Dover Motorsports, Inc. Reports a 64% Increase in Net Earnings for the Third Quarter
DOVER, Del., Oct. 27, 2005 -- Dover Motorsports, Inc. today reported its results for the third quarter ended September 30, 2005.
Net earnings for the quarter ended September 30, 2005 increased by 64% to $6,772,000 compared with $4,136,000 for the same period last year. Earnings from continuing operations per diluted share increased by 55% for the quarter ended September 30, 2005 to $.17 compared with $.11 for the same period last year. Earnings from continuing operations before income taxes for the quarter ended September 30, 2005 increased by $1,969,000, or 18%, to $12,936,000 compared with $10,967,000 in the comparable quarter of the prior year. Improvements at the Company's fall Dover NASCAR weekend events and the inclusion of Gateway's NASCAR Busch Series event contributed to the increase in earnings from continuing operations before income taxes.
Revenues increased by $5,409,000 to $42,822,000 for the quarter ended September 30, 2005 compared with $37,413,000 in the third quarter of 2004. The Company promoted a total of seven major motorsports events in the third quarter of 2005 compared with six events in the third quarter of 2004. The extra event in 2005 was the Gateway NASCAR Busch Series event, which was held during the second quarter of 2004. In addition, the Gateway Craftsman Truck Series event that was held in the third quarter of 2004 was promoted in the second quarter of 2005 and the Memphis Truck event that was held in the second quarter of 2004 was promoted this year in the third quarter. Broadcasting and admissions revenues for comparable NASCAR events all increased over the same period of the prior year.
Operating and marketing expenses were $23,436,000 for the quarter ended September 30, 2005 compared with $19,634,000 in the comparable quarter of 2004. Direct operating expenses from those third quarter events that were not in the prior year's third quarter represented $2,648,000 of the increase in operating expense.
General and administrative expenses were $3,324,000 in the third quarter of 2005 compared with $3,498,000 for the same quarter last year. Administrative expenses in 2004 included $267,000 for a judgment entered into against the Company related to a claim from a prior year.
Net interest expense was $268,000 lower in the third quarter of 2005 compared with the same quarter of the prior year primarily due to lower average amounts outstanding on the Company's bank credit facility during most of the third quarter of 2005. On September 10, the Company closed on a self- tender offer, which required borrowings of approximately $28 million. The impact of higher short-term interest rates in 2005 was virtually offset by narrower spreads on the Company's bank facility during this period. Interest expense in the third quarter of 2004 also included $115,000 of pre-judgment interest related to the claim mentioned earlier.
The Company's effective income tax rates in the third quarter of 2005 and 2004 were 47.6% and 58.8%, respectively. The decrease in the effective income tax rate from the comparable period in the prior year was due to an increase in the Company's estimated annual consolidated pre-tax earnings for 2005 as compared to 2004.
For the nine months ended September 30, 2005, revenues were $87,749,000 compared with $81,220,000 in the prior year. The Company promoted 14 major events in the first nine months of both years. For the nine months ended September 30, 2005 net earnings increased by 83% to $11,174,000 compared with $6,113,000 for the prior year. Earnings from continuing operations per diluted share increased by 53% to $.26 compared with $.17 last year.
The Company's financial position during the first nine months of 2005 remained stable. Cash flow from continuing operations was $16,591,000 compared with $14,259,000 for the first nine months of last year. At September 30, 2005, indebtedness was $56,285,000, compared with $46,288,000 that was outstanding a year earlier. The increase in debt was primarily due to the tender offer mentioned earlier.
Capital spending was $8,582,000 for the nine-month period ended September 30, 2005 compared with $2,657,000 in the same period of the prior year.
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 Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Revenues:
Admissions $18,427 $15,790 $36,383 $33,684
Event-related 12,625 12,468 25,444 25,836
Broadcasting 11,618 9,133 25,619 21,638
Other 152 22 303 62
42,822 37,413 87,749 81,220
Expenses:
Operating and marketing 23,436 19,634 48,366 45,375
General and administrative 3,324 3,498 9,714 9,828
Depreciation and amortization 2,386 2,306 7,053 6,884
29,146 25,438 65,133 62,087
Operating earnings 13,676 11,975 22,616 19,133
Interest income 7 1 15 485
Interest expense (747) (1,009) (2,432) (3,102)
Earnings from continuing operations
before income taxes 12,936 10,967 20,199 16,516
Income taxes 6,164 6,453 9,626 9,492
Earnings from continuing operations 6,772 4,514 10,573 7,024
(Loss) earnings from discontinued
operation
(including gain on disposal of
$5,143 for the nine months ended
September 30, 2005), net of income
taxes of $3,574 for the nine months
ended September 30, 2005, and income tax
benefits of $204 and $514 for the
three and nine months ended
September 30, 2004 - (378) 601 (911)
Net earnings $6,772 $4,136 $11,174 $6,113
Earnings per common share - basic:
Continuing operations $0.17 $0.11 $0.26 $0.17
Discontinued operation - (0.01) 0.02 (0.02)
Net earnings $0.17 $0.10 $0.28 $0.15
Earnings per common share - diluted:
Continuing operations $0.17 $0.11 $0.26 $0.17
Discontinued operation - (0.01) 0.02 (0.02)
Net earnings $0.17 $0.10 $0.28 $0.15
Average shares outstanding:
- Basic 39,407 40,037 39,851 40,008
- Diluted 39,656 40,052 40,011 40,027
DOVER MOTORSPORTS, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
Sept. 30, Sept. 30, Dec. 31,
2005 2004 2004
ASSETS
Current assets:
Cash and cash equivalents $1,930 $857 $134
Accounts receivable 10,038 9,108 2,336
Inventories 205 240 208
Prepaid expenses and other 1,566 1,535 1,812
Receivable from Dover Downs Gaming &
Entertainment, Inc. - 105 -
Deferred income taxes 426 379 675
Current assets of discontinued
operation 13 1,671 2,593
Total current assets 14,178 13,895 7,758
Property and equipment, net 223,280 221,073 220,949
Restricted cash 3,217 3,568 3,571
Other assets, net 1,326 1,390 1,385
Deferred income taxes 45 46 46
Goodwill 2,487 2,487 2,487
Non-current assets of discontinued
operation - 11,908 12,054
Total assets $244,533 $254,367 $248,250
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,703 $1,688 $1,898
Accrued liabilities 6,112 6,024 5,323
Payable to Dover Downs Gaming &
Entertainment, Inc. - - 2
Income taxes payable 1,866 1,049 324
Current portion of long-term debt 875 805 805
Deferred revenue 4,865 5,266 9,306
Current liabilities of discontinued
operation 355 1,874 2,633
Total current liabilities 16,776 16,706 20,291
Notes payable to banks 38,600 27,800 27,000
Long-term debt 16,810 17,683 17,684
Other liabilities 42 64 64
Deferred income taxes 51,942 49,528 44,745
Stockholders' equity:
Common stock 1,544 1,688 1,695
Class A common stock 2,092 2,330 2,324
Additional paid-in capital 101,537 128,483 128,542
Retained earnings 16,597 10,909 6,834
Accumulated other comprehensive loss (525) (403) (527)
Deferred compensation (882) (421) (402)
Total stockholders' equity 120,363 142,586 138,466
Total liabilities and stockholders'
equity $244,533 $254,367 $248,250
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
Nine Months Ended
September 30,
2005 2004
Operating activities:
Net earnings $11,174 $6,113
Adjustments to reconcile net earnings
to net cash provided by operating activities
of continuing operations:
Depreciation and amortization 7,053 6,884
Amortization of credit facility fees 117 220
Amortization of deferred compensation 156 32
Tax benefit of stock options exercised - 6
Deferred income taxes 7,447 7,674
(Earnings) loss of discontinued
operation, net (601) 911
Changes in assets and liabilities:
Accounts receivable (7,702) (7,348)
Inventories 3 (25)
Prepaid expenses and other 273 (62)
Accounts payable 805 (1,598)
Accrued liabilities 789 1,880
Payable to/receivable from Dover Downs
Gaming & Entertainment, Inc. (2) (9)
Income taxes payable/receivable 1,542 3,547
Deferred revenue (4,441) (3,945)
Other liabilities (22) (21)
Net cash provided by operating
activities of continuing operations 16,591 14,259
Investing activities:
Capital expenditures (8,582) (2,657)
Proceeds from sale of discontinued
operation, net of transaction costs 15,132 -
Restricted cash 354 (135)
Net cash provided by (used in) investing
activities of continuing operations 6,904 (2,792)
Financing activities:
Borrowings from (repayments on) notes
payable to banks, net 11,600 (15,245)
Repayments of long-term debt (804) (744)
Repurchase of common stock (28,518) -
Proceeds from stock options exercised 494 259
Credit facility origination and
amendment fees (145) (332)
Dividends paid (1,411) (1,203)
Net cash used in financing activities
of continuing operations (18,784) (17,265)
Net cash (used in) provided by
discontinued operation (2,915) 3,307
Net increase (decrease) in cash and
cash equivalents 1,796 (2,491)
Cash and cash equivalents, beginning of
period 134 3,348
Cash and cash equivalents, end of
period $1,930 $857