DVD Dover Motorsports Inc

DOVER, Del., July 27 /PRNewswire-FirstCall/ -- Dover Motorsports, Inc. (NYSE:DVD) 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. 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 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 DATASOURCE: Dover Motorsports, Inc. CONTACT: Patrick J. Bagley, Sr. Vice President of Finance, +1-302-857-3745 Web site: http://www.dovermotorsports.com/

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