DVD Dover Motorsports Inc

Dover Motorsports, Inc. Reports a 66% Increase in Pre-Tax Earnings for the Third Quarter DOVER, Del., Oct. 28 /PRNewswire-FirstCall/ -- Dover Motorsports, Inc. (NYSE:DVD) today reported its results for the third quarter ended September 30, 2004. Earnings before income taxes for the quarter ended September 30, 2004 increased by $4,114,000 or 65.6% to $10,385,000 compared with $6,271,000 in the comparable quarter of the prior year. Improvements in all of the Company's NASCAR events, the favorable impact of certain previously discontinued events, as well as lower depreciation and net interest expense contributed to the increase in earnings before income taxes. Revenues increased by $195,000 to $38,402,000 for the quarter ended September 30, 2004 compared with $38,207,000 in the third quarter of 2003. The Company promoted a total of six major motorsports events in the third quarter of 2004 compared with eight events in the third quarter of 2003. Broadcast revenues, admissions and event-related revenues for comparable NASCAR events all increased over the same period of the prior year. The prior year third quarter revenues included a total of $4,456,000 from the Grand Prix of Denver and Gateway IRL events, which were not promoted in 2004. Operating and marketing expenses were $20,687,000 in the third quarter of 2004 compared with $24,686,000 in the comparable quarter of 2003. The prior year amount included $5,991,000 related to the two events mentioned above. On a comparable basis, operating and marketing expenses were $1,992,000 higher than in the prior year's third quarter, primarily due to increased sanction fees and purses. General and administrative expenses were $3,907,000 in the third quarter of 2004 compared with $3,521,000 for the same quarter last year. Savings from the elimination of overhead at Denver and St. Petersburg were more than offset by higher wages and fringe benefits, and legal, audit and consulting expenses related to compliance with Sarbanes-Oxley activities. Administrative expenses also included $267,000 for a judgment entered into against the Company in August related to a claim that arose during the construction of the Company's Nashville facility in 2000. The Company has filed an appeal, but has recorded an expense for the amount of the claim, pending the outcome of the appeal. Depreciation and amortization were $283,000 lower in the third quarter of 2004, primarily due to a decrease in property and equipment resulting from the write-off of assets in December 2003 at Denver and St. Petersburg. Net interest expense was $23,000 lower in the third quarter of 2004 compared with the same quarter of the prior year. Lower average amounts outstanding on the Company's credit facility during the third quarter of 2004 was the principal reason for the decrease in interest expense. Higher short-term interest rates were virtually offset by narrower spreads during this period. Interest expense in the third quarter of 2004 also included $115,000 of pre-judgment interest related to the Nashville claim mentioned earlier. Net earnings for the quarter ended September 30, 2004 were $4,136,000 or $0.10 per diluted share compared with $4,465,000 or $0.11 per diluted share for the same period last year. Net earnings and net earnings per share were negatively affected in the third quarter of 2004 by a 60.2% effective income tax rate compared with a 28.8% rate in the third quarter of 2003. The higher rate in 2004 was principally due to an increase in state income tax expense attributable to valuation allowances established on state net operating losses. For the nine months ended September 30, 2004, revenues were $90,450,000 compared with $90,023,000 in the prior year, which included revenues of $7,404,000 from three events that were not promoted in 2004. The Company's financial position strengthened during the first nine months of 2004 as cash flow from operations was $17,644,000 compared with $14,665,000 for the first nine months of last year. At September 30, 2004, indebtedness was $46,288,000, down $15,989,000 from the $62,277,000 that was outstanding nine months earlier. Capital spending was $2,735,000 for the nine month period ended September 30, 2004 compared with $2,865,000 in the same period of the prior year. The installation of Steel and Foam Energy Reduction ("SAFER") walls at the Company's fixed facilities represented $854,000 of capital expenditures in 2004. The Company expects to spend an additional $1,500,000 to $2,000,000 on SAFER walls during the remainder of 2004. 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 five motorsports tracks (four permanent facilities and one temporary circuit) in four states and promote motorsports events under the auspices of four of the premier sanctioning bodies in motorsports - NASCAR, IRL, NHRA and Champ Car. 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 in Memphis, Tennessee. It also organizes and promotes the Toyota Grand Prix of Long Beach in California. DOVER MOTORSPORTS, INC. CONSOLIDATED STATEMENT OF EARNINGS In Thousands, Except Per Share Amounts (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Revenues: Admissions $15,790 $16,738 $36,307 $38,400 Event-related revenue 12,468 13,905 30,841 33,076 Broadcasting revenue 9,133 7,417 21,647 17,803 Other revenue 1,011 147 1,655 744 38,402 38,207 90,450 90,023 Expenses: Operating and marketing 20,687 24,686 54,215 60,639 General and administrative 3,907 3,521 11,316 11,269 Depreciation and amortization 2,415 2,698 7,211 8,022 27,009 30,905 72,742 79,930 Operating earnings 11,393 7,302 17,708 10,093 Interest income 1 155 485 161 Interest expense (1,009) (1,186) (3,102) (3,923) Earnings before income taxes 10,385 6,271 15,091 6,331 Income taxes 6,249 1,806 8,978 1,836 Net earnings $4,136 $4,465 $6,113 $4,495 Net earnings per common share: - Basic $0.10 $0.11 $0.15 $0.11 - Diluted $0.10 $0.11 $0.15 $0.11 Average shares outstanding: - Basic 40,037 39,935 40,008 39,854 - Diluted 40,052 40,017 40,027 39,968 DOVER MOTORSPORTS, INC. CONSOLIDATED BALANCE SHEET In Thousands (Unaudited) Sept. 30, Sept. 30, Dec. 31, 2004 2003 2003 ASSETS Current assets: Cash and cash equivalents $857 $1,535 $3,348 Accounts receivable 10,367 9,379 2,643 Inventories 255 588 259 Prepaid expenses and other 1,810 1,677 1,691 Receivable from Dover Downs Gaming & Entertainment, Inc. 105 - 96 Income taxes receivable - 3,289 5,819 Deferred income taxes 501 298 548 Total current assets 13,895 16,766 14,404 Property and equipment, net 225,191 239,873 229,603 Restricted cash 3,568 4,309 3,433 Other assets, net 1,390 1,599 1,434 Deferred income taxes 46 3,067 90 Goodwill 8,521 21,883 8,521 Total assets $252,611 $287,497 $257,485 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $1,723 $3,761 $3,333 Accrued liabilities 6,716 6,872 4,587 Payable to Dover Downs Gaming & Entertainment, Inc. - 211 - Income taxes payable 1,049 - - Notes payable to banks - 42,540 - Current portion of long-term debt 805 745 745 Deferred revenue 6,412 7,669 11,304 Total current liabilities 16,705 61,798 19,969 Notes payable to banks 27,800 - 43,045 Long-term debt 17,683 18,486 18,487 Other liabilities 64 85 85 Deferred income taxes 47,773 42,621 38,527 Stockholders' equity: Common stock 1,688 1,649 1,656 Class A common stock 2,330 2,345 2,344 Additional paid-in capital 128,483 127,792 127,783 Retained earnings 10,909 33,032 5,999 Accumulated other comprehensive loss (403) (311) (410) Deferred compensation (421) - - Total stockholders' equity 142,586 164,507 137,372 Total liabilities and stockholders' equity $252,611 $287,497 $257,485 DOVER MOTORSPORTS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS In Thousands (Unaudited) Nine Months Ended September 30, 2004 2003 Operating activities: Net earnings $6,113 $4,495 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 7,211 8,022 Amortization and write-off of credit facility fees 220 928 Amortization of deferred compensation 32 - Tax benefit of options exercised 6 526 Deferred income taxes 6,835 4,275 Changes in assets and liabilities: Accounts receivable (7,724) (5,853) Inventories 4 (206) Prepaid expenses and other (27) 2,010 Receivable from/payable to Dover Downs Gaming & Entertainment, Inc. (9) (582) Accounts payable (1,610) 1,319 Accrued liabilities 2,129 1,547 Income taxes payable/receivable 9,377 2,617 Deferred revenue (4,892) (4,411) Other liabilities (21) (22) Net cash provided by operating activities 17,644 14,665 Investing activities: Capital expenditures (2,735) (2,865) Restricted cash (135) (626) Other - 70 Net cash used in investing activities (2,870) (3,421) Financing activities: Repayments on notes payable to banks, net (15,245) (8,975) Repayments of long-term debt (744) (683) Proceeds from stock options exercised 259 132 Credit facility origination and amendment fees (332) (470) Dividends paid (1,203) (1,198) Net cash used in financing activities (17,265) (11,194) Net (decrease) increase in cash and cash equivalents (2,491) 50 Cash and cash equivalents, beginning of period 3,348 1,485 Cash and cash equivalents, end of period $857 $1,535 DATASOURCE: Dover Motorsports, Inc. CONTACT: Patrick J. Bagley, Sr. Vice President-Finance, Dover Motorsports, +1-302-857-3745 Web site: http://www.dovermotorsportsinc.com/

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