Dover Motorsports, Inc. Reports Results for the Quarter Ended March 31, 2004
DOVER, Del., April 29 -- Dover Motorsports, Inc. today reported its results for the quarter ended March 31, 2004.
The first quarter historically results in a loss for the Company due to the seasonality of the motorsports business. No major motorsports events were held during the first quarter of 2004. Loss before income tax benefit for the quarter ended March 31, 2004 was $8,387,000, which was a $1,599,000 improvement over the prior year primarily due to a loss sustained at the 2003 St. Petersburg event, but also due to better results from other events and track rentals in 2004.
Revenues were $1,160,000 compared with $3,967,000 in the first quarter of 2003. The decrease in revenues in 2004 was entirely due to the absence of the St. Petersburg event. Revenue from the Company's weekly and other events and track rentals in the first quarter of 2004 increased by 24% over the prior year's first quarter.
Operating and marketing expenses for the quarter ended March 31, 2004 decreased by $4,145,000, principally as a result of not promoting the St. Petersburg event. On a comparable basis, operating and marketing expenses not associated with the St. Petersburg event were $74,000 higher than the prior year.
For the quarter ended March 31, 2004, general and administrative expenses were $82,000 higher than the prior year. General and administrative expenses included $253,000 of costs from offices that have since been closed in St. Petersburg and Denver.
Depreciation and amortization decreased by $234,000 in the first quarter of 2004 primarily due to a lower property and equipment base resulting from the write-off of assets at Denver and St. Petersburg in December 2003. Net interest expense decreased by $109,000 in the first quarter of 2004 due to lower average levels of indebtedness in 2004.
The income tax benefit for the quarter ended March 31, 2004 was $5,201,000, which was the result of using the Company's expected estimated effective income tax rate of 62.0% for the full year. The increase in the effective tax rate from the comparable period in the prior year is principally due to an increase in state income tax expense attributable to valuation allowances established on state net operating losses.
Net loss for the quarter ended March 31, 2004 was $3,186,000 or $.08 per diluted share compared with $4,993,000 or $.13 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 a positive $8,712,000 in the first quarter of 2004. Virtually all of the Company's excess cash flow was used to reduce indebtedness, which decreased by $7,809,000 during the first quarter. Deferred revenue, an indicator of future ticket and sponsor sales, was $32,396,000 at March 31, 2004, up almost 4% from a year earlier. Capital spending was $799,000 in the first quarter of 2004 compared with $1,823,000 in the first quarter of 2003.
At March 31, 2004, the Company's indebtedness was $54,468,000 compared with $61,000,000 a year ago and $78,636,000 at April 1, 2002, the date the Company spun-off its gaming operations.
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 marketer and promoter of motorsports entertainment in the United States. Its motorsports subsidiaries operate five motorsports tracks (four permanent facilities and one temporary circuit) in four states and promote motorsports events under the auspices of four of the premier sanctioning bodies in motorsports - NASCAR, IRL, CART 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.
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
Three Months Ended
March 31,
2004 2003
Revenues $1,160 $3,967
Expenses:
Operating and marketing 2,325 6,470
General and administrative 3,693 3,611
Depreciation and amortization 2,392 2,626
8,410 12,707
Operating loss (7,250) (8,740)
Interest expense, net (1,137) (1,246)
Loss before income tax benefit (8,387) (9,986)
Income tax benefit 5,201 4,993
Net loss $(3,186) $(4,993)
Net loss per common share:
- Basic $(0.08) $(0.13)
- Diluted $(0.08) $(0.13)
Average shares outstanding:
- Basic 39,994 39,734
- Diluted 39,994 39,734
DOVER MOTORSPORTS, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
March 31, March 31, December 31,
2004 2003 2003
ASSETS
Current assets:
Cash and cash equivalents $4,336 $3,266 $3,348
Accounts receivable 10,000 9,820 2,643
Inventories 343 585 259
Prepaid expenses and other 4,954 4,459 1,691
Receivable from Dover Downs Gaming &
Entertainment, Inc. - - 96
Income taxes receivable 363 5,385 5,819
Deferred income taxes 337 450 548
Total current assets 20,333 23,965 14,404
Property and equipment, net 228,031 244,183 229,603
Restricted cash 1,810 1,916 3,433
Other assets, net 1,563 1,990 1,434
Deferred income taxes 90 2,202 90
Goodwill 8,521 21,883 8,521
Total assets $260,348 $296,139 $257,485
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,798 $4,417 $3,333
Accrued liabilities 3,377 4,139 4,587
Payable to Dover Downs Gaming &
Entertainment, Inc. 3 1,490 -
Current portion of long-term debt 805 745 745
Deferred revenue 32,396 31,230 11,304
Total current liabilities 39,379 42,021 19,969
Notes payable to banks 35,980 41,770 43,045
Long-term debt 17,683 18,485 18,487
Other liabilities 64 107 85
Deferred income taxes 33,456 38,524 38,527
Stockholders' equity:
Common stock 1,662 1,638 1,656
Class A common stock 2,338 2,345 2,344
Additional paid-in capital 127,783 127,235 127,783
Retained earnings 2,413 24,344 5,999
Accumulated other comprehensive loss (410) (330) (410)
Total stockholders' equity 133,786 155,232 137,372
Total liabilities and stockholders'
equity $260,348 $296,139 $257,485
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
Three Months Ended
March 31,
2004 2003
Operating activities:
Net loss $(3,186) $(4,993)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization 2,392 2,626
Amortization and write-off of credit
facility fees 98 220
Deferred income taxes (4,840) 873
Changes in assets and liabilities:
Accounts receivable (7,357) (6,294)
Inventories (84) (203)
Prepaid expenses and other (3,193) (567)
Income taxes receivable 5,436 521
Accounts payable (535) 1,975
Accrued liabilities (1,210) (1,186)
Payable to/receivable from Dover Downs
Gaming & Entertainment, Inc. 99 697
Deferred revenue 21,092 19,150
Net cash provided by operating
activities 8,712 12,819
Investing activities:
Capital expenditures (799) (1,823)
Restricted cash 1,623 1,767
Net cash provided by (used in)
investing activities 824 (56)
Financing activities:
Repayments on revolving debt
agreement, net (7,065) (9,745)
Repayments of long-term debt (744) (684)
Proceeds from stock options exercised - 90
Other liabilities (21) -
Credit facility origination and
amendment fees (318) (245)
Dividends paid (400) (398)
Net cash used in financing activities (8,548) (10,982)
Net increase in cash and cash
equivalents 988 1,781
Cash and cash equivalents, beginning
of period 3,348 1,485
Cash and cash equivalents, end of
period $4,336 $3,266