Dover Motorsports, Inc. Reports Higher Results for the Second Quarter
DOVER, Del., July 28 -- Dover Motorsports, Inc. today reported its results for the second quarter ended June 30, 2005.
Net earnings for the quarter ended June 30, 2005 were $8,284,000 or $.21 per diluted share compared with $5,163,000 or $.13 per diluted share for the same period last year. The second quarter 2005 results included $956,000 after taxes or $.02 per diluted share from discontinued operations. On June 10, 2005 the Company sold its interest in and related assets of the Toyota Grand Prix of Long Beach. Accordingly, results for Long Beach, as well as the Company's prior street races in other cities, are shown as discontinued operations for all periods reported.
Earnings from continuing operations for the quarter ended June 30, 2005 increased by $2,160,000 or 41.8% to $7,328,000 over the comparable quarter of the prior year. On a diluted per share basis, earnings from continuing operations in the second quarter of 2005 were $.19 compared with $.13 per share in the second quarter of the prior year.
Overall, for the quarter ended June 30, 2005 revenues decreased by $1,309,000 to $41,854,000 from $43,163,000 in the second quarter of 2004. The Company promoted six major events in the second quarter of 2005 compared with eight events in the second quarter of 2004. A NASCAR Craftsman Truck Series event at our Memphis Motorsports Park facility, promoted in the second quarter of 2004 will be promoted in the third quarter of 2005; and the first of two NASCAR Busch Series events in Nashville was promoted in the first quarter in 2005 instead of during the second quarter as it was in the prior year. In addition, the Gateway International Raceway NASCAR Busch Series event that was held in the second quarter of last year will be promoted in the third quarter this year. Gateway's Craftsman Truck Series event was held in the second quarter this year, whereas it was held in the third quarter last year. The negative revenue impact in the second quarter of 2005 resulting from these changes in the schedule was $4,441,000.
For the quarter ended June 30, 2005 operating and marketing expenses decreased to $20,662,000 compared with $23,985,000 in the comparable quarter of 2004. The overall decrease in operating expense in the second quarter of 2005 was primarily due to promoting two fewer events and the substitution of a NASCAR Craftsman Truck Series event for a NASCAR Busch Series event in Gateway.
General and administrative expenses were $3,297,000 in the second quarter of 2005 compared with $3,286,000 for the same quarter last year. Higher wages, fringe benefit costs and outside contractor services in 2005 were primarily offset by lower legal claim costs.
Interest expense was $749,000 in the second quarter of 2005 compared with $954,000 in the second quarter of 2004. Lower average amounts of debt outstanding and the reversal of $128,000 of interest from a pre-judgment claim in Nashville contributed to the lower expense in the second quarter of 2005. The prior year's second quarter results included $481,000 of interest income from the IRS related to a prior year income tax refund.
The income tax provision for the quarter ended June 30, 2005 was $7,471,000 compared with $7,957,000 in the prior year. The effective tax rate for the second quarter of 2005 was 50.5% compared with 60.6% in the prior year. The decrease in the effective income tax rate for 2005 as compared to 2004 is due to an increase in the Company's estimated annual consolidated pre- tax earnings. The tax rates in both years were affected by state income tax expenses attributable to valuation allowances established on state net operating losses.
For the six months ended June 30, 2005, revenues were $44,927,000 compared with $43,807,000 in the prior year. The Company promoted seven major events in the first half of 2005 compared with eight in the first half of 2004.
For the six months ended June 30, 2005, earnings from continuing operations were $3,801,000 or $.10 per diluted share compared with $2,510,000 or $.06 per diluted share in the comparable period of the prior year.
The Company's financial position continued to improve during the first half of 2005 as cash provided by continuing operations was $11,054,000. The prior year's cash provided by continuing operations of $14,811,000 included $8,698,000 related to income tax refunds. Cash provided by investing activities of continuing operations included proceeds from the sale of a discontinued operation, net of transaction costs, of $15,132,000, which was used principally to reduce indebtedness. At June 30, 2005, indebtedness was $31,785,000, down $13,704,000 from the $45,489,000 that was outstanding six months earlier.
Capital spending was $7,822,000 in the first half of 2005 compared with $1,645,000 in the first half of the prior year. The acquisition of additional land adjacent to our Dover facility represented a substantial portion of 2005's capital spending. The Company expects capital spending of $1,500,000 to $2,000,000 during the second half of the year.
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 four motorsports tracks in three states and promote motorsports events under the auspices of three of the premier sanctioning bodies in motorsports - NASCAR, 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 in Memphis, Tennessee.
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
Revenues:
Admissions $16,753 $17,806 $17,956 $17,894
Event-related 11,712 12,832 12,819 13,368
Broadcasting 13,370 12,505 14,001 12,505
Other 19 20 151 40
41,854 43,163 44,927 43,807
Expenses:
Operating and marketing 20,662 23,985 24,930 25,741
General and administrative 3,297 3,286 6,390 6,330
Depreciation and amortization 2,351 2,295 4,667 4,578
26,310 29,566 35,987 36,649
Operating earnings 15,544 13,597 8,940 7,158
Interest income 4 482 8 484
Interest expense (749) (954) (1,685) (2,093)
Earnings from continuing operations
before income taxes 14,799 13,125 7,263 5,549
Income taxes 7,471 7,957 3,462 3,039
Earnings from continuing operations 7,328 5,168 3,801 2,510
Earnings (loss) from discontinued
operation (including gain on disposal
of $5,143), net of income taxes of
$3,771 and $3,574 for the three and
six months ended June 30, 2005,
respectively, and income tax
benefits of $27 and $310 for the
three and six months ended
June 30, 2004, respectively 956 (5) 601 (533)
Net earnings $8,284 $5,163 $4,402 $1,977
Earnings per common share - basic:
Continuing operations $0.19 $0.13 $0.10 $0.06
Discontinued operation 0.02 - 0.01 (0.01)
Net earnings $0.21 $0.13 $0.11 $0.05
Earnings per common share - diluted:
Continuing operations $0.19 $0.13 $0.10 $0.06
Discontinued operation 0.02 - 0.01 (0.01)
Net earnings $0.21 $0.13 $0.11 $0.05
Average shares outstanding:
- Basic 40,079 39,994 40,078 39,994
- Diluted 40,217 40,031 40,193 40,014
DOVER MOTORSPORTS, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
June 30, June 30, December 31,
2005 2004 2004
ASSETS
Current assets:
Cash and cash equivalents $2,884 $4,587 $134
Accounts receivable 14,128 14,487 2,336
Inventories 251 295 208
Prepaid expenses and other 4,479 3,690 1,812
Receivable from Dover Downs Gaming &
Entertainment, Inc. 14 - -
Deferred income taxes 556 212 675
Current assets of discontinued
operation 163 4,666 2,593
Total current assets 22,475 27,937 7,758
Property and equipment, net 224,885 222,345 220,949
Restricted cash 1,957 1,857 3,571
Other assets, net 1,313 1,515 1,385
Deferred income taxes 46 90 46
Goodwill 2,487 2,487 2,487
Non-current assets of discontinued
operation - 11,442 12,054
Total assets $253,163 $267,673 $248,250
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,115 $7,193 $1,898
Accrued liabilities 5,178 5,538 5,323
Payable to Dover Downs Gaming &
Entertainment, Inc. - 22 2
Income taxes payable 12 3,434 324
Current portion of long-term debt 875 805 805
Deferred revenue 20,967 18,445 9,306
Current liabilities of discontinued
operation 811 1,522 2,633
Total current liabilities 31,958 36,959 20,291
Notes payable to banks 14,100 30,600 27,000
Long-term debt 16,810 17,683 17,684
Other liabilities 42 64 64
Deferred income taxes 48,081 43,806 44,745
Stockholders' equity:
Common stock 1,707 1,681 1,695
Class A common stock 2,323 2,330 2,324
Additional paid-in capital 129,167 128,225 128,542
Retained earnings 10,429 7,175 6,834
Accumulated other comprehensive loss (527) (410) (527)
Deferred compensation (927) (440) (402)
Total stockholders' equity 142,172 138,561 138,466
Total liabilities and stockholders'
equity $253,163 $267,673 $248,250
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
Six Months Ended June 30,
2005 2004
Operating activities:
Net earnings $4,402 $1,977
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation and amortization 4,667 4,578
Amortization of credit facility fees 78 154
Amortization of deferred compensation 111 13
Deferred income taxes 3,455 2,075
(Earnings) loss of discontinued
operation, net (601) 533
Changes in assets and liabilities:
Accounts receivable (11,792) (12,727)
Inventories (43) (80)
Prepaid expenses and other (2,606) (2,269)
Receivable from/payable to Dover Downs
Gaming & Entertainment, Inc. (16) 118
Accounts payable 2,217 3,907
Accrued liabilities (145) 1,394
Income taxes payable/receivable (312) 5,925
Deferred revenue 11,661 9,234
Other liabilities (22) (21)
Net cash provided by continuing
operations 11,054 14,811
Investing activities:
Capital expenditures (7,822) (1,645)
Proceeds from sale of discontinued
operation, net of transaction costs 15,132 -
Restricted cash 1,614 1,576
Net cash provided by (used in)
investing activities of continuing
operations 8,924 (69)
Financing activities:
Repayments on notes payable to banks,
net (12,900) (12,445)
Repayments of long-term debt (804) (744)
Credit facility origination and
amendment fees (105) (318)
Dividends paid (807) (801)
Net cash used in financing activities
of continuing operations (14,616) (14,308)
Net cash (used in) provided by
discontinued operation (2,612) 805
Net increase in cash and cash
equivalents 2,750 1,239
Cash and cash equivalents, beginning of
period 134 3,348
Cash and cash equivalents, end of
period $2,884 $4,587