UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2003
Commission file number 1-11929
Dover Motorsports, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 51-0357525 | |
| (State or Other Jurisdiction of Incorporation) | (I.R.S. Employer Identification Number) |
1131 North DuPont Highway, Dover, Delaware 19901
(Address of principal executive offices)
(302) 674-4600
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
As of July 31, 2003, the number of shares of each class of the Registrant’s common stock outstanding is as follows:
| Common Stock - |
16,486,457 shares | |
| Class A Common Stock - |
23,448,585 shares |
Part I—Financial Information
| Item 1. | Financial Statements |
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF EARNINGS
In Thousands, Except Per Share Amounts
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
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| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Revenues |
$ | 47,849 | $ | 48,641 | $ | 51,816 | $ | 49,637 | ||||||||
| Expenses: |
||||||||||||||||
| Operating and marketing |
29,483 | 28,346 | 35,953 | 30,539 | ||||||||||||
| Depreciation and amortization |
2,698 | 2,372 | 5,324 | 4,729 | ||||||||||||
| General and administrative |
4,137 | 3,886 | 7,748 | 7,397 | ||||||||||||
| 36,318 | 34,604 | 49,025 | 42,665 | |||||||||||||
| Operating earnings |
11,531 | 14,037 | 2,791 | 6,972 | ||||||||||||
| Interest income |
3 | 25 | 6 | 38 | ||||||||||||
| Interest expense |
(1,488 | ) | (1,138 | ) | (2,737 | ) | (2,035 | ) | ||||||||
| Earnings from continuing operations before income taxes and cumulative effect of accounting change |
10,046 | 12,924 | 60 | 4,975 | ||||||||||||
| Income taxes |
5,023 | 5,542 | 30 | 1,956 | ||||||||||||
| Earnings from continuing operations before cumulative effect of accounting change |
5,023 | 7,382 | 30 | 3,019 | ||||||||||||
| Earnings from discontinued operation, net of income taxes of $3,542 |
— | — | — | 5,168 | ||||||||||||
| Direct costs of spin-off, net of income tax benefit of $90 |
— | — | — | (691 | ) | |||||||||||
| Earnings before cumulative effect of accounting change |
5,023 | 7,382 | 30 | 7,496 | ||||||||||||
| Cumulative effect of accounting change for goodwill impairment |
— | — | — | (28,606 | ) | |||||||||||
| Net earnings (loss) |
$ | 5,023 | $ | 7,382 | $ | 30 | $ | (21,110 | ) | |||||||
| Net earnings (loss) per common share—basic: |
||||||||||||||||
| Continuing operations before accounting change |
$ | 0.13 | $ | 0.19 | $ | — | $ | 0.08 | ||||||||
| Discontinued operation |
— | — | — | 0.12 | ||||||||||||
| Accounting change |
— | — | — | (0.75 | ) | |||||||||||
| Net earnings (loss) |
$ | 0.13 | $ | 0.19 | $ | — | $ | (0.55 | ) | |||||||
| Net earnings (loss) per common share—diluted: |
||||||||||||||||
| Continuing operations before accounting change |
$ | 0.13 | $ | 0.19 | $ | — | $ | 0.08 | ||||||||
| Discontinued operation |
— | — | — | 0.12 | ||||||||||||
| Accounting change |
— | — | — | (0.75 | ) | |||||||||||
| Net earnings (loss) |
$ | 0.13 | $ | 0.19 | $ | — | $ | (0.55 | ) | |||||||
The Notes to the Consolidated Financial Statements are an integral part of these consolidated statements.
2
DOVER MOTORSPORTS, INC.
CONSOLIDATED BALANCE SHEET
In Thousands, Except Share and Per Share Amounts
(Unaudited)
| June 30, 2003 |
December 31, 2002 |
|||||||
| ASSETS |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 1,227 | $ | 454 | ||||
| Accounts receivable |
11,910 | 3,526 | ||||||
| Inventories |
637 | 382 | ||||||
| Prepaid expenses and other |
4,957 | 4,088 | ||||||
| Income taxes receivable |
4,176 | 5,906 | ||||||
| Deferred income taxes |
644 | 810 | ||||||
| Total current assets |
23,551 | 15,166 | ||||||
| Property and equipment, net |
242,288 | 244,965 | ||||||
| Restricted cash |
1,956 | 3,683 | ||||||
| Other assets, net |
1,358 | 1,790 | ||||||
| Deferred income taxes |
2,419 | 1,865 | ||||||
| Goodwill |
21,883 | 21,883 | ||||||
| Total assets |
$ | 293,455 | $ | 289,352 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 2,062 | $ | 1,411 | ||||
| Accrued liabilities |
7,102 | 5,325 | ||||||
| Payable to Dover Downs Gaming & Entertainment, Inc. |
638 | 793 | ||||||
| Notes payable to banks |
43,460 | — | ||||||
| Current portion of long-term debt |
745 | 685 | ||||||
| Deferred revenue |
19,165 | 12,080 | ||||||
| Total current liabilities |
73,172 | 20,294 | ||||||
| Notes payable to banks |
— | 51,515 | ||||||
| Long-term debt |
18,486 | 19,229 | ||||||
| Other liabilities |
85 | 107 | ||||||
| Deferred income taxes |
41,282 | 37,674 | ||||||
| Commitments and contingencies (see Notes to the Consolidated Financial Statements) |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, $.10 par value; 1,000,000 shares authorized; issued and outstanding: none |
— | — | ||||||
| Common stock, $.10 par value; 75,000,000 shares authorized; issued and outstanding: June 30, 2003—16,486,457 shares; December 31, 2002—16,143,252 shares |
1,649 | 1,614 | ||||||
| Class A common stock, $.10 par value; 55,000,000 shares authorized; issued and outstanding: June 30, 2003—23,448,585 shares; December 31, 2002—23,448,585 shares |
2,345 | 2,345 | ||||||
| Additional paid-in capital |
127,799 | 127,169 | ||||||
| Retained earnings |
28,967 | 29,735 | ||||||
| Accumulated other comprehensive loss |
(330 | ) | (330 | ) | ||||
| Total stockholders’ equity |
160,430 | 160,533 | ||||||
| Total liabilities and stockholders’ equity |
$ | 293,455 | $ | 289,352 | ||||
The Notes to the Consolidated Financial Statements are an integral part of these consolidated statements.
3
DOVER MOTORSPORTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
In Thousands
(Unaudited)
| Six Months Ended June 30, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net earnings (loss) |
$ | 30 | $ | (21,110 | ) | |||
| Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
5,324 | 4,729 | ||||||
| Amortization and write-off of credit facility fees |
743 | — | ||||||
| Earnings from discontinued operation, net |
— | (5,168 | ) | |||||
| Cumulative effect of accounting change |
— | 28,606 | ||||||
| Tax benefit of options exercised |
533 | — | ||||||
| Deferred income taxes |
3,220 | 3,628 | ||||||
| Changes in assets and liabilities: |
||||||||
| Accounts receivable |
(8,384 | ) | (10,077 | ) | ||||
| Inventories |
(255 | ) | (69 | ) | ||||
| Prepaid expenses and other |
(1,048 | ) | (1,901 | ) | ||||
| Income taxes receivable |
1,730 | (218 | ) | |||||
| Accounts payable |
651 | (89 | ) | |||||
| Accrued liabilities |
1,777 | 2,757 | ||||||
| Payable to Dover Downs Gaming & Entertainment, Inc. |
(155 | ) | — | |||||
| Deferred revenue |
7,085 | 8,196 | ||||||
| Net cash provided by continuing operations |
11,251 | 9,284 | ||||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures |
(2,604 | ) | (2,520 | ) | ||||
| Restricted cash |
1,727 | |||||||