SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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CHAMPIONSHIP AUTO RACING TEAMS, INC.
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THE FOLLOWING IS THE TEXT OF A PRESS RELEASE ISSUED BY CHAMPIONSHIP AUTO
RACING TEAMS, INC. ON OCTOBER 30, 2003:
CART logo
CHAMPIONSHIP AUTO RACING TEAMS
Contact: Thomas L. Carter, Chief Financial Officer, (317) 715-4195
CHAMPIONSHIP AUTO RACING TEAMS REPORTS THIRD QUARTER 2003 RESULTS
INDIANAPOLIS - October 30, 2003 - Championship Auto Racing Teams, Inc. (the
"Company") (OTCBB: CPNT.OB) announced today financial results for the third
quarter ended September 30, 2003.
The number of events held in a quarter, the type of event, whether the race pays
a sanction fee or is self promoted and whether the event was broadcast on
network or cable television affects the comparability of earnings information
from quarter to quarter. CART, Inc., a wholly owned subsidiary of the Company,
conducted eight events in both the third quarter of 2003 and 2002. Toyota
Atlantics held seven events in the third quarter of 2003 compared to six events
in the third quarter of 2002. For the nine months ended September 30, 2003,
CART, Inc. conducted sixteen events compared to fifteen events in the nine
months ended September 30, 2002. Toyota Atlantics conducted twelve events in the
nine months ended September 30, 2003 and 2002.
For the three months ended September 30, 2003, total revenues were $18.2
million, compared to $18.5 million in the same period in the prior year. Total
expenses rose to $53.1 million compared to $32.2 million in the same period in
the prior year.
Net loss for the 2003 third quarter was $34.4 million, or $2.34 per fully
diluted share, compared to a net loss of $8.3 million, or $0.56 per fully
diluted share, in the same period in the prior year.
For the nine months ended September 30, 2003, total revenues were $38.7 million,
compared to $43.4 million in the same period in the prior year. Total expenses
for the nine months ended September 30, 2003, were $117.4 million, compared to
$65.9 million in the same period in the prior year. Net loss for the nine months
ended September 30, 2003, was $77.9 million, or $5.29 per fully diluted share,
compared to a net loss of $13.5 million, or $0.85 per fully diluted share, in
the same period in the prior year.
Our cash balance on September 30, 2003, was $2.1 million, a net decrease of $4.7
million from December 31, 2002. Our short-term investment balance on September
30, 2003, was $17.6 million, a decrease of $61.9 million from December 31, 2002.
As announced previously, in light of the significant near term financial
challenges facing the Company, we retained the investment banking firm of Bear
Stearns & Co. Inc. to assist us in exploring financing and other strategic
alternatives that may be available to us. On August 18, 2003, the Company
announced it had received a proposal from Open Wheel Racing Series, LLC ("Open
Wheel") and was engaged in negotiations regarding a possible transaction with
Open Wheel. Subsequently, on September 10, 2003, the Company and Open Wheel
announced that they had signed a definitive merger agreement providing for Open
Wheel to
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acquire the Company for cash equivalent to $0.56 per share, based on
the number of shares of Company common stock then outstanding (which we will not
take any action to increase while the proposed transaction is pending). The
merger is subject to approval of our stockholders, and satisfaction or waiver of
other conditions. If the merger is adopted by our stockholders, we currently
expect to complete the proposed transaction with Open Wheel late in the fourth
quarter of 2003, as quickly as possible after the special meeting of the
Company's stockholders and after all of the conditions to the merger are
satisfied or waived. We intend to manage our cash on hand such that we will
continue our operations until such time as we hold a special meeting of the
stockholders to consider adoption of the merger agreement. We anticipate that we
will defer certain of our accounts payable longer than we have in the past.
Unanticipated events, delays in collecting our accounts receivable, or other
factors could result in an inability to fund all of our obligations with cash
reserves. For a more complete description of the proposed merger please see the
preliminary proxy statement described below.
If the proposed merger with Open Wheel is not completed for any reason, and if
no strategic transaction that is an alternative to the merger is available to
us at that time, it is expected that we will be required immediately to cease
our operations, wind up our affairs and seek to liquidate our remaining assets
because our cash resources and other sources of liquidity would be
substantially depleted by that time. In that event, we expect that CART, Inc.
and our other subsidiaries would discontinue racing and other operations and
commence liquidation. Although the definitive merger agreement permits our
board of directors to consider proposals for a competing transaction and
accept a superior proposal, no such competing proposal is currently being
considered by us as an alternative to the proposed transaction with Open Wheel
and no superior proposal is available.
ABOUT CHAMPIONSHIP AUTO RACING TEAMS, INC.
Championship Auto Racing Teams, Inc. (OTCBB: CPNT.OB) owns, operates and markets
the 2003 Bridgestone Presents The Champ Car World Series Powered by Ford.
Veteran racing teams such as Newman/Haas Racing, Player's/Forsythe Racing, Team
Rahal, Patrick Racing and Walker Racing will compete with many new teams this
year in pursuit of the Vanderbilt Cup. CART Champ Cars are thoroughbred racing
machines that reach speeds in excess of 200 miles per hour, showcasing the
technical expertise of manufacturers such as Ford Motor Company, Lola Cars,
Reynard Motorsport and Bridgestone/Firestone North American Tire, LLC. The
19-race 2003 Bridgestone Presents The Champ Car World Series Powered by Ford
will be broadcast by television partners CBS and SPEED Channel. The Company also
owns and operates its top development series, the Toyota Atlantic Championship.
Learn more about the Company's open-wheel racing series at
www.champcarworldseries.com.
SAFE HARBOR STATEMENT
Statements made in this news release that state the company's or management's
beliefs or expectations and which are not historical facts or which apply
prospectively are forward-looking statements. Words such as "may," "will,"
"expect," "believe," "anticipate," "forecast," "intend," "could," "would,"
"estimate," or "continue" or the negative variation thereof or comparable
terminology are intended to identify forward looking statements. It is important
to note that the company's actual results could differ materially from those
contained or implied by such forward-looking statements. The risks and
uncertainties to be considered include, but are not limited to, the failure of
the proposed merger with Open Wheel to be completed for any reason, CART, Inc.'s
new co-promoted and self-promoted events; new television and advertising
arrangements; the success of events in new venues; participation by race teams;
the current uncertain
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economic environment and weak advertising market; and availability in capital;
among others. Additional information concerning factors that could cause actual
results to differ materially from those in the forward-looking statements is
contained in the Company's SEC filings made from time to time, including, but
not limited to, the Form 10-K for the year ended December 31, 2002, as amended,
and subsequent 10-Qs. Copies of those filings are available from the Company and
the Company's website at www.champcarworldseries.com and the SEC and the SEC's
website at www.sec.gov.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger with Open Wheel, the Company filed a
preliminary proxy statement with the SEC on October 7, 2003. INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THE PRELIMINARY PROXY STATEMENT, WHICH IS
AVAILABLE NOW, AND THE DEFINITIVE PROXY STATEMENT, WHEN IT BECOMES AVAILABLE,
BECAUSE IT CONTAINS AND WILL CONTAIN IMPORTANT INFORMATION REGARDING THE
PROPOSED MERGER. The preliminary proxy statement is not final and may be
amended. A definitive proxy statement will be sent to stockholders of the
Company seeking their approval of the proposed transaction. Investors and
security holders may obtain a free copy of the preliminary proxy statement and
the definitive proxy statement (when it is available) and other documents filed
by the Company with the SEC at the SEC's website at www.sec.gov. Stockholders
will receive information at an appropriate time on how to obtain documents
relating to the proposed merger for free from the Company.
The Company and its directors, executive officers and certain other members of
its management may be deemed to be soliciting proxies from its stockholders in
connection with the proposed merger. Information concerning the interests of the
Company's participants in the solicitation is set forth in the preliminary proxy
statement. Investors may obtain additional information regarding the interests
of such participants by reading the preliminary proxy statement and the
definitive proxy statement (when it is available).
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Championship Auto Racing Teams, Inc.
Consolidated Statements of Income (Unaudited)
For the Quarter Ended September 30, 2003 and 2002
(In Thousands, Except Earnings Per Share)
Quarter ended Quarter ended
September 30, 2003 September 30, 2002
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REVENUES
Sanction fees $ 7,831 $ 12,555
Sponsorship revenue 2,623 2,934
Television revenue 831 1,967
Race promotion revenue 5,607 --
Engine lease revenue 475 --
Other revenue 803 1,081
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Total revenues 18,170 18,537
EXPENSES
Race distributions 21,067 8,427
Race expenses 2,589 4,110
Race promotion expense 9,874 5,452
Television expense 6,492 4,892
Administrative and indirect expenses 6,115 8,966
Litigation and settlements expense 1,281 --
Merger and strategic charges 1,355
Relocation expense -- --
Asset impairment 3,299
Depreciation and amortization 998 357
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Total expenses 53,070 32,204
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OPERATING LOSS (34,900) (13,667)
Realized gain on sale of investments 248 2
Interest income 248 882
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LOSS BEFORE INCOME TAXES (34,404) (12,783)
Income tax expense (benefit) -- (4,473)
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LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $(34,404) $ (8,310)
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CUMULATIVE EFFECT OF ACCOUNTING CHANGE (NET OF TAX) $ -- $ --
NET LOSS $(34,404) $ (8,310)
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LOSS PER SHARE BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE:
BASIC $ (2.34) $ (0.56)
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DILUTED $ (2.34) $ (0.56)
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NET LOSS PER SHARE:
BASIC $ (2.34) $ (0.56)
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DILUTED $ (2.34) $ (0.56)
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WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 14,718 14,718
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DILUTED 14,718 14,718
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Championship Auto Racing Teams, Inc.
Consolidated Statements of Income
For the Nine Months Ended September 30, 2003 and 2002
(In Thousands, Except Earnings Per Share)
Nine Months Ended Nine Months Ended
September 30, 2003 September 30, 2002
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REVENUES
Sanction fees $ 16,131 $ 27,082
Sponsorship revenue 6,591 8,039
Television revenue 1,734 4,230
Race promotion revenue 10,628 1,417
Engine leases 1,425 --
Other 2,233 2,665
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Total revenues 38,742 43,433
EXPENSES
Race distributions 49,728 15,778
Race expenses 6,530 8,432
Race promotion expense 20,784 8,935
Television expense 13,910 9,604
Administrative and indirect expenses 16,334 20,762
Litigation and settlements expense 2,660 --
Relocation expense 1,305
Merger and strategic Charges 1,355
Asset impairment 3,299
Depreciation and amortization 2,842 1,045
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Total expenses 117,442 65,861
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OPERATING LOSS (78,700) (22,428)
Realized gain on sale of investments 332 2
Interest income 1,121 3,083
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LOSS BEFORE INCOME TAXES (77,247) (19,343)
Income tax expense (benefit) 660 (6,769)
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LOSS BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE $ (77,907) $ (12,574)
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CUMULATIVE EFFECT OF ACCOUNTING CHANGE (NET OF TAX) $ -- $ (956)
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NET LOSS $ (77,907) $ (13,530)
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LOSS PER SHARE BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE:
BASIC $ (5.29) $ (0.85)
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DILUTED $ (5.29) $ (0.85)
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NET LOSS PER SHARE AFTER CUMULATIVE
EFFECT OF ACCOUNTING CHANGE:
BASIC $ (5.29) $ (0.92)
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DILUTED $ (5.29) $ (0.92)
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WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 14,718 14,718
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DILUTED 14,718 14,718
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Championship Auto Racing Teams, Inc.
Consolidated Balance Sheets
As of September 30, 2003 and December 31, 2002
(In Thousands)
(Unaudited)
September 30, 2003 December 31, 2002
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ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,099 $ 6,773
Short-term investments 17,551 79,489
Accounts receivable - net 3,774 4,657
Prepaid expenses and other current assets 6,116 1,474
Income tax refundable 695 10,087
Deferred income taxes -- 1,184
Current portion note receivable 132 --
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TOTAL CURRENT ASSETS 30,367 103,664
NOTE RECEIVABLE 891 --
PROPERTY AND EQUIPMENT - NET 11,847 10,403
GOODWILL -- --
OTHER ASSETS 548 384
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TOTAL ASSETS $ 43,653 $114,451
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Long term debt-current portion 2,523 --
Accounts payable $ 3,768 $ 1,703
Accrued liabilities:
Race expense and point award 3,316 --
Royalties 90 173
Payroll 600 2,455
Taxes 454 743
Other 4,950 4,879
Deferred revenue 3,272 1,423
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TOTAL CURRENT LIABILITIES 18,973 11,376
DEFERRED INCOME TAXES -- 57
STOCKHOLDERS' EQUITY
Capital stock 147 147
Additional paid-in capital 87,765 87,765
Accumulated earnings (deficit) (63,396) 14,511
Accumulated other comprehensive income 164 595
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TOTAL STOCKHOLDERS' EQUITY 24,680 103,018
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 43,653 $114,451
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