Championship Auto Racing Teams Reports Third Quarter 2003 Results
INDIANAPOLIS, Oct. 30, 2003 -- Championship Auto Racing Teams, Inc. (the "Company") (BULLETIN BOARD: CPNT.OB) announced today financial results for the third quarter ended September 30, 2003.
The number of events held in a quarter, the type of event, whether the race pays a sanction fee or is self promoted and whether the event was broadcast on network or cable television affects the comparability of earnings information from quarter to quarter. CART, Inc., a wholly owned subsidiary of the Company, conducted eight events in both the third quarter of 2003 and 2002. Toyota Atlantics held seven events in the third quarter of 2003 compared to six events in the third quarter of 2002. For the nine months ended September 30, 2003, CART, Inc. conducted sixteen events compared to fifteen events in the nine months ended September 30, 2002. Toyota Atlantics conducted twelve events in the nine months ended September 30, 2003 and 2002.
For the three months ended September 30, 2003, total revenues were $18.2 million, compared to $18.5 million in the same period in the prior year. Total expenses rose to $53.1 million compared to $32.2 million in the same period in the prior year.
Net loss for the 2003 third quarter was $34.4 million, or $2.34 per fully diluted share, compared to a net loss of $8.3 million, or $0.56 per fully diluted share, in the same period in the prior year.
For the nine months ended September 30, 2003, total revenues were $38.7 million, compared to $43.4 million in the same period in the prior year. Total expenses for the nine months ended September 30, 2003, were $117.4 million, compared to $65.9 million in the same period in the prior year. Net loss for the nine months ended September 30, 2003, was $77.9 million, or $5.29 per fully diluted share, compared to a net loss of $13.5 million, or $0.85 per fully diluted share, in the same period in the prior year.
Our cash balance on September 30, 2003, was $2.1 million, a net decrease of $4.7 million from December 31, 2002. Our short-term investment balance on September 30, 2003, was $17.6 million, a decrease of $61.9 million from December 31, 2002.
As announced previously, in light of the significant near term financial challenges facing the Company, we retained the investment banking firm of Bear Stearns & Co. Inc. to assist us in exploring financing and other strategic alternatives that may be available to us. On August 18, 2003, the Company announced it had received a proposal from Open Wheel Racing Series, LLC ("Open Wheel") and was engaged in negotiations regarding a possible transaction with Open Wheel. Subsequently, on September 10, 2003, the Company and Open Wheel announced that they had signed a definitive merger agreement providing for Open Wheel to acquire the Company for cash equivalent to $0.56 per share, based on the number of shares of Company common stock then outstanding (which we will not take any action to increase while the proposed transaction is pending). The merger is subject to approval of our stockholders, and satisfaction or waiver of other conditions. If the merger is adopted by our stockholders, we currently expect to complete the proposed transaction with Open Wheel late in the fourth quarter of 2003, as quickly as possible after the special meeting of the Company's stockholders and after all of the conditions to the merger are satisfied or waived. We intend to manage our cash on hand such that we will continue our operations until such time as we hold a special meeting of the stockholders to consider adoption of the merger agreement. We anticipate that we will defer certain of our accounts payable longer than we have in the past. Unanticipated events, delays in collecting our accounts receivable, or other factors could result in an inability to fund all of our obligations with cash reserves. For a more complete description of the proposed merger please see the preliminary proxy statement described below.
If the proposed merger with Open Wheel is not completed for any reason, and if no strategic transaction that is an alternative to the merger is available to us at that time, it is expected that we will be required immediately to cease our operations, wind up our affairs and seek to liquidate our remaining assets because our cash resources and other sources of liquidity would be substantially depleted by that time. In that event, we expect that CART, Inc. and our other subsidiaries would discontinue racing and other operations and commence liquidation. Although the definitive merger agreement permits our board of directors to consider proposals for a competing transaction and accept a superior proposal, no such competing proposal is currently being considered by us as an alternative to the proposed transaction with Open Wheel and no superior proposal is available.
About Championship Auto Racing Teams, Inc.
Championship Auto Racing Teams, Inc. (BULLETIN BOARD: CPNT.OB) 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 19-race 2003 Bridgestone Presents The Champ Car World Series Powered by Ford will be broadcast by television partners CBS and SPEED Channel. The Company also owns and operates its top development series, the Toyota Atlantic Championship. Learn more about the Company's open-wheel racing series at www.champcarworldseries.com .
Championship Auto Racing Teams, Inc.
Consolidated Statements of Income (Unaudited)
For the Quarter Ended September 30, 2003 and 2002
(In Thousands, Except Earnings Per Share)
Quarter ended Quarter ended
September 30, 2003 September 30, 2002
Revenues
Sanction fees $7,831 $12,555
Sponsorship revenue 2,623 2,934
Television revenue 831 1,967
Race promotion revenue 5,607 -
Engine lease revenue 475 -
Other revenue 803 1,081
Total revenues 18,170 18,537
Expenses
Race distributions 21,067 8,427
Race expenses 2,589 4,110
Race promotion expense 9,874 5,452
Television expense 6,492 4,892
Administrative and indirect expenses 6,115 8,966
Litigation and settlements expense 1,281 -
Merger and strategic charges 1,355
Relocation expense - -
Asset impairment 3,299
Depreciation and amortization 998 357
Total expenses 53,070 32,204
Operating loss (34,900) (13,667)
Realized gain on sale of investments 248 2
Interest income 248 882
Loss before income taxes (34,404) (12,783)
Income tax expense (benefit) - (4,473)
Loss before cumulative effect of
accounting change $(34,404) $(8,310)
Cumulative effect of accounting
change (net of tax) $- $-
Net loss $(34,404) $(8,310)
Loss per share before cumulative
effect of accounting change:
Basic $(2.34) $(0.56)
Diluted $(2.34) $(0.56)
Net loss per share:
Basic $(2.34) $(0.56)
Diluted $(2.34) $(0.56)
Weighted average shares outstanding:
Basic 14,718 14,718
Diluted 14,718 14,718
Championship Auto Racing Teams, Inc.
Consolidated Statements of Income
For the Nine Months Ended September 30, 2003 and 2002
(In Thousands, Except Earnings Per Share)
Nine Months Ended Nine Months Ended
September 30, 2003 September 30, 2002
Revenues
Sanction fees $16,131 $27,082
Sponsorship revenue 6,591 8,039
Television revenue 1,734 4,230
Race promotion revenue 10,628 1,417
Engine leases 1,425 -
Other 2,233 2,665
Total revenues 38,742 43,433
Expenses
Race distributions 49,728 15,778
Race expenses 6,530 8,432
Race promotion expense 20,784 8,935
Television expense 13,910 9,604
Administrative and indirect expenses 16,334 20,762
Litigation and settlements expense 2,660 -
Relocation expense 1,305
Merger and strategic Charges 1,355
Asset impairment 3,299
Depreciation and amortization 2,842 1,045
Total expenses 117,442 65,861
Operating loss (78,700) (22,428)
Realized gain on sale of investments 332 2
Interest income 1,121 3,083
Loss before income taxes (77,247) (19,343)
Income tax expense (benefit) 660 (6,769)
Loss before cumulative effect of
accounting change $(77,907) $(12,574)
Cumulative effect of accounting
change (net of tax) $- $(956)
Net loss $(77,907) $(13,530)
Loss per share before cumulative
effect of accounting change:
Basic $(5.29) $(0.85)
Diluted $(5.29) $(0.85)
Net loss per share after cumulative
effect of accounting change:
Basic $(5.29) $(0.92)
Diluted $(5.29) $(0.92)
Weighted average shares outstanding:
Basic 14,718 14,718
Diluted 14,718 14,718
Championship Auto Racing Teams, Inc.
Consolidated Balance Sheets
As of September 30, 2003 and December 31, 2002
(In Thousands)
(Unaudited)
September 30, 2003 December 31, 2002
Assets
Current Assets
Cash and cash equivalents $2,099 $6,773
Short-term investments 17,551 79,489
Accounts receivable - net 3,774 4,657
Prepaid expenses and other
current assets 6,116 1,474
Income tax refundable 695 10,087
Deferred income taxes - 1,184
Current portion note receivable 132 -
Total current assets 30,367 103,664
Note receivable 891 -
Property and equipment - net 11,847 10,403
Goodwill - -
Other assets 548 384
Total assets $43,653 $114,451
Liabilities and stockholders' equity
Current liabilities
Long term debt-current portion 2,523 -
Accounts payable $3,768 $1,703
Accrued liabilities:
Race expense and point award 3,316 -
Royalties 90 173
Payroll 600 2,455
Taxes 454 743
Other 4,950 4,879
Deferred revenue 3,272 1,423
Total current liabilities 18,973 11,376
Deferred income taxes - 57
Stockholders' equity
Capital stock 147 147
Additional paid-in capital 87,765 87,765
Accumulated earnings (deficit) (63,396) 14,511
Accumulated other comprehensive
income 164 595
Total stockholders' equity 24,680 103,018
Total liabilities and stockholders'
equity $43,653 $114,451