INDIANAPOLIS, July 24 -- Championship Auto Racing Teams, Inc. (NYSE:MPH) (CART) today announced financial results for its second quarter ended June 30, 2002. The number of events held in a particular quarter affects the comparability of earnings...
INDIANAPOLIS, July 24 -- Championship Auto Racing Teams, Inc. (NYSE:MPH) (CART) today announced financial results for its second quarter ended June 30, 2002.
The number of events held in a particular quarter affects the comparability of earnings information from quarter to quarter. CART conducted six events in the second quarter of 2002 and 2001. Indy Lights, which was discontinued for 2002, conducted four races in the second quarter of 2001. Toyota Atlantics conducted five races in the second quarter of 2002, compared to four races in the prior-year period.
Total revenues for the 2002 second quarter were $19.7 million, compared with $19.8 million in the same quarter of the prior year. Total expenses for the second quarter of 2002 rose to $25.7 million from $15.6 million in the 2001 second quarter. "Due to the changed business model, which reflects CART's evolution to a marketing driven company, it is difficult to compare revenues and expenses to prior-year results, particularly television and race promotion revenues and expenses," said Thomas Carter, CART's chief financial officer. "In addition, a one-time relocation expense of $1.3 million for the company's move to Indianapolis, Indiana from Troy, Michigan contributed to the increase in total expenses."
Net loss for the second quarter of 2002 was $3.2 million, or $0.21 per diluted share, compared with net income of $3.9 million, or $0.25 per diluted share, in the second quarter of 2001.
Christopher R. Pook, CART's president and chief executive officer, said, "While we are never pleased to report a loss, we believe the results reflect an important investment for the future of the company. We have said from the beginning that 2002 will be a transition year, and a great deal has been accomplished during the first six months to build a stable platform for future growth. We have strengthened our management team while streamlining the organization, implemented a new approach toward marketing designed to unlock greater potential, and announced a landmark Entrant Support Program that is designed to provide financial support for our teams and strengthen CART's team participation in 2003.
"Together with a great line up of Champ car drivers, we are able to present a first class, well-operated entertainment product to the public that serves as a powerful, international marketing vehicle for multi-national corporations," Pook continued. "Attendance records to date underscore the popularity and vitality of the CART FedEx Championship Series."
Three-day attendance levels for the seven races staged in the first six months of 2002 totaled nearly 900,000. Including races in Toronto and Cleveland in the beginning of the third quarter, total three-day event attendance surpassed the one million mark.
At the end of the second quarter, the company hosted its first CART-promoted race of the season; the CART Grand Prix of Chicago. "Although the financial outcome of the race did not reach our projected results, Chicago is an important geographic market to the total CART package and we remain committed to the city," added Pook.
For the six-month period ended June 30, 2002, total revenues were $25.3 million versus $26.2 million in the 2001 corresponding period. Total expenses amounted to $33.3 million in the first half of the current year, compared with $23.9 million in the corresponding prior-year period. CART recorded a net loss before the cumulative effect of an accounting change of $3.8 million, or $0.26 per diluted share, for the first half of the current year, compared with net income of $4.0 million, or $0.26 per diluted share, a year ago. CART conducted seven FedEx Championship races in the first six months of both 2002 and 2001.
CART has implemented FASB Statement No. 142, effective January 1, 2002. As a result of the implementation, CART's results for the six months ended June 30, 2002, include a write-off of $1.5 million for impairment of goodwill. The company does not anticipate future write-offs of its intangible assets, but will conduct annual reviews as required.
The company recorded a net loss after the cumulative effect of this accounting change of $4.7 million, or $0.32 per share, for the six months ended June 30, 2002.
"We are beginning to see the fruits of our labor with improvements in our television ratings which further strengthen the marketing power of the CART series. The collective effort by our television production staff to provide more exposure for our sponsors during race broadcasts has resulted in a 38% increase in overall exposure time through the first eight races compared to 2001. It has also resulted in a 35% increase in sponsor mentions during race broadcasts. Total broadcast time has increased to more than six hours per race weekend in 2002 from an average of 3.5 hours in 2001. Increases in broadcast time are the result of extended race coverage, addition of Friday qualifying and additional pre-race programming. During this transitional year, we are now seeing television revenues lower and television expenses higher than originally projected.
Recently, CART announced that despite concerted efforts by the officials and provisional receiver following EuroSpeedway's insolvency filing earlier this month, the FedEx Championship Series race scheduled for September 19 -- 21, 2002 in Lausitz, Germany has been cancelled. "In our overall geographic scheme, Europe is a strategically important international market," Pook said. "While we are disappointed to be parting with Lausitz, we will shift our focus to find another European region to supplement our Rockingham 500 race in England."
Pook continued, "As we have progressed through the year, we are also recognizing numerous other changes to our revenue and expense expectations. Given the number of elements in our business model that are new or still in a fluid state, we find it necessary to rescind our previously published guidance for 2002 and no longer believe it prudent to publish forward-looking guidance for the balance of the year. Rather, we intend to focus on re-examining our business model and executing on the tremendous opportunity CART continues to present so that the 2003 year can begin to reflect stronger value creation for our shareholders, teams and sponsors."
Carter noted that at the close of the 2002 second quarter, CART's balance sheet continued to be strong with cash and short-term investments of $118.8 million, working capital of $106.3 million and no debt.
Championship Auto Racing Teams, Inc. (NYSE:MPH) owns, operates and markets the CART FedEx Championship Series. Current points leader Cristiano da Matta, former series champions Michael Andretti, Jimmy Vasser and 19-time race winner Paul Tracy are among the stars who will battle for the 2002 FedEx Championship Series title with championship-winning teams such as Target Chip Ganassi Racing and Team KOOL Green. CART Champ Cars are thoroughbred racing machines that reach speeds in excess of 200 miles per hour, showcasing the technical expertise of manufacturers such as American Honda, Ford Motor Company, Toyota, Lola Cars, Reynard Motorsport and Bridgestone/Firestone North American Tire, LLC. The 19-race 2002 CART FedEx Championship Series will be broadcast by new television partners, CBS, FOX and SPEED Channel. CART also owns and operates its top development series, the CART Toyota Atlantic Championship. Learn more about CART's open-wheel racing series at http://www.cart.com/.
Statements made in this news release that state the company's or management's beliefs or expectations and which are not historical facts or which apply prospectively are forward-looking statements. It is important to note that the company's actual results could differ materially from those contained or implied by such forward-looking statements. Among the risks and uncertainties to be considered include, but are not limited to, CART's new co-promoted and self-promoted events; new television and advertising arrangements; the success of races in new venues; the current uncertain economic environment and weak advertising market; among others. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company's SEC filings made from time to time, including, but not limited to, the Form 10-Ks and subsequent 10-Qs. Copies of those filings are available from the company and the SEC.