Championship Auto Racing Teams Reports Q1 1999 Results
27 April 1999
Championship Auto Racing Teams Reports First Quarter 1999 Results
DETROIT--April 26, 1999--Championship Auto Racing Teams, Inc. today announced revenues, net income and earnings per share for the first quarter ended March 31, 1999 which exceeded consensus analyst estimates on a diluted per common share basis by $.01.The number of events held in a particular quarter will effect the comparability of earnings information from quarter to quarter. In the first quarter of 1999, CART conducted one event, the Grand Prix of Miami Presented by Toyota in Homestead, Florida. In the first quarter of 1998, CART conducted two events, the Grand Prix of Miami Presented by Toyota in Homestead, Florida and the Budweiser 500 in Motegi, Japan.
For comparability purposes, CART will conduct eight events in the second quarter of 1999 versus seven events in the second quarter of 1998, nine events in the third quarter of 1999 versus seven events in the third quarter of 1998, and three races in both the fourth quarter of 1999 and 1998.
Actual Results
Revenues for the first quarter of 1999 were $7.3 million, versus $10.0 million in the comparable quarter in 1998, a decrease of 27%. Net income for the first quarter of 1999 was $1.6 million, compared to $2.9 million in the first quarter of 1998, a decrease of 43%. On a diluted per common share basis, earnings were $.10 in 1999 compared to $.26 in the first quarter of 1998. The above results for the first quarter of 1998 only include the results of American Racing Series and BP Automotive ("Indy Lights") from the effective date of the acquisition, March 13, 1998 through March 31, 1998. In addition, first quarter of 1998 results take into account a non-recurring insurance settlement which resulted in a $.02 benefit on a diluted per common share basis.
Pro Forma Results
Assuming the ARS, BP Automotive, and Pro-Motion Agency, Ltd. acquisitions had been effective January 1, 1998, pro forma results for the first quarter of 1998 in comparison to first quarter of 1999 would have been as follows:
Revenues for the first quarter of 1999 were $7.3 million, versus $11.4 million in the comparable quarter in 1998, a decrease of 35%. Net income for the first quarter of 1999 was $1.6 million, compared to $3.1 million in the first quarter of 1998, a decrease of 47%. On a diluted per common share basis, earnings were $.10 in 1999 compared to $.27 in the first quarter of 1998. The first quarter of 1998 results include a non-recurring insurance settlement which resulted in a $.02 benefit on a diluted per common share basis.
"We made a number of significant announcements in the first quarter. We entered an important agreement with Quokka Sports Inc. for the future development of CART.com. We believe that this agreement will position us very well as digital media opportunities develop in the future," said Andrew Craig, CART's Chairman and CEO. "Our successful sponsorship program continues to grow with the addition of Parke-Davis, Motorola, Sears DieHard and Automobile Magazine to our sponsor roster. Additionally, we announced the Hawaiian Super Prix a non-championship event that will provide a prize of $5 million to the race winner. Our schedule was reorganized in 1999. The reorganization makes it more effective for our promoters and provides better TV times throughout the year. The reorganization resulted in one less race being run in first quarter in 1999 when compared with first quarter 1998. This is reflected in the 1999 first quarter results but has no impact on the company on a full-year basis."
Championship Auto Racing Teams, Inc. owns, operates and markets the FedEx Championship Series, which is comprised of 20 races in five countries on four continents in 1999. There also will be a non-points race held in Hawaii at the conclusion of the season, pushing the event total to twenty-one. Drivers such as Michael Andretti, Adrian Fernandez, Dario Franchitti, Bryan Herta, Greg Moore, Al Unser, Jr., and Jimmy Vasser race 900-plus horsepower, open wheel cars at speeds of more than 230 miles per hour on some circuits. CART also owns and operates its top two development series, the PPG Dayton Indy Lights Championship and the KOOL Toyota Atlantic Championship.
Championship Auto Racing Teams, Inc.
Consolidated Statement of Operations
For the Three Months Ended March 31, 1999 and 1998
(In Thousands, Except Earnings Per Share)
Qtr ended Qtr ended
March 31, March 31,
1999 1998
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Revenues
Sanction fees $ 1,356 $ 4,992
Sponsorship revenue 4,197 3,159
TV revenue 265 602
Engine leases, rebuilds and wheel sales 522 198
Other 1,009 1,079
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Total revenues 7,349 10,030
Expenses
Race distributions 738 1,388
Race expenses 953 832
Cost of engine rebuilds and wheel sales 181 63
Administrative and indirect expenses 3,928 3,446
Compensation expense -- --
Depreciation and amortization 235 141
Minority interest -- (54)
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Total expenses 6,035 5,816
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Operating income 1,314 4,214
Interest income (expense) 1,237 267
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Income before income taxes 2,551 4,481
Income tax expense (benefit) 912 1,618
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Net income $ 1,639 $ 2,863
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Earnings per share
Basic $ 0.11 $ 0.26
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Diluted $ 0.10 $ 0.26
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Weighted average shares outstanding
Basic 15,175 11,189
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Diluted 15,670 11,225
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Championship Auto Racing Teams, Inc.
Consolidated Statement of Operations - Proforma
For the Three Months Ended March 31, 1999 and 1998
(Unaudited)
(In Thousands, Except Earnings Per Share)
Qtr Ended Qtr Ended
March 31, March 31,
1999 1998
--------- ---------
Revenues
Sanction fees $ 1,356 $ 4,992
Sponsorship revenue 4,197 3,586
TV revenue 265 602
Engine leases, rebuilds and wheel sales 522 910
Other 1,009 1,274
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Total revenues 7,349 11,364
Expenses
Race distributions 738 1,408
Race expenses 953 911
Cost of engine rebuilds and wheel sales 181 350
Administrative and indirect expenses 3,928 3,923
Compensation expense -- --
Depreciation and amortization 235 236
Minority interest -- (54)
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Total expenses 6,035 6,774
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Operating income 1,314 4,590
Interest income (expense) 1,237 267
-------- --------
Income before income taxes 2,551 4,857
Income tax expense (benefit) 912 1,753
-------- --------
Net income $ 1,639 $ 3,104
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Earnings per share
Basic $ 0.11 $ 0.27
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Diluted $ 0.10 $ 0.27
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Weighted average shares outstanding
Basic 15,175 11,564
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Diluted 15,670 11,600
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Championship Auto Racing Teams, Inc.
Consolidated Balance Sheets
As of March 31, 1999 and December 31, 1998
(In Thousands)
March 31, December 31,
1999 1998
-------- --------
Assets
Current Assets
Cash and Cash Equivalents $ 16,199 $ 15,080
Short Term Investments 74,100 61,610
Accounts Receivable 6,248 4,708
Current Portion of Notes Receivable 824 824
Prepaid Expenses 794 331
Inventory 82 71
Current Deferred Tax Asset 117 119
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Total Current Assets 98,364 82,743
Notes Receivable 3,326 3,350
Property and Equipment - Net 5,078 5,026
Noncurrent Deferred Tax -- --
Goodwill 5,741 5,778
Other Assets 484 289
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Total Assets $ 112,993 $ 97,186
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Liabilities and Stockholders' Equity
Current Liabilities
Accounts Payable $ 2,339 $ 1,946
Accrued Liabilities
Race Expenses and Point Awards 171 --
Royalties 394 1,026
Payroll 224 482
Taxes 1,057 1,733
Other 1,582 934
Unearned Income 18,038 4,273
Current Portion of Long Term Debt 130 130
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Total Current Liabilities 23,935 10,524
Long Term Debt 152 184
Deferred Federal Taxes - Noncurrent 296 259
Stockholders' Equity/Partners' Capital
Capital Stock 152 151
Additional Paid In Capital 90,706 89,771
Retained Earnings (2,402) (4,033)
Unrealized Gain/(Loss)
on Investments 154 330
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Total Stockholders'
Equity/Partners' Equity 88,610 86,219
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Total Liabilities and
Stockholders' Equity $ 112,993 $ 97,186
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