Dover Motorsports, Inc. reports results for the quarter ended June 30, 2010
Dover Motorsports, Inc. (NYSE: DVD) today reported results for the three months ended June 30, 2010.
The Company promoted seven major events over four weekends in the second quarter of 2010 compared to seven major events over five weekends in 2009.
Revenues for the quarter ended June 30, 2010 were $ 32,510,000 compared with $ 35,618,000 in the second quarter of 2009. The decrease in revenues was despite higher broadcast revenues and was primarily due to lower attendance, resulting in reduced admissions revenue and event-related revenue, and also due to the closure of our Memphis facility in the fourth quarter of 2009.
The Company’s NASCAR triple-header in Dover saw lower attendance and event related revenue as a result of continued weak overall economic conditions. Corporate spending on hospitality and sponsorships was also down slightly compared to 2009.
Operating and marketing expenses were $ 20,679,000 in the second quarter of 2010 as compared to $ 23,147,000 in the second 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.
The Company concluded in the second quarter that it was necessary to review the carrying value of the long-lived assets of its Gateway facility for impairment. As a result of this review, the Company recorded a non-cash impairment charge of $ 7,964,000 to write down the carrying value of the Gateway facility to fair value. The Company’s wholly-owned subsidiary, Gateway International Raceway, has notified NASCAR that it will not seek 2011 sanctions for its two Nationwide Series and one Camping World Truck Series races. The Company is currently evaluating all options for the facility.
General and administrative expenses of $ 3,204,000 in the second quarter of 2010 were up from $ 3,099,000 for the same quarter last year. The increase is primarily due to higher real estate taxes at Gateway International Raceway, partially offset by reduced costs from the closure of our Memphis facility.
Net interest expense was $ 834,000 for the quarter ended June 30, 2010 compared to $ 732,000 in the second quarter of 2009. The increase was due to higher borrowing costs.
(Loss) earnings before income taxes was $ (1,740,000) in the second quarter of 2010 compared with $ 6,921,000 in the comparable quarter of the prior year. The current year’s results include the aforementioned non-cash impairment charge of $ 7,964,000. The Company’s financial results are shown on an adjusted basis on the accompanying schedule – “Reconciliation of GAAP (Loss) Earnings to Adjusted Earnings (Loss)”. On an adjusted basis, earnings before income taxes were $ 6,224,000 in the second quarter of 2010 compared with $ 6,921,000 in the comparable quarter of the prior year.
The effective tax rate for the second quarter of 2010 was 3.2% compared to 43.8% in the prior year. The lower effective rate is due to a reduction in our combined effective state income tax rate based upon the mix of state taxable earnings and losses for the current quarter resulting primarily from the impairment charge. On an adjusted basis, the effective tax rate for the second quarter of 2010 was 43.9% compared with 43.8% in the prior year.
Net (loss) earnings were $ (1,685,000) or $ (0.05) per diluted share compared to $ 3,888,000 or $ 0.11 per diluted share for the same period last year. On an adjusted basis, net earnings for the quarter ended June 30, 2010 were $ 3,491,000 or <>.10 per diluted share compared with $ 3,888,000 or $ 0.11 per diluted share for the same period last year.
For the first half of 2010, cash provided by operations was $ 6,451,000 compared with $ 9,997,000 in the prior year. Capital spending was $ 345,000 in the first half of 2010 compared with $ 1,817,000 in the comparable period in the prior year.
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. (NYSE: DVD) is a leading promoter of NASCAR sanctioned motorsports events whose subsidiaries own and operate Dover International Speedway in Dover, Del., and Nashville Superspeedway near Nashville. The company also plays host to the Firefly Music Festival, produced by Red Frog Events and Goldenvoice. For more information, visit www.DoverMotorsports.com.