Dover Motorsports, Inc. reports results for the third quarter of 2011
Dover Motorsports, Inc. (NYSE: DVD) today reported its results for the third quarter ended September 30, 2011.
Results for this quarter are not comparable to the prior year’s quarter due to various race schedule changes and non-cash charges taken in this quarter in connection with the Company’s Nashville facility.
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 continue to conduct the weekly events we have scheduled for the remainder of 2011 and are currently evaluating all of our options for the facility.
The Company’s NASCAR fall race weekend in Dover 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. Also, the Company’s 2011 summer tandem weekend held during July in Nashville included a NASCAR Nationwide Series event that was held during the second quarter of 2010. Accordingly, the Company promoted only three major events over two weekends in the third quarter of 2011 compared with four major events in the third quarter of 2010.
For the quarter ended September 30, 2011 revenues were $ 2,916,000 compared with $ 24,824,000 in the third quarter of 2010. The decrease in revenues was primarily due to the Dover International Speedway schedule change.
Operating and marketing expenses were $ 4,382,000 in the third quarter of 2011 compared to $ 13,428,000 in the third quarter of 2010. The decrease is primarily due to the schedule changes and to savings realized from a reduction in operations at the Company’s Nashville facility.
General and administrative expenses of $ 2,200,000 in the third quarter of 2011 decreased from $ 2,672,000 for the same quarter last year. The decrease is primarily due to the 2010 quarter including approximately $ 200,000 of legal and banking expenses and from lower employee costs in the third quarter of 2011, partially offset by severance costs at the Nashville facility.
During the quarter, 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.
Denis McGlynn, President and Chief Executive Office of Dover Motorsports, Inc. stated, “We are now a streamlined Company with our focus on Dover International Speedway – a facility that has consistently generated cash flows and profits for us. The racing at the Monster Mile’s high banked concrete track is second to none and with recent improvements in fan amenities and ticket pricing options we will ensure that our racing fans continue to get an unparalleled experience on race days.”
Depreciation and amortization expense of $ 992,000 in the third quarter of 2011 decreased from $ 1,508,000 in the third quarter of 2010 primarily due to the impairment of all depreciable assets of the Nashville facility.
Net interest expense was $ 381,000 for the third quarter of 2011 compared to a negative expense of $ 38,000 in the third quarter of 2010. The increase is primarily due to a reduced reversal of accrued interest associated with uncertain income tax positions ($ 121,000 in 2011 and $ 856,000 in 2010) that is no longer required, offset by lower interest expense in 2011 from lower average outstanding borrowings and lower interest rates.
In September 1999, the Sports Authority of the County of Wilson (Tennessee) issued Variable Rate Tax Exempt Infrastructure Revenue Bonds for public infrastructure improvements near the Company’s Nashville facility. These bonds are direct obligations of the Sports Authority and are payable solely from sales taxes and incremental property taxes generated from the facility. If the sales taxes and incremental property taxes are insufficient for the payment of principal and interest on the bonds, the Company is responsible for the difference. Since the Company will no longer promote NASCAR sanctioned events at the facility and does not anticipate generating sales taxes, we have estimated that the existing bond fund balance and future funding from taxes will be insufficient to satisfy the remaining obligation starting in 2021. As such, we recorded a charge of $ 2,245,000 reflecting the estimated shortfall that we would be responsible for.
Loss from continuing operations before income tax benefit for the third quarter of 2011 was ($ 22,958,000). The current year’s results include the 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) compared with earnings of $ 7,555,000 in the comparable quarter of the prior year. The decrease is primarily due to the schedule change for Dover’s fall race weekend discussed above.
For the third quarter of 2011, loss from discontinued operation, net of income tax benefit, was ($ 2,000), compared to ($ 964,000) or ($ .03) per diluted share for the third quarter of 2010.
Net (loss) earnings for the third quarter of 2011 were ($ 14,581,000) or ($ .40) per diluted share compared to $ 3,416,000 or $ .09 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.
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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.