CART Posts Q2 1998 Results
3 August 1998
Championship Auto Racing Teams Reports Second Quarter 1998 ResultsDETROIT, Aug. 3 -- Championship Auto Racing Teams, Inc. today announced record revenues, net income and earnings per share for the second quarter and six months ended June 30, 1998. Actual Results Total revenues for the second quarter of 1998 were up 7% to $20.0 million from $18.7 million in the comparable quarter in 1997. Net income for the second quarter of 1998 was up to $5.0 million, compared to a net loss of $1.2 million in the second quarter of 1997. On a diluted per common share basis, earnings were $0.32 in 1998 compared to a loss of $(0.12) in the second quarter of 1997. For the six month period ended June 30, 1998, revenues increased 25% to $30.1 million from $24.1 million. Net income rose to $7.8 million or $0.59 per diluted share versus a net loss of $0.3 million, or $(0.03) per diluted share. Pro Forma Results Assuming the American Racing Series, BP Automotive and Pro-Motion Agency acquisitions had been effective January 1, 1997 and January 1, 1998, and after eliminating certain non-recurring race team expenses in the second quarter and six months ended June 30, 1997, pro forma results for the periods would have been as follows: Total revenues for the second quarter of 1998 decreased 4% to $20.0 million from $20.8 million in the comparable quarter in 1997. Net income for the second quarter of 1998 decreased 2% to $5.0 million, compared to $5.1 million in the second quarter of 1997. On a diluted per common share basis, earnings were $0.32 in 1998 compared to $0.48 in the second quarter of 1997. For the six month period ended June 30, 1998, revenues increased 18% to $31.4 million from $26.6 million. Net income rose 34% to $8.1 million or $0.59 per diluted share versus $6.0 million, or $.57 per diluted share. The number of events held in a particular quarter will affect the comparability of earnings information from quarter to quarter. In the second quarter of 1998, CART conducted 7 events, which was one event less than the comparable quarter in 1997. The CART event conducted in Australia moved out of the second quarter and will be run in the fourth quarter on October 18, 1998. Andrew Craig, CART Chairman and CEO, stated, "despite running one less event in the second quarter, revenues and earnings were comparable with the previous year, primarily due to a 60% increase in sponsorship revenue which is attributable to the addition in 1998 of FedEx as the title sponsor of the series. We continued to control and contain costs which allowed the company to exceed analyst estimates for the quarter. "During the second quarter, the company continued to grow and enhance the business by adding to its ladder system with the acquisition of Pro-Motion Agency, which runs the KOOL/Toyota Atlantic Championship. In addition, we announced a new venue for 1999 in Chicago, Illinois at the Chicago Motor Speedway and completed a marketing representation agreement with ISL Worldwide, which secures minimum sponsorship revenues of $215-235 million dollars over the next nine years." Championship Auto Racing Teams, Inc., a New York Stock Exchange listed company that completed a initial public offering on March 10, 1998, is the leading promoter of open wheel racing in the United States and owns, operates and markets the FedEx Championship Series, which is comprised of 19 races in five countries on four continents in 1998. Drivers such as Michael Andretti, Bobby Rahal, Al Unser, Jr., and 1997 champion Alex Zanardi race 800-plus horsepower, open-wheel cars at speeds of more than 230 per hour on some circuits. CART also owns and sanctions the PPG Dayton Indy Lights Championship as well as the KOOL Toyota Atlantic Championship. Championship Auto Racing Teams, Inc. Consolidated Statement of Operations For the Three and Six Months Ended June 30, 1998 and 1997 (Unaudited) (In Thousands, Except Earnings Per Share) QTR ended QTR ended YTD YTD June 30, June 30, June 30, June 30, 1998 1997 1998 1997 Revenues: Sanction Fees $10,251 $12,546 $15,243 $13,953 Sponsorship Revenue 4,603 2,342 7,763 4,319 TV Revenue 1,911 2,276 2,458 2,627 Engine Leases, Rebuilds and Wheel Sales 755 -- 954 -- Other 2,514 1,540 3,647 3,168 Total Revenues 20,034 18,704 30,065 24,067 Expenses Race and franchise fund distributions 5,486 13,919 6,874 15,560 Race Expenses 1,304 2,321 2,135 3,440 Cost of Engine Rebuilds and Wheel Sales 241 -- 304 -- Administrative and indirect expenses 5,966 3,972 9,411 5,650 Depreciation and amortization 188 117 329 220 Minority Interest 17 (15) (37) (217) Total Expenses 13,202 20,314 19,016 21,653 Operating Income 6,832 (1,610) 11,049 (586) Interest income/(expense) 968 140 1,234 192 Income before income taxes7,800 (1,470) 12,283 (394) Income Tax Expense 2,847 (240) 4,465 (52) Net Income $4,953 $(1,230) $7,818 $(342) Earnings per share Basic $0.33 $(0.12) $0.59 $(0.03) Diluted $0.32 $(0.12) $0.59 $(0.03) Weighted Average Shares Outstanding Basic 15,172 10,200 13,191 10,200 Diluted 15,336 10,200 13,291 10,200 Championship Auto Racing Teams, Inc. Consolidated Statement of Operations-Proforma For the Three and Six Months ended June 30, 1998 and 1997 (Unaudited) (In Thousands, Except Earnings Per Share) QTR Ended QTR Ended YTD YTD June 30, June 30, June 30, June 30, 1998 1997 1998 1997 Revenues: Sanction Fees $10,251 $12,546 $15,243 $13,963 Sponsorship Revenue 4,603 2,876 8,189 5,575 TV Revenue 1,911 2,369 2,458 2,665 Engine Leases, Rebuilds and Wheel Sales 755 978 1,665 1,659 Other 2,514 2,073 3,843 2,747 Total Revenues 20,034 20,842 31,398 26,599 Expenses Race and franchise fund distributions 5,486 6,231 6,888 7,246 Race Expenses 1,304 1,436 2,215 2,222 Cost of Engine Rebuilds and Wheel Sales 241 356 591 556 Administrative and indirect expenses 5,939 4,437 9,868 6,722 Depreciation and amortization 188 214 424 352 Minority Interest 17 64 (37) (123) Total Expenses 13,175 12,738 19,949 16,975 Operating Income 6,859 8,104 11,449 9,624 Interest income/(expense) 968 128 1,235 148 Income before income taxes7,827 8,232 12,684 9,772 Income Tax Expense 2,847 3,130 4,600 3,749 Net Income $4,980 $5,102 $8,084 $6,023 Earnings per share Basic $0.33 $0.48 $0.59 $0.57 Diluted $0.32 $0.48 $0.59 $0.57 Weighted Average Shares Outstanding Basic 15,172 10,638 13,629 10,638 Diluted 15,336 10,638 13,728 10,638 Championship Auto Racing Teams, Inc. Consolidated Balance Sheets As of June 30, 1998 and December 31, 1997 (In Thousands) June 30, December 31, 1998 1997 Assets Current Assets Cash and Cash Equivalents $39,931 $1,164 Short Term Investments 32,066 -- Accounts Receivable 12,367 3,156 Current Portion of Notes Receivable 945 -- Prepaid Expenses 667 751 Inventory 110 -- Current Deferred Tax Asset 376 4,683 Total Current Assets 86,362 9,754 Notes Receivable 3,432 49 Property and Equipment-Net 5,191 2,236 Trademark-Net -- -- Noncurrent Deferred Tax -- -- Other Assets 5,598 309 Total Assets $100,583 $12,348 Liabilities and Stockholders' Equity Current Liabilities Accounts Payable $1,890 $1,889 Accrued Liabilities Race Expenses and Point Awards1,653 9,500 Taxes 593 491 Other 1,907 724 Unearned Income 16,022 2,352 Current Portion of Long Term Debt130 130 Total Current Liabilities 22,195 15,086 Long Term Debt 249 314 Deferred Federal Taxes-Noncurrent 54 -- Minority interest (44) (7) Stockholders' Equity/Partners' Capital Capital Stock 151 102 Additional Paid In Capital 89,221 15,975 Retained Earnings (11,304) (19,122) Unrealized Gain/(Loss) on Investments 61 -- Total Stockholders' Equity/Partners' Equity 78,129 (3,045) Total Liabilities and Stockholders' Equity $100,583 $12,348