Dover Motorsports, Inc. (NYSE:DVD) today reported its results
for the third quarter ended September 30, 2010.
The Company promoted five major events over three weekends in
the third quarter of 2010 compared with five major events in the
third quarter of 2009.
For the quarter ended September 30, 2010 revenues were
$28,511,000 compared with $31,144,000 in the third quarter of 2009.
The decrease in revenues is primarily due to lower attendance at
events, resulting in reduced admissions revenue and event-related
revenue, and also due to the fact that our Memphis facility was not
operating in 2010.
The Company’s NASCAR Fall race weekend in Dover saw lower
attendance and lower attendance related revenue as a result of
continued weak overall economic conditions. Increased sponsorship
and broadcast revenue partially offset the lower attendance related
revenue.
Operating and marketing expenses were $17,463,000 in the third
quarter of 2010 compared to $19,159,000 in the third quarter of
2009. The decrease is primarily related to direct and indirect cost
savings from the closure of our Memphis facility, reduced purses
for NASCAR events and lower costs associated with the decline in
event-related revenue.
General and administrative expenses of $3,557,000 in the third
quarter of 2010 increased from $3,062,000 for the same quarter last
year. The increase is primarily due to higher real estate taxes at
Gateway International Raceway and approximately $200,000 of
expenses associated with the previously contemplated merger with
Dover Downs Gaming & Entertainment, Inc., partially offset by
reduced costs from the closure of our Memphis facility.
A $298,000 gain was realized related to an insurance settlement
on property damage.
Net interest expense was a negative $29,000 for the third
quarter of 2010 compared to a negative $244,000 in the third
quarter of 2009. These amounts reflect the reversal of accrued
interest ($856,000 for the third quarter of 2010 and $1,011,000 for
the third quarter of 2009) associated with uncertain income tax
positions that are no longer required.
The Company purchased and retired the remaining $1,751,000 of
outstanding SWIDA bonds associated with its Gateway facility during
the third quarter of 2010. The Company incurred a loss of $208,000
on the extinguishment primarily due to redemption premiums and the
write-off of unamortized costs.
Earnings before income taxes for the third quarter of 2010 were
$6,074,000 compared with $83,000 in the comparable quarter of the
prior year. The prior year’s results include a non-cash impairment
charge of $7,478,000 during the third quarter of 2009 to write down
the carrying value of the Memphis facility to its fair value. On an
adjusted basis, income before income taxes for the third quarter of
2009 was $7,561,000. The Company’s financial results are shown on
an adjusted basis on the accompanying schedule – “Reconciliation of
GAAP Earnings (Loss) to Adjusted Earnings (Loss)”.
The effective income tax rate was 43.8% for the third quarter of
2010. Excluding the effect of the impairment charge, the effective
income tax rate was 42.6% in the third quarter of 2009.
Net (loss) earnings for the third quarter of 2010 were
$3,416,000 or $.09 per diluted share compared to $(524,000) or
$(.01) per diluted share for the same period last year. On an
adjusted basis, net earnings were $4,337,000 or $.12 per diluted
share for the third quarter of 2009.
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
three motorsports tracks in three states and promote NASCAR
sanctioned and other motorsports events. The Company owns and
operates Dover International Speedway in Dover, Delaware; Gateway
International Raceway near St. Louis, Missouri; and Nashville
Superspeedway near Nashville, Tennessee. For further information,
log on to www.dovermotorsports.com.
DOVER MOTORSPORTS, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS In Thousands, Except Per Share Amounts (Unaudited)
Three Months Ended Nine Months
Ended September 30, September 30, 2010 2009
2010 2009 Revenues: Admissions $
8,874 $ 11,196 $ 18,757 $ 23,149 Event-related 6,991 7,481 14,449
16,260 Broadcasting 12,645 12,346 27,979 27,284 Other
1 121
3 154
28,511 31,144
61,188 66,847
Expenses: Operating and marketing 17,463 19,159 39,850 44,505
General and administrative 3,557 3,062 10,100 9,219 Impairment
charges - 7,478 7,964 7,478 Depreciation and amortization
1,539 1,606
4,690 4,788
22,559 31,305
62,604 65,990
Gain from insurance settlement
298
- 298
- Operating earnings (loss) 6,250 (161 )
(1,118 ) 857 Interest income 4 - 11 7 Interest expense 25
244 (1,624 ) (1,275 ) Gain (loss) on sale of investments 3 - 3 (102
) Loss on extinguishment of debt
(208
) -
(208 ) -
Earnings (loss) before income tax (expense) benefit 6,074 83
(2,936 ) (513 ) Income tax (expense) benefit
(2,658 ) (607
) 68
(811 ) Net earnings (loss)
$ 3,416 $
(524 ) $ (2,868
) $ (1,324 )
Net earnings (loss) per common share: Basic
$
0.09 $ (0.01
) $ (0.08 )
$ (0.04 ) Diluted
$ 0.09 $
(0.01 ) $ (0.08
) $ (0.04 )
Weighted average shares outstanding: Basic 36,099 36,025
36,094 36,019 Diluted 36,099 36,025 36,094 36,019
DOVER MOTORSPORTS, INC. RECONCILIATION OF GAAP EARNINGS (LOSS) TO
ADJUSTED EARNINGS (LOSS) In Thousands, Except Per Share Amounts
(Unaudited) Three Months Ended
Nine Months Ended September 30, September 30, 2010
2009 2010 2009 GAAP
earnings (loss) before income taxes $ 6,074 $ 83 $ (2,936 ) $ (513
) Non-cash impairment charge (1)
-
7,478 7,964
7,478 Adjusted earnings (loss)
before income taxes
$ 6,074
$ 7,561 $
5,028 $ 6,965
GAAP net earnings (loss) $ 3,416 $ (524 ) $ (2,868 ) $
(1,324 ) Non-cash impairment charge, net of income taxes (1)
- 4,861
5,176 4,861
Adjusted net earnings (loss)
$ 3,416
$ 4,337 $
2,308 $ 3,537
GAAP net earnings (loss) per common share - diluted $ 0.09 $
(0.01 ) $ (0.08 ) $ (0.04 ) Non-cash impairment charge, net
of income taxes (1)
- 0.13
0.14 0.13
Adjusted net earnings (loss) per common share -
diluted
$ 0.09 $
0.12 $ 0.06
$ 0.09
(1)
During the third quarter of 2009, we reviewed the long-lived
assets of our Memphis Motorsports Park facility for impairment.
Based on the results of this analysis, we recorded a non-cash
impairment charge of $7,478,000 to write-down the carrying value of
long-lived assets at our Memphis facility to fair value.
During the second quarter of 2010, we reviewed the long-lived
assets of our Gateway International Raceway facility for
impairment. Based on the results of this analysis, we recorded a
non-cash impairment charge of $7,964,000 to write-down the carrying
value of long-lived assets at our Gateway facility to fair value.
The above financial information is presented using
other than generally accepted accounting principles ("non-GAAP"),
and is reconciled to comparable information presented using GAAP.
Non-GAAP adjusted earnings (loss) before income taxes, adjusted net
earnings (loss) and adjusted net earnings (loss) per common share -
diluted are derived by adjusting amounts determined in accordance
with GAAP for the aforementioned non-cash impairment charge. We
believe such non-GAAP information is useful and meaningful to
investors, and is used by investors and us to assess core
operations. This non-GAAP financial information may not be
comparable to similarly titled measures used by other entities and
should not be considered as an alternative to operating earnings
(loss), net earnings (loss) or diluted earnings (loss) per share,
which are determined in accordance with GAAP. DOVER
MOTORSPORTS, INC. CONSOLIDATED BALANCE SHEETS In Thousands
(Unaudited) September 30, September 30,
December 31, 2010 2009 2009
ASSETS Current assets: Cash and cash equivalents $
280 $ 838 $ 155 Accounts receivable 9,732 9,240 1,260 Inventories
281 317 277 Prepaid expenses and other 2,182 1,682 1,528 Deferred
income taxes 134 116 118 Assets held for sale
2,800 -
2,800 Total current assets 15,409 12,193 6,138
Property and equipment, net 118,043 134,547 130,182
Restricted cash - 3,962 5,333 Other assets, net 600 722 712
Deferred income taxes
148
257 164 Total assets
$ 134,200 $
151,681 $ 142,529
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $ 2,047 $ 2,343 $ 456 Accrued
liabilities 4,728 6,537 2,986 Payable to Dover Downs Gaming &
Entertainment, Inc. 40 35 5 Income taxes payable 736 1,214 199
Current portion of bonds payable - 1,235 1,235 Deferred revenue
2,087 3,992
5,931 Total current liabilities 9,638
15,356 10,812 Revolving line of credit 39,800 39,200 41,000
Bonds payable - 1,738 1,739 Liability for pension benefits 1,793
2,706 1,695 Other liabilities 143 932 875 Non current income taxes
payable 2,121 4,696 3,269 Deferred income taxes
20,754 20,940
20,850 Total liabilities
74,249 85,568
80,240 Stockholders' equity: Common
stock 1,821 1,811 1,806 Class A common stock 1,851 1,851 1,851
Additional paid-in capital 101,380 100,868 100,943 Accumulated
deficit (43,862 ) (36,423 ) (40,994 ) Accumulated other
comprehensive loss
(1,239 )
(1,994 ) (1,317
) Total stockholders' equity
59,951 66,113
62,289 Total liabilities and stockholders'
equity
$ 134,200 $
151,681 $ 142,529
DOVER MOTORSPORTS, INC. CONSOLIDATED
STATEMENTS OF CASH FLOWS In Thousands (Unaudited)
Nine Months Ended September 30, 2010 2009 Operating
activities: Net loss $ (2,868 ) $ (1,324 )
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization 4,690 4,788 Amortization of credit
facility fees 316 121 Stock-based compensation 502 425 Deferred
income taxes (1,517 ) (1,115 ) Impairment charge 7,964 7,478 Gain
from insurance settlement (298 ) - Loss on extinguishment from debt
208 - Changes in assets and liabilities: Accounts receivable (8,472
) (7,290 ) Inventories (4 ) (44 ) Prepaid expenses and other (661 )
166 Accounts payable 1,678 1,739 Accrued liabilities 1,648 3,570
Payable to/receivable from Dover Downs Gaming & Entertainment,
Inc. 35 46 Income taxes payable/receivable 759 1,126 Deferred
revenue (3,844 ) (2,970 ) Other liabilities
(522 ) (366
) Net cash (used in) provided by operating activities
(386 ) 6,350
Investing activities: Capital expenditures (469 )
(1,896 ) Insurance proceeds 298 - Restricted cash 5,333 1,257
Proceeds from sale of available-for-sale securities 108 187
Purchase of available-for-sale securities
(111
) (185 ) Net cash
provided by (used in) investing activities
5,159 (637 )
Financing activities: Borrowings from revolving line of
credit 25,700 27,150 Repayments on revolving line of credit (26,900
) (30,150 ) Repayments of bonds payable (2,986 ) (1,128 ) Premium
and fees on extinguisment of debt (167 ) - Dividends paid - (733 )
Repurchase of common stock (50 ) (19 ) Credit facility fees
(245 ) (283
) Net cash used in financing activities
(4,648 ) (5,163
) Net increase in cash and cash equivalents 125
550 Cash and cash equivalents, beginning of period
155 288 Cash and
cash equivalents, end of period
$ 280
$ 838
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