Back to GetFilings.com

Table of Contents

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-K

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2003

Commission file number 1-11929

Dover Motorsports, Inc.

(Exact name of registrant as specified in its charter)

1131 North DuPont Highway, Dover, Delaware 19901

(Address of principal executive offices)

(302) 674-4600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None.

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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).     Yes  x    No  ¨

The aggregate market value of common stock held by non-affiliates of the registrant was $59,477,540 as of June 30, 2003 (the last day of our most recently completed second quarter).

As of February 29, 2004, the number of shares of each class of the registrant’s common stock outstanding is as follows:

Documents Incorporated by Reference

Portions of the registrant’s Proxy Statement in connection with the Annual Meeting of Stockholders to be held April 28, 2004 are incorporated by reference into Part III, Items 10 through 14 of this report.

Table of Contents

Part I

References in this document to “the Company,” “DVD,” “we,” “us,” and “our” mean Dover Motorsports, Inc. and its wholly owned subsidiaries.

Item 1. Business

Overview

Dover Motorsports, Inc. is a leading promoter of motorsports events in the United States. Its motorsports subsidiaries operate five motorsports tracks (four permanent facilities and one temporary circuit) in four states and promoted 19 major events during 2003 under the auspices of four of the premier sanctioning bodies in motorsports - the National Association for Stock Car Auto Racing (“NASCAR”), Championship Auto Racing Teams (“CART”), the Indy Racing League (“IRL”) and the National Hot Rod Association (“NHRA”). The Company owns and operates Dover International Speedway in Dover, Delaware; Nashville Superspeedway near Nashville, Tennessee; Gateway International Raceway near St. Louis, Missouri; and Memphis Motorsports Park near Memphis, Tennessee. The Company also organizes and promotes the Toyota Grand Prix of Long Beach in California. In 2003, the Company promoted the following major events:

The Company generates revenues from the following four sources: (1) admissions, which include all ticket sales to our events; (2) broadcasting fees, which include rights paid by TV networks to broadcast our events as well as radio and ancillary rights fees; (3) sponsor, hospitality and other revenue, which include sponsor and promotion fees, luxury suite rentals, hospitality tent and expo rentals and other related revenue; and (4) food, beverage and merchandise revenue.

Dover Downs, Inc. was incorporated in 1967 and began motorsports and harness horse racing operations in 1969. As a result of several restructurings, Dover Downs, Inc. became a wholly owned subsidiary of the Company and transferred all of its motorsports operations to another wholly owned subsidiary of ours, Dover International Speedway, Inc. Consequently, Dover Downs, Inc. became the operating entity for what previously comprised our gaming operations.

Effective March 31, 2002, the Company completed the tax-free spin-off of Dover Downs, Inc., its gaming business. To accomplish the spin-off, the Company contributed 100 percent of the issued and outstanding common stock of Dover Downs, Inc. to Dover Downs Gaming & Entertainment, Inc. (“Gaming”), a newly formed wholly owned subsidiary of the Company. On the effective date of the spin-off, the Company distributed all of the capital stock of Gaming to the Company’s stockholders on a pro-rata basis. Holders of the Company’s common stock or Class A common stock received 0.7 shares of Gaming common stock or Class A common stock for each share of the Company’s common stock or Class A common stock owned at the close of business on March 18, 2002, the record date for the spin-off. Each share of common stock or Class A common stock distributed was accompanied by one stock purchase right. Accordingly, the operations of the gaming business have been reflected as a discontinued operation in the Company’s consolidated financial statements included elsewhere in this Annual Report on Form 10-K. No gain or loss was recognized as a result of the spin-off due to the pro-rata nature of the distribution. The Company’s continuing operations subsequent to the spin-off consist solely of its motorsports activities. Based on an Internal Revenue Service Private Letter Ruling, the spin-off was tax-free to the Company and its stockholders, except for cash received for any fractional shares. Immediately following the spin-off, the Company owned no shares of Gaming, and Gaming became an independent public company. A total of 9,998,976 shares of Gaming common stock and 16,638,359 shares of Gaming Class A common stock were distributed in connection with the spin-off. Also as part of the spin-off, a $9.5 million receivable from Gaming was cancelled.

2

Table of Contents

Dover International Speedway

We have promoted NASCAR-sanctioned racing events for 35 consecutive years at Dover International Speedway and currently promote five major NASCAR-sanctioned events at the facility annually. Two races are in the NASCAR NEXTEL Cup Series (f/k/a Winston Cup) professional stock car racing circuit, two races are in the Busch Series racing circuit and one race is in the Craftsman Truck Series racing circuit.

Each of the Busch Series events and the Craftsman Truck Series event at Dover International Speedway are conducted on the days before a NASCAR NEXTEL Cup Series event. Dover International Speedway is one of only seven speedways in the country that presents two NASCAR NEXTEL Cup Series events and two Busch Series events each year. Additionally, the Company is one of only seven tracks to host three major NASCAR events at one facility on the same weekend. The June and September dates have historically allowed Dover International Speedway to hold the first and last NASCAR NEXTEL Cup Series events in the Maryland to Maine region each year.

Dover International Speedway is a high-banked, one-mile, concrete superspeedway with a seating capacity of approximately 140,000. Unlike some superspeedways, substantially all grandstand and skybox seats offer an unobstructed view of the entire track. The concrete racing surface makes Dover International Speedway the only concrete superspeedway (one mile or greater in length) that conducts NASCAR NEXTEL Cup Series events.

Nashville Superspeedway

The Company acquired Nashville Speedway, USA, Inc. on January 2, 1998. To accommodate the demand for major motorsports events in the Nashville area, the Company constructed a new superspeedway and motorsports complex in Wilson County, Tennessee, that opened in April 2001. The 1.33-mile concrete superspeedway has 25,000 permanent grandstand seats with an infrastructure in place to expand to 150,000 seats as demand requires. Additionally, the first phase of construction included lights at the superspeedway to allow for nighttime racing and the foundation work for a dirt track, short track and drag strip, which may be completed in the future. Nashville Superspeedway promoted two NASCAR Busch Series events, a NASCAR Craftsman Truck Series event, an IRL event and other regional and national touring events during the 2003 season.

Grand Prix Association of Long Beach

The Company acquired Grand Prix Association of Long Beach, Inc. (“Grand Prix”) on July 1, 1998. For the past 29 years, Grand Prix has organized and promoted the Grand Prix of Long Beach, an annual temporary circuit professional motorsports event run on the streets of Long Beach, California. The Grand Prix of Long Beach is a CART-sanctioned event and has the second highest paid attendance of any Indy-style car race promoted in the United States of America, second only to the Indianapolis 500.

Grand Prix also organizes and promotes the CART-sanctioned Grand Prix of Denver in Colorado. In the fourth quarter of 2003, the Company recognized an impairment loss of $4,309,000 related to the write-down of assets used to promote the Grand Prix of Denver event. After analyzing the financial and operational difficulties of CART, and noting the bankruptcy filing by CART in December 2003, the Company concluded from its impairment review that the carrying value of assets associated with the Grand Prix of Denver was zero. On March 4, 2004, the Company announced that Grand Prix had reached an agreement with Centrix Financial LLC to assign its rights relative to the organization and promotion of the Grand Prix of Denver event to Centrix Financial LLC.

3

Table of Contents

Grand Prix organized and promoted the inaugural Grand Prix of St. Petersburg in Florida in February 2003. The financial results of the event were significantly lower than expected, and as a result of uncertainties surrounding CART advance ticket and sponsorship sales for the February 2004 event indicated that the event would not generate an operating profit in 2004. In the fourth quarter of 2003, the Company recognized an impairment loss of $2,867,000 which represented the carrying value of all assets used to run the St. Petersburg event. On December 1, 2003, the Company announced that Grand Prix had reached an agreement with CART to terminate its agreement with CART relative to the organization and promotion of the St. Petersburg event. In December 2003, Grand Prix provided refunds to patrons who purchased tickets in advance for the February 2004 event since the 2004 event was cancelled. Efforts by Grand Prix to transfer certain assets and rights relative to the St. Petersburg event, first to CART and then to Open Wheel Racing Series LLC (“OWRS”), the entity which in 2004 purchased most of CART’s assets in connection with CART’s 2003 bankruptcy proceedings, proved unsuccessful.

Gateway International Raceway

Gateway International Raceway (“Gateway”), acquired in the Grand Prix acquisition, promoted four major events in 2003. These events were sanctioned by NASCAR, IRL and NHRA. The facility also hosts a number of regional and national touring events. Beginning in 2004, Gateway will no longer promote its annual IRL sanctioned event.

The auto racing facility includes a 1.25-mile paved oval track with 55,000 permanent seats, a nationally renowned drag strip capable of seating approximately 30,000 people and a road course. The facility, which is equipped with lights for nighttime racing, is located in Madison, Illinois, approximately five miles from the Gateway Arch in St. Louis.

Memphis Motorsports Park

Memphis Motorsports Park (“Memphis”), also acquired in the Grand Prix acquisition, promoted three major events in 2003. These events were sanctioned by NASCAR and NHRA. The facility also hosts a number of regional and national touring events.

The auto racing facility includes a 0.75-mile paved tri-oval track with approximately 16,000 permanent seats, a nationally renowned drag strip capable of seating approximately 25,000 people, a 0.25-mile dirt track and a road course. The facility is located in Millington, Tennessee, approximately 10 miles from Memphis, Tennessee.

Competition

The Company’s racing events compete with other racing events sanctioned by various racing bodies and with other sports and recreational events scheduled on the same dates. Racing events sanctioned by different organizations are often held on the same dates at different tracks. The quality of the competition, type of racing event, caliber of the event, sight lines, ticket pricing, location and customer conveniences, among other things, differentiate the motorsports facilities.

Seasonality

DVD derives a substantial portion of its total revenues from admissions, television broadcast rights and other event-related revenue attributable to its major motorsports events held from February through October (beginning in 2004, major motorsports events will be held from April through October). As a result, DVD’s business is highly seasonal.

Employees

As of December 31, 2003, DVD had approximately 156 full-time employees and 28 part-time employees. We engage temporary personnel to assist during our motorsports racing season, many of whom are volunteers. We believe that we enjoy a good relationship with our employees.

4

Table of Contents

Available Information

We file annual, quarterly and current reports, information statements and other information with the United States Securities and Exchange Commission (the “SEC”). The public may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.

Internet Address

We maintain a website where additional information concerning our business and various upcoming events can be found. The address of our Internet website is http://www.dovermotorsportsinc.com. We provide a link on our website, under Investor Relations, to our filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports.

Item 2. Properties

Dover International Speedway

Dover International Speedway is located in Dover, Delaware, on approximately 747 acres of land owned by the Company. Use by Gaming of the Company’s 5/8-mile harness racing track is under an easement granted by the Company which does not require the payment of any rent. Under the terms of the easement, Gaming has exclusive use of the harness track during the period beginning November 1 of each year and ending April 30 of the following year, together with set up and tear down rights for the two weeks before and after such period. The harness track is located on property owned by the Company and is on the inside of its one-mile motorsports superspeedway. Gaming’s indoor grandstands are used by the Company at no charge in connection with its motorsports events. The Company also leases its principal executive office space from Gaming. Various easements and agreements relative to access, utilities and parking have also been entered into between the Company and Gaming relative to their respective Dover, Delaware facilities.

Nashville Superspeedway

Nashville Superspeedway is located on approximately 1,465 acres of land owned by the Company in Wilson County and Rutherford County, Tennessee, approximately 30 miles from downtown Nashville, Tennessee.

Long Beach

Grand Prix owns its office at 3000 Pacific Avenue, Long Beach, California, which consists of approximately 82,000 square feet of land and a building with approximately 50,000 square feet of office and warehouse space. Grand Prix leases a 750-square foot ticket office in downtown Long Beach for the sale of tickets and leases storage facilities in Long Beach for its equipment and structures.

Denver

The Company’s Grand Prix subsidiary leases 4 acres of land in Denver, Colorado for the purpose of storing its equipment and structures used in the Grand Prix of Denver event. A portion of the Grand Prix of Denver was run on property leased to us by the Pepsi Center. In addition, office space is provided to us by the Pepsi Center.

5

Table of Contents

Gateway International Raceway

Gateway International Raceway is located on approximately 416 acres of land in Madison, Illinois, five miles from the Gateway Arch in St. Louis. The Company owns approximately 123 acres and has three long-term leases with purchase options (expiring in 2011, 2025 and 2070) for an additional 259 acres. The Company is also a party to a ten-year lease (with four five-year renewals) for 20 acres for the purpose of providing overflow parking for major events on a neighboring golf course, and a five-year lease for approximately 14 acres for major event parking. The Company has granted a first mortgage lien on all the real property owned and a security interest in all property leased by the Company at Gateway to Southwestern Illinois Development Authority (“SWIDA”) as security for the repayment of principal and interest on its remaining $19.2 million loan from SWIDA.

Memphis Motorsports Park

Memphis Motorsports Park is located on approximately 350 acres of land owned by the Company approximately ten miles northeast of downtown Memphis, Tennessee. The facility is encumbered by a first trust deed to First Tennessee Bank for the purpose of securing a stand-by letter of credit issued by First Tennessee Bank to Gateway International Motorsports Corporation to satisfy its debt service reserve fund obligation to SWIDA.

Other

As of December 31, 2003, all real property owned by Dover International Speedway and Nashville Speedway, USA, Inc. was encumbered by a first mortgage lien to PNC Bank, Delaware, as security for the repayment of principal outstanding under the Company’s revolving credit facility. Effective February 19, 2004, the Company and all of its wholly owned subsidiaries, as co-borrowers, entered into a new revolving credit facility with a different bank group and granted a first priority perfected security interest and lien on all available assets of the Company and its subsidiaries.

Item 3. Legal Proceedings

The Company is a party to ordinary routine litigation incidental to its business. Management does not believe that the resolution of any of these matters is likely to have a serious adverse effect on our results of operations, financial condition or cash flows.

Item 4. Submission Of Matters To A Vote Of Security Holders

No matters were submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders.

6

Table of Contents

Part II

Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of Equity Securities

The Company’s common stock is listed on the New York Stock Exchange under the ticker symbol “DVD.” There is no public trading market for DVD Class A common stock. However, Class A common stock is freely convertible at any time into shares of common stock on a one-for-one basis at the option of the stockholder. As of February 29, 2004, there were 16,617,898 shares of common stock and 23,376,185 shares of Class A common stock outstanding. There were 1,270 holders of record for common stock and 16 holders of record for Class A common stock.

The high and low sales prices for the Company’s common stock on the New York Stock Exchange and the dividends declared per share for the years ended December 31, 2003 and 2002 are detailed in the following table:

For comparison purposes, the historical market value of the Company’s common stock prior to the March 31, 2002 tax-free spin-off of Gaming to the Company’s stockholders is not meaningful since the historical values included Gaming. Similarly, a comparison of the historical dividend payout prior to the spin-off should factor in the effect of the spin-off.

Our revolving credit agreement allows us to pay dividends in the ordinary course of business consistent with past practices as long as we are not in default under the agreement.

Equity Compensation Plan Information

Securities authorized for issuance under equity compensation plans at December 31, 2003 are as follows:

7

Table of Contents

Item 6. Selected Financial Data

The following table summarizes certain selected historical financial data and should be read in conjunction with management’s discussion and analysis of financial condition and results of operations and the consolidated financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K. The historical financial information presented below is not necessarily indicative of the results of operations or financial position that DVD would have reported if it had operated exclusive of its discontinued gaming operation during the periods presented or in the future. See NOTE 2–Discontinued Operation appearing in the Notes to the Consolidated Financial Statements on page 34 of this Annual Report on Form 10-K.

Five Year Selected Financial Data