DVD Dover Motorsports Inc

Dover Motorsports, Inc. (NYSE: DVD) today reported its results for the quarter and year ended December 31, 2011.

Results for this quarter are not comparable to the prior year’s quarter due to a race schedule change to the Company’s NASCAR fall race weekend in Dover, which was held from September 30, 2011 through October 2, 2011. The K&N Pro Series East event was held during the third quarter of 2011 while the NASCAR Nationwide Series and Sprint Cup Series races were held during the fourth quarter of 2011. The entire fall race weekend was held during the third quarter of 2010. Accordingly, the Company promoted two major events in the fourth quarter of 2011 compared with none in the fourth quarter of 2010.

As previously reported, the assets, liabilities and operating results of the Company’s Gateway facility have been reclassified in the accompanying consolidated financial statements to report Gateway as a discontinued operation. We also previously announced that the Company’s Nashville facility had notified NASCAR that it will not seek 2012 sanction agreements for its two Nationwide Series and two Camping World Truck Series events. We expect to host race team testing during 2012 at Nashville and we will continue to evaluate all of our options for the facility.

For the quarter ended December 31, 2011, revenues were $22,443,000 compared with $19,000 in the fourth quarter of 2010. The increase in revenues was due to the Dover International Speedway schedule change discussed above.

Operating and marketing expenses were $10,768,000 in the fourth quarter of 2011 compared to $1,266,000 in the fourth quarter of 2010. The increase is due to the schedule change offset by savings realized from the reduction in operations at the Nashville facility.

General and administrative expenses of $1,832,000 in the fourth quarter of 2011 decreased from $2,290,000 for the same quarter last year. The decrease is primarily due to lower employee costs at Dover and from savings from the closure of our Nashville facility.

Depreciation and amortization expense of $843,000 in the fourth quarter of 2011 decreased from $1,500,000 in the fourth quarter of 2010 primarily due to the previously recorded impairment in the third quarter of 2011 of all depreciable assets of the Nashville facility.

Net interest expense was $431,000 for the fourth quarter of 2011 compared to $847,000 in the fourth quarter of 2010. The decrease is primarily due to lower average outstanding borrowings and lower interest rates in the fourth quarter of 2011 compared to 2010.

Earnings (loss) from continuing operations before income taxes for the fourth quarter of 2011 were $8,562,000 compared with ($6,590,000) for the fourth quarter of 2010. The results for the fourth quarter of 2010 include a non-cash impairment charge of $809,000 to write down the carrying value of Company’s former Memphis facility to its fair value. On an adjusted basis, loss from continuing operations before income taxes for the fourth quarter of 2010 was ($5,781,000). The increase is primarily due to the schedule change for Dover’s fall race weekend discussed above. The Company’s financial results are shown on an adjusted basis on the accompanying schedule – “Reconciliation of GAAP Earnings (Loss) to Adjusted Earnings (Loss)”.

For the fourth quarter of 2011, loss from discontinued operation, net of income tax benefit, was ($1,000), compared to ($1,272,000) or ($.04) per diluted share for the fourth quarter of 2010.

Net earnings for the fourth quarter of 2011 were $5,061,000 or $.14 per diluted share compared to a loss of ($5,305,000) or ($.15) per diluted share for the same period last year.

For the year ended December 31, 2011, total revenues were $51,870,000 compared with $54,844,000 in the prior year.

Net loss was ($9,185,000) or ($0.25) per diluted share for the year ended December 31, 2011 compared to a net loss of ($8,173,000) or ($0.23) per diluted share for 2010. The current year’s annual results include a non-cash impairment charge of $15,687,000 to write down the carrying value of the Nashville facility to its fair value, a provision for contingent obligation of $2,250,000 and a loss from discontinued operations of $71,000 while the results for 2010 include the previously mentioned impairment charge of $809,000 and a loss from discontinued operations of $8,885,000. On an adjusted basis, net income from continuing operations was $2,419,000 or $.07 per diluted share for the year ended 2011 compared with $1,238,000 or $.03 per diluted share in 2010.

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 two motorsports tracks in two states and promote NASCAR sanctioned and other motorsports events. The Company owns and operates Dover International Speedway in Dover, Delaware 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 Years Ended December 31, December 31, 2011 2010 2011 2010 Revenues: Admissions $ 6,165 $ - $ 13,633 $ 16,363 Event-related 4,410 6 10,309 11,594 Broadcasting 11,822 - 27,778 26,872 Other   46     13     150     15     22,443     19     51,870     54,844     Expenses: Operating and marketing 10,768 1,266 31,926 34,286 General and administrative 1,832 2,290 8,329 9,786 Impairment charge - 809 15,687 809 Depreciation and amortization   843     1,500     4,588     5,825     13,443     5,865     60,530     50,706     Gain from insurance settlement   -     100     -     398     Operating earnings (loss) 9,000 (5,746 ) (8,660 ) 4,536   Interest expense, net (431 ) (847 ) (2,245 ) (2,360 ) Other (expense) income (2 ) 3 15 6 Provision for contingent obligation (5 ) - (2,250 ) - Loss on extinguishment of debt   -     -     (67 )   -    

Earnings (loss) from continuing operations before income tax (expense) benefit

8,562 (6,590 ) (13,207 ) 2,182   Income tax (expense) benefit   (3,500 )   2,557     4,093     (1,470 )   Earnings (loss) from continuing operations 5,062 (4,033 ) (9,114 ) 712  

Loss from discontinued operation, net of income tax benefit

  (1 )   (1,272 )   (71 )   (8,885 )   Net earnings (loss) $ 5,061   $ (5,305 ) $ (9,185 ) $ (8,173 )   Net earnings (loss) per common share - basic: Continuing operations $ 0.14 $ (0.11 ) $ (0.25 ) $ 0.02 Discontinued operation   -     (0.04 )   -     (0.25 ) Net earnings (loss) $ 0.14   $ (0.15 ) $ (0.25 ) $ (0.23 )   Net earnings (loss) per common share - diluted: Continuing operations $ 0.14 $ (0.11 ) $ (0.25 ) $ 0.02 Discontinued operation   -     (0.04 )   -     (0.25 ) Net earnings (loss) $ 0.14   $ (0.15 ) $ (0.25 ) $ (0.23 )   Weighted average shares outstanding: Basic 36,195 36,099 36,194 36,095 Diluted 36,195 36,099 36,194 36,095     DOVER MOTORSPORTS, INC. RECONCILIATION OF GAAP EARNINGS (LOSS) TO ADJUSTED EARNINGS (LOSS) In Thousands, Except Per Share Amounts (Unaudited)               Three Months Ended Years Ended December 31, December 31, 2011 2010 2011 2010  

GAAP earnings (loss) from continuing operations before income taxes

$ 8,562 $ (6,590 ) $ (13,207 ) $ 2,182   Non-cash impairment charge (1) - 809 15,687 809   Provision for contingent obligation (1)   5     -     2,250     -    

Adjusted earnings (loss) from continuing operations before income taxes

$ 8,567   $ (5,781 ) $ 4,730   $ 2,991     GAAP earnings (loss) from continuing operations $ 5,062 $ (4,033 ) $ (9,114 ) $ 712   Non-cash impairment charge, net of income taxes (1) - 526 10,197 526   Provision for contingent obligation, net of income taxes (1)   3     -     1,336     -     Adjusted earnings (loss) from continuing operations $ 5,065   $ (3,507 ) $ 2,419   $ 1,238    

GAAP earnings (loss) per common share from continuing operations - diluted

$ 0.14 $ (0.11 ) $ (0.25 ) $ 0.02   Non-cash impairment charge, net of income taxes (1) - 0.01 0.28 0.01   Provision for contingent obligation, net of income taxes (1)   -     -     0.04     -    

Adjusted earnings (loss) per common share from continuing operations - diluted

$ 0.14   $ (0.10 ) $ 0.07   $ 0.03  

 

    (1)   On August 3, 2011, we announced that our wholly-owned subsidiary Nashville Superspeedway had notified NASCAR that it will not seek 2012 sanction agreements for its two Nationwide Series and two Camping World Truck Series events. We conducted the weekly events we had scheduled for the remainder of 2011 and are currently evaluating all of our options for the facility. We incurred a non-cash impairment charge of $15,687,000 in the third quarter of 2011 as a result of this event. Additionally, we recorded a $2,250,000 provision for contingent obligation reflecting the estimated shortfall on the Wilson County bonds debt service not covered by the projected sales and incremental property taxes from the Nashville facility.   We held an auction for the real and personal property comprising our Memphis Motorsports Park facility on December 14, 2010. The high bidder for the real estate bid $1,875,000. Since the carrying amount of the long-lived assets of the Memphis facility exceeded the sales price, we recognized a non-cash impairment charge of $809,000 in the fourth quarter of 2010.   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 (loss) earnings from continuing operations before income taxes, adjusted (loss) earnings from continuing operations and adjusted (loss) earnings per common share from continuing operations - diluted are derived by adjusting amounts determined in accordance with GAAP for the aforementioned non-cash impairment charge and the provision for contingent obligation. 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 (loss) earnings from continuing operations before income taxes, (loss) earnings from continuing operations or diluted (loss) earnings per share from continuing operations, which are determined in accordance with GAAP.     DOVER MOTORSPORTS, INC. CONSOLIDATED BALANCE SHEETS In Thousands (Unaudited)           December 31, December 31, 2011 2010   ASSETS Current assets: Cash $ 15 $ 69 Accounts receivable 689 743 Inventories 115 232 Prepaid expenses and other 1,255 1,713 Receivable from Dover Downs Gaming & Entertainment, Inc. 11 - Deferred income taxes 67 242 Current assets held for sale - 1,875 Current assets of discontinued operation   -     115   Total current assets 2,152 4,989   Property and equipment, net 96,380 116,330 Other assets, net 783 527 Deferred income taxes 496 206 Non current assets of discontinued operation   -     233   Total assets $ 99,811   $ 122,285     LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 116 $ 142 Accrued liabilities 2,584 2,470 Payable to Dover Downs Gaming & Entertainment, Inc. - 18 Income taxes payable 145 123 Deferred revenue 3,129 3,644 Current liabilities of discontinued operation   -     685   Total current liabilities 5,974 7,082   Revolving line of credit 29,160 38,200 Liability for pension benefits 2,713 2,291 Other liabilities 2,250 121 Non current income taxes payable - 1,241 Deferred income taxes   14,765     18,843   Total liabilities   54,862     67,778     Stockholders' equity: Common stock 1,828 1,820 Class A common stock 1,851 1,851 Additional paid-in capital 101,888 101,541 Accumulated deficit (58,352 ) (49,167 ) Accumulated other comprehensive loss   (2,266 )   (1,538 ) Total stockholders' equity   44,949     54,507   Total liabilities and stockholders' equity $ 99,811   $ 122,285       DOVER MOTORSPORTS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS In Thousands (Unaudited)       Years Ended December 31, 2011     2010   Operating activities: Net loss $ (9,185 ) $ (8,173 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortization 4,588 6,190 Amortization of credit facility fees 382 501 Stock-based compensation 407 662 Deferred income taxes (4,935 ) (4,128 ) Gain from insurance settlement - (398 ) Loss on extinguishment of debt 67 208 Facility exit costs - 324 Impairment charge 15,687 8,773 Provision for contingent obligation 2,250 - Changes in assets and liabilities: Accounts receivable 150 421 Inventories 86 32 Prepaid expenses and other 174 (132 ) Receivable from/payable to Dover Downs Gaming & Entertainment, Inc. (29 ) 13 Accounts payable (30 ) (223 ) Accrued liabilities (965 ) (253 ) Income taxes payable 21 3 Deferred revenue (515 ) (2,287 ) Other liabilities   (295 )   (567 ) Net cash provided by operating activities   7,858     966     Investing activities: Capital expenditures (258 ) (488 ) Proceeds from the sale of assets 1,875 129 Insurance proceeds - 398 Restricted cash - 5,333 Proceeds from the sale of available-for-sale securities 526 179 Purchase of available-for-sale securities   (532 )   (185 ) Net cash provided by investing activities   1,611     5,366     Financing activities: Borrowings from revolving line of credit 60,700 32,600 Repayments on revolving line of credit (69,740 ) (35,400 ) Repayments of bonds payable - (2,986 ) Premium and fees on extinguishment of debt - (167 ) Repurchase of common stock (52 ) (50 ) Credit facility fees   (431 )   (415 ) Net cash used in financing activities   (9,523 )   (6,418 )   Net decrease in cash (54 ) (86 ) Cash, beginning of period   69     155   Cash, end of period $ 15   $ 69