Dover Motorsports, Inc. Reports Higher Results for the Second Quarter
DOVER, Del., July 27 -- Dover Motorsports, Inc. today reported its results for the second quarter ended June 30, 2006.
Earnings from continuing operations for the quarter ended June 30, 2006 improved by 13.7% to $8,329,000 compared with $7,328,000 in the comparable quarter of the prior year. On a diluted per share basis, earnings from continuing operations in the second quarter of 2006 increased by 21.1% to $.23 compared with $.19 in the second quarter of the prior year.
Revenues for the quarter ended June 30, 2006 increased to $45,003,000 compared with $41,854,000 in the second quarter of 2005. Due to a schedule change, the Company promoted seven major events in the second quarter of 2006 compared with six events in the second quarter of 2005. Nashville Superspeedway promoted two NASCAR Busch Series events in the second quarter of 2006 compared with one in the same quarter of the prior year.
For the quarter ended June 30, 2006 operating and marketing expenses increased to $23,272,000 compared with $20,662,000 in the same quarter of 2005. The overall increase was primarily due to promoting one more event in the second quarter of 2006.
General and administrative expenses decreased almost 4% to $3,173,000 in the second quarter of 2006 compared with $3,297,000 for the same quarter last year. The $124,000 decrease resulted primarily from a reduction in maintenance expenses, lower contracted services and investor relations expenses, and a reduction in real estate taxes at the Company's Nashville Superspeedway facility. Partially offsetting these decreases was an increase in stock-based compensation expense from the adoption of FASB Statement No. 123R effective January 1, 2006.
Interest expense was $1,160,000 in the second quarter of 2006 compared with $749,000 in the second quarter of 2005. Higher average amounts of debt outstanding resulting primarily from the Company's September 2005 self-tender contributed to the higher expense in the second quarter of 2006.
The effective income tax rate for the second quarter of 2006 was 44.5% compared with 50.5% in the prior year. The lower tax rate in 2006 was due to an increase in the Company's estimated annual consolidated pre-tax earnings for 2006 in relation to the Company's non-deductible expenses as compared to 2005 and the impact of a reduction of a tax contingency accrual in 2006. 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, 2006, revenues were $45,804,000 compared with $44,927,000 in the comparable period in the prior year. The Company promoted seven major events in the first half of both years.
For the six months ended June 30, 2006, earnings from continuing operations were $3,936,000 or $.11 per diluted share compared with $3,801,000 or $.10 per diluted share in the comparable period of the prior year.
The Company's operations in the first half of 2006 continued to generate positive cash flow enabling it to repurchase $1,141,000 of common stock and reduce indebtedness by $3,674,000. At June 30, 2006, indebtedness was $51,204,000 compared with $54,878,000 at December 31, 2005.
Capital spending was $2,038,000 in the first half of 2006 compared with $7,822,000 in the comparable period of 2005.
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 Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Revenues:
Admissions $16,613 $16,753 $16,698 $17,956
Event-related 12,117 11,712 12,807 12,819
Broadcasting 16,244 13,370 16,244 14,001
Other 29 19 55 151
45,003 41,854 45,804 44,927
Expenses:
Operating and marketing 23,272 20,662 25,490 24,930
General and administrative 3,173 3,297 6,192 6,390
Depreciation and amortization 2,397 2,351 4,780 4,667
28,842 26,310 36,462 35,987
Operating earnings 16,161 15,544 9,342 8,940
Interest income 11 4 23 8
Interest expense (1,160) (749) (2,286) (1,685)
Earnings from continuing operations
before income taxes 15,012 14,799 7,079 7,263
Income taxes 6,683 7,471 3,143 3,462
Earnings from continuing operations 8,329 7,328 3,936 3,801
Earnings from discontinued operation,
net of income taxes of $3,771 and
$3,574 for the three and six months
ended June 30, 2005, respectively - 956 - 601
Net earnings 8,329 8,284 3,936 4,402
Unrealized gain on interest rate swap,
net of income taxes of $91 and $211
for the three and six months ended
June 30, 2006, respectively 133 - 309 -
Comprehensive earnings $8,462 $8,284 $4,245 $4,402
Earnings per common share -- basic:
Continuing operations $0.23 $0.19 $0.11 $0.10
Discontinued operation - 0.02 - 0.01
Net earnings $0.23 $0.21 $0.11 $0.11
Earnings per common share -- diluted:
Continuing operations $0.23 $0.19 $0.11 $0.10
Discontinued operation - 0.02 - 0.01
Net earnings $0.23 $0.21 $0.11 $0.11
Weighted average shares outstanding:
-- Basic 35,999 40,079 36,049 40,078
-- Diluted 36,198 40,217 36,211 40,193
DOVER MOTORSPORTS, INC.
CONSOLIDATED BALANCE SHEET
In Thousands
(Unaudited)
June 30, June 30, December 31,
2006 2005 2005
ASSETS
Current assets:
Cash and cash equivalents $1,249 $2,884 $953
Accounts receivable 15,101 14,128 2,366
Inventories 290 251 230
Prepaid expenses and other 4,202 4,479 1,705
Prepaid income taxes 158 - -
Receivable from Dover Downs Gaming &
Entertainment, Inc. - 14 -
Deferred income taxes 495 556 517
Current assets of discontinued
operation - 163 -
Total current assets 21,495 22,475 5,771
Property and equipment, net 218,285 224,885 221,005
Restricted cash 2,104 1,957 3,200
Other assets, net 1,346 1,313 963
Deferred income taxes - 46 -
Goodwill 2,487 2,487 2,487
Total assets $245,717 $253,163 $233,426
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,642 $4,115 $1,477
Accrued liabilities 5,549 5,178 5,421
Payable to Dover Downs Gaming &
Entertainment, Inc. 1 - 15
Income taxes payable - 12 290
Current portion of long-term debt 695 875 875
Deferred revenue 20,058 20,967 9,522
Current liabilities of discontinued
operation 103 811 144
Total current liabilities 29,048 31,958 17,744
Notes payable to banks 46,300 14,100 49,100
Long-term debt 4,209 16,810 4,903
Other liabilities 21 42 42
Deferred income taxes 50,610 48,081 48,360
Stockholders' equity:
Common stock 1,637 1,707 1,650
Class A common stock 1,992 2,323 1,992
Additional paid-in capital 100,032 129,167 101,757
Retained earnings 12,296 10,429 9,453
Accumulated other comprehensive loss (428) (527) (737)
Deferred compensation - (927) (838)
Total stockholders' equity 115,529 142,172 113,277
Total liabilities and stockholders'
equity $245,717 $253,163 $233,426
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
Six Months Ended June 30,
2006 2005
Operating activities:
Net earnings $3,936 $4,402
Adjustments to reconcile net earnings
to net cash
provided by operating activities of
continuing operations:
Depreciation and amortization 4,780 4,667
Amortization of credit facility fees 97 78
Stock-based compensation 235 111
Deferred income taxes 2,061 3,455
Earnings from discontinued operation, net - (601)
Changes in assets and liabilities:
Accounts receivable (12,735) (11,792)
Inventories (60) (43)
Prepaid expenses and other (2,482) (2,606)
Prepaid income taxes/income taxes payable (448) (312)
Accounts payable 1,165 2,217
Accrued liabilities 128 (145)
Payable to/receivable from Dover Downs
Gaming & Entertainment, Inc. (14) (16)
Deferred revenue 10,536 11,661
Other liabilities (21) (22)
Net cash provided by operating
activities of continuing operations 7,178 11,054
Net cash used in operating activities
of discontinued operation (41) (2,434)
Investing activities:
Capital expenditures (2,038) (7,822)
Proceeds from sale of discontinued
operation, net of transaction costs - 15,132
Restricted cash 1,096 1,614
Net cash (used in) provided by
investing activities of continuing operations (942) 8,924
Net cash used in investing activities
of discontinued operation - (178)
Financing activities:
Repayments of notes payable to banks, net (2,800) (12,900)
Repayments of long-term debt (874) (804)
Dividends paid (1,093) (807)
Repurchase of common stock (1,141) -
Credit facility origination and amendment fees - (105)
Excess tax benefit on nonvested stock 16 -
Other (7) -
Net cash used in financing activities
of continuing operations (5,899) (14,616)
Net increase in cash and cash
equivalents 296 2,750
Cash and cash equivalents, beginning of period 953 134
Cash and cash equivalents, end of period $1,249 $2,884