Championship Auto Racing Teams Reports 2002 Results
INDIANAPOLIS, March 11 -- Championship Auto Racing Teams, Inc. today announced financial results for the fourth quarter and year ended December 31, 2002.
The number of events held in a particular quarter affects the comparability of earnings information from quarter to quarter. CART conducted four events in the fourth quarter of both 2002 and 2001 periods. As previously reported, race promotion expenses associated with the Grand Prix of the Americas event, held October 6, 2002, were recorded in the company's third quarter results. Toyota Atlantics did not have any races in the fourth quarter of 2002, compared with two races in the prior-year season. Indy Lights, which was discontinued for 2002, conducted two races in the fourth quarter of 2001.
For the three months ended December 31, 2002, total revenues were $13.8 million, compared with $14.5 million a year earlier. In line with the company's cost control initiatives, total expenses declined to $16.0 million in the 2002 fourth quarter from $20.8 million in the comparable prior-year period. The 2001 fourth quarter included a one-time $2.9 million severance expense.
Thomas L. Carter, Chief Financial Officer, noted, "Due to the new marketing-driven business structure of CART, revenues and expenses, particularly those relating to television, sanction fees and race promotion line items, are not comparable to prior-year results."
Net loss for the 2002 fourth quarter narrowed to $989,000, or $0.07 per share, from $3.3 million, or $0.21 per share, in the comparable period a year ago.
For the twelve months ended December 31, 2002, CART conducted 19 races, compared with 20 events in the 2001 season. Total revenues were $57.2 million for the 2002 year, versus $70.3 million in 2001. Total expenses amounted to $81.9 million for 2002, compared with $78.8 million a year earlier.
Effective January 1, 2002, CART implemented FASB Statement No. 142. As a result of the implementation, the company's results for the 2002 year include a write-off of $956,000, net of tax, for the impairment of goodwill. CART does not anticipate future write-offs of its intangible assets, but will conduct annual reviews as required.
CART recorded a net loss of $13.6 million, or $0.92 per share, before the cumulative effect of the accounting change for 2002. This compares with a net loss of $950,000, or $0.06 per share, a year earlier. After the cumulative effect of the accounting change, CART's net loss for 2002 totaled $14.5 million, or $0.99 per share.
CART continues to maintain a strong balance sheet with cash and short-term investments of $86.3 million, working capital of $92.3 million and no debt.
"This past year marked a period of significant progress in our transition of CART and the Champ Car World Series from a sanctioning body to a powerful marketing delivery mechanism for multi-national corporations to reach target audiences in major markets across NAFTA venues, Europe and Australia," said Christopher R. Pook, Chief Executive Officer. "While we faced challenges on many fronts, the strides we made in implementing adjustments to CART's business structure are designed to create a stable foundation and support the future growth of the series. We have in place a much leaner, talented management team to execute our strategic growth plan. We restructured operations to maximize the marketing potential for our sponsorships, and we initiated the most robust team support program in the history of CART," Pook said.
"But just as important, attendance levels throughout CART's 2002 season demonstrated the continuing popularity and vitality of the Champ Car series and validated our position that we have the most competitive and compelling open-wheel racing series in the world with our combination of high-speed ovals and high-impact street and road courses," added Pook.
Because of the evolving business model for the Champ Car World Series, the company has elected not to provide forward-looking financial guidance at this time. CART intends to publish its strategic outlook on its 2003 year in the second quarter.
About Championship Auto Racing Teams, Inc.
Championship Auto Racing Teams, Inc. owns, operates and markets the 2003 Bridgestone Presents The Champ Car World Series Powered by Ford. Veteran racing teams such as Newman/Haas Racing, Player's/Forsythe Racing, Team Rahal, Patrick Racing and Walker Racing will compete with many new teams this year in pursuit of the Vanderbilt Cup. CART Champ Cars are thoroughbred racing machines that reach speeds in excess of 200 miles per hour, showcasing the technical expertise of manufacturers such as Ford Motor Company, Lola Cars, Reynard Motorsport and Bridgestone/Firestone North American Tire, LLC. The 18-race 2003 Bridgestone Presents The Champ Car World Series Powered by Ford will be broadcast by television partners CBS and SPEED Channel. CART also owns and operates its top development series, the Toyota Atlantic Championship. Learn more about CART's open-wheel racing series at www.champcarworldseries.com .
Championship Auto Racing Teams, Inc.
Consolidated Statements of Income (Unaudited)
For the Quarter Ended December 31, 2002 and 2001
(In Thousands, Except Earnings Per Share)
Quarter ended Quarter ended
December 31, 2002 December 31, 2001
Revenues
Sanction fees $9,525 $9,593
Sponsorship revenue 2,111 2,204
Television revenue 308 1,023
Engine leases, rebuilds and wheel
sales - 378
Other 1,869 1,282
Total revenues 13,813 14,480
Expenses
Race distributions 4,019 4,839
Race expenses 2,391 2,801
Race promotion expense 752 -
Cost of engine rebuilds and wheel
sales - 6
Television expense 1,372 -
Administrative and indirect expenses 6,995 12,856
Relocation expense 117 -
Depreciation and amortization 391 342
Total expenses 16,037 20,844
Operating income (loss) (2,224) (6,364)
Realized gain (loss) on sale of
investments 24 -
Interest income 679 1,333
Income (loss) before income taxes (1,521) (5,031)
Income tax expense (benefit) (532) (1,761)
Net income (loss) $(989) $(3,270)
Earnings (loss) per share:
Basic $(0.07) $(0.21)
Diluted $(0.07) $(0.21)
Weighted average shares outstanding:
Basic 14,718 15,141
Diluted 14,718 15,149
Championship Auto Racing Teams, Inc.
Consolidated Statements of Income
For the Year Ended December 31, 2002 and 2001
(In Thousands, Except Earnings Per Share)
Year Ended Year Ended
December 31, 2002 December 31, 2001
Revenues
Sanction fees $36,607 $47,226
Sponsorship revenue 10,150 12,314
Television revenue 4,538 5,228
Race promotion revenue 1,417 -
Engine leases, rebuilds and wheel
sales - 1,286
Other 4,533 4,209
Total revenues 57,245 70,263
Expenses
Race distributions 19,797 18,599
Race expenses 10,823 10,618
Race promotion expense 9,687 -
Cost of engine rebuilds and wheel
sales - 348
Television expense 10,975 -
Administrative and indirect expenses 27,756 35,605
Litigation expense - 3,547
Relocation expense 1,422 -
Asset impairment and strategic
charges - 8,548
Depreciation and amortization 1,436 1,493
Total expenses 81,896 78,758
Operating income (loss) (24,651) (8,495)
Realized gain (loss) on sale of
investments 26 -
Interest income 3,762 7,033
Income (loss) before income taxes (20,863) (1,462)
Income tax expense (benefit) (7,302) (512)
Net income (loss) before cumulative
effect of accounting change $(13,561) $(950)
Cumulative effect of accounting
change (net of tax) $(956) $-
Net income (loss) $(14,517) $(950)
Earnings (loss) per share before
cumulative effect of accounting changes:
Basic $(0.92) $(0.06)
Diluted $(0.92) $(0.06)
Earnings (loss) per share after
cumulative effect of accounting changes:
Basic $(0.99) $(0.06)
Diluted $(0.99) $(0.06)
Weighted average shares outstanding:
Basic 14,718 15,624
Diluted 14,738 15,624
Championship Auto Racing Teams, Inc.
Consolidated Balance Sheets
As of December 31, 2002 and December 31, 2001
(In Thousands)
December 31, 2002 December 31, 2001
Assets
Current Assets
Cash and cash equivalents $6,773 $27,765
Short-term investments 79,489 87,621
Accounts receivable - net 4,657 5,195
Current portion of notes
receivable - -
Prepaid expenses and other
current assets 1,474 2,805
Inventory - 70
Income tax refundable 10,087 -
Deferred income taxes 1,184 2,856
Total current assets 103,664 126,312
Property and equipment - net 10,403 4,832
Goodwill - net - 1,470
Other assets 384 327
Total assets $114,451 $132,941
Liabilities and stockholders' equity
Current liabilities
Accounts payable $1,703 $3,009
Accrued liabilities:
Royalties 173 222
Payroll 2,455 4,298
Taxes 743 110
Other 4,879 5,558
Deferred revenue 1,423 1,511
Total current liabilities 11,376 14,708
Deferred income taxes 57 297
Stockholders' equity
Capital stock 147 147
Additional paid-in capital 87,765 87,765
Retained earnings 14,511 29,028
Unrealized gain on investments 595 996
Total stockholders' equity 103,018 117,936
Total liabilities and stockholders'
equity $114,451 $132,941