Speedway Motorsports Earnings Outlook Revised
6 November 1999
Speedway Motorsports Earnings Outlook Revised
CONCORD, N.C., Nov. 6 -- Speedway Motorsports, Inc.
today announced that net earnings for the quarter ended
September 30, 1999 will be approximately $6 million below expectations. The
results are attributable to Indy Racing League (IRL) and National Hot Rod
Association (NHRA) events, continued carrying costs of the Las Vegas Motor
Speedway Industrial Park, and start-up expenses of Oil-Chem Research Corp.
The Company estimates that these shortfalls will result in a loss for the
quarter, although a record profit will be generated for the nine months ended
September 30, 1999.
"For the past four and one-half years we have achieved record earnings
almost quarterly," stated Bruton Smith, chairman and chief executive officer
of Speedway Motorsports.
"We are experiencing record revenues and attendance in our core business
and we expect this trend to continue. SMI has enjoyed great success and we
have a strong position in America's fastest growing sport. Exciting things are
happening in our industry, particularly the current NASCAR television
broadcast negotiations that we believe will lift this form of racing to new
heights, but a convergence of negative factors hit the quarter producing this
unusual shortfall."
Approximately one half of the earnings shortfall results from less than
expected attendance at the IRL events held at Atlanta Motor Speedway and Las
Vegas Motor Speedway. The balance of the shortfall is equally divided among
the rain plagued inaugural Winston Showdown NHRA event at Bristol Dragway,
expenses from the 1.4 million-square-foot Las Vegas Motor Speedway Industrial
Park currently held for sale, and marketing expenses at Oil-Chem Research
Corp.
H.A. Wheeler, chief operating officer and president of Speedway
Motorsports stated, "Strong actions to improve these factors are underway."
"We plan to lessen the risk of financial losses from IRL and NHRA events
by renegotiating our agreements with the sanctioning bodies and restructuring
our events to ensure their profitability. These shortfalls should not occur
in the future."
"When we acquired Las Vegas Motor Speedway, we had indications that the
industrial park was saleable on an as-is basis; for a variety of reasons this
proved overly optimistic," stated William R. Brooks, chief financial officer.
"Since January 1999, when certificates of occupancy were obtained, more than
530,000 square feet of the facility have been leased and we expect the
property to sell as occupancy improves."
"Oil-Chem expects to commence retail sales for zMax(TM), the metal
moisturizer, in early 2000. Unfortunately we will experience losses in 1999,
as we incur marketing and promotional expenses in preparation for retail
sales," concluded Brooks.
While the Company expects to generate a profit in the fourth quarter,
these factors will also likely cause fourth quarter net earnings to be
$3 million less than expected.
This news release contains forward-looking statements with regard to SMI's
growth potential, future operations and financial results. There are many
factors that may affect future events and trends of SMI's business including,
but not limited to the success of IRL and NHRA racing events, zMax(TM), and
the real estate markets. These factors, and other factors set forth in SMI's
filings with the Securities and Exchange Commission, could cause actual
results or events to differ materially from management's views and
expectations.
Speedway Motorsports is a leading marketer and promoter of motorsports
entertainment in the United States. SMI owns and operates the following
premiere facilities: Atlanta Motor Speedway, Bristol Motor Speedway, Lowe's
Motor Speedway at Charlotte, Las Vegas Motor Speedway, Sears Point Raceway and
Texas Motor Speedway. SMI also provides event, food, beverage, and souvenir
merchandising services through its Finish Line Events subsidiary, and
manufactures and distributes smaller-scale, modified racing cars through its
600 Racing subsidiary.