Dover Motorsports, Inc. Reports Results for the Second Quarter
DOVER, Del., July 29 -- Dover Motorsports, Inc. today reported its results for the second quarter ended June 30, 2004.
Earnings before income taxes for the quarter ended June 30, 2004 increased by $3,047,000 or 30.3% to $13,093,000 compared with $10,046,000 in the comparable quarter of the prior year. Improvements in all of the Company's NASCAR events as well as lower general and administrative expenses, depreciation and net interest expense contributed to the increase in earnings before income taxes.
Revenues increased by $3,039,000 or 6.4% to $50,888,000 in the quarter ended June 30, 2004 compared with $47,849,000 in the second quarter of 2003. Broadcast revenues, admissions and event-related revenues all increased over the comparable period of the prior year. The Company promoted a total of nine major motorsports events in the second quarter of both 2004 and 2003.
Operating and marketing expenses were $31,203,000 in the second quarter of 2004 compared with $29,483,000 in the comparable quarter of 2003. Sanction fees and purses, which increased by $956,000 to $14,347,000 in the second quarter of 2004 compared with $13,391,000 for the same period of the previous year, represented the largest increase in operating expenses.
General and administrative expenses were $3,716,000 in the second quarter of 2004 compared with $4,137,000 for the same quarter last year. The prior year included $355,000 for the settlement of a claim at Gateway International Raceway. Excluding this claim, general and administrative expenses in the second quarter of 2004 were $66,000 lower than the same quarter of the prior year. Savings from the elimination of overhead at Denver and St. Petersburg were partially offset by higher wages and fringe benefits, and legal, audit and consulting expenses related to compliance with Sarbanes-Oxley activities.
Depreciation and amortization were $294,000 lower in the second quarter of 2004, primarily due to a decrease in property and equipment resulting from the write-off of assets in December 2003 at Denver and St. Petersburg.
Net interest expense was $1,013,000 lower in the second quarter of 2004 primarily as a result of $481,000 of interest received from the IRS in May 2004 related to an income tax refund as well as lower average amounts outstanding on the Company's credit facility and lower bank fees in the second quarter of 2004.
Net earnings for the quarter ended June 30, 2004 were $5,163,000 or $.13 per diluted share compared with $5,023,000 or $.13 per diluted share for the same period last year. Net earnings and net earnings per share were negatively affected in 2004 by a 61% effective income tax rate compared with a 50% rate in 2003. The higher rate in 2004 was principally due to an increase in state income tax expenses attributable to valuation allowances established on state net operating losses.
For the six months ended June 30, 2004, revenues were $52,048,000 compared with $51,816,000 in the prior year, which included revenues of $3,043,000 from the discontinued Grand Prix of St. Petersburg.
The Company's financial position improved during the first half of 2004 as cash flow from operations was $15,686,000 compared with $11,169,000 for the first half of last year. Substantially all of the cash flow was used to reduce indebtedness. At June 30, 2004, indebtedness was $49,088,000, down $13,189,000 from the $62,277,000 that was outstanding six months earlier.
Capital spending was $1,715,000 in the first half of 2004 compared with $2,604,000 in the first half of the prior year. Capital spending will increase in the second half of 2004 with the installation of Steel and Foam Energy Reduction ("SAFER") walls, which is currently underway at Dover International Speedway. The Company expects to spend between $2,000,000 to $2,500,000 for the installation of SAFER walls at its four permanent facilities during the remainder of 2004 and a similar amount to complete these projects in 2005. The Company noted that any excess cash flow during the period will continue to be used to reduce indebtedness.
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 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, NHRA and Champ Car. 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 in 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 Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Revenues:
Admissions $20,429 $20,021 $20,517 $21,662
Event-related revenue 17,835 17,324 18,373 19,171
Broadcasting revenue 12,514 10,386 12,514 10,386
Other revenue 110 118 644 597
50,888 47,849 52,048 51,816
Expenses:
Operating and marketing 31,203 29,483 33,528 35,953
General and administrative 3,716 4,137 7,409 7,748
Depreciation and amortization 2,404 2,698 4,796 5,324
37,323 36,318 45,733 49,025
Operating earnings 13,565 11,531 6,315 2,791
Interest income 482 3 484 6
Interest expense (954) (1,488) (2,093) (2,737)
Earnings before income taxes 13,093 10,046 4,706 60
Income taxes 7,930 5,023 2,729 30
Net earnings $5,163 $5,023 $1,977 $30
Net earnings per common share:
- Basic $0.13 $0.13 $0.05 $ -
- Diluted $0.13 $0.13 $0.05 $ -
Average shares outstanding:
- Basic 39,994 39,891 39,994 39,813
- Diluted 40,031 39,960 40,014 39,925
DOVER MOTORSPORTS, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
June 30, June 30, December 31,
2004 2003 2003
ASSETS
Current assets:
Cash and cash equivalents $4,587 $2,198 $3,348
Accounts receivable 15,032 11,910 2,643
Inventories 311 637 259
Prepaid expenses and other 4,347 4,708 1,691
Receivable from Dover Downs Gaming &
Entertainment, Inc. - - 96
Income taxes receivable - 4,176 5,819
Deferred income taxes 331 644 548
Total current assets 24,608 24,273 14,404
Property and equipment, net 226,565 242,288 229,603
Restricted cash 1,857 1,956 3,433
Other assets, net 1,515 1,607 1,434
Deferred income taxes 90 2,419 90
Goodwill 8,521 21,883 8,521
Total assets $263,156 $294,426 $257,485
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $7,518 $3,033 $3,333
Accrued liabilities 6,320 7,102 4,587
Payable to Dover Downs Gaming &
Entertainment, Inc. 22 638 -
Income taxes payable 105 - -
Notes payable to banks - 43,460 -
Current portion of long-term debt 805 745 745
Deferred revenue 18,861 19,165 11,304
Total current liabilities 33,631 74,143 19,969
Notes payable to banks 30,600 - 43,045
Long-term debt 17,683 18,486 18,487
Other liabilities 64 85 85
Deferred income taxes 42,617 41,282 38,527
Stockholders' equity:
Common stock 1,681 1,649 1,656
Class A common stock 2,330 2,345 2,344
Additional paid-in capital 128,225 127,799 127,783
Retained earnings 7,175 28,967 5,999
Accumulated other comprehensive loss (410) (330) (410)
Deferred compensation (440) - -
Total stockholders' equity 138,561 160,430 137,372
Total liabilities and stockholders'
equity $263,156 $294,426 $257,485
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
Six Months Ended June 30,
2004 2003
Operating activities:
Net earnings $1,977 $30
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 4,796 5,324
Amortization and write-off of
credit facility fees 154 743
Amortization of deferred compensation 13 -
Tax benefit of options exercised - 533
Deferred income taxes 1,786 3,220
Changes in assets and liabilities:
Accounts receivable (12,389) (8,384)
Inventories (52) (255)
Prepaid expenses and other (2,616) (1,048)
Accounts payable 4,185 591
Accrued liabilities 1,733 1,777
Payable to/receivable from Dover
Downs Gaming & Entertainment, Inc. 118 (155)
Income taxes payable/receivable 8,445 1,730
Deferred revenue 7,557 7,085
Other liabilities (21) (22)
Net cash provided by operating activities 15,686 11,169
Investing activities:
Capital expenditures (1,715) (2,604)
Restricted cash 1,576 1,727
Other - 70
Net cash used in investing activities (139) (807)
Financing activities:
Borrowings from revolving debt agreement 14,520 23,050
Repayments on revolving debt agreement (26,965) (31,105)
Repayments of long-term debt (744) (683)
Proceeds from stock options exercised - 132
Credit facility origination and
amendment fees (318) (245)
Dividends paid (801) (798)
Net cash used in financing activities (14,308) (9,649)
Net increase in cash and cash equivalents 1,239 713
Cash and cash equivalents,
beginning of period 3,348 1,485
Cash and cash equivalents, end of period $4,587 $2,198