Dover Motorsports, Inc. Reports Results for the Quarter and Year Ended December 31, 2005
DOVER, Del., Jan. 26, 2006 -- Dover Motorsports, Inc. today reported its results for the quarter and year ended December 31, 2005.
The Company promoted one major event in the fourth quarter of 2005 and 2004 -- the NASCAR Busch Series race at Memphis Motorsports Park. Results from continuing operations in both years excluded activities related to the Grand Prix of Long Beach, which the Company sold in June 2005.
For the quarter ended December 31, 2005, revenues were $3,250,000 compared with $2,968,000 in the fourth quarter of 2004. Revenue from the Busch event in Memphis was 17% higher in 2005 primarily due to higher attendance and TV broadcast rights fees.
For the quarter ended December 31, 2005, operating and marketing expenses were $362,000 lower than the prior year's fourth quarter and general and administrative expenses were $226,000 higher than the comparable quarter last year. As a result of the improved revenues and lower expenses, the operating loss in the fourth quarter was reduced to $7,540,000 compared with $7,892,000 in the fourth quarter of the prior year.
Net interest expense increased by $288,000 in the fourth quarter of 2005 primarily due to higher borrowings in connection with a self tender that the Company completed for approximately 10% of its outstanding capital stock in September 2005. In October 2005, the Company extinguished $11,908,000 of its outstanding long-term debt, which resulted in a $3,174,000 charge in the fourth quarter. The Company paid off the bonds with borrowings under its unsecured credit facility.
The loss from continuing operations in the fourth quarter of 2005 was also affected by a less favorable effective income tax rate compared with the previous year, primarily due to the long-term debt extinguishment. The income tax benefit in the fourth quarter of 2005 was $5,214,000, which represented an effective tax rate of 44.1% compared with the prior year's fourth quarter effective tax rate of 62.6%. Therefore, the Company recorded a substantially lower tax benefit in the fourth quarter of 2005 compared with the fourth quarter of 2004.
For the quarter ended December 31, 2005, loss from continuing operations was $6,598,000 or $.18 per diluted share compared with $3,257,000 or $.08 per diluted share for the same period last year.
On an adjusted basis the early extinguishment of debt and the self-tender had the following impact:
Quarter Ended December 31,
2005 2004
Dollars EPS Dollars EPS
Loss from continuing operations
(GAAP basis) $ (6,598) $ (.18) $ (3,257) $ (.08)
Early extinguishment of debt 1,774 .05 - -
Difference in 2004 income tax rate 2,185 .06 - -
Adjusted results $ (2,639) $ (.07) $ (3,257) $ (.08)
For the year ended December 31, 2005 revenues increased by 8% to $90,999,000 compared with $84,188,000 in the prior year. Higher broadcast rights fees, admissions and sponsorships contributed to the revenue improvement.
For the year ended December 31, 2005, operating and marketing expenses increased by $2,629,000 primarily due to higher purses, marketing costs and maintenance expenses. General and administrative expenses increased by $112,000 over the prior year.
Earnings from continuing operations before income taxes for the year ended December 31, 2005 increased by 7% to $8,387,000 compared with $7,814,000 in the prior year. Earnings from continuing operations per diluted share increased to $.10 compared with $.09 in the prior year.
Cash flow provided by operating activities for the year ended December 31, 2005 increased by $402,000 to $17,981,000 compared with $17,579,000 for the prior year. Capital expenditures were $8,675,000 in 2005 compared with $4,826,000 last year. Capital expenditures in 2005 included approximately $6,000,000 for the purchase of property adjacent to Dover International Speedway. Long-term debt and notes payable to banks at December 31, 2005 were $54,878,000 compared to $45,489,000 at December 31, 2004, primarily the result of a self-tender of the Company's common stock and Class A common stock.
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; Gateway International Raceway near St. Louis, Missouri; Memphis Motorsports Park in Memphis, Tennessee; and Nashville Superspeedway near Nashville, Tennessee. For further information log on to http://www.dovermotorsports.com/.
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF EARNINGS AND COMPREHENSIVE EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
Three Months Ended Years Ended
December 31, December 31,
2005 2004 2005 2004
Revenues:
Admissions $812 $940 $37,195 $34,624
Event-related 1,617 1,427 27,061 27,263
Broadcasting 648 582 26,267 22,220
Other 173 19 476 81
3,250 2,968 90,999 84,188
Expenses:
Operating and marketing 4,427 4,789 52,793 50,164
General and administrative 3,983 3,757 13,697 13,585
Depreciation and amortization 2,380 2,314 9,433 9,198
10,790 10,860 75,923 72,947
Operating (loss) earnings (7,540) (7,892) 15,076 11,241
Interest income 12 3 27 488
Interest expense (1,110) (813) (3,542) (3,915)
Loss on extinguishment of debt (3,174) - (3,174) -
(Loss) earnings from continuing
operations before income tax
(benefit) expense (11,812) (8,702) 8,387 7,814
Income tax (benefit) expense (5,214) (5,445) 4,412 4,047
(Loss) earnings from continuing
operations (6,598) (3,257) 3,975 3,767
(Loss) earnings from discontinued
operation
(including gain on disposal of
$5,143 for the year ended December
31, 2005), net of income tax expense
of $3,574 for the year ended
December 31, 2005 and income tax
benefits of $224 and $738 for the
three months and year ended
December 31, 2004 respectively - (416) 601 (1,327)
Net (loss) earnings (6,598) (3,673) 4,576 2,440
Change in minimum pension liability,
net of income tax benefit (212) (124) (212) (124)
Comprehensive (loss) earnings $(6,810) $(3,797) $4,364 $2,316
(Loss) earnings per common share -
basic:
Continuing operations $(0.18) $(0.08) $0.10 $0.09
Discontinued operation - (0.01) 0.02 (0.03)
Net (loss) earnings $(0.18) $(0.09) $0.12 $0.06
(Loss) earnings per common share -
diluted:
Continuing operations $(0.18) $(0.08) $0.10 $0.09
Discontinued operation - (0.01) 0.02 (0.03)
Net (loss) earnings $(0.18) $(0.09) $0.12 $0.06
Average shares outstanding:
- Basic 36,150 40,073 38,913 40,024
- Diluted 36,150 40,073 39,087 40,056
DOVER MOTORSPORTS, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
December 31, December 31,
2005 2004
ASSETS
Current assets:
Cash and cash equivalents $953 $134
Accounts receivable 2,366 2,336
Inventories 230 208
Prepaid expenses and other 1,705 1,812
Deferred income taxes 517 675
Current assets of discontinued
operation - 2,593
Total current assets 5,771 7,758
Property and equipment, net 221,005 220,949
Restricted cash 3,200 3,571
Other assets, net 963 1,385
Deferred income taxes - 46
Goodwill 2,487 2,487
Non-current assets of discontinued
operation - 12,054
Total assets $233,426 $248,250
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,477 $1,898
Accrued liabilities 5,421 5,323
Payable to Dover Downs Gaming &
Entertainment, Inc. 15 2
Income taxes payable 290 324
Current portion of long-term debt 875 805
Deferred revenue 9,522 9,306
Current liabilities of discontinued
operation 144 2,633
Total current liabilities 17,744 20,291
Notes payable to banks 49,100 27,000
Long-term debt 4,903 17,684
Other liabilities 42 64
Deferred income taxes 48,360 44,745
Stockholders' equity:
Common stock 1,650 1,695
Class A common stock 1,992 2,324
Additional paid-in capital 101,757 128,542
Retained earnings 9,453 6,834
Accumulated other comprehensive loss (737) (527)
Deferred compensation (838) (402)
Total stockholders' equity 113,277 138,466
Total liabilities and stockholders'
equity $233,426 $248,250
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
Years Ended December 31,
2005 2004
Operating activities:
Net earnings $4,576 $2,440
Adjustments to reconcile net earnings
to net cash provided by operating
activities of continuing operations:
Depreciation and amortization 9,433 9,198
Amortization of credit facility fees 167 275
Amortization of deferred compensation 200 51
Tax benefit of stock options exercised - 6
Deferred income taxes 3,939 2,595
Loss on extinguishment of debt 3,174 -
(Earnings) loss of discontinued
operation, net (601) 1,327
Changes in assets and liabilities:
Accounts receivable (30) (576)
Inventories (22) 7
Prepaid expenses and other 62 (411)
Accounts payable (421) (1,388)
Accrued liabilities (330) 983
Payable to/receivable from Dover Downs
Gaming & Entertainment, Inc. 13 98
Income taxes payable/receivable (2,373) 2,900
Deferred revenue 216 95
Other liabilities (22) (21)
Net cash provided by operating
activities of continuing operations 17,981 17,579
Net cash (used in) provided by
operating activities of discontinued
operation (597) 2,675
Investing activities:
Capital expenditures (8,675) (4,826)
Proceeds from sale of discontinued
operation, net of transaction costs 15,132 -
Restricted cash 371 (138)
Net cash provided by (used in)
investing activities of continuing
operations 6,828 (4,964)
Net cash used in investing activities
of discontinued operation (178) (93)
Financing activities:
Borrowings from (repayments on) notes
payable to banks, net 22,100 (16,045)
Repayments of long-term debt (803) (743)
Extinguishment of long-term debt (14,587) -
Repurchase of common stock (28,562) -
Proceeds from stock options exercised 764 319
Credit facility origination and
amendment fees (170) (337)
Dividends paid (1,957) (1,605)
Net cash used in financing activities
of continuing operations (23,215) (18,411)
Net increase (decrease) in cash and
cash equivalents 819 (3,214)
Cash and cash equivalents, beginning of
year 134 3,348
Cash and cash equivalents, end of year $953 $134