Speedway Motorsports Announces Record Earnings From Continuing Operations

02/11/2003

CONCORD, N.C., Feb. 11 /PRNewswire-FirstCall/ -- Speedway Motorsports, Inc. (NYSE: TRK) announced today record full year earnings from continuing operations, and that fourth quarter and full year 2002 results meet consensus expectations.

The Company also announced that fiscal 2002 revenues and income and diluted earnings per share from continuing operations increased over 2001, with admission revenues increasing 4%. The Company also provided additional guidance on estimated operating results for fiscal 2003.

The fiscal and fourth quarter 2002 results are not directly comparable to those for 2001 because:

  • Texas Motor Speedway hosted NASCAR Craftsman Truck and Indy Racing League Series racing events in the fourth quarter 2001 which were held in the third quarter 2002;
  • fourth quarter 2001 results also reflect a gain from settlement of a cancelled Championship Auto Racing Teams (CART) race at Texas Motor Speedway;
  • fiscal year 2002 results reflect an accounting change for goodwill impairment; and
  • fourth quarter and fiscal year 2002 results reflect the new ten year food and beverage agreement with Levy Restaurants and Compass Group USA (Levy/Compass) whereby associated net operating profits are now reported as net event related and other operating revenue.

For fiscal year 2002 as compared to 2001:

  • total revenues increased $710,000 to $376.0 million, with admissions revenue increasing 4% or $5.0 million to $141.3 million, and
  • other expense and the loss on early debt redemption aggregating $3.5 million in 2002 increased $7.8 million when compared to other income and the cancelled CART race settlement aggregating $4.3 million in 2001; therefore,
  • income from continuing operations before the cumulative effect of an accounting change increased 5% or $2.8 million to $61.2 million,
  • diluted earnings per share from continuing operations before accounting change increased 5% or $0.07 to $1.43, consistent with consensus expectations,
  • net income decreased 2% or $1.4 million to $56.2 million, and
  • diluted earnings per share decreased 1% or $0.02 to $1.32.

For fourth quarter 2002 as compared to 2001:

  • total revenues decreased 10% or $7.8 million to $72.9 million, and
  • other expense of $1.0 million in 2002 increased $5.7 million when compared to other expense and the cancelled CART race settlement aggregating $4.7 million in 2001; therefore,
  • income from continuing operations decreased 22% or $2.4 million to $8.5 million, and
  • net income decreased 20% or $2.1 million to $8.5 million; however,
  • diluted earnings per share of $0.20 was consistent with consensus expectations.

In the fourth quarter, Lowe's Motor Speedway hosted the UAW-GM Quality 500 NASCAR Winston Cup Series and "Little Trees" 300 NASCAR Busch Series racing events, and Atlanta Motor Speedway hosted the NAPA 500 NASCAR Winston Cup Series and Aaron's 312 Busch Series racing events. Attendance and associated event related revenues of weekend events at both Atlanta and Lowe's Motor Speedways were negatively impacted by poor weather.

"Reporting our third consecutive year of record income and earnings per share from continuing operations gives me great pride," stated H.A. "Humpy" Wheeler, chief operating officer and president of Speedway Motorsports. "These 2002 results, and importantly our admissions revenues, reflect year- over-year increases which are particularly encouraging given SMI faced continuing challenges with the economy, reduced travel, declines in corporate spending and poor weather conditions."

"We are extremely proud that Winston Cup television ratings and household viewers increased for the second consecutive year of the new broadcasting agreement, and we believe SMI is exceptionally well positioned in proven top markets to capitalize on the continuing growth of NASCAR, motorsports and the anticipated upturn in the general economy," stated Mr. Wheeler.

"We made significant strides in 2002 by strengthening SMI's balance sheet through reducing debt, strong cash flow from long-term contracted revenue streams, paying SMI's first annual dividend and disposing of an under- performing operation," stated Mr. O. Bruton Smith, chairman and chief executive officer of Speedway Motorsports. "The marketing and broadcasting appeal of SMI's premier facilities and venues is clearly demonstrated through long-term strategic naming rights alliances for our newly-modernized and expanded Infineon Raceway, Lowe's Motor Speedway, and our successful first year with Levy/Compass, the market leader in premium foodservice at sports and entertainment facilities. The percentage of our revenues contracted in advance on a longer-term basis from such relationships has increased significantly in the past few years."

Mr. Smith continued, "We are extremely proud of being instrumental in elevating NASCAR and motorsports racing to its current national prominence and look forward to building an even stronger future with audience growth remaining unmatched by other professional sports. Our core fan base has made this the most stable sport in America, and we remain committed first to them."

William R. Brooks, chief financial officer of Speedway Motorsports, stated "Assuming current industry and economic trends continue, the Company estimates 2003 total revenues of $390-$410 million, net income of $66-$70 million, depreciation and interest of $58-$62 million and diluted earnings per share of $1.55-$1.65."

Fiscal year 2002 results reflect a pre-tax charge of $1.2 million, $751,000 net of tax or $0.02 per diluted share, related to the early redemption of $53.7 million of convertible subordinated debentures in April 2002. The fourth quarter and fiscal year 2001 results reflect pre-tax income of $4.8 million and $1.4 million, $2.9 million and $826,000 net of tax, or $0.07 and $0.02 per diluted share, respectively, related to settlement of the cancelled CART race.

The Company adopted Statement of Financial Accounting Standards No. 142 "Goodwill and Other Intangible Assets" as of January 1, 2002. The fiscal 2002 results reflect the cumulative effect of an accounting change for goodwill impairment of $4.3 million, net of taxes of $297,000 or $0.10 per diluted share, associated with certain non-motorsports related reporting units. Also, amortization of $444,000 and $1.8 million on goodwill and other intangible assets recorded as of December 31, 2001 was not reflected in the fourth quarter and fiscal 2002 under the new accounting guidelines.

The Company disposed of the operations of SoldUSA in the second quarter 2002 due to continuing difficult market conditions for internet auction and e- commerce companies. The Company's results reflect losses, net of taxes, from SoldUSA's discontinued operations and disposal of $297,000, or $0.01 per diluted share, for the fourth quarter 2001, and $686,000 and $817,000, or $0.01 and $0.02 per diluted share, for fiscal years 2002 and 2001, respectively. There were no such losses in the fourth quarter 2002.

Changes in racing schedules, and operating arrangements such as the Levy/Compass agreement, can lessen the comparability of operating results between quarterly financial statements of successive years.

Speedway Motorsports is a leading marketer and promoter of motorsports entertainment in the United States. The Company owns and operates the following premier facilities: Atlanta Motor Speedway, Bristol Motor Speedway, Lowe's Motor Speedway, Las Vegas Motor Speedway, Infineon Raceway and Texas Motor Speedway. The Company provides souvenir merchandising services through its SMI Properties subsidiary, and manufactures and distributes smaller-scale, modified racing cars through its 600 Racing subsidiary. The Company also owns Performance Racing Network which broadcasts syndicated motorsports programming to over 750 stations nationwide. For more information, visit the Company's website at www.gospeedway.com.

This news release contains forward-looking statements, particularly statements with regard to the Company's future operations and financial results. There are many factors that affect future events and trends of the Company's business including, but not limited to, consumer and corporate spending sentiment, air travel, governmental regulations, military actions, national or local catastrophic events, the success of and weather surrounding NASCAR, IRL, NHRA and other racing events, the success of expense reduction efforts, litigation, insurance, and economic conditions. These factors and other factors, including those contained in Exhibit 99.1 to the Company's Annual Report on Form 10-K, involve certain risks and uncertainties that could cause actual results or events to differ materially from management's views and expectations. Inclusion of any information or statement in this news release does not necessarily imply that such information or statement is material. The Company does not undertake any obligation to release publicly revised or updated forward-looking information, and such information included in this news release is based on information currently available and may not be reliable after this date.

Note: Speedway Motorsports will host a conference call and web-cast today at 11:00 a.m. ET. The call and web-cast are open to all participants. To participate in the conference call, you may dial 800-446-1671 for domestic calls or 1-847-413-3362 for international calls. The reference number is 6559929. To participate in the web-cast, you may visit the Company's website at www.gospeedway.com. Participating in the call and web-cast will be H.A. Wheeler, Chief Operating Officer and President; William R. Brooks, Chief Financial Officer; and Marylaurel E. Wilks, Vice President, Communications and General Counsel.

    Speedway Motorsports, Inc. and Subsidiaries
    Selected Financial Data - Unaudited
    For The Three and Twelve Months Ended December 31, 2002 and 2001
    (in thousands except per share amounts)

                                     Three Months Ended   Twelve Months Ended

    INCOME STATEMENT DATA          12/31/2002 12/31/2001 12/31/2002 12/31/2001

    REVENUES:
      Admissions                     $23,213   $26,476    $141,315   $136,362
      Event related revenue           27,396    31,654     122,172    133,289
      NASCAR broadcasting revenue     14,970    12,719      77,936     67,488
      Other operating revenue          7,314     9,823      34,537     38,111
         Total Revenues               72,893    80,672     375,960    375,250
    EXPENSES AND OTHER:
      Direct expense of events        11,619    16,236      69,297     76,579
      NASCAR purse and sanction
       fees                           12,323    10,830      61,217     54,479
      Other direct operating
       expenses                        8,597    10,750      31,032     35,787
      General and administrative      12,295    15,519      57,235     59,331
      Depreciation and amortization    7,970     8,397      31,720     32,747
      Interest expense, net            5,058     5,730      21,199     24,316
      Loss on early debt redemption       --        --       1,237         --
      Cancelled CART race settlement,
       net                                --    (4,830)         --     (1,361)
      Other expense (income), net      1,048        93       2,239     (2,907)
         Total Expenses and Other     58,910    62,725     275,176    278,971
    Income From Continuing
     Operations
     Before Income Taxes and
     Cumulative
     Effect of Accounting Change      13,983    17,947     100,784     96,279
    Income Tax Provision               5,497     7,050      39,609     37,870
    Income From Continuing
     Operations
     Before Cumulative Effect of
     Accounting Change                 8,486    10,897      61,175     58,409
    Loss From Operations and
     Disposal of
     Discontinued Business                --      (297)       (686)      (817)
    Income Before Cumulative Effect
     of Accounting Change              8,486    10,600      60,489     57,592
    Cumulative Effect of Accounting
     Change for Goodwill Impairment       --        --      (4,273)        --
    NET INCOME                        $8,486   $10,600     $56,216    $57,592


    Basic Earnings Per Share:
    Continuing Operations Before
     Accounting Change                 $0.20     $0.26       $1.44      $1.40
    Discontinued Operations               --     (0.01)      (0.01)     (0.02)
    Accounting Change                     --        --       (0.10)        --
    Basic Earnings Per Share           $0.20     $0.25       $1.33      $1.38
    Weighted average shares
     outstanding                      42,245    41,770      42,114     41,753

    Diluted Earnings Per Share:
    Continuing Operations Before
     Accounting Change                 $0.20     $0.26       $1.43      $1.36
    Discontinued Operations               --     (0.01)      (0.01)     (0.02)
    Accounting Change                     --        --       (0.10)        --
    Diluted Earnings Per Share         $0.20     $0.25       $1.32      $1.34
    Weighted average shares
     outstanding                      42,581    44,249      43,001     44,367


                                                           Consolidated
    BALANCE SHEET DATA                             12/31/02           12/31/01

    Cash and cash equivalents                     $112,638            $93,980
    Total current assets                           153,566            140,735
    Property and equipment, net                    857,146            813,154
    Goodwill and other intangible assets, net       51,990             56,742
    Total assets                                 1,105,740          1,063,578

    Current liabilities                            131,240            106,054
    Revolving credit facility borrowings            90,000             90,000
    Deferred race event income, net                 85,565             71,578
    Total long-term debt                           342,225            397,313
    Total liabilities                              614,568            624,689
    Total stockholders' equity                    $491,172           $438,889

SOURCE Speedway Motorsports, Inc.