of the shares. We have a stock incentive plan which provides for the grant of up to 2,000,000 shares of common stock to our officers and key employees through stock options and/or awards valued in whole or in part by reference to our common stock, such as nonvested restricted stock awards. Under the plan, nonvested restricted stock vests an aggregate of twenty percent each year beginning on the second anniversary date of the grant. The aggregate market value of the nonvested restricted stock at the date of issuance is being amortized on a straight-line basis over the six-year period. As of December 31, 2017, there were 1,064,926 shares available for granting options or stock awards. Nonvested restricted stock activity for the year ended December 31, 2017 was as follows: Number of Weighted Nonvested at December 31, 2016 $ Granted $ Vested ) $ Forfeited ) $ Nonvested at December 31, 2017 $ The aggregate market value of the nonvested restricted stock at the date of issuance is being amortized on a straight-line basis over the six-year service period or the service period remaining until normal retirement age, if shorter. The total fair value of shares vested during the years ended December 31, 2017, 2016 and 2015 based on the weighted average grant date fair value was $381,000, $477,000 and $608,000, respectively. The grant-date fair value per share of restricted stock awards granted during the years ended December 31, 2017, 2016 and 2015 was $1.05, $0.97 and $0.89, respectively. We recorded, within general and administrative expenses, compensation expense of $295,000, $326,000 and $375,000 related to restricted stock awards for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017, there was $476,000 of total deferred compensation cost related to nonvested restricted stock awards granted to employees under our stock incentive plan. That cost is expected to be recognized over a weighted-average period of 3.5 years. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | NOTE 10—Fair Value Measurements Our financial instruments are classified and disclosed in one of the following three categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The following table summarizes the valuation of our financial instrument pricing levels as of December 31, 2017 and 2016: Total Level 1 Level 2 Level 3 2017 Available-for-sale securities $ $ $ — $ — 2016 Available-for-sale securities $ $ $ — $ — Our investments in available-for-sale securities consist of mutual funds. These investments are included in other assets on our consolidated balance sheets. The carrying amounts of other financial instruments reported in our consolidated balance sheets for current assets and current liabilities approximates their fair values because of the short maturity of these instruments. At December 31, 2017 and 2016, there was $19,900,000 and $25,250,000, respectively, outstanding under our revolving credit agreement. The borrowings under our revolving credit agreement bear interest at the variable rate described in NOTE 6 — Credit Facility and therefore we believe approximate fair value. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions | |
Related Party Transactions | NOTE 11—Related Party Transactions During the years ended December 31, 2017, 2016 and 2015, we allocated costs of $1,862,000, $1,952,000 and $1,851,000, respectively to DVD, a company related through common ownership, for certain administrative and operating services, including leased space. DVD allocated certain administrative and operating service costs of $187,000, $158,000 and $252,000, respectively, to us for the years ended December 31, 2017, 2016 and 2015. The allocations were based on an analysis of each company’s share of the costs. In connection with DVD’s 2017, 2016 and 2015 NASCAR event weekends at Dover International Speedway, we provided certain services, primarily catering, for which DVD was invoiced $903,000, $876,000 and $836,000, respectively. Additionally, DVD invoiced us $224,000, $200,000 and $230,000 during 2017, 2016 and 2015, respectively, for tickets, their commission for suite catering and other services to the NASCAR events. As of December 31, 2017 and 2016, respectively, our consolidated balance sheets included $7,000 in receivables from DVD for the aforementioned items. We settled these items in January of 2018 and 2017. The net costs incurred by each company for these services are not necessarily indicative of the costs that would have been incurred if the companies had been unrelated entities and/or had otherwise independently managed these functions; however, management believes that these costs are reasonable. Prior to our spin-off from DVD in 2002, both companies shared certain real property in Dover, Delaware. At the time of the spin-off, some of this real property was transferred to us to ensure that the real property holdings of each company was aligned with its past uses and future business needs. During our harness racing season, we have historically used the 5/8-mile harness racing track that is located on DVD’s property and is on the inside of its one-mile motorsports superspeedway. In order to continue this historic use, DVD granted a perpetual easement to the harness track to us at the time of the spin-off. This perpetual easement allows us to have exclusive use of the harness track during the period beginning November 1 of each year and ending April 30 of the following year, together with set up and tear down rights for the two weeks before and after such period. The easement requires that we maintain the harness track but does not require the payment of any rent. Various easements and agreements relative to access, utilities and parking have also been entered into between us and DVD relative to our respective Dover, Delaware facilities. DVD pays rent to us for the lease of its principal executive office space. We also allow DVD to use our indoor grandstands in connection with DVD’s two annual motorsports weekends. We do not assess rent for this nominal use and may discontinue the use at our discretion. In conjunction with the spin-off from DVD, we and DVD entered into various agreements that addressed the allocation of assets and liabilities between the two companies and that define the companies’ relationship after the separation. Among these are the Real Property Agreement and the Transition Support Services Agreement. The Real Property Agreement governs certain real property transfers, leases and easements affecting our Dover, Delaware facility. The Transition Support Services Agreement provides for each of us and DVD to provide each other with certain administrative and operational services. The party receiving the services is required to pay for them within 30 business days after receipt of an invoice at rates agreed upon by us and DVD. The agreement may be terminated in whole or in part 90 days after the request of the party receiving the services or 180 days after the request of the party providing the services. Henry B. Tippie, Chairman of our Board of Directors, controls in excess of fifty percent of our voting power. Mr. Tippie’s voting control emanates from his direct and indirect holdings of common stock and Class A common stock, from his status as trustee of the RMT Trust, our largest stockholder, and from certain shares as to which he has voting rights pursuant to a voting agreement with R. Randall Rollins, one of our directors. This means that Mr. Tippie has the ability to determine the outcome of our election of directors and to determine the outcome of many significant corporate transactions, many of which only require the approval of a majority of our voting power. Patrick J. Bagley, Timothy R. Horne, Denis McGlynn, Jeffrey W. Rollins, R. Randall Rollins, Richard K. Struthers and Henry B. Tippie are all Directors of ours and DVD. Denis McGlynn is the President and Chief Executive Officer of both companies, Klaus M. Belohoubek is the Senior Vice President — General Counsel and Secretary of both companies and Timothy R. Horne is the Senior Vice President — Finance and Chief Financial Officer of both companies. Mr. Tippie controls in excess of fifty percent of the voting power of DVD. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies | |
Commitments and Contingencies | NOTE 12—Commitments and Contingencies We are a party to ordinary routine litigation incidental to our business. Management does not believe that the resolution of any of these matters is likely to have a material adverse effect on our results of operations, financial position or cash flows. We have employment, severance and noncompete agreements with certain of our officers and directors under which certain change of control, severance and noncompete payments and benefits might become payable in the event of a change in our control, defined to include a tender offer or the closing of a merger or similar corporate transactions. In the event of such a change in our control and the subsequent termination of employment of all employees covered under these agreements, we estimate that the maximum contingent liability would range from $8,400,000 to $10,300,000 depending on the tax treatment of the payments. To the extent that any of the potential payments or benefits due under the agreements constitute an excess “parachute payment” under the Internal Revenue Code and result in the imposition of an excise tax, each agreement requires that we pay the amount of such excise tax plus any additional amounts necessary to place the officer or director in the same after-tax position as he would have been had no excise tax been imposed. We estimate that the tax gross ups that could be paid under the agreements in the event the agreements were triggered due to a change of control could be between $1,200,000 and $3,100,000 and these amounts have been included in the maximum contingent liability disclosed above. This maximum tax gross up assumes that none of the payments made after the hypothetical change in control would be characterized as reasonable compensation for services rendered. Each agreement with an executive officer provides that fifty percent of the monthly amount paid during the term is paid in consideration of the executive officer’s non-compete covenants. The exclusion of these amounts would reduce the calculated amount of excess parachute payments subject to tax. We are unable to conclude whether the Internal Revenue Service would characterize all or some of these non-compete payments as reasonable compensation for services rendered. |
Quarterly Results (unaudited)
Quarterly Results (unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Results (unaudited) | |
Quarterly Results (unaudited) | NOTE 13—Quarterly Results (unaudited) March 31 June 30 September 30 December 31(a) Year Ended December 31, 2017 Revenues $ $ $ $ Operating earnings (loss) $ $ $ ) $ ) Net (loss) earnings $ ) $ $ ) $ ) Net (loss) earnings per share-basic and diluted $ ) $ — $ — $ ) Year Ended December 31, 2016 Revenues $ $ $ $ Operating earnings (loss) $ $ $ $ ) Net (loss) earnings $ ) $ $ $ ) Net (loss) earnings per share-basic and diluted $ ) $ $ $ ) (a) In the fourth quarter of 2017, the passage of the Tax Cuts and Jobs Act lowered our future federal income tax rate to 21% requiring us to revalue net deferred federal tax assets. As a result, net loss and net loss per share — basic and diluted increased by $662,000 and $0.02, respectively. See NOTE 6 — Income Taxes. Our quarterly operating results are affected by weather and the general economic conditions in the United States. Additionally, given our high level of fixed operating costs, fluctuations in our business volume can lead to variations in quarterly operating results. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
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. |
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. |
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 (loss) income. See NOTE 9 — Stockholders’ Equity and NOTE 10 — Fair Value Measurements for further discussion. |
Inventories | Inventories— Inventories consisting primarily of food, beverage and operating supplies are stated at the lower of cost or net realizable value with cost being determined on the first-in, first-out basis. |
Property and equipment | Property and equipment— Property and equipment is stated at cost. Depreciation is provided using the straight-line method over the following estimated useful lives: Facilities 10-40 years Furniture, fixtures and equipment 3-10 years 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. |
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 2013 remain open to examination for federal and state income tax purposes. We recognize interest expense and penalties on uncertain income tax positions as a component of interest expense. No interest expense or penalties were recorded for uncertain income tax matters in 2017, 2016 or 2015. As of December 31, 2017 and 2016, we had no liabilities for uncertain income tax matters. |
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 $1,700,000 and $1,652,000, respectively, at December 31, 2017 and 2016, 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. |
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 $18,812,000, $18,784,000 and $18,003,000 for the years ended December 31, 2017, 2016 and 2015, 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 (loss) earnings. 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. |
Advertising costs | Advertising costs— Advertising costs are charged to operations as incurred. Advertising expenses were $2,034,000, $2,161,000 and $2,135,000 in 2017, 2016 and 2015, respectively. |
Net (loss) earnings per common share | Net (loss) earnings 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 (loss) earnings 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): 2017 2016 2015 Net (loss) earnings per common share — basic and diluted: Net (loss) earnings $ ) $ $ Allocation to nonvested restricted stock awards — Net (loss) earnings available to common stockholders $ ) $ $ Weighted-average shares outstanding Net (loss) earnings per common share — basic and diluted $ ) $ $ There were no options outstanding and we paid no dividends during 2017, 2016 or 2015. |
Accounting for stock-based compensation | Accounting for stock-based compensation— We recorded total stock-based compensation expense for our restricted stock awards of $295,000, $326,000 and $375,000 as general and administrative expenses for the years ended December 31, 2017, 2016 and 2015, respectively. We recorded income tax benefit (expense) of $48,000, $14,000 and ($20,000) for the years ended December 31, 2017, 2016 and 2015, respectively, related to vesting of our restricted stock awards. |
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. Volatility in credit and 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. |
Segment information | Segment information —We account for operating segments based on those used for internal reporting to management. We report information under a single gaming and entertainment segment. |
Recent accounting pronouncements | Recent accounting pronouncements —In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which provides the option to reclassify certain income tax effects related to the Tax Cuts and Jobs Act passed in December of 2017 between accumulated other comprehensive income and retained earnings and also requires additional disclosures. The amendments in this ASU are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. Adoption of this ASU is to be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the tax laws or rates were recognized. We are currently analyzing the impact of this ASU and, at this time, we have not yet determined whether we will elect to make this optional reclassification. In March 2017, the FASB issued ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (Topic 715) . ASU 2017-07 provides guidance on the presentation of the service cost component and the other components of net period pension cost in the consolidated statements of (loss) earnings. The standard is effective for annual and interim reporting periods beginning after December 15, 2017 and requires retrospective adoption. We adopted this ASU in the first quarter of 2018, which did not have a material impact to our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) - Classification of Certain Cash Receipts and Cash Payments , which provides guidance on how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We adopted this ASU in the first quarter of 2018. The adoption of this ASU did not have an impact on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , which is intended to simplify various aspects of the accounting for share-based payments, including treatment of excess tax benefits, forfeitures, consideration of minimum statutory tax withholding requirements and classification on the statement of cash flows. The update was effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. We adopted this ASU in the first quarter of 2017, which did not have a material impact to our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires that lessees recognize assets and liabilities for leases with lease terms greater than twelve months in the statement of financial position and also requires improved disclosures to help users of financial statements better understand the amount, timing and uncertainty of cash flows arising from leases. The update is effective for fiscal years beginning after December 15, 2018, including interim reporting periods within those fiscal years. Early adoption is permitted. We are currently analyzing the impact of this ASU and, at this time, we are unable to determine the impact on the new standard, if any, on our consolidated financial statements. In July 2015, the FASB issued ASU No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory , which requires companies to measure inventory at lower of cost and net realizable value, versus lower of cost or market. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The update was effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. We adopted this ASU in the first quarter of 2017, which did not have an impact to our consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which supersedes nearly all existing revenue recognition guidance under accounting principles generally accepted in the United States of America. The FASB has issued several amendments to the standard, including clarification on accounting for and identifying performance obligations. The standard can be applied using the full retrospective method or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application. The new standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. Additionally, the guidance requires improved disclosures to help users of financial statements better understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We will adopt this standard effective January 1, 2018 using the full retrospective method. We have almost completed our analysis of the new standard across all of our revenue streams to evaluate its impact. We expect the most significant effect on our consolidated financial statements will be related to the accounting for our point loyalty program and casino promotional allowances, which will impact the classification of revenues between gaming and other operating. Under our point loyalty program, customers earn points based on the volume of their gaming activity. All reward points earned by customers are expensed in the period earned. Prior to the adoption of ASU 2014-09, the estimated amount of points redeemable for cash was recorded as a reduction of gaming revenue and the estimated cost of points redeemable for services and merchandise was recorded as gaming expense. Our liability for unredeemed points was based on the estimated costs of services or merchandise to be provided and estimated redemption rates. Under the new standard, points awarded under our point loyalty program are considered a material right given to the customers based on their gaming play and the promise to provide points to customers is accounted for as a separate performance obligation. The new standard requires us to allocate the revenues associated with the customers’ gaming activity between gaming revenue and the value of the points earned after factoring in the likelihood of redemption. As a result, gaming revenues are reduced with a corresponding increase to other operating revenues or our point liability. The value of the unredeemed points will now be determined based on the estimated standalone selling price of the points earned. The revenue associated with the points earned is recognized in the period in which they are redeemed. As a result of applying the new standard, we expect to increase our point liability and reduce our retained earnings balance at January 1, 2016 by approximately $500,000. We will recast prior period results; however, the impact to our quarterly operating earnings for the years 2016 and 2017 is expected to be less than $50,000 and is not considered material. Prior to the adoption of ASU 2014-09, other operating revenues did 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. The estimated direct cost of providing these items was charged to the casino through interdepartmental allocations and included in gaming marketing expenses. The new standard requires the complimentary items to be considered a separate performance obligation, which requires us to allocate a portion of revenue from a gaming transaction to other operating revenue based on the estimated standalone selling prices of the promotional items provided. For example, when a casino customer is given a complimentary room, we are now required to allocate a portion of the casino revenue earned from the customer to rooms revenue based on the estimated standalone selling price of the room. As a result of applying the new standard, we expect a significant decrease in gaming revenue and expenses and a similar increase in other operating revenue and expenses. However, due to the complexity and nature of the gaming industry, the quantitative effects of these changes have not yet been determined and are still being analyzed. |
Reclassifications | Reclassifications— Certain amounts in the prior year financial statements have been reclassified to conform to the current-year presentation. The impact of the reclassifications made to prior year amounts are not material and did not affect net earnings. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies | |
Schedule of estimated useful lives of property and equipment | Facilities 10-40 years Furniture, fixtures and equipment 3-10 years |
Schedule of the computation of EPS | The following table sets forth the computation of EPS (in thousands, except per share amounts): 2017 2016 2015 Net (loss) earnings per common share — basic and diluted: Net (loss) earnings $ ) $ $ Allocation to nonvested restricted stock awards — Net (loss) earnings available to common stockholders $ ) $ $ Weighted-average shares outstanding Net (loss) earnings per common share — basic and diluted $ ) $ $ |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property and Equipment | |
Schedule of property and equipment | 2017 2016 Land $ $ Casino facility Hotel facility Harness racing facilities General facilities Furniture, fixtures and equipment Construction in progress Less accumulated depreciation ) ) $ $ |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accrued Liabilities | |
Schedule of accrued liabilities | 2017 2016 Point loyalty program $ $ Payroll and related items Win due to Delaware State Lottery Office Other $ $ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Schedule of current and deferred income tax (expense) benefit | Years ended December 31, 2017 2016 2015 Current: Federal $ — $ ) $ ) State ) ) ) ) ) ) Deferred: Federal ) State ) Total income tax expense $ ) $ ) $ ) |
Schedule of reconciliation of the effective income tax rate with the applicable statutory federal income tax rate | Years ended December 31, 2017 2016 2015 Federal tax at statutory rate % % % State taxes, net of federal benefit % % % Non-deductible stock based compensation )% % % Federal tax credit for payroll tax on employee tips % )% )% Tax Cuts and Jobs Act )% — — Other )% % )% Effective income tax rate )% % % |
Schedule of components of deferred income tax assets and liabilities | 2017 2016 Deferred income tax assets: Point loyalty program $ $ Accrued expenses Federal tax credits Other Total deferred income tax assets Deferred income tax liabilities: Depreciation — property and equipment ) ) Total deferred income tax liabilities ) ) Net deferred income tax assets $ $ Amounts recognized in the consolidated balance sheet: Noncurrent deferred income tax assets $ $ |
Pension Plans (Tables)
Pension Plans (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Pension Plans | |
Schedule of the plan's funded status | 2017 2016 Change in benefit obligation: Benefit obligation at beginning of year $ $ Interest cost Actuarial loss Benefits paid ) ) Benefit obligation at end of year Change in plan assets: Fair value of plan assets at beginning of year Actual gain on plan assets Employer contribution Benefits paid ) ) Fair value of plan assets at end of year Unfunded status $ ) $ ) |
Schedule of amounts recognized in the company's consolidated balance sheets | 2017 2016 Accrued liabilities $ ) $ ) Liability for pension benefits ) ) $ ) $ ) |
Schedule of amounts recognized in accumulated other comprehensive loss that have not yet been recognized as components of net periodic pension benefit (expense) | 2017 2016 Net actuarial loss, pre-tax $ $ |
Schedule of components of net periodic pension benefit | 2017 2016 2015 Interest cost $ $ $ Expected return on plan assets ) ) ) Recognized net actuarial loss $ ) $ ) $ ) |
Schedule of amounts included in accumulated comprehensive loss which are expected to be recognized as components of net periodic benefit (expense) in next fiscal year | Actuarial loss $ |
Schedule of principal assumptions used to determine net periodic pension benefit and actuarial value of the benefit obligation | Net Periodic Pension Cost Benefit Obligation 2017 2016 2015 2017 2016 Weighted-average discount rate % % % % % Weighted-average rate of compensation increase n/a n/a n/a n/a n/a Expected long-term rate of return on plan assets % % % n/a n/a |
Schedule of fair values of the company's pension assets by asset category | The fair values of our pension assets as of December 31, 2017 by asset category are as follows (refer to NOTE 10 — Fair Value Measurements for a description of Level 1, Level 2 and Level 3 categories): Asset Category Total Level 1 Level 2 Level 3 Mutual funds/ETFs: Equity-large cap $ $ — — Equity-mid cap — — Equity-small cap — — Equity-international — — Fixed income — — Money market — — Total mutual funds/ETFs $ $ — — The fair values of our pension assets as of December 31, 2016 by asset category are as follows (refer to NOTE 10 — Fair Value Measurements for a description of Level 1, Level 2 and Level 3 categories): Asset Category Total Level 1 Level 2 Level 3 Corporate common stock $ $ $ — $ — Mutual funds/ETFs: Equity-large cap — — Equity-mid cap — — Equity-small cap — — Equity-international — — Fixed income — — Real estate — — Money market — — Total mutual funds/ETFs — — Grand total $ $ $ — $ — |
Schedule of estimated future benefit payments | 2018 $ 2019 $ 2020 $ 2021 $ 2022 $ 2023-2027 $ |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity | |
Schedule of changes in the components of stockholders' equity | Changes in the components of stockholders’ equity are as follows (in thousands, except per share amounts): Common Class A Additional Retained Accumulated Balance at December 31, 2014 $ $ $ $ $ ) Net earnings — — — — Issuance of nonvested stock awards, net of forfeitures — ) — — Stock-based compensation — — — — Change in net actuarial loss and prior service cost, net of income tax expense of $318 — — — — Unrealized loss on available-for-sale securities, net of income tax benefit of $4 — — — — ) Repurchase and retirement of common stock ) — ) — — Balance at December 31, 2015 ) Net earnings — — — — Issuance of nonvested stock awards, net of forfeitures — ) — — Stock-based compensation — — — — Change in net actuarial loss and prior service cost, net of income tax benefit of $261 — — — — ) Unrealized gain on available-for-sale securities, net of income tax expense of $1 — — — — Repurchase and retirement of common stock ) — ) — — Balance at December 31, 2016 ) Net loss — — — ) — Issuance of nonvested stock awards, net of forfeitures — ) — — Stock-based compensation — — — — Change in net actuarial loss and prior service cost, net of income tax benefit of $72 — — — — ) Unrealized gain on available-for-sale securities, net of income tax expense of $4 — — — — Repurchase and retirement of common stock ) — ) — — Balance at December 31, 2017 $ $ $ $ $ ) |
Schedule of accumulated other comprehensive loss | 2017 2016 Net actuarial loss and prior service cost not yet recognized in net periodic benefit cost, net of income tax benefit of $3,152,000 and $3,080,000, respectively $ ) $ ) Accumulated unrealized gain on available-for-sale securities, net of income tax expense of $23,000 and $19,000, respectively Accumulated other comprehensive loss $ ) $ ) |
Schedule of nonvested restricted stock activity | Number of Weighted Nonvested at December 31, 2016 $ Granted $ Vested ) $ Forfeited ) $ Nonvested at December 31, 2017 $ |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Measurements | |
Summary of valuation of financial instrument pricing levels | Total Level 1 Level 2 Level 3 2017 Available-for-sale securities $ $ $ — $ — 2016 Available-for-sale securities $ $ $ — $ — |
Quarterly Results (unaudited) (
Quarterly Results (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Results (unaudited) | |
Schedule of quarterly results | March 31 June 30 September 30 December 31(a) Year Ended December 31, 2017 Revenues $ $ $ $ Operating earnings (loss) $ $ $ ) $ ) Net (loss) earnings $ ) $ $ ) $ ) Net (loss) earnings per share-basic and diluted $ ) $ — $ — $ ) Year Ended December 31, 2016 Revenues $ $ $ $ Operating earnings (loss) $ $ $ $ ) Net (loss) earnings $ ) $ $ $ ) Net (loss) earnings per share-basic and diluted $ ) $ $ $ ) (a) In the fourth quarter of 2017, the passage of the Tax Cuts and Jobs Act lowered our future federal income tax rate to 21% requiring us to revalue net deferred federal tax assets. As a result, net loss and net loss per share — basic and diluted increased by $662,000 and $0.02, respectively. See NOTE 6 — Income Taxes. |
Business Operations (Details)
Business Operations (Details) | 12 Months Ended | |
Dec. 31, 2017ft²subsidiaryroomitem | Mar. 31, 2002 | |
Business Operations | ||
Area (in square feet) | ft² | 165,000 | |
Number of retail outlets | 6 | |
Number of rooms | room | 500 | |
Number of wholly owned subsidiaries | subsidiary | 2 | |
Percentage of the issued and outstanding common stock of Dover Downs, Inc. contributed by DVD | 100.00% | |
Percentage of issued and outstanding common stock distributed to parent stockholders | 100.00% | |
Number of Licensed Agents under Delaware State Lottery Code | 3 | |
Number of consecutive years for which annual license has been received from the Harness Racing Commission | 49 years | |
Gaming win | Geographic concentration risk | Maryland patrons | ||
Risks and Uncertainties | ||
Allocation of gaming win by patron location (in percent) | 28.00% | |
Capital Club member gaming win | Geographic concentration risk | Out of state patrons | ||
Risks and Uncertainties | ||
Allocation of gaming win by patron location (in percent) | 60.00% |
Going Concern (Details)
Going Concern (Details) - Credit facility - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Jul. 25, 2017 |
Going Concern | |||
Maximum borrowing capacity | $ 32,500,000 | $ 35,000,000 | $ 35,000,000 |
Outstanding borrowings | $ 19,900,000 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies - PPE (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Minimum | Facilities | |
Property and equipment | |
Estimated useful lives | 10 years |
Minimum | Furniture, fixtures and equipment | |
Property and equipment | |
Estimated useful lives | 3 years |
Maximum | Facilities | |
Property and equipment | |
Estimated useful lives | 40 years |
Maximum | Furniture, fixtures and equipment | |
Property and equipment | |
Estimated useful lives | 10 years |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income taxes | |||
Interest expense and penalties on uncertain income tax matters | $ 0 | $ 0 | $ 0 |
Liabilities for uncertain income tax matters | 0 | 0 | |
Point loyalty program | |||
Amount of points redeemable for services and merchandise | 1,700,000 | 1,652,000 | |
Revenue and expense recognition | |||
Goods and services provided without charge to customers as promotional items | 18,812,000 | 18,784,000 | 18,003,000 |
Advertising costs | |||
Advertising expenses | $ 2,034,000 | $ 2,161,000 | $ 2,135,000 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies - EPS (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Net (loss) earnings per common share - basic and diluted: | |||||||||
Net (loss) earnings | $ (1,068,000) | $ 786,000 | $ 1,873,000 | ||||||
Allocation to nonvested restricted stock awards | 20,000 | 44,000 | |||||||
Net (loss) earnings available to common stockholders | $ (1,068,000) | $ 766,000 | $ 1,829,000 | ||||||
Weighted-average shares outstanding - basic and diluted | 32,321,000 | 32,201,000 | 32,085,000 | ||||||
Net (loss) earnings per common share - basic and diluted | $ (0.02) | $ (0.01) | $ (0.01) | $ 0.02 | $ 0.02 | $ (0.01) | $ (0.03) | $ 0.02 | $ 0.06 |
Anti-dilutive securities not included in the computation of diluted EPS (in shares) | 0 | 0 | 0 | ||||||
Dividends paid | $ 0 | $ 0 | $ 0 | ||||||
Nonvested restricted stock | |||||||||
Accounting for stock-based compensation | |||||||||
Stock-based compensation expense | 295,000 | 326,000 | 375,000 | ||||||
Income tax benefit (expense) related to vesting of restricted stock awards | $ 48,000 | $ 14,000 | $ (20,000) |
Summary of Significant Accoun33
Summary of Significant Accounting Policies - Recent accounting pronouncements (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Jan. 01, 2016 | |
Point loyalty program | $ 1,700,000 | $ 1,652,000 | $ 1,700,000 | $ 1,652,000 | ||||||||
Retained earnings | 110,220,000 | 111,288,000 | 110,220,000 | 111,288,000 | ||||||||
Quarterly operating earnings for the years | (35,000) | $ (7,000) | $ 223,000 | $ 52,000 | (275,000) | $ 1,013,000 | $ 1,509,000 | $ 34,000 | $ 233,000 | $ 2,281,000 | $ 3,875,000 | |
Expected impact to prior period results | ASU 2014-09 | ||||||||||||
Point loyalty program | $ 500,000 | |||||||||||
Retained earnings | $ (500,000) | |||||||||||
Expected impact to prior period results | ASU 2014-09 | Maximum | ||||||||||||
Quarterly operating earnings for the years | $ 50,000 | $ 50,000 | $ 50,000 | $ 50,000 | $ 50,000 | $ 50,000 | $ 50,000 | $ 50,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Property and Equipment | ||
Property and equipment, gross | $ 278,674,000 | $ 278,505,000 |
Less accumulated depreciation | (144,147,000) | (137,791,000) |
Property and equipment, net | 134,527,000 | 140,714,000 |
Land | ||
Property and Equipment | ||
Property and equipment, gross | 785,000 | 785,000 |
Casino facility | ||
Property and Equipment | ||
Property and equipment, gross | 77,027,000 | 77,032,000 |
Hotel facility | ||
Property and Equipment | ||
Property and equipment, gross | 113,763,000 | 113,685,000 |
Harness racing facilities | ||
Property and Equipment | ||
Property and equipment, gross | 10,982,000 | 10,982,000 |
General facilities | ||
Property and Equipment | ||
Property and equipment, gross | 16,935,000 | 16,798,000 |
Furniture, fixtures and equipment | ||
Property and Equipment | ||
Property and equipment, gross | 58,960,000 | 58,642,000 |
Construction in progress | ||
Property and Equipment | ||
Property and equipment, gross | $ 222,000 | $ 581,000 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accrued Liabilities | ||
Point loyalty program | $ 1,700,000 | $ 1,652,000 |
Payroll and related items | 2,558,000 | 2,351,000 |
Win due to Delaware State Lottery Office | 3,688,000 | 3,583,000 |
Other | 1,865,000 | 2,268,000 |
Accrued liabilities | $ 9,811,000 | $ 9,854,000 |
Credit Facility (Details)
Credit Facility (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2017 | Mar. 31, 2018 | Jul. 25, 2017 | Dec. 31, 2016 | |
Credit Facility | ||||
Outstanding borrowings | $ 19,900,000 | $ 25,250,000 | ||
Credit facility | ||||
Credit Facility | ||||
Maximum borrowing capacity | $ 35,000,000 | $ 32,500,000 | $ 35,000,000 | |
Variable interest rate base | LIBOR | |||
Percentage points added to the reference rate | 2.00% | |||
Outstanding borrowings | $ 19,900,000 | |||
Interest rate on the amount outstanding (as a percent) | 3.56% | |||
Amount available for borrowing pursuant to the facility | $ 15,100,000 | |||
Credit facility | Minimum | ||||
Credit Facility | ||||
Percentage points added to the reference rate | 1.50% | |||
Credit facility | Maximum | ||||
Credit Facility | ||||
Percentage points added to the reference rate | 3.50% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | |||
Federal | $ (513,000) | $ (972,000) | |
State | $ (4,000) | (155,000) | (378,000) |
Current income tax (expense) benefit | (4,000) | (668,000) | (1,350,000) |
Deferred: | |||
Federal | (495,000) | 34,000 | 423,000 |
State | 38,000 | 2,000 | 85,000 |
Deferred income tax (expense) benefit | (457,000) | 36,000 | 508,000 |
Total | |||
Total income tax expense | $ (461,000) | $ (632,000) | $ (842,000) |
Reconciliation of the effective income tax rate with the applicable statutory federal income tax rate | |||
Federal tax at statutory rate (as a percent) | 34.00% | 34.00% | 34.00% |
State taxes, net of federal benefit (as a percent) | 5.40% | 6.00% | 6.00% |
Non-deductible stock based compensation (as a percent) | (11.80%) | 8.40% | 6.30% |
Federal tax credit for payroll tax on employee tips | 6.70% | (4.70%) | (14.60%) |
Tax Cuts and Jobs Act (as a percent) | (109.20%) | ||
Other (as a percent) | (1.00%) | 0.90% | (0.70%) |
Effective income tax rate (as a percent) | (75.90%) | 44.60% | 31.00% |
Deferred income tax assets: | |||
Point loyalty program | $ 474,000 | $ 656,000 | |
Accrued expenses | 2,827,000 | 4,077,000 | |
Federal tax credits | 131,000 | 96,000 | |
Other | 129,000 | 236,000 | |
Total deferred income tax assets | 3,561,000 | 5,065,000 | |
Deferred income tax liabilities: | |||
Depreciation - property and equipment | (1,931,000) | (3,045,000) | |
Total deferred income tax liabilities | (1,931,000) | (3,045,000) | |
Net deferred income tax assets | 1,630,000 | 2,020,000 | |
Amounts recognized in the consolidated balance sheet: | |||
Noncurrent deferred income tax assets | $ 1,630,000 | $ 2,020,000 |
Income Taxes - Tax cuts and job
Income Taxes - Tax cuts and jobs act (Details) - USD ($) | Jan. 01, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Statement [Line Items] | ||||
Federal tax at statutory rate (as a percent) | 34.00% | 34.00% | 34.00% | |
Decrease in net deferred tax assets on remeasurements | $ (662,000) | |||
Increase in deferred income tax expense | $ 662,000 | |||
Forecast | ||||
Statement [Line Items] | ||||
Federal tax at statutory rate (as a percent) | 21.00% |
Pension Plans (Details)
Pension Plans (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Pension Plans | |||
Fair values of pension assets | $ 17,057,000 | $ 14,960,000 | $ 14,442,000 |
Excess plan | |||
Pension Plans | |||
Fair values of pension assets | $ 344,000 | $ 304,000 |
Pension Plans - Funded status a
Pension Plans - Funded status and amounts recognized (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Change in benefit obligation: | |||
Benefit obligation at beginning of year | $ 23,187,000 | $ 22,358,000 | |
Interest cost | 873,000 | 867,000 | $ 948,000 |
Actuarial loss | 1,597,000 | 502,000 | |
Benefits paid | (629,000) | (540,000) | |
Benefit obligation at end of year | 25,028,000 | 23,187,000 | 22,358,000 |
Change in plan assets: | |||
Fair value of plan assets at beginning of year | 14,960,000 | 14,442,000 | |
Actual gain on plan assets | 2,436,000 | 848,000 | |
Employer contribution | 290,000 | 210,000 | |
Benefits paid | (629,000) | (540,000) | |
Fair value of plan assets at end of year | 17,057,000 | 14,960,000 | 14,442,000 |
Unfunded status | (7,971,000) | (8,227,000) | |
Obligations recognized in consolidated balance sheets | |||
Accrued liabilities | (488,000) | (452,000) | |
Liability for pension benefits | (7,483,000) | (7,775,000) | |
Pension liabilities recognized in consolidated balance sheet | (7,971,000) | (8,227,000) | |
Amounts recognized in accumulated other comprehensive loss that have not yet been recognized as components of net periodic pension benefit (expense) | |||
Net actuarial loss, pre-tax | (7,885,000) | (7,704,000) | |
Components of net periodic pension benefit | |||
Interest cost | 873,000 | 867,000 | 948,000 |
Expected return on plan assets | (1,181,000) | (1,137,000) | (1,158,000) |
Recognized net actuarial loss | 161,000 | 136,000 | 146,000 |
Total net periodic pension cost | (147,000) | $ (134,000) | $ (64,000) |
Amounts included in accumulated comprehensive loss which are expected to be recognized as components of net periodic benefit (expense) in next fiscal year | |||
Actuarial loss | $ 163,000 | ||
Net Periodic Pension Cost | |||
Weighted-average discount rate (as a percent) | 4.30% | 4.40% | 4.10% |
Expected long-term rate of return on plan assets (as a percent) | 8.00% | 8.00% | 8.00% |
Benefit Obligation | |||
Weighted-average discount rate (as a percent) | 3.90% | 4.30% |
Pension Plans - Fair Value of P
Pension Plans - Fair Value of Pension (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Pension Plans | |||
Fair values of pension assets | $ 17,057,000 | $ 14,960,000 | $ 14,442,000 |
Expected contribution to the pension plan in 2018 | 490,000 | ||
Estimated future benefit payments | |||
2,018 | 1,264,000 | ||
2,019 | 805,000 | ||
2,020 | 863,000 | ||
2,021 | 892,000 | ||
2,022 | 942,000 | ||
2023-2027 | $ 5,624,000 | ||
Level 1 | |||
Pension Plans | |||
Fair values of pension assets | 14,960,000 | ||
Equities | |||
Pension Plans | |||
Target allocations for plan assets (as a percent) | 60.00% | ||
Equities - passively managed securities using ETFs | |||
Pension Plans | |||
Target allocations for plan assets (as a percent) | 50.00% | ||
Equities - actively managed investment vehicles | |||
Pension Plans | |||
Target allocations for plan assets (as a percent) | 50.00% | ||
Common Stock | |||
Pension Plans | |||
Fair values of pension assets | 1,210,000 | ||
Common Stock | Level 1 | |||
Pension Plans | |||
Fair values of pension assets | 1,210,000 | ||
Mutual funds/ETFs: | |||
Pension Plans | |||
Fair values of pension assets | $ 17,057,000 | 13,750,000 | |
Mutual funds/ETFs: | Level 1 | |||
Pension Plans | |||
Fair values of pension assets | 17,057,000 | 13,750,000 | |
Equity-large cap | |||
Pension Plans | |||
Fair values of pension assets | 4,900,000 | 3,521,000 | |
Equity-large cap | Level 1 | |||
Pension Plans | |||
Fair values of pension assets | 4,900,000 | 3,521,000 | |
Equity-mid cap | |||
Pension Plans | |||
Fair values of pension assets | 2,719,000 | 1,419,000 | |
Equity-mid cap | Level 1 | |||
Pension Plans | |||
Fair values of pension assets | 2,719,000 | 1,419,000 | |
Equity-small cap | |||
Pension Plans | |||
Fair values of pension assets | 2,705,000 | 287,000 | |
Equity-small cap | Level 1 | |||
Pension Plans | |||
Fair values of pension assets | 2,705,000 | 287,000 | |
Equity-international | |||
Pension Plans | |||
Fair values of pension assets | 3,385,000 | 1,666,000 | |
Equity-international | Level 1 | |||
Pension Plans | |||
Fair values of pension assets | $ 3,385,000 | 1,666,000 | |
Fixed income | |||
Pension Plans | |||
Target allocations for plan assets (as a percent) | 40.00% | ||
Fair values of pension assets | $ 2,863,000 | 5,649,000 | |
Fixed income | Level 1 | |||
Pension Plans | |||
Fair values of pension assets | 2,863,000 | 5,649,000 | |
Real estate | |||
Pension Plans | |||
Fair values of pension assets | 822,000 | ||
Real estate | Level 1 | |||
Pension Plans | |||
Fair values of pension assets | 822,000 | ||
Money market | |||
Pension Plans | |||
Fair values of pension assets | 485,000 | 386,000 | |
Money market | Level 1 | |||
Pension Plans | |||
Fair values of pension assets | $ 485,000 | $ 386,000 |
Pension Plans - SERP (Details)
Pension Plans - SERP (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
SERP | |||
Defined contribution plan | |||
Expense recorded | $ 120,000 | $ 124,000 | $ 99,000 |
Employer contributions | 122,000 | 99,000 | 126,000 |
Liability for SERP benefits | 120,000 | 122,000 | |
401 (k) plan | |||
Defined contribution plan | |||
Expense recorded | $ 842,000 | $ 833,000 | $ 874,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Changes in the components of stockholders' equity | |||
Balance at the beginning of the year | $ 115,662,000 | ||
Net (loss) earnings | (1,068,000) | $ 786,000 | $ 1,873,000 |
Unrealized gain (loss) on available-for-sale securities, net of income taxes of $4, $1 and $4 in 2017, 2016 and 2015 respectively | 6,000 | 3,000 | (6,000) |
Repurchase and retirement of common stock | (74,000) | (66,000) | (65,000) |
Balance at the end of the year | 114,712,000 | 115,662,000 | |
Income tax expense (benefit) on change in pension net actuarial loss and prior service cost | (72,000) | (261,000) | 318,000 |
Income tax expense (benefit) on unrealized loss on available-for-sale securities | 4,000 | 1,000 | (4,000) |
Common Stock | Common Stock | |||
Changes in the components of stockholders' equity | |||
Balance at the beginning of the year | 1,814,000 | 1,799,000 | 1,788,000 |
Issuance of nonvested stock awards, net of forfeitures | 20,000 | 22,000 | 18,000 |
Repurchase and retirement of common stock | (7,000) | (7,000) | (7,000) |
Balance at the end of the year | 1,827,000 | 1,814,000 | 1,799,000 |
Common Stock | Class A Common Stock | |||
Changes in the components of stockholders' equity | |||
Balance at the beginning of the year | 1,487,000 | 1,487,000 | 1,487,000 |
Balance at the end of the year | 1,487,000 | 1,487,000 | 1,487,000 |
Additional Paid-in Capital | |||
Changes in the components of stockholders' equity | |||
Balance at the beginning of the year | 5,669,000 | 5,424,000 | 5,125,000 |
Issuance of nonvested stock awards, net of forfeitures | (20,000) | (22,000) | (18,000) |
Stock-based compensation | 295,000 | 326,000 | 375,000 |
Repurchase and retirement of common stock | (67,000) | (59,000) | (58,000) |
Balance at the end of the year | 5,877,000 | 5,669,000 | 5,424,000 |
Retained Earnings | |||
Changes in the components of stockholders' equity | |||
Balance at the beginning of the year | 111,288,000 | 110,502,000 | 108,629,000 |
Net (loss) earnings | (1,068,000) | 786,000 | 1,873,000 |
Balance at the end of the year | 110,220,000 | 111,288,000 | 110,502,000 |
Accumulated Other Comprehensive Loss | |||
Changes in the components of stockholders' equity | |||
Balance at the beginning of the year | (4,596,000) | (4,204,000) | (4,680,000) |
Change in net actuarial loss and prior service cost, net of income tax benefit of $72, $261, $318 in 2017, 2016 and 2015 respectively | (109,000) | (395,000) | 482,000 |
Unrealized gain (loss) on available-for-sale securities, net of income taxes of $4, $1 and $4 in 2017, 2016 and 2015 respectively | 6,000 | 3,000 | (6,000) |
Balance at the end of the year | $ (4,699,000) | $ (4,596,000) | $ (4,204,000) |
Stockholders' Equity - Accumula
Stockholders' Equity - Accumulated other comprehensive loss (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Accumulated other comprehensive loss | ||
Net actuarial loss and prior service cost not yet recognized in net periodic benefit cost, net of income tax benefit of $3,152,000 and $3,080,000, respectively | $ (4,733,000) | $ (4,624,000) |
Accumulated unrealized gain on available-for-sale securities, net of income tax expense of $23,000 and $19,000, respectively | 34,000 | 28,000 |
Accumulated other comprehensive loss | (4,699,000) | (4,596,000) |
Income tax benefit of net actuarial loss and prior service cost not yet recognized in net periodic benefit cost | 3,152,000 | 3,080,000 |
Income tax expense of accumulated unrealized gain on available-for-sale securities | $ 23,000 | $ 19,000 |
Stockholders' Equity - Repurcha
Stockholders' Equity - Repurchase (Details) | 12 Months Ended | ||
Dec. 31, 2017item$ / sharesshares | Dec. 31, 2016$ / sharesshares | Oct. 23, 2002shares | |
Class of Stock Disclosures | |||
Shares of authorized capital stock | 125,000,000 | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.10 | $ 0.10 | |
Termination period of license after change of ownership of the licensed agent | 90 days | ||
Number of shares of outstanding common stock authorized to be repurchased | 3,000,000 | ||
Purchases made pursuant to repurchase authorization (in shares) | 0 | 0 | |
Number of remaining shares of common stock authorized to be repurchased | 1,653,333 | ||
Change Of Ownership of a Licensed Agent And Stockholder Rights Plan | |||
Minimum acquisition percentage of the licensed agent to effect change of ownership | 10.00% | ||
Minimum transfer percentage of legal or beneficial interest in the licensed agent | 20.00% | ||
Minimum acquisition percentage of outstanding common stock by stockholder for which a prior written approval is needed | 10.00% | ||
Number of shares of common stock to be purchased for each right held by the registered holder | item | 1 | ||
Unsolicited acquisition of beneficial ownership as a percentage of outstanding combined common stock and Class A common stock, minimum | 10.00% | ||
Tender or exchange offer as a percentage of outstanding combined common stock and Class A common stock, minimum | 10.00% | ||
Common Stock | Common Stock | |||
Class of Stock Disclosures | |||
Common stock, shares authorized | 74,000,000 | 74,000,000 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.10 | $ 0.10 | |
Number of votes per common share held | item | 1 | ||
Common Stock | Class A Common Stock | |||
Class of Stock Disclosures | |||
Common stock, shares authorized | 50,000,000 | 50,000,000 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.10 | $ 0.10 | |
Number of votes per common share held | item | 10 | ||
Conversion ratio of shares | 1 |
Stockholders' Equity - Stock in
Stockholders' Equity - Stock incentive plan (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Stockholders' Equity | |||
Number of common stock shares purchased and retired | 70,483 | 67,555 | 73,453 |
Amount of common stock purchased and retired | $ 74,000 | $ 66,000 | $ 65,000 |
Common stock shares reserved for issuance under the 2012 Stock Incentive Plan | 2,000,000 | ||
Shares available for granting options or stock awards | 1,064,926 | ||
Nonvested restricted stock | |||
Stockholders' Equity | |||
Vesting percentage on each anniversary of the grant date | 20.00% | ||
Service period to amortize aggregate market value of the nonvested restricted stock | 6 years | ||
Number of Shares | |||
Nonvested at the beginning of the year (in shares) | 813,000 | ||
Granted (in shares) | 208,500 | ||
Vested (in shares) | (190,900) | ||
Forfeited (in shares) | (10,200) | ||
Nonvested at the end of the year (in shares) | 820,400 | 813,000 | |
Weighted Average Grant Date Fair Value | |||
Nonvested at the beginning of the year (in dollars per share) | $ 1.45 | ||
Granted (in dollars per share) | 1.05 | $ 0.97 | $ 0.89 |
Vested (in dollars per share) | 2 | ||
Forfeited (in dollars per share) | 1.30 | ||
Nonvested at the end of the year (in dollars per share) | $ 1.22 | $ 1.45 | |
Fair value of shares vested | $ 381,000 | $ 477,000 | $ 608,000 |
Compensation Expense | 295,000 | $ 326,000 | $ 375,000 |
Deferred compensation cost related to nonvested restricted stock | $ 476,000 | ||
Weighted-average period to recognize deferred compensation cost related to nonvested restricted stock | 3 years 6 months |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value Measurements | ||
Available-for-sale securities | $ 344,000 | $ 304,000 |
Credit facility | ||
Fair Value Measurements | ||
Amount outstanding under revolving credit agreement | 19,900,000 | 25,250,000 |
Level 1 | ||
Fair Value Measurements | ||
Available-for-sale securities | $ 344,000 | $ 304,000 |
Related Party Transactions (Det
Related Party Transactions (Details) | 12 Months Ended | ||
Dec. 31, 2017USD ($)itemmi | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Related Party Transactions | |||
Receivable from Dover Motorsports, Inc. | $ 7,000 | $ 7,000 | |
Dover Motorsports, Inc. (DVD) | |||
Related Party Transactions | |||
Harness racing track length (in miles) | mi | 0.625 | ||
Motorsports superspeedway length (in miles) | mi | 1 | ||
Period for set up and tear down rights | 14 days | ||
Number of annual motorsports weekends | item | 2 | ||
Dover Motorsports, Inc. (DVD) | Various agreements | |||
Related Party Transactions | |||
Number of companies between which assets and liabilities are allocated | item | 2 | ||
Dover Motorsports, Inc. (DVD) | Transition Support Services Agreement | |||
Related Party Transactions | |||
Period for payment against services received | 30 days | ||
Agreement termination period by recipient of services | 90 days | ||
Agreement termination period by provider of services | 180 days | ||
Dover Motorsports, Inc. (DVD) | Certain administrative and operating service costs | |||
Related Party Transactions | |||
Due from related party | $ 1,862,000 | 1,952,000 | $ 1,851,000 |
Allocations and invoicing from Dover Motorsports, Inc. | 187,000 | 158,000 | 252,000 |
Dover Motorsports, Inc. (DVD) | NASCAR event at Dover International Speedway | |||
Related Party Transactions | |||
Due from related party | 903,000 | 876,000 | 836,000 |
Allocations and invoicing from Dover Motorsports, Inc. | 224,000 | 200,000 | $ 230,000 |
Receivable from Dover Motorsports, Inc. | $ 7,000 | $ 7,000 | |
Board of Directors Chairman | |||
Related Party Transactions | |||
Minimum percentage of voting power controlled by related party | 50.00% | ||
Minimum percentage of voting power of Gaming controlled by other related party | 50.00% |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Commitments and Contingencies | |
Excise tax | $ 0 |
Tax Gross Ups Payable, Change of Control | Minimum | |
Commitments and Contingencies | |
Contingent liability | 8,400,000 |
Tax Gross Ups Payable, Change of Control | Maximum | |
Commitments and Contingencies | |
Contingent liability | $ 10,300,000 |
Monthly Payment to Employee, Non-compete Covenants | |
Commitments and Contingencies | |
Monthly amount paid to an executive officer in consideration of noncompete covenants (as a percent) | 50.00% |
Monthly Payment to Employee, Non-compete Covenants | Minimum | |
Commitments and Contingencies | |
Contingent liability | $ 1,200,000 |
Monthly Payment to Employee, Non-compete Covenants | Maximum | |
Commitments and Contingencies | |
Contingent liability | $ 3,100,000 |
Quarterly Results (unaudited)50
Quarterly Results (unaudited) (Details) - USD ($) | Jan. 01, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Revenues | $ 44,377,000 | $ 45,094,000 | $ 43,305,000 | $ 44,148,000 | $ 44,241,000 | $ 47,110,000 | $ 46,224,000 | $ 44,717,000 | $ 176,924,000 | $ 182,292,000 | $ 182,946,000 | |
Operating earnings (loss) | (35,000) | (7,000) | 223,000 | 52,000 | (275,000) | 1,013,000 | 1,509,000 | 34,000 | $ 233,000 | $ 2,281,000 | $ 3,875,000 | |
Net (loss) earnings | $ (779,000) | $ (137,000) | $ 32,000 | $ (184,000) | $ (291,000) | $ 520,000 | $ 796,000 | $ (239,000) | ||||
Net (loss) earnings per share-basic and diluted (in dollars per share) | $ (0.02) | $ (0.01) | $ (0.01) | $ 0.02 | $ 0.02 | $ (0.01) | $ (0.03) | $ 0.02 | $ 0.06 | |||
Effect of Tax cuts and Jobs Act | ||||||||||||
Future federal income tax rates (as a percent) | 34.00% | 34.00% | 34.00% | |||||||||
Increase in net loss due to TCJA 2017 | $ 662,000 | |||||||||||
Increase in net loss per share due to TCJA 2017 | $ 0.02 | |||||||||||
Forecast | ||||||||||||
Effect of Tax cuts and Jobs Act | ||||||||||||
Future federal income tax rates (as a percent) | 21.00% |