Dover Motorsports, Inc. Reports Results for the Quarter and Year Ended December 31, 2003 DOVER, Del., Jan. 29 -- Dover Motorsports, Inc. (NYSE:DVD) today reported its results for the quarter and year ended December 31, 2003. Revenues were ...
Dover Motorsports, Inc. Reports Results for the Quarter and Year Ended December 31, 2003
DOVER, Del., Jan. 29 -- Dover Motorsports, Inc. (NYSE:DVD) today reported its results for the quarter and year ended December 31, 2003.
Revenues were $3,603,000 for the quarter ended December 31, 2003 compared with $2,472,000 for the fourth quarter of 2002. The Company promoted one major motorsports event during the quarter in each year, the NASCAR Busch Series event at Memphis Motorsports Park, which had a slight increase in revenue in 2003. The principal increase in revenue in the fourth quarter of 2003 was the result of a settlement of a contractual dispute with a vendor for which the Company received a cash payment in connection with settling the dispute.
Loss from continuing operations before income taxes in the fourth quarter of 2003 was $30,694,000 compared with a loss of $10,399,000 for the same quarter of the prior year. The components of the loss included the following:
<pre> 2003 2002 Loss before impairment charges $9,363,000 $10,399,000 Non-cash impairment charges: Goodwill related to Grand Prix of Long Beach 13,362,000 - Other long-lived assets primarily related to CART-sanctioned street events 7,969,000 - $30,694,000 $10,399,000
</pre> For the quarter ended December 31, 2003, operating and marketing expenses were $595,000 higher than the prior year's fourth quarter primarily due to prepaid race expenses written off related to the cancelled St. Petersburg event originally scheduled for February 2004 and also due to higher costs at the Busch Series event in Memphis and at other weekly events at Gateway and Memphis.
For the quarter ended December 31, 2003, general and administrative expenses were $3,882,000 compared with $4,519,000 in the comparable quarter last year. The $637,000 decrease in general and administrative expenses was a result of lower wages, utilities, legal claims and other expenses in 2003, and was achieved despite higher insurance and medical benefits costs in 2003.
For the quarter ended December 31, 2003, net loss was $26,633,000 or $.67 per diluted share compared with a net loss of $5,339,000 or $.13 per diluted share for the same period last year. For the quarters ended December 31, 2003 and 2002, the effective income tax rates were 13.2% and 48.7%, respectively. The lower effective rate in 2003 was primarily the result of the non- deductibility of the goodwill impairment charges and valuation allowances recorded against certain state net operating losses.
For the year ended December 31, 2003, revenues were $93,626,000 compared with $93,731,000 in the prior year. The inclusion of revenue from the St. Petersburg event was offset by declines in revenue at the other two CART events. Operating and marketing expenses increased by $4,762,000 primarily as a result of the inclusion of the St. Petersburg event, higher sanction fees and purses, and increased insurance and medical benefits costs. Loss before income taxes for the year ended December 31, 2003 was $24,363,000 ($3,032,000 excluding the impairment charges) compared with earnings of $2,263,000 for the prior year. Lower results at each of the Company's three CART events contributed $3,873,000 to the earnings decline in 2003 and higher interest and depreciation also decreased 2003's results by $1,390,000.
The impairment charges in the fourth quarter did not affect the Company's cash flow, as it remained stable during the year ended December 31, 2003. Cash flow from operations was $15,620,000 for the year ended December 31, 2003 compared with $22,809,000 for the prior year. For the year ended December 31, 2003, capital expenditures were $3,117,000 compared with $9,167,000 last year. The Company currently has no major capital projects in progress. The positive cash flow, together with the low level of capital expenditures, enabled the Company to reduce its indebtedness by $9,152,000 during the year and increase its cash balance by $1,863,000.
In December, the Company and a group of banks entered into a commitment to refinance the Company's existing credit line, which is due to expire in February 2004. The new three-year agreement will provide for working capital needs and necessary capital expenditures.
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 six motorsports tracks (four permanent facilities and two temporary circuits) in five states and promote motorsports events under the auspices of four of the premier sanctioning bodies in motorsports - NASCAR, IRL, NHRA and CART. The Company owns and operates Dover International Speedway in Dover, Delaware; Nashville Superspeedway near Nashville, Tennessee; Gateway International Raceway near St. Louis, Missouri; and Memphis Motorsports Park near Memphis, Tennessee. It also organizes and promotes the Toyota Grand Prix of Long Beach in California and the Centrix Financial Grand Prix of Denver in Colorado.
DOVER MOTORSPORTS, INC. CONSOLIDATED STATEMENT OF EARNINGS In Thousands, Except Per Share Amounts (Unaudited)
Three Months Ended Year Ended December 31, December 31, 2003 2002 2003 2002 Revenues $3,603 $2,472 $93,626 $93,731
Expenses: Operating and marketing 5,185 4,590 65,824 61,062 Impairment charges 21,331 - 21,331 - Depreciation and amortization 2,572 2,582 10,594 9,786 General and administrative 3,882 4,519 15,151 16,113 32,970 11,691 112,900 86,961
Operating (loss) earnings (29,367) (9,219) (19,274) 6,770 Interest expense, net 1,327 1,180 5,089 4,507 (Loss) earnings from continuing operations before income taxes and cumulative effect of accounting change (30,694) (10,399) (24,363) 2,263 Income tax provision (benefit) (4,061) (5,060) (2,225) 852
(Loss) earnings from continuing operations before cumulative effect of accounting change (26,633) (5,339) (22,138) 1,411
Earnings from discontinued operation, net of income taxes of $3,542 - - - 5,168
Direct costs of spin-off, net of income tax benefit of $90 - - - (691)
(Loss) earnings before cumulative effect of accounting change (26,633) (5,339) (22,138) 5,888
Cumulative effect of accounting change for goodwill impairment - - - (28,606)
Net loss (26,633) (5,339) (22,138) (22,718)
Minimum pension liability (99) (330) (80) (330)
Comprehensive loss $(26,732) $(5,669) $(22,218) $(23,048)
Net (loss) earnings per common share - basic: Continuing operations before accounting change $(0.67) $(0.13) $(0.56) $0.04 Discontinued operation - - - 0.11 Accounting change - - - (0.74) Net loss $(0.67) $(0.13) $(0.56) $(0.59)
Net (loss) earnings per common share - diluted: Continuing operations before accounting change $(0.67) $(0.13) $(0.56) $0.04 Discontinued operation - - - 0.11 Accounting change - - - (0.73) Net loss $(0.67) $(0.13) $(0.56) $(0.58)
Average shares outstanding: - Basic 39,955 39,553 39,880 38,634 - Diluted 39,955 39,553 39,880 38,980
DOVER MOTORSPORTS, INC. CONSOLIDATED BALANCE SHEET In Thousands (Unaudited)
December 31, 2003 2002
ASSETS Current assets: Cash and cash equivalents $3,348 $1,485 Accounts receivable 2,643 3,526 Inventories 259 382 Prepaid expenses and other 1,691 3,839 Receivable from Dover Downs Gaming & Entertainment, Inc. 96 - Income taxes receivable 5,819 5,906 Deferred income taxes 548 810 Total current assets 14,404 15,948
Property and equipment, net 229,603 244,965 Restricted cash 3,433 3,683 Other assets, net 1,434 2,039 Deferred income taxes 90 1,865 Goodwill 8,521 21,883 Total assets $257,485 $290,383
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $3,333 $2,442 Accrued liabilities 4,587 5,325 Payable to Dover Downs Gaming & Entertainment, Inc. - 793 Current portion of long-term debt 745 685 Deferred revenue 11,304 12,080 Total current liabilities 19,969 21,325
Notes payable to banks 43,045 51,515 Long-term debt 18,487 19,229 Other liabilities 85 107 Deferred income taxes 38,527 37,674
Stockholders' equity: Common stock 1,656 1,614 Class A common stock 2,344 2,345 Additional paid-in capital 127,783 127,169 Retained earnings 5,999 29,735 Accumulated other comprehensive loss (410) (330) Total stockholders' equity 137,372 160,533 Total liabilities and stockholders' equity $257,485 $290,383
DOVER MOTORSPORTS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS In Thousands (Unaudited)
Year Ended December 31, 2003 2002
Cash flows from operating activities: Net loss $(22,138) $(22,718) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 10,594 9,786 Amortization and write-off of credit facility fees 1,161 225 Impairment charges 21,331 - Earnings from discontinued operation, net - (5,168) Cumulative effect of accounting change - 28,606 Tax benefit of options exercised 500 93 Deferred income taxes 2,962 7,962 Changes in assets and liabilities: Accounts receivable 883 644 Inventories 123 41 Prepaid expenses and other 1,776 (1,026) Receivable from/payable to Dover Downs Gaming & Entertainment, Inc. (889) 793 Income taxes receivable 87 883 Accounts payable 891 1,418 Accrued liabilities (885) 2,102 Deferred revenue (776) (832) Net cash provided by continuing operations 15,620 22,809
Cash flows from investing activities: Capital expenditures (3,117) (9,167) Restricted cash 250 (522) Other 283 - Net cash used in investing activities of continuing operations (2,584) (9,689)
Cash flows from financing activities: Repayments on revolving debt agreement, net (8,470) (59,095) Debt paid down by Dover Downs Gaming & Entertainment, Inc. - 45,000 Repayments of long-term debt (682) (626) Repayment of shareholder loan - 92 Proceeds from sale of common stock, net - 6,203 Proceeds from stock options exercised 155 67 Other liabilities (22) (24) Credit facility amendment and origination fees (556) (839) Dividends paid (1,598) (3,631) Net cash used in financing activities of continuing operations (11,173) (12,853) Net cash used in discontinued operation - (1,730) Net increase (decrease) in cash and cash equivalents 1,863 (1,463) Cash and cash equivalents, beginning of year 1,485 2,948 Cash and cash equivalents, end of year $3,348 $1,485
Source: Dover Motorsports, Inc.