Dover Motorsports, Inc. Reports Results For The Third Quarter Of 2010

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  
 

Copyright Business Wire 2010

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