Dover Motorsports, Inc. Reports Results for the Quarter Ended March 31, 2003
DOVER, Del., April 24 -- Dover Motorsports, Inc. today reported its results for the quarter ended March 31, 2003.
Revenues were $3,967,000 compared with $996,000 in the first quarter of 2002. The Company promoted one major motorsports event during the first quarter of 2003, which was the CART inaugural grand prix event in St. Petersburg, Florida. The increase in revenue in 2003 was substantially all from the St. Petersburg event as the Company's revenue from weekly and special events and track rentals from its other facilities was essentially the same as in the prior year.
The inaugural Grand Prix of St. Petersburg event, which was run through the streets of a revitalized St. Petersburg was successful in all operational aspects. Unfortunately, the event did not meet revenue goals as a result of the soft economy, a threat of war and too few sponsors.
Operating and marketing expenses for the quarter ended March 31, 2003 increased by $4,277,000, principally as a result of the new event in St. Petersburg and also due to higher sales and marketing expenses.
A 2.8% increase in general and administrative expenses for the quarter ended March 31, 2003 included higher wages, benefits and insurance for the Company on a stand-alone basis after the spin-off of its gaming business, but these increases were substantially offset by other cost reductions throughout the Company. General and administrative expenses also were $908,000 less than in the fourth quarter of 2002, which reflected the impact of certain recent cost-cutting measures. Net interest expense increased by $362,000 in the first quarter as the prior year amount reflected a pre-spin-off capital structure.
Depreciation and amortization increased by 11.4% in the first quarter of 2003 primarily due to recent investments required for the inaugural grand prix events in Denver and St. Petersburg.
Loss from continuing operations for the quarter ended March 31, 2003 was $4,993,000 or $.13 per diluted share compared with $4,363,000 or $.12 per diluted share for the comparable period of the prior year.
The financial condition of the Company improved during the first quarter despite the expected seasonal loss from operations. Cash flow from operations was $10,973,000 in the first quarter of 2003 compared with $11,368,000 in the prior year. Virtually all of the Company's cash flow was used to reduce indebtedness, which decreased by $10,429,000 during the first quarter. Capital spending was $1,823,000 in the first quarter, with most of it used for the completion of the St. Petersburg street construction project.
At March 31, 2003, the Company's indebtedness was $61,000,000 compared with $78,636,000 at April 1, 2002.
Dover Motorsports, Inc. is a leading marketer and promoter of motorsports entertainment in the United States. Its motorsports subsidiaries operate seven motorsports tracks (four permanent facilities and three temporary circuits) in six states and promote motorsports events under the auspices of four of the premier sanctioning bodies in motorsports -- NASCAR, CART, IRL and NHRA. The Company owns and operates Dover International Speedway in Dover, Delaware; Nashville Superspeedway near Nashville, Tennessee; Gateway International Raceway near St. Louis, Missouri; and Memphis Motorsports Park near Memphis, Tennessee. It also organizes and promotes the Toyota Grand Prix of Long Beach in California, the Shell Grand Prix of Denver in Colorado and the Grand Prix of St. Petersburg in Florida.
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
Three Months Ended March 31,
2003 2002
Revenues $3,967 $996
Expenses:
Operating and marketing 6,470 2,193
Depreciation and amortization 2,626 2,357
General and administrative 3,611 3,511
12,707 8,061
Operating loss (8,740) (7,065)
Interest expense, net 1,246 884
Loss from continuing operations before
income taxes and cumulative effect of
accounting change (9,986) (7,949)
Income tax benefit (4,993) (3,586)
Loss from continuing operations before
cumulative effect of accounting change (4,993) (4,363)
Earnings from discontinued operation,
net of income taxes of $3,542 _ 5,168
Direct costs of spin-off, net of
income tax benefit of $90 _ (691)
(Loss) earnings before cumulative
effect of accounting change (4,993) 114
Cumulative effect of accounting
change for goodwill impairment _ (28,606)
Net loss $(4,993) $(28,492)
Loss per common share _ basic:
Continuing operations before accounting
change $(0.13) $(0.12)
Discontinued operation _ 0.12
Accounting change _ (0.75)
Net loss $(0.13) $(0.75)
Loss per common share _ diluted:
Continuing operations before accounting
change $(0.13) $(0.12)
Discontinued operation _ 0.12
Accounting change _ (0.75)
Net loss $(0.13) $(0.75)
Average shares outstanding:
- Basic 39,734 38,053
- Diluted 39,734 38,053
DOVER MOTORSPORTS, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
March 31, December 31,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $389 $454
Accounts receivable 9,820 3,526
Inventories 585 382
Prepaid expenses and other 4,708 4,088
Income taxes receivable 5,385 5,906
Deferred income taxes 450 810
Total current assets 21,337 15,166
Property and equipment, net 244,183 244,965
Restricted cash 1,916 3,683
Other assets, net 1,741 1,790
Deferred income taxes 7,889 6,868
Goodwill, net 21,883 21,883
Total assets $298,949 $294,355
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,540 $1,411
Accrued liabilities 4,139 5,325
Payable to Dover Downs Gaming &
Entertainment, Inc. 1,490 793
Current portion of long-term debt 745 685
Deferred revenue 31,230 12,080
Total current liabilities 39,144 20,294
Notes payable to banks 41,770 51,515
Long-term debt 18,485 19,229
Other liabilities 107 107
Deferred income taxes 44,211 42,677
Stockholders' equity:
Common stock 1,638 1,614
Class A common stock 2,345 2,345
Additional paid-in capital 127,235 127,169
Retained earnings 24,344 29,735
Accumulated other comprehensive loss (330) (330)
Total stockholders' equity 155,232 160,533
Total liabilities and stockholders'
equity $298,949 $294,355
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
Three Months Ended March 31,
2003 2002
Cash flows from operating activities:
Net loss $(4,993) $(28,492)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 2,626 2,357
Amortization and write-off of credit
facility fees 220 -
Earnings from discontinued operation, net - (5,168)
Cumulative effect of accounting change - 28,606
Deferred income taxes 873 555
Changes in assets and liabilities:
Accounts receivable (6,294) (982)
Inventories (203) -
Prepaid expenses and other (567) (4,641)
Accounts payable 129 2,208
Accrued liabilities (1,186) (337)
Payable to Dover Downs Gaming &
Entertainment, Inc. 697 -
Income taxes receivable/payable 521 (2,362)
Deferred revenue 19,150 19,624
Net cash provided by continuing
operations 10,973 11,368
Cash flows from investing activities:
Capital expenditures (1,823) (543)
Restricted cash 1,767 1,656
Net cash used in investing activities
of continuing operations (56) 1,113
Cash flows from financing activities:
Borrowings from revolving debt agreement 5,950 81,270
Repayments on revolving debt
agreement (15,695) (88,149)
Repayments of long-term debt (684) (635)
Repayment of shareholder loan - 92
Proceeds from stock options exercised 90 -
Credit facility amendment fees (245) -
Dividends paid (398) (1,713)
Net cash used in financing activities (10,982) (9,135)
Net cash used in discontinued operation - (1,730)
Net (decrease) increase in cash and
cash equivalents (65) 1,616
Cash and cash equivalents, beginning
of period 454 2,948
Cash and cash equivalents, end of period $389 $4,564