Dover Motorsports, Inc. Reports Results for the Second Quarter
DOVER, Del., July 24 -- Dover Motorsports, Inc. today reported its results for the second quarter ended June 30, 2003.
Revenues were $47,849,000 in the quarter ended June 30, 2003 compared with $48,641,000 in the second quarter of 2002. Broadcast revenues and sponsor- related revenues increased over the comparable period in the prior year. Adverse weather affected five events in the quarter contributing to a decline in admissions, concessions and merchandise revenues. The Company promoted a total of nine major events in both the second quarter of 2003 and 2002 with one change at Gateway International Raceway. In 2002, Gateway hosted a NASCAR Craftsman Truck Series event, whereas, in the second quarter of 2003, it hosted a NASCAR Busch Series event.
Earnings before income taxes for the quarter ended June 30, 2003 were $10,046,000 compared with $12,924,000 in the comparable quarter of the prior year. Lower earnings from the Grand Prix of Long Beach event, higher interest expense and depreciation, and settlement of a claim for legal fees contributed to the earnings decline. Net earnings for the quarter ended June 30, 2003 were $5,023,000 or $.13 per diluted share compared with $7,382,000 or $.19 per diluted share for the same period last year.
Operating expenses were $1,402,000 higher in the second quarter of 2003 than in the comparable quarter of 2002 primarily due to higher sanction fees and purses, as well as the impact of running a NASCAR Busch Series event instead of a NASCAR Truck Series event. Marketing expenses were $265,000 lower than in the prior year's second quarter.
General and administrative expenses were $251,000 higher in the second quarter of 2003 than in the same quarter last year. Administrative expenses in 2003 included $355,000 for the settlement of a claim for attorney's fees in conjunction with a purchase of land near Gateway International Raceway. All other general and administrative expenses were down slightly from the prior year. Higher insurance and benefits costs in 2003 were more than offset by lower wages as a result of fewer people.
Depreciation and amortization was $326,000 higher in the second quarter of 2003, primarily due to the impact of investments in street race events in Denver and St. Petersburg during the past year. No major construction projects are currently underway.
Net interest expense was $372,000 higher in the second quarter of 2003 primarily as a result of the write-off and amortization of bank facility fees. Interest on lower amounts outstanding was generally offset by the impact of higher rates.
The Company's financial position remained strong at June 30, 2003, despite lower earnings during the first half of the year. Cash flow from operations for the first half of 2003 was $11,251,000 compared with $9,284,000 for the first half of last year.
Indebtedness at June 30, 2003 was $62,691,000 compared with $79,593,000 at June 30, 2002. Capital spending was $2,604,000 in the first half of 2003 compared with $2,520,000 in the first half of the prior year. Despite the current sluggish economic environment, the Company expects to continue to generate positive cash flow for the remainder of the year. The Company noted that any excess cash flow will continue to be used to reduce indebtedness.
Dover Motorsports, Inc. is a leading promoter of motorsports events 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 Centrix Financial 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 Six Months Ended
June 30, June 30,
2003 2002 2003 2002
Revenues $47,849 $48,641 $51,816 $49,637
Expenses:
Operating and marketing 29,483 28,346 35,953 30,539
Depreciation and amortization 2,698 2,372 5,324 4,729
General and administrative 4,137 3,886 7,748 7,397
36,318 34,604 49,025 42,665
Operating earnings 11,531 14,037 2,791 6,972
Interest expense, net 1,485 1,113 2,731 1,997
Earnings from continuing operations
before income taxes
and cumulative effect of
accounting change 10,046 12,924 60 4,975
Income taxes 5,023 5,542 30 1,956
Earnings from continuing operations
before cumulative effect of
accounting change 5,023 7,382 30 3,019
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)
Earnings before cumulative effect of
accounting change 5,023 7,382 30 7,496
Cumulative effect of accounting
change for goodwill impairment - - - (28,606)
Net earnings (loss) $5,023 $7,382 $30 $(21,110)
Earnings (loss) per common share -
basic:
Continuing operations before
accounting change $0.13 $0.19 $- $0.08
Discontinued operation - - - 0.12
Accounting change - - - (0.75)
Net earnings (loss) $0.13 $0.19 $- $(0.55)
Earnings (loss) per common share -
diluted:
Continuing operations before
accounting change $0.13 $0.19 $- $0.08
Discontinued operation - - - 0.12
Accounting change - - - (0.75)
Net earnings (loss) $0.13 $0.19 $- $(0.55)
Average shares outstanding:
- Basic 39,891 38,059 39,813 38,056
- Diluted 39,960 38,574 39,925 38,467
DOVER MOTORSPORTS, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
June 30, December 31,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $1,227 $454
Accounts receivable 11,910 3,526
Inventories 637 382
Prepaid expenses and other 4,957 4,088
Income taxes receivable 4,176 5,906
Deferred income taxes 644 810
Total current assets 23,551 15,166
Property and equipment, net 242,288 244,965
Restricted cash 1,956 3,683
Other assets, net 1,358 1,790
Deferred income taxes 2,419 1,865
Goodwill 21,883 21,883
Total assets $293,455 $289,352
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,062 $1,411
Accrued liabilities 7,102 5,325
Payable to Dover Downs Gaming &
Entertainment, Inc. 638 793
Notes payable to banks 43,460 -
Current portion of long-term debt 745 685
Deferred revenue 19,165 12,080
Total current liabilities 73,172 20,294
Notes payable to banks - 51,515
Long-term debt 18,486 19,229
Other liabilities 85 107
Deferred income taxes 41,282 37,674
Stockholders' equity:
Common stock 1,649 1,614
Class A common stock 2,345 2,345
Additional paid-in capital 127,799 127,169
Retained earnings 28,967 29,735
Accumulated other comprehensive loss (330) (330)
Total stockholders' equity 160,430 160,533
Total liabilities and stockholders'
equity $293,455 $289,352
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
Six Months Ended June 30,
2003 2002
Cash flows from operating
activities:
Net earnings (loss) $30 $(21,110)
Adjustments to reconcile net
earnings (loss) to net
cash provided by operating
activities:
Depreciation and amortization 5,324 4,729
Amortization and write-off of credit
facility fees 743 -
Earnings from discontinued
operation, net - (5,168)
Cumulative effect of accounting
change - 28,606
Tax benefit of options exercised 533 -
Deferred income taxes 3,220 3,628
Changes in assets and liabilities:
Accounts receivable (8,384) (10,077)
Inventories (255) (69)
Prepaid expenses and other (1,048) (1,901)
Income taxes receivable 1,730 (218)
Accounts payable 651 (89)
Accrued liabilities 1,777 2,757
Payable to Dover Downs Gaming &
Entertainment, Inc. (155) -
Deferred revenue 7,085 8,196
Net cash provided by continuing
operations 11,251 9,284
Cash flows from investing
activities:
Capital expenditures (2,604) (2,520)
Restricted cash 1,727 1,639
Other 70 -
Net cash used in investing
activities of continuing operations (807) (881)
Cash flows from financing
activities:
Repayments on revolving debt
agreement, net (8,055) (50,922)
Debt paid down by Dover Downs Gaming
& Entertainment, Inc. - 45,000
Repayments of long-term debt (683) (635)
Repayment of shareholder loan - 92
Proceeds from stock options
exercised 132 33
Other liabilities (22) (8)
Credit facility amendment fees (245) -
Dividends paid (798) (2,474)
Net cash used in financing
activities of continuing operations (9,671) (8,914)
Net cash used in discontinued
operation - (1,730)
Net increase (decrease) in cash and
cash equivalents 773 (2,241)
Cash and cash equivalents, beginning
of period 454 2,948
Cash and cash equivalents, end of
period $1,227 $707