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Dover Motorsports, Inc. Reports Results for the Third Quarter of 2012

  Dover Motorsports, Inc. Reports Results for the Third Quarter of 2012

Business Wire

DOVER, Del. -- October 25, 2012

Dover Motorsports, Inc. (NYSE: DVD) today reported its results for the third
quarter ended September 30, 2012.

Results for this quarter are not comparable to the prior year’s quarter due to
the timing of Dover’s fall NASCAR race weekend, the decision not to promote
NASCAR sanctioned events at the Company’s Nashville facility after the 2011
season and the prior year charges that resulted from that decision.

The Company’s fall NASCAR race weekend in Dover was held entirely in the third
quarter of 2012 while only the K&N Pro Series East event was held during the
third quarter of 2011. The NASCAR Nationwide Series and Sprint Cup Series
races were held during the fourth quarter of 2011. Also, the Company promoted
a tandem NASCAR Nationwide Series and NASCAR Truck Series weekend in Nashville
in July of 2011. These events were not held in 2012.

The Company promoted three major events over one weekend in the third quarter
of 2012 compared to three major events over two weekends in the third quarter
of 2011. Also, the Company hosted the inaugural Firefly Music Festival from
July 20-22, 2012 on the Company’s parking grounds. The Company’s involvement
included renting the land to the promoter, providing logistical assistance and
handling certain concessions.

For the quarter ended September 30, 2012 revenues were $22,773,000 compared
with $2,916,000 in the third quarter of 2011. The increase in revenues was
primarily due to the timing of Dover’s fall NASCAR race weekend mentioned
above and to a lesser extent, from concessions revenue and rental income from
the Firefly Music Festival, offset by the fact that events are no longer
promoted in Nashville.

Operating and marketing expenses were $12,075,000 in the third quarter of 2012
compared to $4,382,000 in the third quarter of 2011. The increase is primarily
from the aforementioned changes.

General and administrative expenses of $1,723,000 in the third quarter of 2012
decreased from $2,200,000 for the same quarter last year. The decrease is due
to the reduced operations at the Nashville facility and lower costs in Dover.

During the third quarter of 2011, we reviewed the carrying value of the
Nashville facility for impairment and recorded a non-cash charge of
$15,687,000 to reduce the carrying value of the Nashville facility to its fair
value.

Depreciation and amortization expense of $824,000 in the third quarter of 2012
decreased from $992,000 in the third quarter of 2011 primarily due to the
impairment of all depreciable assets of the Nashville facility during the
third quarter of last year.

Net interest expense was $332,000 for the third quarter of 2012 compared to
$381,000 in the third quarter of 2011. The decrease was due to lower average
outstanding borrowings and lower rates in the third quarter of 2012 compared
to 2011.

Provision for contingent obligation represents the estimated shortfall in
future sales taxes and incremental property taxes used to satisfy certain
bonds which were used for public infrastructure improvements near the
Company’s Nashville facility. We estimated that the existing bond fund balance
and future funding from taxes will be insufficient to satisfy the remaining
obligation starting in 2021 as a result of the reduced operations at the
Nashville facility. As such, we recorded an initial charge of $2,245,000
during the third quarter of 2011 reflecting the estimated shortfall that we
would be responsible for.

Earnings from continuing operations before income tax expense were $7,746,000
for the third quarter of 2012 compared to a loss before income tax benefit of
($22,958,000) for the third quarter of 2011. The prior year’s results include
the aforementioned non-cash impairment charge of $15,687,000 to write down the
carrying value of the Nashville facility to its fair value and the provision
for contingent obligation of $2,245,000. On an adjusted basis, loss from
continuing operations before income tax benefit for the third quarter of 2011
was ($5,026,000). The improvement in 2012 is primarily due to the timing of
Dover’s fall NASCAR race weekend discussed above.

Net earnings for the third quarter of 2012 were $4,532,000 or $.12 per diluted
share compared to a net loss of ($14,581,000) or ($.40) per diluted share for
the same period last year. On an adjusted basis, loss from continuing
operations was ($3,049,000) or ($.08) per diluted share for the third quarter
of 2011.

The Company announced yesterday that its Board of Directors declared an annual
cash dividend on both classes of common stock of $.04 per share. The dividend
will be payable on December 10, 2012 to shareholders of record at the close of
business on November 10, 2012. Due to the seasonal nature of our business, we
will evaluate dividends annually.

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 NASCAR sanctioned motorsports
events whose subsidiaries own and operate Dover International Speedway in
Dover, Delaware and own Nashville Superspeedway near Nashville, Tennessee. For
further information, log on towww.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,
                           2012         2011          2012         2011
Revenues:
Admissions                 $ 5,105      $ 752         $ 10,428     $ 7,468
Event-related                5,708        1,321         9,789        5,899
Broadcasting                 11,959       841           26,393       15,956
Other                       1          2           8          104     
                            22,773     2,916       46,618     29,427  
                                                                   
Expenses:
Operating and marketing      12,075       4,382         25,703       21,158
Impairment charge            -            15,687        -            15,687
General and                  1,723        2,200         5,458        6,497
administrative
Depreciation                824        992         2,491      3,745   
                            14,622     23,261      33,652     47,087  
                                                                   
Operating earnings           8,151        (20,345 )     12,966       (17,660 )
(loss)
                                                                   
Interest expense, net        (332   )     (381    )     (1,105 )     (1,814  )
Provision for contingent     (21    )     (2,245  )     268          (2,245  )
obligation
Other (expense) income       (52    )     13            (48    )     17
Loss on extinguishment      -          -           -          (67     )
of debt

Earnings (loss) from
continuing operations        7,746        (22,958 )     12,081       (21,769 )
before income tax
(expense) benefit
                                                                   
Income tax (expense)        (3,214 )    8,379       (5,154 )    7,593   
benefit
                                                                   
Earnings (loss) from         4,532        (14,579 )     6,927        (14,176 )
continuing operations
                                                                   
Loss from discontinued
operation, net of income    -          (2      )    -          (70     )
tax benefit
                                                                   
Net earnings (loss)        $ 4,532     $ (14,581 )   $ 6,927     $ (14,246 )
                                                                   
Net earnings (loss) per
common share - basic:
Continuing operations      $ 0.12       $ (0.40   )   $ 0.19       $ (0.39   )
Discontinued operation      -          -           -          -       
Net earnings (loss)        $ 0.12      $ (0.40   )   $ 0.19      $ (0.39   )
                                                                   
Net earnings (loss) per
common share - diluted:
Continuing operations      $ 0.12       $ (0.40   )   $ 0.19       $ (0.39   )
Discontinued operation      -          -           -          -       
Net earnings (loss)        $ 0.12      $ (0.40   )   $ 0.19      $ (0.39   )
                                                                   
Weighted average shares
outstanding:
Basic                        36,300       36,195        36,299       36,194
Diluted                      36,300       36,195        36,299       36,194
                                                                   

                                                              
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,
                              2012      2011          2012         2011
                                                                   
GAAP earnings (loss) from
continuing operations         $ 7,746   $ (22,958 )   $ 12,081     $ (21,769 )
before income taxes
                                                                   
Non-cash impairment             -         15,687        -            15,687
charge ^(1)
                                                                   
Provision for contingent       21       2,245       (268   )    2,245   
obligation ^(1)

Adjusted earnings (loss)
from continuing operations    $ 7,767   $ (5,026  )   $ 11,813    $ (3,837  )
before income taxes
                                                                   
GAAP earnings (loss) from     $ 4,532   $ (14,579 )   $ 6,927      $ (14,176 )
continuing operations
                                                                   
Non-cash impairment charge,     -         10,197        -            10,197
net of income taxes ^(1)
                                                                   
Provision for contingent
obligation, net of income      12       1,333       (159   )    1,333   
taxes ^(1)
                                                                   
Adjusted earnings (loss)      $ 4,544   $ (3,049  )   $ 6,768     $ (2,646  )
from continuing operations

GAAP earnings (loss) per
common share from             $ 0.12    $ (0.40   )   $ 0.19       $ (0.39   )
continuing operations -
diluted
                                                                   
Non-cash impairment charge,     -         0.28          -            0.28
net of income taxes ^(1)
                                                                   
Provision for contingent
obligation, net of income      -        0.04        -          0.04    
taxes ^(1)
                                                                   
Adjusted earnings (loss)
per common share from         $ 0.12    $ (0.08   )   $ 0.19      $ (0.07   )
continuing operations -
diluted
                                                                   

    
      On August 3, 2011, we announced that our wholly-owned subsidiary
      Nashville Superspeedway notified NASCAR that it would not seek 2012
      sanction agreements for its two Nationwide Series and two Camping World
      Truck Series events and therefore we no longer promote NASCAR events at
      this facility. We continue to use the track for NASCAR team testing and
(1)   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
      $2,245,000 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.
      
      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) from continuing operations before income taxes, adjusted earnings
      (loss) from continuing operations and adjusted earnings (loss) 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 earnings (loss) from
      continuing operations before income taxes, earnings (loss) from
      continuing operations or diluted earnings (loss) per share from
      continuing operations, which are determined in accordance with GAAP.
      

                                                              
DOVER MOTORSPORTS, INC.
CONSOLIDATED BALANCE SHEETS
In Thousands
(Unaudited)
                                                                  
                                                                  
                                  September 30,   September 30,   December 31,
                                  2012            2011            2011
                                                                  
ASSETS
Current assets:
Cash                              $  775          $  399          $  15
Accounts receivable                  9,413           782             689
Inventories                          126             283             115
Prepaid expenses and other           1,040           5,787           1,255
Receivable from Dover Downs          -               -               11
Gaming & Entertainment, Inc.
Prepaid income taxes                 -               600             -
Deferred income taxes               71            105            67      
Total current assets                 11,425          7,956           2,152
                                                                  
Property and equipment, net          93,715          97,193          96,380
Other assets                         780             809             783
Deferred income taxes               460           316            496     
Total assets                      $  106,380     $  106,274      $  99,811  
                                                                  
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable                  $  87           $  497          $  116
Accrued liabilities                  4,413           2,408           2,584
Payable to Dover Downs Gaming &      -               4               -
Entertainment, Inc.
Income taxes payable                 798             -               145
Deferred revenue                    1,278         11,066         3,129   
Total current liabilities            6,576           13,975          5,974
                                                                  
Revolving line of credit             24,620          34,980          29,160
Liability for pension benefits       2,573           1,359           2,713
Other liabilities                    1,987           2,256           2,250
Deferred income taxes               18,465        12,762         14,765  
Total liabilities                   54,221        65,332         54,862  
                                                                  
Stockholders' equity:
Common stock                         1,838           1,829           1,828
Class A common stock                 1,851           1,851           1,851
Additional paid-in capital           102,098         101,797         101,888
Accumulated deficit                  (51,425  )      (63,413  )      (58,352 )
Accumulated other comprehensive     (2,203   )     (1,122   )     (2,266  )
loss
Total stockholders' equity          52,159        40,942         44,949  
Total liabilities and             $  106,380     $  106,274      $  99,811  
stockholders' equity
                                                                  

                                                              
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)

                                                     Nine Months Ended
                                                     September 30,
                                                     2012          2011
                                                                   
Operating activities:
Net earnings (loss)                                  $ 6,927       $ (14,246 )
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation                                           2,491         3,745
Amortization of credit facility fees                   170           319
Stock-based compensation                               247           317
Deferred income taxes                                  3,689         (7,733  )
Impairment charge                                      -             15,687
Provision for contingent obligation                    (268    )     2,245
Loss on extinguishment of debt                         -             67
Loss on sale of land                                   52            -
Changes in assets and liabilities:
Accounts receivable                                    (8,724  )     57
Inventories                                            (11     )     (82     )
Prepaid expenses and other                             194           (4,344  )
Accounts payable                                       (29     )     351
Accrued liabilities                                    1,829         (546    )
Payable to/receivable from Dover Downs Gaming &        11            (14     )
Entertainment, Inc.
Income taxes payable/prepaid income taxes              654           (589    )
Deferred revenue                                       (1,851  )     7,422
Other liabilities                                     (75     )    (266    )
Net cash provided by operating activities             5,306       2,390   
                                                                   
Investing activities:
Capital expenditures                                   (464    )     (229    )
Proceeds from the sale of property and equipment       585           1,875
Proceeds from the sale of available-for-sale           -             311
securities
Purchase of available-for-sale securities             (100    )    (314    )
Net cash provided by investing activities             21          1,643   
                                                                   
Financing activities:
Borrowings from revolving line of credit               15,820        56,340
Repayments on revolving line of credit                 (20,360 )     (59,560 )
Repurchase of common stock                             (27     )     (52     )
Credit facility fees                                  -           (431    )
Net cash used in financing activities                 (4,567  )    (3,703  )
                                                                   
Net increase in cash                                   760           330
Cash, beginning of period                             15          69      
Cash, end of period                                  $ 775        $ 399     
                                                                   

Contact:

Dover Motorsports, Inc.
Timothy R. Horne – Sr. Vice President - Finance
302-857-3292
 
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