Dover Motorsports, Inc. Reports Results For the Third Quarter
DOVER, Del., Oct. 30, 2003 -- Dover Motorsports, Inc. today reported its results for the third quarter ended September 30, 2003.
Revenues were $38,207,000 in the quarter ended September 30, 2003 compared with $41,622,000 for the third quarter of 2002. The Company experienced a decline in admissions and other related revenue at its IRL and NASCAR Craftsman Truck Series events in Nashville, its IRL event at Gateway International Raceway ("Gateway"), and at its Grand Prix of Denver event. The substitution of a NASCAR Craftsman Truck Series event for a NASCAR Busch Series event at Gateway in the third quarter also resulted in a $1.2 million revenue decline. Revenues increased slightly at the NHRA event at Memphis Motorsports Park and at the Fall NASCAR weekend at Dover International Speedway, despite the cancellation of all activities on Thursday and Friday from the effects of Hurricane Isabel.
Operating and marketing expenses in the third quarter were $1,247,000 lower than in the comparable period in the prior year largely due to the lower costs at the Craftsman Truck Series event at Gateway compared with the Busch Series event held last year and also due to cost reductions this year at the Grand Prix of Denver, offset by higher purses and sanction fees for most of the other events. Depreciation was $223,000 higher in the third quarter of 2003 than in the same quarter of the previous year and net interest expense was $299,000 lower than the comparable quarter last year. General and administrative expenses were $676,000 lower in the third quarter of 2003 primarily due to headcount reductions and lower legal claims, offset by increased insurance expenses.
Earnings before income taxes were $6,271,000 compared with $7,687,000 in the comparable period last year. Lower earnings in the third quarter of 2003 resulted from those four events mentioned above with declines in revenue. Higher purses and sanction fees and insurance expense also contributed to lower earnings.
Net earnings for the quarter ended September 30, 2003 were $4,465,000 or $.11 per diluted share compared with $3,731,000 or $.10 per diluted share for the same period last year. The higher net earnings resulted primarily from a substantially lower income tax rate in the third quarter of 2003 compared with a 51% effective tax rate last year. Since 18 of the Company's 19 major events for 2003 were completed by the end of the third quarter and the Company has determined the impact of its 2003 income tax attributes, it now estimates that the full year effective income tax rate for 2003 will be 29%. Under current accounting rules, the Company is required to use its estimated annual income tax rate in interim reporting periods and therefore a 29% tax rate was used for the third quarter and nine-month periods ended September 30, 2003.
For the nine months ended September 30, 2003, revenues decreased to $90,023,000 compared with $91,259,000 for the comparable period in the prior year. For the nine months ended September 30, 2003, operating expenses increased by $4,167,000 primarily as a result of the inclusion of a new event in St. Petersburg in 2003 and higher sanction fees and purses for most of the other events. Earnings before income taxes for the nine months ended September 30, 2003 were $6,331,000 compared with $12,662,000 for the comparable period last year. Lower attendance, hospitality and sponsor revenue caused by a combination of rain, economic uncertainty and other factors were the primary causes for the decline in earnings for the nine months ending September 30, 2003. Earnings from continuing operations were $4,495,000 for the nine months ended September 30, 2003 compared with $6,750,000 in the prior year.
The Company's financial position remained stable at September 30, 2003. Cash flow from operations was $14,528,000 during the first nine months of the year compared with $15,648,000 for the comparable period in the prior year. For the nine months ended September 30, 2003, capital expenditures were $2,865,000 compared with $6,843,000 last year. The Company currently has no major capital projects in progress. The strong cash flow, together with the low level of capital expenditures, enabled the Company to reduce its indebtedness by $9,658,000 during the last nine months.
This release contains or may contain forward-looking statements based on management's beliefs and assumptions. Such statements are subject to various risks and uncertainties which could cause results to vary materially. Please refer to the Company's SEC filings for a discussion of such factors.
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 Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Revenues $38,207 $41,622 $90,023 $91,259
Expenses:
Operating and marketing 24,686 25,933 60,639 56,472
Depreciation and
amortization 2,698 2,475 8,022 7,204
General and administrative 3,521 4,197 11,269 11,594
30,905 32,605 79,930 75,270
Operating earnings 7,302 9,017 10,093 15,989
Interest expense, net 1,031 1,330 3,762 3,327
Earnings from continuing
operations before income
taxes
and cumulative effect of
accounting change 6,271 7,687 6,331 12,662
Income taxes 1,806 3,956 1,836 5,912
Earnings from continuing
operations
before cumulative effect
of accounting change 4,465 3,731 4,495 6,750
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 4,465 3,731 4,495 11,227
Cumulative effect of
accounting change for
goodwill
impairment - - - (28,606)
Net earnings (loss) $4,465 $3,731 $4,495 $(17,379)
Earnings (loss) per common
share - basic:
Continuing operations before
accounting change $0.11 $0.10 $0.11 $0.18
Discontinued operation - - - 0.12
Accounting change - - - (0.75)
Net earnings (loss) $0.11 $0.10 $0.11 $(0.45)
Earnings (loss) per common
share - diluted:
Continuing operations before
accounting change $0.11 $0.10 $0.11 $0.17
Discontinued operation - - - 0.12
Accounting change - - - (0.74)
Net earnings (loss) $0.11 $0.10 $0.11 $(0.45)
Average shares outstanding:
- Basic 39,935 38,853 39,854 38,325
- Diluted 40,017 39,165 39,968 38,701
DOVER MOTORSPORTS, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
September 30, December 31,
2003 2002 2002
ASSETS
Current assets:
Cash and cash equivalents $345 $1,776 $454
Accounts receivable 9,379 13,022 3,526
Inventories 588 415 382
Prepaid expenses and other 1,939 2,551 4,088
Income taxes receivable 3,289 4,127 5,906
Deferred income taxes 298 139 810
Total current assets 15,838 22,030 15,166
Property and equipment, net 239,873 245,204 244,965
Restricted cash 4,309 2,466 3,683
Other assets, net 1,337 1,834 1,790
Deferred income taxes 3,067 1,464 1,865
Goodwill 21,883 21,883 21,883
Total assets $286,307 $294,881 $289,352
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,571 $3,183 $1,411
Accrued liabilities 6,872 5,683 5,325
Payable to Dover Downs Gaming &
Entertainment, Inc. 211 1,910 793
Notes payable to banks 42,540 - -
Current portion of long-term debt 745 685 685
Deferred revenue 7,669 7,055 12,080
Total current liabilities 60,608 18,516 20,294
Notes payable to banks - 55,050 51,515
Long-term debt 18,486 19,229 19,229
Other liabilities 85 107 107
Deferred income taxes 42,621 36,283 37,674
Stockholders' equity:
Common stock 1,649 1,590 1,614
Class A common stock 2,345 2,361 2,345
Additional paid-in capital 127,792 126,276 127,169
Retained earnings 33,032 35,469 29,735
Accumulated other comprehensive loss (311) - (330)
Total stockholders' equity 164,507 165,696 160,533
Total liabilities and stockholders'
equity $286,307 $294,881 $289,352
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF CAST FLOWS
In Thousands
(Unaudited)
Nine Months Ended September 30,
2003 2002
Cash flows from operating
activities:
Net earnings (loss) $4,495 $(17,379)
Adjustments to reconcile net
earnings (loss) to net
cash provided by operating
activities:
Depreciation and amortization 8,022 7,204
Amortization and write-off of credit
facility fees 928 151
Earnings from discontinued
operation, net - (5,168)
Cumulative effect of accounting
change - 28,606
Tax benefit of options exercised 526 -
Deferred income taxes 4,275 10,374
Changes in assets and liabilities:
Accounts receivable (5,853) (8,852)
Inventories (206) 8
Prepaid expenses and other 2,010 511
Income taxes receivable 2,617 (308)
Accounts payable 1,160 2,159
Accrued liabilities 1,547 2,289
Payable to Dover Downs Gaming &
Entertainment, Inc. (582) 1,910
Deferred revenue (4,411) (5,857)
Net cash provided by continuing
operations 14,528 15,648
Cash flows from investing
activities:
Capital expenditures (2,865) (6,843)
Restricted cash (626) 695
Other 70 -
Net cash used in investing
activities of continuing operations (3,421) (6,148)
Cash flows from financing
activities:
Repayments on revolving debt
agreement, net (8,975) (55,551)
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 sale of common stock,
net - 6,213
Proceeds from stock options
exercised 132 38
Other liabilities (22) (24)
Credit facility amendment and
origination fees (470) (839)
Dividends paid (1,198) (3,236)
Net cash used in financing
activities of continuing operations (11,216) (8,942)
Net cash used in discontinued
operation - (1,730)
Net decrease in cash and cash
equivalents (109) (1,172)
Cash and cash equivalents, beginning
of period 454 2,948
Cash and cash equivalents, end of
period $345 $1,776