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United States

Securities and Exchange Commission

Washington, D.C. 20549



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Form 10-K



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



For the
fiscal year ended December 31, 2004



Commission file
number 1-11929



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Dover Motorsports, Inc.

(Exact name
of registrant as specified in its charter)



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|                                               |  |                                        
|---------------------------------------------- |  | ---------------------------------------
|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)



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



|                             |  |                                     
|---------------------------- |  | ------------------------------------
|Title of Class               |  | Name of Exchange on Which Registered
|Common Stock, $.10 Par Value |  | New York Stock Exchange             



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



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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 $58,791,064 as of June 30, 2004 (the last day of our most recently completed second quarter).



As of February 28, 2005, the number of shares of each class of the
registrants common stock outstanding is as follows:



|                       |  |                  
|---------------------- |  | -----------------
|Common Stock -         |  | 17,061,426 shares
|Class A Common Stock - |  | 23,240,185 shares



Documents
Incorporated by Reference



Portions of the
registrants Proxy Statement in connection with the Annual Meeting of Stockholders to be held April 27, 2005 are incorporated by reference into Part III, Items 10 through 14 of this report.



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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 marketer and promoter of motorsports
entertainment in the United States. Its motorsports subsidiaries operate five motorsports tracks (four permanent facilities and one temporary circuit) in four states and promoted 16 major events during 2004 under the auspices of four of the premier
sanctioning bodies in motorsports - the National Association for Stock Car Auto Racing (NASCAR), the Indy Racing League (IRL), the National Hot Rod Association (NHRA) and the Champ Car World Series
(CCWS). 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 in Memphis,
Tennessee. The Company also organizes and promotes the Toyota Grand Prix of Long Beach in California.



In 2004, the Company promoted the following major events:



| |  | 2 NASCAR NEXTEL Cup Series events;
|- |  | ----------------------------------



| |  | 6 NASCAR Busch Series, Grand National Division events;
|- |  | ------------------------------------------------------



| |  | 4 NASCAR Craftsman Truck Series events;
|- |  | ---------------------------------------



| |  | 1 Champ Car World Series event;
|- |  | -------------------------------



| |  | 1 IRL Indy Car Series events; and
|- |  | ---------------------------------



| |  | 2 NHRA national events.
|- |  | -----------------------



The Company generates revenues primarily from the following sources:



| |  | ticket sales;
|- |  | -------------



| |  | rights fees obtained for television and radio broadcasts of the Companys events and ancillary rights fees;
|- |  | -----------------------------------------------------------------------------------------------------------



| |  | sponsorship fees;
|- |  | -----------------



| |  | luxury suite rentals;
|- |  | ---------------------



| |  | hospitality tent rentals and catering;
|- |  | --------------------------------------



| |  | concessions and souvenir sales and vendor commissions for the right to sell concessions and souvenirs at our facilities;
|- |  | ------------------------------------------------------------------------------------------------------------------------



| |  | track rentals and other event-related revenues; and
|- |  | ---------------------------------------------------



| |  | non event-related revenue from its grandstand rental business.
|- |  | --------------------------------------------------------------



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, by contributing 100% 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. The Companys
continuing operations subsequent to the spin-off consist solely of its motorsports activities.





2



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Dover International Speedway



We have promoted NASCAR-sanctioned racing events for 36 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 professional stock car racing circuit, two races are in the NASCAR Busch Series racing circuit and one race is in the Craftsman Truck
Series racing circuit.



Each of the NASCAR 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 eight speedways in the country that presents two NASCAR NEXTEL Cup
Series events and two NASCAR Busch Series events each year. Additionally, the Company is one of only nine 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. Our September event is the second of ten races in the Race for the NEXTEL Cup which determines the NASCAR NEXTEL
Cup Series champion for the racing season.



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. During 2004, Dover International Speedway completed the construction of its DuPont
Monster Bridge which debuted at the June 2004 NASCAR event weekend. The climate controlled DuPont Monster Bridge spans across the width of the superspeedway at a height of 29 feet and houses 50-luxury seats, refreshment bar and other amenities. The
bridge is the only one of its kind in the motorsports industry and has a federal patent application pending.



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 approximately 30 miles
from downtown Nashville 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 2004 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 30 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 Toyota Grand Prix of Long Beach is a CCWS-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.



On March 25, 2004, Grand Prix reached an agreement with CCWS (f/k/a Open Wheel Racing Series, LLC), the successor to Championship Auto Racing Teams, Inc.
(CART), to transfer to CCWS certain assets and rights that Grand Prix had relative to the organization and promotion of the Grand Prix of Denver. Grand Prix had a multi-year agreement with the City of Denver pursuant to which it was
entitled to stage an annual auto racing event in and around the PepsiCenter in Denver. Grand Prix assigned to CCWS its rights in this agreement and the City consented to the assignment on July 27, 2004.



3



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Gateway International Raceway



Gateway International Raceway (Gateway), acquired in the Grand Prix acquisition, promoted three major events in
2004. These events were sanctioned by NASCAR and NHRA. The facility also hosts a number of regional and national touring events, as well as weekly events on its drag strip and road course.



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 just across the Mississippi River in Madison, Illinois,
within view of 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 2004. These events were sanctioned by NASCAR and NHRA. The facility also hosts a number of regional and national touring events, as well as weekly events on its drag strip and
dirt track.



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 approximately 10 miles northeast of
downtown 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 April through October. As a result, DVDs business is highly seasonal.



Employees



As of
December 31, 2004, DVD had approximately 161 full-time employees and 21 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.



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.



4



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Item 2. Properties



Dover International Speedway



Dover International Speedway is located in Dover, Delaware, on approximately 757 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.



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.



Gateway International Raceway



Gateway
International Raceway is located on approximately 350 acres of land in Madison, Illinois, five miles from the Gateway Arch in St. Louis. The Company owns approximately 130 acres and has three long-term leases with purchase options (expiring in 2011,
2025 and 2070) for approximately 200 additional 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. 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 $18.5 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, 2004, all available assets of the Company and its wholly owned subsidiaries were encumbered by a first priority perfected security
interest and lien in favor of Mercantile-Safe Deposit and Trust Company as security for the repayment of principal outstanding under the Companys revolving credit facility.



5



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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.



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. The Companys Class A common stock is not publicly traded but is freely convertible on a one-for-one basis into DVD common stock at any time at the option of the holder thereof. As of
February 28, 2005, there were 17,061,426 shares of common stock and 23,240,185 shares of Class A common stock outstanding. There were 1,246 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, 2004 and 2003 are detailed in the following table:



|                   |  |      |      |     |   |                    |  |   |     
|------------------ |  | ---- | ---- | --- | - | ------------------ |  | - | ----
|Quarter Ended:     |  | High |      | Low |   | Dividends Declared
|December 31, 2004  |  | $    | 6.10 |     | $ | 4.16               |  | $ | 0.01
|September 30, 2004 |  |      | 4.76 |     |   | 3.83               |  |   | 0.01
|June 30, 2004      |  |      | 5.53 |     |   | 3.84               |  |   | 0.01
|March 31, 2004     |  |      | 4.23 |     |   | 3.51               |  |   | 0.01
|                   |  |      |     
|December 31, 2003  |  | $    | 4.35 |     | $ | 3.50               |  | $ | 0.01
|September 30, 2003 |  |      | 4.74 |     |   | 3.75               |  |   | 0.01
|June 30, 2003      |  |      | 4.11 |     |   | 3.07               |  |   | 0.01
|March 31, 2003     |  |      | 5.08 |     |   | 3.18               |  |   | 0.01



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



The Company has a 1996 stock option plan (the 1996 Plan) which provided for the grant of stock options to its officers and key employees. The
Companys Board of Directors has frozen the 1996 Plan and no additional option grants may be made under the 1996 Plan. The Company has a 2004 stock incentive plan (the 2004 Plan) which provides for the grant of up to 1,500,000
shares of stock to our officers and key employees through stock options and/or awards valued in whole or in part by reference to our common stock, such as restricted stock awards. Refer to NOTE 10  Stockholders Equity of the consolidated
financial statements included elsewhere in this Annual Report on Form 10-K for further discussion.



6



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Securities authorized for issuance under equity compensation plans at December 31, 2004 are as follows:



|                                                           |  |                                                                                         |  |                                                                             |      |                                                                                                                                         |          
|---------------------------------------------------------- |  | --------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------- | ---- | --------------------------------------------------------------------------------------------------------------------------------------- | ---------
|Plan Category                                              |  | Number of securities to beissued upon exercise ofoutstandingoptions, warrantsand
rights |  | Weighted-average exercise price of outstanding options, warrants and
rights |      | Number of securities remaining available forfuture issuance under equity compensationplans
(excludingsecurities reflected incolumn (a))
|                                                           |  | (a)                                                                                     |  | (b)                                                                         |      | (c)                                                                                                                                    
|Equity compensation plans approved by security holders     |  | 1,179,801                                                                               |  | $                                                                           | 5.70 |                                                                                                                                         | 1,391,000
|                                                           |  |                                                                                         | 
|Equity compensation plans not approved by security holders |  |                                                                                        |  |                                                                             |     |                                                                                                                                         |         
|                                                           |  |                                                                                         |  |                                                                             |      |                                                                                                                                         |          
|Total                                                      |  | 1,179,801                                                                               |  | $                                                                           | 5.70 |                                                                                                                                         | 1,391,000
|                                                           |  |                                                                                         |  |                                                                             |      |                                                                                                                                         |          



On July 28, 2004, the
Companys Board of Directors authorized the repurchase of up to 2,000,000 shares of the Companys outstanding common stock. The purchases may be made in the open market or in privately negotiated transactions as conditions warrant. The
repurchase authorization does not obligate the Company to acquire any specific number of shares and may be suspended at any time. As of December 31, 2004, there have been no repurchases of outstanding common stock pursuant to the authorization.



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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. See NOTE 2 
Discontinued Operation of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.



Five Year Selected Financial Data



|                                                                                                                            |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ------------------------------ | - | ------- | ------------------------ |  | - | ------- | - |  | ---- | -------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                                                                            |  | Years Ended December 31, |         |   | Six Months Ended Dec. 31, 2000 |   |         | Year Ended June 30, 2000 | 
|                                                                                                                            |  | 2004                     |         |   | 2003                           |   |         | 2002                     |  |   | 2001    |   |  |     
|Consolidated Statement of Earnings Data(in thousands, except per share data):                                               |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|Revenues                                                                                                                    |  | $                        | 93,617  |   |                                | $ | 93,626  |                          |  | $ | 93,731  |   |  | $    | 86,551   |   |  | $ | 39,045  |   |  | $ | 77,311  |  
|Expenses:                                                                                                                   |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|Operating and marketing                                                                                                     |  |                          | 59,392  |   |                                |   | 65,824  |                          |  |   | 61,062  |   |  |      | 50,882   |   |  |   | 21,573  |   |  |   | 41,984  |  
|Impairment charges (b)                                                                                                      |  |                          |        |   |                                |   | 21,331  |                          |  |   |        |   |  |      |         |   |  |   |        |   |  |   |        |  
|General and administrative                                                                                                  |  |                          | 15,414  |   |                                |   | 15,151  |                          |  |   | 16,113  |   |  |      | 11,408   |   |  |   | 4,661   |   |  |   | 8,578   |  
|Depreciation and amortization                                                                                               |  |                          | 9,635   |   |                                |   | 10,594  |                          |  |   | 9,786   |   |  |      | 10,023   |   |  |   | 4,001   |   |  |   | 6,671   |  
|                                                                                                                            |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|                                                                                                                            |  |                          | 84,441  |   |                                |   | 112,900 |                          |  |   | 86,961  |   |  |      | 72,313   |   |  |   | 30,235  |   |  |   | 57,233  |  
|                                                                                                                            |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|Operating earnings (loss)                                                                                                   |  |                          | 9,176   |   |                                |   | (19,274 | )                        |  |   | 6,770   |   |  |      | 14,238   |   |  |   | 8,810   |   |  |   | 20,078  |  
|Interest expense, net                                                                                                       |  |                          | 3,427   |   |                                |   | 5,089   |                          |  |   | 4,507   |   |  |      | 1,614    |   |  |   | 9       |   |  |   | 924     |  
|                                                                                                                            |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|Earnings (loss) from continuing operations before income tax provision (benefit) and cumulative effect of accounting change |  |                          | 5,749   |   |                                |   | (24,363 | )                        |  |   | 2,263   |   |  |      | 12,624   |   |  |   | 8,801   |   |  |   | 19,154  |  
|Income tax provision (benefit)                                                                                              |  |                          | 3,309   |   |                                |   | (2,225  | )                        |  |   | 852     |   |  |      | 5,753    |   |  |   | 3,945   |   |  |   | 8,181   |  
|                                                                                                                            |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|Earnings (loss) from continuing operations before cumulative effect of accounting change                                    |  |                          | 2,440   |   |                                |   | (22,138 | )                        |  |   | 1,411   |   |  |      | 6,871    |   |  |   | 4,856   |   |  |   | 10,973  |  
|Cumulative effect of accounting change (a)                                                                                  |  |                          |        |   |                                |   |        |                          |  |   | (28,606 | ) |  |      |         |   |  |   |        |   |  |   |        |  
|                                                                                                                            |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|Earnings (loss) from continuing operations                                                                                  |  | $                        | 2,440   |   |                                | $ | (22,138 | )                        |  | $ | (27,195 | ) |  | $    | 6,871    |   |  | $ | 4,856   |   |  | $ | 10,973  |  
|                                                                                                                            |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|Earnings (loss) per common share  basic:                                                                                   |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|Continuing operations before accounting change                                                                              |  | $                        | 0.06    |   |                                | $ | (0.56   | )                        |  | $ | 0.04    |   |  | $    | 0.18     |   |  | $ | 0.13    |   |  | $ | 0.30    |  
|Accounting change                                                                                                           |  |                          |        |   |                                |   |        |                          |  |   | (0.74   | ) |  |      |         |   |  |   |        |   |  |   |        |  
|                                                                                                                            |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|Continuing operations                                                                                                       |  | $                        | 0.06    |   |                                | $ | (0.56   | )                        |  | $ | (0.70   | ) |  | $    | 0.18     |   |  | $ | 0.13    |   |  | $ | 0.30    |  
|                                                                                                                            |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|Earnings (loss) per common share  diluted:                                                                                 |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|Continuing operations before accounting change                                                                              |  | $                        | 0.06    |   |                                | $ | (0.56   | )                        |  | $ | 0.04    |   |  | $    | 0.18     |   |  | $ | 0.13    |   |  | $ | 0.30    |  
|Accounting change                                                                                                           |  |                          |        |   |                                |   |        |                          |  |   | (0.73   | ) |  |      |         |   |  |   |        |   |  |   |        |  
|                                                                                                                            |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|Continuing operations                                                                                                       |  | $                        | 0.06    |   |                                | $ | (0.56   | )                        |  | $ | (0.69   | ) |  | $    | 0.18     |   |  | $ | 0.13    |   |  | $ | 0.30    |  
|                                                                                                                            |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|Dividends declared                                                                                                          |  | $                        | 0.04    |   |                                | $ | 0.04    |                          |  | $ | 0.06    |   |  | $    | 0.18     |   |  | $ | 0.09    |   |  | $ | 0.18    |  
|                                                                                                                            |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|                                                                                                                            |  |                         
|                                                                                                                            |  | December 31,             |         |   | June 30, 2000                  |  
|                                                                                                                            |  | 2004                     |         |   | 2003                           |   |         | 2002                     |  |   | 2001    |   |  | 2000 |          |  
|Consolidated Balance Sheet Data (in thousands):                                                                             |  |                          |         |   |                                |   |         |                          |  |   |         |   |  |      |          |   |  |   |         |   |  |   |         |  
|Working capital deficit                                                                                                     |  | $                        | (12,532 | ) |                                | $ | (5,565  | )                        |  | $ | (5,377  | ) |  | $    | (113,968 | ) |  | $ | (44,740 | ) |  | $ | (45,739 | )
|Property and equipment, net                                                                                                 |  |                          | 224,973 |   |                                |   | 229,603 |                          |  |   | 244,965 |   |  |      | 245,143  |   |  |   | 235,189 |   |  |   | 189,245 |  
|Total assets                                                                                                                |  |                          | 246,255 |   |                                |   | 257,485 |                          |  |   | 290,383 |   |  |      | 417,556  |   |  |   | 381,095 |   |  |   | 334,658 |  
|Long-term debt, less current portion                                                                                        |  |                          | 44,684  |   |                                |   | 61,532  |                          |  |   | 70,744  |   |  |      | 19,905   |   |  |   | 79,290  |   |  |   | 35,540  |  
|Total stockholders equity                                                                                                  |  |                          | 138,466 |   |                                |   | 137,372 |                          |  |   | 160,533 |   |  |      | 244,519  |   |  |   | 230,382 |   |  |   | 217,791 |  

---

|(a) | Reflects the adoption of Financial Accounting Standard Board Statement No. 142, which resulted in a non-cash charge in the first quarter of 2002.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | The Company recorded impairment charges of $21,331,000 in the fourth quarter of 2003. Of the total, $13,362,000 related to the impairment of goodwill and $7,969,000 related to the
impairment of long-lived assets other than goodwill.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



8



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Item 7. Managements Discussion And Analysis Of Financial Condition And Results Of Operation



The following discussion is based upon and should be read
in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.



On March 31, 2002, DVD completed the tax-free spin-off of Dover Downs Gaming & Entertainment, Inc., its gaming business. Accordingly, the operations
of this business have been reflected as a discontinued operation and excluded from consolidated revenues and expenses in the consolidated financial statements included elsewhere in this Annual Report on Form 10-K and our discussions herein.



Results of Operations



Year Ended December 31, 2004 vs. Year Ended December 31, 2003



The Company classifies its revenues as admissions, event-related revenue,
broadcasting revenue and other revenue. Admissions includes ticket sales for all Company events. Event-related revenue includes amounts received from sponsorship fees, which includes tickets provided to sponsors; luxury suite
rentals; hospitality tent rentals and catering; concessions and souvenir sales and vendor commissions for the right to sell concessions and souvenirs at our facilities; sales of programs; track rentals and other event-related revenues.
Broadcasting revenue includes rights fees obtained for television and radio broadcasts of events held at the Companys speedways and ancillary rights fees. Other revenue includes revenues from the Companys
grandstand rental business and other miscellaneous revenues.



Admissions revenue was $37,230,000 in 2004 as compared to $38,874,000 in 2003. The decrease resulted from the Companys decision to discontinue the Grand Prix of St. Petersburg event, the Grand Prix of Denver event and the IRL event at
Gateway International Raceway in 2004, which had combined admissions revenue of $2,885,000 in 2003, and a decrease in attendance at the Grand Prix of Long Beach event. These decreases were partially offset by increases in admissions revenue at
thirteen of the sixteen major events promoted by the Company in 2004, primarily from higher attendance.



Event-related revenue was $32,277,000 in 2004 as compared to $34,724,000 in 2003. The decrease resulted from the Companys decision to discontinue
the Grand Prix of St. Petersburg event, the Grand Prix of Denver event and the IRL event at Gateway International Raceway in 2004, which had combined event-related revenue of $4,699,000 in 2003. These decreases were partially offset by increases in
event-related revenue at thirteen of the sixteen major events promoted by the Company in 2004, primarily from corporate sponsorships, hospitality tent rentals and catering and concessions sales.



Broadcasting revenue was $22,229,000 in 2004 as compared to $18,250,000 in
2003. The $3,979,000 increase resulted primarily from an increase in television broadcasting rights related to the Companys June and September NASCAR event weekends at Dover International Speedway.



Other revenue was $1,881,000 in 2004 as compared to $1,778,000 in 2003. The
increase primarily related to additional revenues from the Companys grandstand rental business of $1,057,000. Other revenue for 2003 included $900,000 related to the settlement of a contractual dispute with a vendor.



Revenues pertaining to specific events are deferred until the event is held.
Concession revenue from concession stand sales and sales of souvenirs are recorded at the time of sale. Revenues and related expenses from barter transactions in which the Company receives advertising or other goods or services in exchange for
sponsorships of motorsports events are recorded at fair value in accordance with Emerging Issues Task Force (EITF) Issue No. 99-17, Accounting for Advertising Barter Transactions. Barter transactions accounted for $1,703,000,
$2,154,000 and $1,450,000 of total revenues for the years ended December 31, 2004, 2003 and 2002, respectively.



9



---

Expenses that are not directly related to a specific event are recorded as incurred. Expenses that
specifically relate to an event are deferred until the event is held, at which time they are expensed. Expenses to promote and operate our events are categorized as follows: (1) sanction fees and purses, which include payments made to sanctioning
bodies for prize and point fund monies as well as fees to the sanctioning body; (2) sales, marketing and promotion expenses, which include all costs to advertise and promote our events together with the overhead costs of the sales and marketing
organization; and (3) other operating expenses, which include all direct costs associated with running events, such as hospitality, equipment, supplies, security, traffic control and labor as well as all facility-related costs such as real estate
taxes, utilities and insurance. The distribution of these expenses for the last three years was as follows:



|                                |  |      |            |  |       |   |  |      |             |  |       |   |  |   |            |  |       |  
|------------------------------- |  | ---- | ---------- |  | ----- | - |  | ---- | ----------- |  | ----- | - |  | - | ---------- |  | ----- | -
|                                |  | 2004 |            |  | 2003  |   |  | 2002 |            
|Sanction fees and purses        |  | $    | 27,191,000 |  | 32.2  | % |  | $    | 27,171,000  |  | 29.7  | % |  | $ | 24,938,000 |  | 28.7  | %
|Sales, marketing and promotion  |  |      | 9,932,000  |  | 11.8  | % |  |      | 11,643,000  |  | 12.7  | % |  |   | 11,169,000 |  | 12.8  | %
|Other operating                 |  |      | 22,269,000 |  | 26.4  | % |  |      | 27,010,000  |  | 29.5  | % |  |   | 24,955,000 |  | 28.7  | %
|General and administrative      |  |      | 15,414,000 |  | 18.2  | % |  |      | 15,151,000  |  | 16.5  | % |  |   | 16,113,000 |  | 18.5  | %
|Depreciation and amortization   |  |      | 9,635,000  |  | 11.4  | % |  |      | 10,594,000  |  | 11.6  | % |  |   | 9,786,000  |  | 11.3  | %
|                                |  |      |            |  |       |   |  |      |             |  |       |   |  |   |            |  |       |  
|Total before impairment charges |  |      | 84,441,000 |  | 100.0 | % |  |      | 91,569,000  |  | 100.0 | % |  |   | 86,961,000 |  | 100.0 | %
|                                |  |      |            |  |       |   |  |      |             |  |       |   |  |   |            |  |       |  
|Impairment charges              |  |      |           |  |       |   |  |      | 21,331,000  |  |       |   |  |   |           |  |       |  
|                                |  |      |            |  |       |   |  |      |             |  |       |   |  |   |            |  |       |  
|Total expenses                  |  | $    | 84,441,000 |  |       |   |  | $    | 112,900,000 |  |       |   |  | $ | 86,961,000 |  |       |  
|                                |  |      |            |  |       |   |  |      |             |  |       |   |  |   |            |  |       |  



Operating and
marketing expenses decreased by $6,432,000, primarily as a result of the Companys decision to discontinue the St. Petersburg event, the Grand Prix of Denver event and the IRL event at its Gateway International Raceway facility in 2004, which
had combined expenses of $10,388,000 in 2003. These decreases were partially offset by an increase in sanction fees and purse expenses at all of the Companys NASCAR-sanctioned events promoted in 2004 and an increase in expenses associated with
the additional revenues from the Companys grandstand rental business.



General and administrative expenses increased by $263,000 to $15,414,000 from $15,151,000 in 2003. Higher wages and fringe benefits, and legal, audit and consulting expenses related to the Companys compliance
with the Sarbanes-Oxley Act of 2002 represented the largest increases in 2004. Additionally, general and administrative expenses for 2004 included a $267,000 judgment, which the Company is appealing, relating to a subcontractors claim that
arose during the construction of the Companys Nashville facility in 2000. Partially offsetting these increases was a decrease in expenses of $795,000 from the closure of the St. Petersburg and Denver offices, in April 2004. The year ended
December 31, 2003 also included $355,000 related to the settlement of a legal claim at Gateway International Raceway.



Depreciation and amortization expense decreased by $959,000, primarily due to the reduction in the Companys depreciable asset base resulting from
impairment charges recorded in the fourth quarter of 2003 to write-down the assets used to promote and run the Companys former Grand Prix of Denver and Grand Prix of St. Petersburg events.



Net interest expense decreased by $1,662,000, primarily as a result of the
decrease in the outstanding borrowings on the Companys credit facility in 2004 as compared to 2003 and the receipt in May 2004 of $481,000 of interest from the Internal Revenue Service related to an income tax refund for prior years. Interest
expense in 2004 included $115,000 for interest related to the judgment discussed above.



The Companys effective income tax rates for 2004 and 2003 were 57.6% and 9.1%, respectively. The increase in the effective tax rate from the prior year is principally due to the 2003 rate being affected by the
non-deductibility of the impairment of goodwill and the fact that the Company paid state income taxes to Delaware because of the profitability at Dover International Speedway even though the consolidated entity reported a pre-tax loss. The 2004 and
2003 rates were affected by state income tax expense attributable to valuation allowances established on state net operating losses. The Company expects its 2005 effective income tax rate to be higher than the statutory rate for similar reasons.



The Company reported net earnings of $2,440,000 in 2004 as
compared to a net loss of $22,138,000 in 2003. The net loss in 2003 resulted primarily from the Company recording an after-tax, non-cash charge of $17,787,000 related to the impairment of goodwill and other long-lived assets and from operating
losses associated with the promotion of the Grand Prix of St. Petersburg event, the Grand Prix of Denver event and the IRL event at Gateway International



10



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Raceway. The net earnings in 2004 resulted primarily from the improvement in operations at fourteen of the sixteen major events promoted by the Company, the
Companys decision to discontinue the St. Petersburg event, the Denver event and the Gateway IRL event in 2004, and the aforementioned decreases in depreciation and net interest expenses.



Year Ended December 31, 2003 vs. Year Ended December 31, 2002



For the year ended December 31, 2003, revenues declined by less than 1.0% to
$93,626,000 as compared to 2002. We reported a loss from continuing operations before cumulative effect of accounting change of $22,138,000 in 2003 as compared to earnings from continuing operations before cumulative effect of accounting change of
$1,411,000 in 2002, as follows:



|                                                                                                                            |  |      |             |   |      |   |           |  |   |             |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- | - | --------- |  | - | ----------- | -
|                                                                                                                            |  | 2003 |             |   | 2002 |   | Change    | 
|(Loss) earnings from continuing operations before income tax (benefit) provision and cumulative effect of accounting change |  | $    | (24,363,000 | ) |      | $ | 2,263,000 |  | $ | (26,626,000 | )
|Income tax (benefit) provision                                                                                              |  |      | (2,225,000  | ) |      |   | 852,000   |  |   | (3,077,000  | )
|                                                                                                                            |  |      |             |   |      |   |           |  |   |             |  
|(Loss) earnings from continuing operations before cumulative effect of accounting change                                    |  | $    | (22,138,000 | ) |      | $ | 1,411,000 |  | $ | (23,549,000 | )
|                                                                                                                            |  |      |             |   |      |   |           |  |   |             |  
|(Loss) earnings per common share from continuing operations before cumulative effect of accounting change                   |  | $    | (0.56       | ) |      | $ | 0.04      |  | $ | (0.60       | )
|                                                                                                                            |  |      |             |   |      |   |           |  |   |             |  



The change from 2002
to 2003 resulted primarily for two reasons: (1) non-cash impairment charges; and (2) lower results from our CART events. The components of the change in (loss) earnings from continuing operations before cumulative effect of accounting change and
(loss) earnings per common share from continuing operations before cumulative effect of accounting change are as follows (net of income tax benefits):



|                                                      |  |        |             |   |                         |   |       |  
|----------------------------------------------------- |  | ------ | ----------- | - | ----------------------- | - | ----- | -
|                                                      |  | Change |             |   | Per Common Share Change |  
|Goodwill impairment charge                            |  | $      | (13,362,000 | ) |                         | $ | (0.34 | )
|Long-lived asset impairment charges                   |  |        | (4,425,000  | ) |                         |   | (0.11 | )
|Change in operating results of CART events            |  |        | (2,151,000  | ) |                         |   | (0.05 | )
|Additional depreciation from CART investments         |  |        | (394,000    | ) |                         |   | (0.01 | )
|Amortization and write-off of credit facility fees(1) |  |        | (520,000    | ) |                         |   | (0.02 | )
|Deferred income tax asset valuation allowance         |  |        | (2,667,000  | ) |                         |   | (0.07 | )
|All other                                             |  |        | (30,000     | ) |                         |   |      |  
|                                                      |  |        |             |   |                         |   |       |  
|                                                      |  | $      | (23,549,000 | ) |                         | $ | (0.60 | )
|                                                      |  |        |             |   |                         |   |       |  

---

|(1) | These fees arose primarily from amendments to the Companys former bank facility that
were required due to lower than expected earnings, principally from CART-sanctioned events.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Impairment



In accordance with the provisions of Financial Accounting Standards Board (FASB) Statement No. 142, Goodwill and Other Intangible
Assets, we are required to test our goodwill for impairment at least annually. As a result of our November 2003 annual assessment, it was determined that goodwill associated with our 1998 acquisition of Grand Prix was impaired. Therefore, an
impairment charge of $13,362,000 was recorded in the fourth quarter and full year results to adjust goodwill to its fair value. After recording this charge, the amount of goodwill remaining is $8,521,000, which represents 3.3% of total assets and
6.2% of stockholders equity at December 31, 2003.



The
Companys investment in CART-sanctioned street venues relating to its grand prix events was $11,722,000 as of December 31, 2003. In accordance with the provisions of FASB Statement No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets, long-lived assets other than goodwill are assessed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. To analyze recoverability for assets to be held and used,
the Company projects undiscounted net future cash flows expected to be generated by the asset over the remaining life of such assets. If these projected cash flows are less than the carrying value, an impairment loss would be recognized equal to the
difference between the carrying value and the fair value of the assets. As a result of this assessment, it was concluded that assets related to the St. Petersburg and Denver events were impaired. Therefore, a non-cash charge of $7,176,000 was
recorded in the



11



---

fourth quarter of 2003 to reflect the diminution in value of these assets. The uncertainty concerning the future of CART and CARTs bankruptcy filing on
December 16, 2003 contributed substantially to the loss of value. In addition, the Company also recorded an impairment charge of $793,000 in the fourth quarter of 2003 related to equipment that will no longer be used in the normal course of business
and is being disposed of.



Impact of CART



For the year ended December 31, 2003, revenue was $93,626,000 compared with
$93,731,000 in 2002. The following table displays revenue from CART-sanctioned events and all other Company events for the last two years:



|                 |  |      |            |      |   |            |  |      |   
|---------------- |  | ---- | ---------- | ---- | - | ---------- |  | ---- | --
|                 |  | 2003 |            | 2002 |   | Change     | 
|CART events      |  | $    | 15,354,000 |      | $ | 16,421,000 |  | (6.5 | )%
|All other events |  |      | 78,272,000 |      |   | 77,310,000 |  | 1.2  | % 
|                 |  |      |            |      |   |            |  |      |   
|Total revenues   |  | $    | 93,626,000 |      | $ | 93,731,000 |  |     | % 
|                 |  |      |            |      |   |            |  |      |   



Two of the three CART
events in 2003 were held early in the year prior to the start of the Iraqi war. We believe that the uncertainty caused by this geopolitical turmoil, together with lower consumer spending and confidence from the effects of the slow economy and the
much-publicized worsening financial situation at CART, caused a decline in admissions revenue at the Long Beach event and lower than expected admissions at the inaugural St. Petersburg event. The continuing uncertainty as to the ongoing viability of
CART during 2003 also contributed to a significant decline in revenue at our Denver event in August 2003.



The impact of lower revenue at the two existing CART events together with the substantial operating loss at the inaugural St. Petersburg event decreased
the operating profit of the Company by $5,382,000 from the previous year. Further, the Companys $808,000 increase in depreciation in 2003 was almost exclusively the result of its investments in CART-sanctioned events. The decline in operating
results, plus additional depreciation related to our CART-sanctioned events, represented $4,607,000 of the Companys decrease in earnings in 2003. The Company is not running events in St. Petersburg or Denver in 2004, which had revenue of
$2,947,000 and $3,421,000, respectively, in 2003.



Refer to
NOTE 7  Impairment Charges of the consolidated financial statements included elsewhere in this Form 10-K for further discussion.



All Other Operations



The Companys other events recorded a 1.2% increase in revenues in 2003, which resulted from higher broadcasting fees, partially offset by lower
admissions and other revenue. Due to the significant lead time in the industry for sponsors commitments and fans desire to purchase tickets in advance, the sluggish economy in 2002 and early 2003 negatively affected our 2003 sponsorship
and admissions revenue. Poor weather on or near the dates of one-half of our major events in 2003 also impacted admissions, concessions and merchandise sales.



Operating and marketing expenses increased by 7.8% to $65,824,000 in 2003, but actually increased by less than 1% when excluding $4,316,000 of costs
associated with the 2003 St. Petersburg event which will not occur in 2004.



Sanction fees and purses increased by $2,122,000 in 2003 over 2002 and was the Companys largest cost increase in absolute and relative terms. NASCARs current TV broadcast rights contracts have been
reported to contain approximately 20% annual increases in revenue through 2006. A portion of the purses related to the events broadcast under this contract also contain similar percentage increases and represented $1.3 million of the Companys
year-over-year change in sanction fees and purses.



Sales,
marketing and promotion expenses increased by $1,060,000, primarily due to the 2003 inaugural St. Petersburg event. Other operating expenses increased by $1,580,000 due to the St. Petersburg event, offset by savings at other major events. Other
operating expenses at the St. Petersburg event were $2,579,000. Lower labor, hospitality, taxes and other operating expenses at several other major events produced approximately $1,000,000 of savings compared with the prior year.



12



---

General and administrative expenses in 2003 were 6.0% lower than in the previous year, principally due to
lower wages, utilities, legal claims and other expenses. Wages reflected fewer people than a year earlier and lower commissions. Also, there were no management incentive compensation payments in 2003. A decrease in utilities cost reflected internal
efficiencies and tighter scrutiny of demand and usage. Legal claims in 2003 were generally at a normal level considering the risks and business issues of the Company, whereas the prior years legal costs were above historical levels. Legal
costs were approximately $700,000 lower in 2003 than in 2002. Offsetting administrative savings in 2003 were two areas of expense increases. A full year of overhead costs at Denver and St. Petersburg increased administrative expenses by $200,000 and
fringe benefits, particularly from our medical program, also increased administrative expenses by $200,000 in 2003.



Depreciation and amortization expense increased by $808,000 primarily due to an increase in depreciation related to assets acquired for the inaugural
Grand Prix of Denver event that occurred in September 2002 and the Grand Prix of St. Petersburg event that occurred in February 2003.



Net interest expense increased by $582,000 in 2003 due to higher amortization and write-off of credit facility fees of $936,000, partially offset by less
interest expense due to lower outstanding balances under the Companys bank credit facility. Although overall short-term interest rates declined during the year, the Companys effective cost did not decrease at the same rate, as pricing
under the former bank facility was increased during the year as a result of amendments to the facility. Interest expense related to the SWIDA bonds was essentially the same in 2003 and 2002 at $1,761,000 and $1,818,000, respectively. These bonds
contain a fixed rate of interest and the amount outstanding decreased by 3.4% during the year.



The effective income tax rate was 9.1% in 2003 compared with 37.6% in 2002. The 2003 rate was affected principally by the non-deductibility of the impairment of goodwill and also by the establishment of a valuation
allowance recorded against certain state net operating loss carryforwards. The rate was also affected by other permanent book vs. tax differences and the fact that the Company paid income taxes to the State of Delaware.



Liquidity and Capital Resources



Net cash provided by operating activities was $20,255,000 in 2004 compared
to $15,598,000 in 2003. The increase relates primarily to the Company reporting earnings before income taxes and impairment charges of $5,749,000 in 2004 as compared to a loss of $3,032,000 in 2003 and the increase in income tax refunds received.
Offsetting these increases was the impact of the timing of invoicing to and receipts from customers and the timing of payments to vendors.



Net cash used in investing activities was $5,058,000 in 2004 as compared to $2,584,000 in 2003. Capital expenditures were $4,920,000 in 2004, up from the
$3,117,000 in 2003. The only major project under construction during 2004 was the installation of SAFER barriers at the Companys Dover International Speedway, Nashville Superspeedway, Gateway International Raceway and Memphis Motorsports Park
facilities.



Net cash used in financing activities was
$18,411,000 for the year ended December 31, 2004 compared to $11,151,000 for the year ended December 31, 2003. Net cash used in 2004 primarily related to repayments of borrowings under the Companys revolving credit agreement and long-term
debt. The Company paid cash dividends of $1,605,000 in 2004 as compared to $1,598,000 in 2003.



Effective February 19, 2004, the Company and all of its wholly owned subsidiaries, as co-borrowers, entered into a $70,000,000 revolving credit agreement with a bank group that expires February 19, 2007. Provisions of
the credit facility adjust the commitment to $67,000,000 on November 1, 2004, to $64,000,000 on November 1, 2005 and to $60,000,000 on November 1, 2006. The facility, which replaced the Companys previous revolving credit facility, provides for
seasonal funding needs, capital improvements, letter of credit requirements and other general corporate purposes. Interest is based, at the Companys option, upon LIBOR plus a margin that varies between 210 and 510 basis points depending on the
funded debt to earnings before interest, taxes, depreciation and amortization ratio (the leverage ratio) or the base rate (the greater of the prime rate or the federal funds rate plus 0.5%) plus a margin that varies between 37.5 and
237.5 basis points depending on the leverage ratio.



13



---

The terms of the credit facility, as amended effective February 16, 2005, contain certain covenants
including minimum tangible net worth, fixed charge coverage and maximum funded debt to EBITDA. The credit facility is secured by a first priority perfected security interest and lien on all available assets owned by the Company and its subsidiaries.
The credit facility also provides that a default by the Company or any of its wholly owned subsidiaries under any other loan agreement would constitute a default under this credit facility. At December 31, 2004, the Company was in compliance with
the terms of the facility. Material adverse changes in the Companys results of operations could impact its ability to maintain financial ratios necessary to satisfy these requirements. There was $27,000,000 outstanding under the facility at
December 31, 2004, at a weighted average interest rate of 5.45%. After consideration of stand-by letters of credit outstanding, borrowings of $15,089,000 were available pursuant to the facility at December 31, 2004. Based on operating results to
date and projected future results, the Company is expected to be in compliance with all of the covenants for all measurement periods in 2005.



Cash provided by operating activities, less maintenance of a dividend, is expected to generate between $13,000,000-$14,000,000 in excess cash in 2005,
which we expect to use to reduce indebtedness and for capital expenditures. Based on current business conditions, the Company expects to make capital expenditures of approximately $8,000,000-$9,000,000 during 2005. These expenditures primarily
relate to the installation of SAFER barriers at the Companys fixed facility tracks and the acquisition of additional land adjacent to Dover International Speedway to be used for parking facilities and other fan amenities. During the first
quarter of 2005, the remaining parcels of property adjacent to our Dover facility not already owned by the Company became available for sale. The Company purchased these parcels for approximately $5,700,000. Additionally, the Company expects to
contribute approximately $400,000 to its pension plans in 2005. We expect continued cash flows from operating activities and funds available from our credit agreement to also provide for long-term liquidity.



On January 26, 2005, the Companys Board of Directors declared a
quarterly cash dividend on both classes of common stock of $0.01 per share. The dividend was paid on March 10, 2005 to shareholders of record at the close of business on February 10, 2005.



Contractual Obligations



At December 31, 2004, the Company had the following contractual obligations and other commercial commitments:



|                                   |  |       |            |                        |             |           |             |   |            |  |   |           |  |   |           
|---------------------------------- |  | ----- | ---------- | ---------------------- | ----------- | --------- | ----------- | - | ---------- |  | - | --------- |  | - | ----------
|                                   |  | Total |            | Payments Due by Period
|                                   |  |       | 2005       |                        | 2006  2007 |           | 2008  2009 |   | Thereafter
|Notes payable to banks             |  | $     | 27,000,000 |                        | $           |          |             | $ | 27,000,000 |  | $ |          |  | $ |          
|SWIDA bonds                        |  |       | 18,489,000 |                        |             | 805,000   |             |   | 1,830,000  |  |   | 2,170,000 |  |   | 13,684,000
|                                   |  |       |            |                        |             |           |             |   |            |  |   |           |  |   |           
|Total debt                         |  |       | 45,489,000 |                        |             | 805,000   |             |   | 28,830,000 |  |   | 2,170,000 |  |   | 13,684,000
|Operating leases                   |  |       | 5,538,000  |                        |             | 513,000   |             |   | 590,000    |  |   | 365,000   |  |   | 4,070,000 
|                                   |  |       |            |                        |             |           |             |   |            |  |   |           |  |   |           
|Total contractual cash obligations |  | $     | 51,027,000 |                        | $           | 1,318,000 |             | $ | 29,420,000 |  | $ | 2,535,000 |  | $ | 17,754,000
|                                   |  |       |            |                        |             |           |             |   |            |  |   |           |  |   |           



We have a $67,000,000
revolving line of credit agreement. At December 31, 2004, $27,000,000 was outstanding under the facility. After consideration of stand-by letters of credit outstanding, borrowings of $15,089,000 were available pursuant to the facility at December
31, 2004.



In September 1999, the Sports Authority of the
County of Wilson (Tennessee) issued $25,900,000 in Variable Rate Tax Exempt Infrastructure Revenue Bonds, Series 1999, to acquire, construct and develop certain public infrastructure improvements which benefit the operation of Nashville
Superspeedway, of which $24,500,000 was outstanding at December 31, 2004. Principal payments range from $500,000 in September 2005 to $1,600,000 in 2029 and are payable solely from sales taxes and incremental property taxes generated from the
facility. These bonds are direct obligations of the Sports Authority and are therefore not recorded on the accompanying consolidated balance sheet. If the sales taxes and incremental property taxes are insufficient for the payment of principal and
interest on the bonds, the Company would become responsible for the difference. In the event the Company was unable to make the payments, they would be made pursuant to a $24,911,000 irrevocable direct-pay letter of credit issued by the existing
bank group.



14



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The Company believes that the sales taxes and incremental property taxes generated from the facility will
continue to satisfy the necessary debt service requirements of the bonds. As of December 31, 2004 and 2003, $936,000 and $1,135,000, respectively, was available in the sales and incremental property tax fund maintained by the Sports Authority to pay
the remaining principal and interest due under the bonds. During the year ended December 31, 2004, $1,558,000 was paid by the Company into the sales and incremental property tax fund and $1,757,000 was deducted from the fund for principal and
interest payments. If the debt service is not satisfied from the sales and incremental property taxes generated from the facility, the bonds would become a liability of the Company. If we fail to maintain the letter of credit that secures the bonds
or we allow an uncured event of default to exist under our reimbursement agreement relative to the letter of credit, the bonds would be immediately redeemable.



In 1996, the Companys wholly owned subsidiary, Grand Prix, entered into an agreement (the SWIDA loan) with SWIDA to receive the
proceeds from the Taxable Sports Facility Revenue Bonds, Series 1996 (Gateway International Motorsports Corporation Project), a Municipal Bond Offering, in the aggregate principal amount of $21,500,000, of which $18,489,000 was
outstanding at December 31, 2004. SWIDA loaned all of the proceeds from the Municipal Bond Offering to Grand Prix for the purpose of the redevelopment, construction and expansion of Gateway, and the proceeds of the SWIDA loan were irrevocably
committed to complete construction of Gateway, to fund interest, to create a debt service reserve fund and to pay for the cost of issuance of the bonds. The repayment terms and debt service reserve requirements of the bonds issued in the Municipal
Bond Offering correspond to the terms of the SWIDA loan.



The
Company has established certain restricted cash funds to meet debt service as required by the SWIDA loan, which are held by the trustee (BNY Trust Company of Missouri). At December 31, 2004, $3,571,000 of the Companys cash balance was
restricted by the SWIDA loan and is appropriately classified as a non-current asset in the accompanying consolidated balance sheet. The SWIDA loan is secured by a first mortgage lien on all the real property owned and a security interest in all
property leased by Gateway. Also, the SWIDA loan is unconditionally guaranteed by Grand Prix. The SWIDA loan bears interest at varying rates ranging from 8.75% to 9.25% with an effective rate of approximately 8.91%. Interest expense related to the
SWIDA loan was $1,696,000, $1,761,000 and $1,818,000 for the years ended December 31, 2004, 2003 and 2002, respectively. The structure of the bonds permits amortization from February 1997 through February 2017 with debt service beginning in 2000. A
stand-by letter of credit for $2,502,000, which is secured by a trust deed on the Companys facilities in Memphis, Tennessee, also was obtained to satisfy debt service reserve fund obligations. In addition, a portion of the property taxes to be
paid by Gateway (if any) to the City of Madison Tax Incremental Fund have been pledged to the annual retirement of debt and payment of interest.



Related Party Transactions



See NOTE 11  Related Party Transactions of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a full
description of related party transactions.



Critical Accounting Policies



The accounting policies described below are those the
Company considers critical in preparing its consolidated financial statements. These policies include significant estimates made by management using information available at the time the estimates are made. However, as described below, these
estimates could change materially if different information or assumptions were used.



Goodwill



The Company
has made acquisitions in the past that included goodwill. Goodwill is not amortized but is subject to an annual (or under certain circumstances more frequent) impairment test based on its estimated fair value. Estimated fair value is typically less
than values based on undiscounted operating earnings because fair value estimates include a discount factor in valuing future cash flows.



The Company completed its 2004 annual assessment of goodwill in November 2004 and determined that there was no impairment loss related to its goodwill as
of that date. There are many assumptions and estimates underlying the assessment of goodwill. Another estimate using different, but still reasonable, assumptions could produce a



15



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significantly different result that could require the Company to record an impairment charge related to its goodwill. At December 31, 2004, the remaining
balance of goodwill was $8,521,000. Since the majority of our goodwill is associated with Grand Prix, which promotes a CCWS-sanctioned event, any material adverse events impacting CCWS could cause additional impairment losses to be recorded in the
future.



Income Taxes



Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating
losses. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in
tax rates is recognized in the period that includes the enactment date. The Company records a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. Currently, the Company maintains a
valuation allowance, which increased by $726,000 in 2004, on deferred tax assets related to certain state net operating loss carry-forwards. The Company has considered ongoing prudent and feasible tax planning strategies in assessing the need for a
valuation allowance. In the event the Company were to determine that it would be able to realize all or a portion of these deferred tax assets, an adjustment to the deferred tax asset would increase earnings in the period such determination was
made. Likewise, should the Company determine that it would not be able to realize all or a portion of its remaining deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to earnings in the period such
determination was made.



Accrued Pension Cost



The benefits provided by the Companys defined benefit pension plans
are based on years of service and employees remuneration over their employment with the Company. The Company establishes accrued pension costs in accordance with the provisions of FASB Statement No. 87, Employers Accounting for
Pensions. Accrued pension costs are developed using actuarial principles and assumptions which consider a number of factors, including estimates for the discount rate, assumed rate of compensation increase and expected long-term rate of return
on assets. Changes in these estimates would impact the amounts that the Company records in its consolidated financial statements.



Accounts Receivable Reserves



The Company provides for losses on accounts receivable based upon their current status, historical experience and managements evaluation of existing
economic conditions. Significant changes in customer financial condition or general economic conditions may have a significant effect on the Companys allowance for doubtful accounts.



Property and Equipment



Property and equipment are recorded at cost. Depreciation is provided for financial reporting purposes using the
straight-line method over estimated useful lives ranging from 5 to 10 years for furniture, fixtures and equipment and up to 40 years for facilities. These estimates require assumptions that are believed to be reasonable. Long-lived assets are
evaluated for impairment when an event occurs that indicates an impairment may exist. See NOTE 7  Impairment Charges of the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further discussion.



Recent Accounting Pronouncements



See NOTE 3  Summary of Significant Accounting Policies of the
consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a full description of recent accounting pronouncements including the respective expected dates of adoption and effects on results of operations and financial
condition.



16



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Factors That May Affect Operating Results; Forward-Looking Statements



In addition to historical information, this Annual Report on Form 10-K
includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, relating to our financial condition, profitability, liquidity, resources, business outlook, proposed acquisitions, market
forces, corporate strategies, consumer preferences, contractual commitments, legal matters, capital requirements and other matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. To comply
with the terms of the safe harbor, we note that a variety of factors could cause our actual results and experience to differ substantially from the anticipated results or other expectations expressed in our forward-looking statements. When words and
expressions such as: believes, expects, anticipates, estimates, plans, intends, objectives, goals, aims, projects,
forecasts, possible, seeks, may, could, should, might, likely, enable or similar words or expressions are used in this document, as well as
statements containing phrases such as in our view, there can be no assurance, although no assurance can be given or there is no way to anticipate with certainty, forward-looking statements are being
made.



Various risks and uncertainties may affect the
operation, performance, development and results of our business and could cause future outcomes to differ materially from those set forth in our forward-looking statements, including the following factors:



| |  | stability and viability of sanctioning bodies;
|- |  | ----------------------------------------------



| |  | success of or changes in our growth strategies;
|- |  | -----------------------------------------------



| |  | development and potential acquisition of new facilities;
|- |  | --------------------------------------------------------



| |  | anticipated trends in the motorsports industry;
|- |  | -----------------------------------------------



| |  | patron demographics;
|- |  | --------------------



| |  | obtaining favorable contracts relative to sponsorships, event sanctions and broadcast rights;
|- |  | ---------------------------------------------------------------------------------------------



| |  | relationships with sanctioning bodies, sponsors, broadcast media, drivers and teams;
|- |  | ------------------------------------------------------------------------------------



| |  | general market and economic conditions, including consumer and corporate spending sentiment;
|- |  | --------------------------------------------------------------------------------------------



| |  | ability to finance future business requirements;
|- |  | ------------------------------------------------



| |  | the availability of adequate levels of insurance;
|- |  | -------------------------------------------------



| |  | ability to successfully integrate acquired companies and businesses;
|- |  | --------------------------------------------------------------------



| |  | management retention and development;
|- |  | -------------------------------------



| |  | changes in Federal, state and local laws and regulations, including environmental regulations;
|- |  | ----------------------------------------------------------------------------------------------



| |  | the effect of weather conditions on outdoor event attendance;
|- |  | -------------------------------------------------------------



| |  | military or other government actions;
|- |  | -------------------------------------



| |  | availability of air travel; and
|- |  | -------------------------------



| |  | national or local catastrophic events.
|- |  | --------------------------------------



17



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We undertake no obligation to publicly update or revise any forward-looking statements as a result of
future developments, events or conditions. New risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any
factor, or combination of factors, may cause actual results to differ significantly from those forecast in any forward-looking statements. Given these risks and uncertainties, stockholders should not overly rely or attach undue weight to our
forward-looking statements as an indication of our actual future results.



Our Relationships With and the Success of Various Sanctioning Bodies Is Vital To Our Success In Motorsports



Our continued success in motorsports is dependent upon the success of various governing bodies of motorsports that sanction national racing events and our
ability to secure favorable contracts with and maintain a good working relationship with these sanctioning bodies, including NASCAR, IRL, NHRA and CCWS. Sanctioning bodies regularly issue and award sanctioned events and their issuance depends, in
large part, on maintaining good working relationships with the sanctioning bodies. Many events are sanctioned on an annual basis with no obligation to renew, including our agreements with NASCAR. By awarding a sanctioned event or a series of
sanctioned events, the sanctioning bodies do not warrant, nor are they responsible for, the financial success of any sanctioned event. Our inability to obtain additional sanctioned events in the future and to maintain sanction agreements at current
levels would likely result in lower than anticipated revenues from admissions, broadcast rights, sponsorships, hospitality, concessions and merchandise, which could have a material adverse effect on our business, financial condition and results of
operations. A substantial portion of our revenues is derived from the broadcast revenues received through the arrangements that NASCAR has made with various broadcast media, many of which expire in 2006. The success of a particular sanctioning body
in attracting drivers and teams, signing series sponsors and negotiating favorable television and/or radio broadcast rights is largely outside of our control. As our success depends on the success of each event or series that we are promoting, a
material adverse effect on a sanctioning body, such as the loss or defection of top drivers, the loss of significant series sponsors, or the failure to obtain favorable broadcast coverage or to properly advertise the event or series could result in
a reduction in our revenues from admissions, sponsorships, hospitality, concessions and merchandise, which could have a material adverse effect on our business, financial condition and results of operations.



We Rely On Sponsorship Contracts To Generate Revenues



We receive a substantial portion of our annual revenues from sponsorship
agreements, including the sponsorship of our various events and our permanent venues, such as title, official product and promotional partner sponsorships, billboards, signage and skyboxes. Loss of our title
sponsors or other major sponsorship agreements or failure to secure such sponsorship agreements in the future could have a material adverse effect on our business, financial condition and results of operations.



Our Motorsports Events Face Intense Competition For Attendance, Television Viewership And
Sponsorship



We compete with other auto speedways for the
patronage of motor racing spectators as well as for promotions and sponsorships. Moreover, 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, distinguish the motorsports facilities. In addition, all of our events compete with other sports and recreational events scheduled on
the same dates. As a result, our revenues and operations are affected not only by our ability to compete in the motorsports promotion market, but also by the availability of alternative spectator sports events, forms of entertainment and changing
consumer preferences.



Our Long Beach Event Depends On City Permits And Good
Relationships With City Officials



In order to conduct the
Grand Prix of Long Beach, we must obtain an annual permit from the City of Long Beach to hold the race on city streets. Although Grand Prix has operated a racing event on the streets of Long Beach for thirty years, there can be no assurance that
this event will continue to be held or be successful. Our ability to conduct the Grand Prix of Long Beach requires that we maintain excellent relationships with the host city and its officials.



18



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Grand Prixs Ability To Meet Payment Obligations Under A Loan Agreement With An Illinois Government Agency
Depends On Revenues From Gateway



In order to finance the
redevelopment of Gateway International Raceway, Grand Prix entered into a loan agreement with SWIDA, which agreed to fund a loan to Grand Prix by issuing municipal bonds in the aggregate principal amount of $21,500,000. The bonds are unconditionally
guaranteed by Grand Prix. Grand Prix issued a 20-year $21,500,000 promissory note to SWIDA which bears interest at an effective rate of approximately 8.91% per annum. Payments on the SWIDA loan are intended to be made primarily from the revenues
from the operations of Gateway. Although Grand Prix is current on its obligation and expects to meet its future debt payment obligations out of the revenues from Gateway, and although Grand Prix will receive certain assistance from the City of
Madison, Illinois in the form of a tax increment finance fund which should assist it in meeting its debt burdens, there can be no assurance that earnings from the future operations of Gateway will be sufficient to meet Grand Prixs debt service
obligations. A default under the SWIDA loan could have a material adverse effect on our business, financial condition and results of operations.



The Sales Tax And Property Tax Revenues To Service The Revenue Bonds For Infrastructure Improvements At Nashville May Be Inadequate



In September 1999, the Sports Authority of the County of Wilson (Tennessee)
issued $25,900,000 in revenue bonds to build local infrastructure improvements which benefit the operation of Nashville Superspeedway, of which $24,500,000 was outstanding on December 31, 2004. Debt service on the bonds is payable solely from sales
taxes and incremental property taxes generated from the facility. As of December 31, 2004 and 2003, $936,000 and $1,135,000, respectively, was available in the sales and incremental property tax fund maintained by the Sports Authority to pay the
remaining principal and interest due under the bonds. During the year ended December 31, 2004, $1,558,000 was paid by the Company into the sales and incremental property tax fund and $1,757,000 was deducted from the fund for principal and interest
payments. These bonds are direct obligations of the Sports Authority and are therefore not recorded on our consolidated balance sheet. In the event the sales taxes and incremental property taxes are insufficient to cover the payment of principal and
interest on the bonds, the Company would become responsible for the difference. In the event the Company was unable to make the payments, they would be made under a $24,911,000 irrevocable direct-pay letter of credit issued by the existing bank
group pursuant to a reimbursement and security agreement under which we have agreed to reimburse the banks for drawings made under the letter of credit. Such an event could have a material adverse effect on our business, financial condition and
results of operations.



The Seasonality Of Our Motorsports Events Increases
The Variability Of Quarterly Earnings



Our business has
been, and is expected to remain, seasonal given that it depends on our outdoor events for a substantial portion of revenues. We derive a substantial portion of our motorsports revenues from admissions and event-related revenue attributable to six
NASCAR-sanctioned events at Dover, Delaware which are currently held in June and September. This has been offset to some degree by our other motorsports events, but quarterly earnings will vary.



Our Insurance May Not Be Adequate To Cover Catastrophic Incidents



We maintain insurance policies that provide coverage within limits that are
sufficient, in the opinion of management, to protect us from material financial loss incurred in the ordinary course of business. We also purchase special event insurance for motorsports events to protect against race-related liability. However,
there can be no assurance that this insurance will be adequate at all times and in all circumstances. If we are held liable for damages beyond the scope of our insurance coverage, including punitive damages, our business, financial condition and
results of operations could be materially and adversely affected.



Bad
Weather Can Have An Adverse Financial Impact On Our Motorsports Events



We sponsor and promote outdoor motorsports events. Weather conditions affect sales of tickets, concessions and souvenirs, among other things at these events. Although we sell many tickets well in advance of the
outdoor events and these tickets are issued on a non-refundable basis, poor weather conditions may adversely affect additional ticket sales and concessions and souvenir sales, which could have an adverse effect on our business, financial condition
and results of operations.



19



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We do not currently maintain weather-related insurance for major events. Due to the importance of clear
visibility and safe driving conditions to motorsports racing events, outdoor racing events may be significantly affected by weather patterns and seasonal weather changes. Any unanticipated weather changes could impact our ability to stage events.
This could have a material adverse effect on our business, financial condition and results of operations.



Postponement And/Or Cancellation Of Major Motorsports Events Could Adversely Affect Us



If one of our events is postponed because of weather or other reasons such as, for example, the general postponement of all major sporting events in this
country following the September 11, 2001 terrorism attacks, we could incur increased expenses associated with conducting the rescheduled event, as well as possible decreased revenues from tickets, food, drinks and merchandise at the rescheduled
event. If such an event is cancelled, we could incur the expenses associated with preparing to conduct the event as well as losing the revenues, including live broadcast revenues associated with the event.



If a cancelled event is part of the NASCAR NEXTEL Cup Series or NASCAR Busch
Series, we could experience a reduction in the amount of money received from television revenues for all of our NASCAR-sanctioned events in the series that experienced the cancellation. This would occur if, as a result of the cancellation, and
without regard to whether the cancelled event was scheduled for one of our facilities, NASCAR experienced a reduction in broadcast revenues greater than the amount scheduled to be paid to the promoter of the cancelled event.



Our Goodwill May Become Further Impaired In The Future And Require A Write Down To Comply
With Accounting Standards



In June 2001, the FASB issued
Statement No. 142, Goodwill and Other Intangible Assets. Statement No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually in accordance
with the provisions of Statement No. 142. We adopted the provisions of Statement No. 142 effective January 1, 2002 and as a result recorded a non-cash charge of $28,606,000 associated with the goodwill of Grand Prix as a cumulative effect of
accounting change in 2002. Additionally, the Company completed its 2003 annual assessment of goodwill in November 2003 which resulted in the impairment of $13,362,000 of additional goodwill. Even after these charges, $8,521,000, or 3.5%, of our
total assets as of December 31, 2004, consists of goodwill. Although our November 2004 assessment of goodwill indicated that our goodwill was not impaired, if in the future the application of the test for impairment of goodwill results in a
reduction in the carrying value of the goodwill, we will be required to record the amount of the reduction in goodwill as a non-cash charge against operating earnings which would also reduce our stockholders equity.



Item 7A. Quantitative And Qualitative Disclosures About Market Risk



The Company does not utilize financial instruments for
trading purposes and holds no derivative financial instruments which could expose it to market risk. The carrying value of DVDs notes payable to banks approximates its fair value at December 31, 2004. DVD is exposed to market risks related to
fluctuations in interest rates for its variable rate borrowings of $27,000,000 at December 31, 2004 under its revolving credit facility. A change in interest rates of one percent on the balance outstanding at December 31, 2004 would cause a change
in total annual interest costs of $270,000. At December 31, 2004, the Companys long-term debt had a carrying value of $18,489,000 and an estimated fair value of $20,596,000. The fair value was determined through the use of a discounted cash
flow methodology applying interest rates available to the Company for issues with similar terms.



In September 1999, the Sports Authority of the County of Wilson (Tennessee) issued $25,900,000 in revenue bonds, of which $24,500,000 was outstanding at
December 31, 2004. These bonds are direct obligations of the Sports Authority and are therefore not recorded on the Companys consolidated balance sheet; however, DVD is exposed to market risks related to fluctuations in interest rates for
these bonds. A significant change in interest rates could result in the Company being responsible for debt service payments not covered by the sales and incremental property taxes generated from the facility.



20



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Item 8. Financial Statements And Supplementary Data



DVDs consolidated financial statements and the Report of Independent
Registered Public Accounting Firm included in this report are shown on the Index to Consolidated Financial Statements on page 29.



Item 9. Changes In And Disagreements With Accountants On Accounting And Financial Disclosure



None.



Item 9A. Controls and Procedures



Evaluation of Disclosure Controls and Procedures



We have established disclosure controls and procedures to ensure that material information relating to the Company,
including its consolidated subsidiaries, is made known to the officers who certify the Companys financial reports and to other members of senior management and the Board of Directors.



Based on their evaluation as of December 31, 2004, the Chief Executive
Officer and Chief Financial Officer of the Company have concluded that the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective to ensure that the
information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.



Managements Report on Internal Control Over Financial Reporting



Our management is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial
Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on our evaluation under the framework in Internal Control  Integrated Framework,our management concluded that our internal control over financial reporting was effective as of December 31, 2004. Our
managements assessment of the effectiveness of our internal control over financial reporting as of December 31, 2004 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included
herein.



Report of Independent Registered Public Accounting Firm



The Board of Directors and Stockholders

Dover Motorsports, Inc.:



We have audited managements assessment, included in the accompanying Managements Report on Internal Control Over Financial Reporting,that Dover Motorsports, Inc. (the Company) maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting. Our responsibility is to express an opinion on managements assessment and an opinion on the effectiveness of the Companys internal control over financial reporting based on our audit.



21



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We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an
understanding of internal control over financial reporting, evaluating managements assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for our opinion.



A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.



Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.



In our opinion, managements assessment that Dover Motorsports, Inc.
maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, Dover Motorsports, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria
established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).



We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets
of Dover Motorsports, Inc. and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of earnings and comprehensive earnings and cash flows for each of the years in the three-year period ended December 31, 2004, and
our report dated March 8, 2005 expressed an unqualified opinion on those consolidated financial statements.



KPMG LLP



Philadelphia,
Pennsylvania

March 8, 2005



Changes in Internal Control Over Financial Reporting



There were no changes in our internal control over financial reporting during the fourth quarter of fiscal year 2004 that have materially affected, or
that are reasonably likely to materially affect our internal controls over financial reporting.



Item 9B. Other Information



None.



22



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Part III



Item 10. Directors And Executive Officers Of The Registrant



Except as presented below, biographical information relating to the Companys directors and executive officers,
information regarding the Companys audit committee financial experts and information on Section 16(a) Beneficial Ownership Reporting Compliance called for by this Item 10 are incorporated by reference to the DVD Proxy Statement to be filed
pursuant to Regulation 14A for the Annual Meeting of Stockholders to be held on April 27, 2005.



The Company has adopted a Code of Business Conduct applicable to the Chief Executive Officer, Chief Financial Officer, Controller and other employees
performing similar functions as designated by the Companys Chief Executive Officer. A copy of the Code of Business Conduct is available on the Companys website at http://www.dovermotorsportsinc.com. The Company will post on its
website any amendments to, or waivers from, its Code of Business Conduct as required by law.



Executive Officers of the Registrant. As of December 31, 2004, the executive officers of the registrant were:



|                    |  |                             |  |     |  |               
|------------------- |  | --------------------------- |  | --- |  | --------------
|Name                |  | Position                    |  | Age |  | Term of Office
|Denis McGlynn       |  | President and               |  | 59  |  | 11/79 to date 
|                    |  | Chief Executive Officer     |  |     |  |               
|                    |  |                             | 
|Jerome Miraglia     |  | Executive Vice President    |  | 46  |  | 1/02 to date  
|                    |  |                             | 
|Patrick J. Bagley   |  | Sr. Vice President-Finance  |  | 57  |  | 5/02 to date  
|                    |  | and Chief Financial Officer |  |     |  |               
|                    |  |                             | 
|Klaus M. Belohoubek |  | Sr. Vice President-General  |  |     |  |               
|                    |  | Counsel and Secretary       |  | 45  |  | 7/99 to date  
|                    |  |                             | 
|Thomas Wintermantel |  | Treasurer and               |  |     |  |               
|                    |  | Assistant Secretary         |  | 46  |  | 7/02 to date  



The Companys
Chairman of the Board, Henry B. Tippie, is a non-employee director and, therefore, not an executive officer of the Company. Mr. Tippie has served DVD in that capacity, or as Vice Chairman of the Board, for over 8 years. Mr. Tippie also serves as
Chairman of the Board to Gaming as a non-employee director.



Denis McGlynn has served as the Companys President and Chief Executive Officer for 25 years. Mr. McGlynn also serves as President and Chief Executive Officer to Gaming.



Jerome Miraglia joined DVD as Executive Vice President in January 2002. Prior to joining the Company, Mr. Miraglia was the
Executive Vice President of Mariah Vision 3, Inc. From 1991 to 1996, Mr. Miraglia was a partner in the law firm of Miles & Stockbridge in Baltimore, MD.



Partrick J. Bagley joined DVD as Vice President-Finance and Chief Financial Officer in May 2002. Prior to joining the Company, Mr. Bagley was the Vice
President-Finance, Treasurer and CFO of Rollins Truck Leasing Corp. Mr. Bagley has been a director of the Company since 1996 and prior to that had provided consulting services since 1994.



Klaus M. Belohoubek has been Vice President-General Counsel and Secretary since 1999 and has provided legal representation
to the Company in various capacities since 1990. Mr. Belohoubek also serves as Senior Vice President-General Counsel and Secretary of Gaming and previously served as Vice President-General Counsel and Secretary to Rollins Truck Leasing Corp.



23



---

Thomas Wintermantel joined DVD as Treasurer and Assistant Secretary in July 2002. For more than five
years prior to joining the Company, Mr. Wintermantel was the Financial Vice President and Treasurer of John W. Rollins & Associates, Financial Vice President of Rollins Jamaica, Ltd. and President and Director of the John W. Rollins Foundation.



Item 11. Executive Compensation



The information called for by this Item 11 is incorporated by reference to
the DVD Proxy Statement to be filed pursuant to Regulation 14A for the Annual Meeting of Stockholders to be held on April 27, 2005.



Item 12. Security Ownership Of Certain Beneficial Owners And Management



The information called for by this Item 12 is incorporated by reference to the DVD Proxy Statement to be filed pursuant to
Regulation 14A for the Annual Meeting of Stockholders to be held on April 27, 2005.



Item 13. Certain Relationships and Related Transactions



The information called for by this Item 13 is incorporated by reference to the DVD Proxy Statement to be filed pursuant to Regulation 14A for the Annual Meeting of Stockholders to be held on April 27, 2005.



Item 14. Principal Accounting Fees And Services



The information called for by this Item 14 is
incorporated by reference to the DVD Proxy Statement to be filed pursuant to Regulation 14A for the Annual Meeting of Stockholders to be held on April 27, 2005.



Part IV



Item 15. Exhibits, Financial Statement Schedules



|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       | 
|(a)(1) |  | Financial Statements  See accompanying Index to Consolidated Financial Statements on page 29.                                                                                                                                                                                                                                                                                                                                                                              
|       | 
|(2)    |  | Financial Statement Schedules  None.                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | 
|(3)    |  | Exhibits:                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | 
|2.1    |  | Share Exchange Agreement and Plan of Reorganization dated June 14, 1996 between Dover Motorsports, Inc. (f/k/a Dover Downs Entertainment, Inc.), Dover Downs, Inc., Dover Downs International
Speedway, Inc. and the shareholders of Dover Downs, Inc. (incorporated herein by reference to Exhibit 2.1 to the Registration Statement, Number 333-8147, on Form S-1 dated July 15, 1996, which was declared effective on October 3,
1996).                                  
|       | 
|2.2    |  | Agreement and Plan of Merger, dated as of March 26, 1998, by and among Dover Motorsports, Inc. (f/k/a Dover Downs Entertainment, Inc.), FOG Acquisition Corp., and Grand Prix Association of
Long Beach (incorporated herein by reference to Exhibit 2.1 to the Registration Statement, Number 333-53077, on Form S-4 dated May 19, 1998).                                                                                                                                  
|       | 
|2.3    |  | Amended and Restated Agreement Regarding Distribution and Plan of Reorganization, dated as of February 15, 2002, by and between Dover Motorsports, Inc. (f/k/a Dover Downs Entertainment, Inc.)
and Dover Downs Gaming & Entertainment, Inc. (incorporated herein by reference to Exhibit 2.1 to the Registration Statement of Dover Downs Gaming & Entertainment, Inc., Number 1-16791, on Form 10 dated February 26, 2002, which was declared
effective on March 7, 2002).

|
|

|
|













24



---

|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|3.1  |  | Restated Certificate of Incorporation of Dover Motorsports, Inc. (f/k/a Dover Downs Entertainment, Inc.), dated March 10, 2000 (incorporated herein by reference to Exhibit 3.1 to the Quarterly
Report on Form 10-Q dated April 28, 2000).                                                                                                                                                                                                                                                                                                                   
|     | 
|3.2  |  | Amended and Restated By-laws of Dover Motorsports, Inc. dated April 1, 2002 (incorporated herein by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q dated May 10,
2002).                                                                                                                                                                                                                                                                                                                                                                        
|     | 
|4.1  |  | Rights Agreement dated as of June 14, 1996 between Dover Motorsports, Inc. (f/k/a Dover Downs Entertainment, Inc.) and ChaseMellon Shareholder Services, L.L.C. (incorporated herein by reference
to Exhibit 4.2 to the Registration Statement, Number 333-8147, on Form S-1 dated July 15, 1996, which was declared effective on October 3, 1996).                                                                                                                                                                                                           
|     | 
|10.1 |  | Credit Agreement between Dover Motorsports, Inc., Dover International Speedway, Inc., Gateway International Motorsports Corporation, Gateway International Services Corporation, Memphis
International Motorsports Corporation, M & N Services Corp., Nashville Speedway, USA, Inc. and Grand Prix Association of Long Beach, Inc. and Mercantile-Safe Deposit and Trust Company, as agent, dated as of February 17, 2004 (incorporated herein
by reference to Exhibit 10.1 to the Annual Report on Form 10-K dated March 10, 2004).                          
|     | 
|10.2 |  | Amendment No. 2 to the Credit Agreement between Dover Motorsports, Inc., Dover International Speedway, Inc., Gateway International Motorsports Corporation, Gateway International Services
Corporation, Memphis International Motorsports Corporation, M & N Services Corp., Nashville Speedway, USA, Inc. and Grand Prix Association of Long Beach, Inc. and Mercantile-Safe Deposit and Trust Company, as agent, dated as of July 28, 2004
(incorporated herein by reference to Exhibit 10.8 to the Quarterly Report on Form 10-Q dated August 6, 2004).    
|     | 
|10.3 |  | Amendment No. 3 to the Credit Agreement between Dover Motorsports, Inc., Dover International Speedway, Inc., Gateway International Motorsports Corporation, Gateway International Services
Corporation, Memphis International Motorsports Corporation, M & N Services Corp., Nashville Speedway, USA, Inc. and Grand Prix Association of Long Beach, Inc. and Mercantile-Safe Deposit and Trust Company, as agent, dated as of February 16, 2005
(incorporated herein by reference to Exhibit 10.1 to the Current Report on Form 8-K dated February 25, 2005).
|     | 
|10.4 |  | Mortgage and Security Agreement executed by Dover International Speedway, Inc. in favor of Mercantile-Safe Deposit and Trust Company, as agent, dated as of February 17, 2004 (incorporated herein
by reference to Exhibit 10.2 to the Annual Report on Form 10-K dated March 10, 2004).                                                                                                                                                                                                                                                                      
|     | 
|10.5 |  | Commercial Deed of Trust, Security Agreement, Assignment of Leases and Rents, and Fixture Filing by Nashville Speedway, USA, Inc. (Wilson County) for the benefit of Mercantile-Safe Deposit and
Trust Company, as agent, dated as of February 17, 2004 (incorporated herein by reference to Exhibit 10.3 to the Annual Report on Form 10-K dated March 10, 2004).                                                                                                                                                                                            
|     | 
|10.6 |  | Commercial Deed of Trust, Security Agreement, Assignment of Leases and Rents, and Fixture Filing by Nashville Speedway, USA, Inc. (Rutherford County) for the benefit of Mercantile-Safe Deposit
and Trust Company, as agent, dated as of February 17, 2004 (incorporated herein by reference to Exhibit 10.4 to the Annual Report on Form 10-K dated March 10, 2004).                                                                                                                                                                                        
|     | 
|10.7 |  | Commercial Deed of Trust, Security Agreement, Assignment of Leases and Rents, and Fixture Filing by Grand Prix Association of Long Beach, Inc. for the benefit of Mercantile-Safe Deposit and
Trust Company, as agent, dated as of February 17, 2004 (incorporated herein by reference to Exhibit 10.5 to the Annual Report on Form 10-K dated March 10, 2004).                                                                                                                                                                                               
|     | 
|10.8 |  | Commercial Deed of Trust, Security Agreement, Assignment of Leases and Rents, and Fixture Filing by Memphis International Motorsports Corporation for the benefit of Mercantile-Safe Deposit and
Trust Company, as agent, dated as of February 17, 2004 (incorporated herein by reference to Exhibit 10.6 to the Annual Report on Form 10-K dated March 10, 2004).                                                                                                                                                                                            



25



---

|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                 
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.9  |  | Pledge Agreement by Dover Motorsports, Inc. in favor of Mercantile-Safe Deposit and Trust Company, as agent, dated as of February 17, 2004 (incorporated herein by reference to Exhibit 10.7 to
the Annual Report on Form 10-K dated March 10, 2004).                                                                                                                                                                           
|      | 
|10.10 |  | Pledge Agreement by Dover International Speedway, Inc. in favor of Mercantile-Safe Deposit and Trust Company, as agent, dated as of February 17, 2004 (incorporated herein by reference to
Exhibit 10.8 to the Annual Report on Form 10-K dated March 10, 2004).                                                                                                                                                                
|      | 
|10.11 |  | Pledge Agreement by Grand Prix Association of Long Beach, Inc. in favor of Mercantile-Safe Deposit and Trust Company, as agent, dated as of February 17, 2004 (incorporated herein by reference
to Exhibit 10.9 to the Annual Report on Form 10-K dated March 10, 2004).                                                                                                                                                        
|      | 
|10.12 |  | Dover Motorsports, Inc. (f/k/a Dover Downs Entertainment, Inc.) 1996 Stock Option Plan (incorporated herein by reference to Exhibit 10.8 to the Registration Statement, Number 333-8147, on
Form S-1 dated July 15, 1996, which was declared effective on October 3, 1996).                                                                                                                                                     
|      | 
|10.13 |  | Employee Benefits Agreement, dated as of January 15, 2002, by and between Dover Motorsports, Inc. (f/k/a Dover Downs Entertainment, Inc.) and Dover Downs Gaming & Entertainment, Inc.
(incorporated herein by reference to Exhibit 10.2 to the Registration Statement of Dover Downs Gaming & Entertainment, Inc., Number 1-16791, on Form 10 dated January 16, 2002, which was declared effective on March 7, 2002).          
|      | 
|10.14 |  | Transition Support Services Agreement, dated as of January 15, 2002, by and between Dover Motorsports, Inc. (f/k/a Dover Downs Entertainment, Inc.) and Dover Downs Gaming & Entertainment,
Inc. (incorporated herein by reference to Exhibit 10.3 to the Registration Statement of Dover Downs Gaming & Entertainment, Inc., Number 1-16791, on Form 10 dated January 16, 2002, which was declared effective on March 7, 2002).
|      | 
|10.15 |  | Tax Sharing Agreement, dated as of January 15, 2002, by and between Dover Motorsports, Inc. (f/k/a Dover Downs Entertainment, Inc.) and Dover Downs Gaming & Entertainment, Inc.
(incorporated herein by reference to Exhibit 10.4 to the Registration Statement of Dover Downs Gaming & Entertainment, Inc., Number 1-16791, on Form 10 dated January 16, 2002, which was declared effective on March 7, 2002).                
|      | 
|10.16 |  | Real Property Agreement, dated as of January 15, 2002, by and between Dover Motorsports, Inc. (f/k/a Dover Downs Entertainment, Inc.) and Dover Downs Gaming & Entertainment, Inc.
(incorporated herein by reference to Exhibit 10.5 to the Registration Statement of Dover Downs Gaming & Entertainment, Inc., Number 1-16791, on Form 10 dated January 16, 2002, which was declared effective on March 7, 2002).              
|      | 
|10.17 |  | Sanction Agreement between Dover International Speedway, Inc. and National Association for Stock Car Auto Racing for June 2004 NEXTEL Cup Series event (incorporated herein by reference to
Exhibit 10.15 to the Quarterly Report on Form 10-Q dated May 6, 2004).                                                                                                                                                              
|      | 
|10.18 |  | Sanction Agreement between Dover International Speedway, Inc. and National Association for Stock Car Auto Racing for September 2004 NEXTEL Cup Series event (incorporated herein by reference
to Exhibit 10.16 to the Quarterly Report on Form 10-Q dated May 6, 2004).                                                                                                                                                         
|      | 
|10.19 |  | Employment and Non-Compete Agreement between Dover Motorsports, Inc. and Patrick J. Bagley dated June 16, 2004 (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on
Form 10-Q dated August 6, 2004).                                                                                                                                                                                                    
|      | 
|10.20 |  | Employment and Non-Compete Agreement between Dover Motorsports, Inc. and Klaus M. Belohoubek dated June 16, 2004 (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on
Form 10-Q dated August 6, 2004).                                                                                                                                                                                                  
|      | 
|10.21 |  | Employment and Non-Compete Agreement between Dover Motorsports, Inc. and Melvin L. Joseph dated June 16, 2004 (incorporated herein by reference to Exhibit 10.3 to the Quarterly Report on Form
10-Q dated August 6, 2004).                                                                                                                                                                                                     



26



---

|      |  |                                                                                                                                                                                                                                  
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      | 
|10.22 |  | Employment and Non-Compete Agreement between Dover Motorsports, Inc. and Denis McGlynn dated June 16, 2004 (incorporated herein by reference to Exhibit 10.4 to the Quarterly Report on Form
10-Q dated August 6, 2004).         
|      | 
|10.23 |  | Employment and Non-Compete Agreement between Dover Motorsports, Inc. and Jerome T. Miraglia dated June 16, 2004 (incorporated herein by reference to Exhibit 10.5 to the Quarterly Report on
Form 10-Q dated August 6, 2004).    
|      | 
|10.24 |  | Non-Compete Agreement between Dover Motorsports, Inc. and Henry B. Tippie dated June 16, 2004 (incorporated herein by reference to Exhibit 10.6 to the Quarterly Report on Form 10-Q dated
August 6, 2004).                      
|      | 
|10.25 |  | Employment and Non-Compete Agreement between Dover Motorsports, Inc. and Thomas G. Wintermantel dated June 16, 2004 (incorporated herein by reference to Exhibit 10.7 to the Quarterly Report
on Form 10-Q dated August 6, 2004).
|      | 
|10.26 |  | Dover Motorsports, Inc. 2004 Stock Incentive Plan (incorporated herein by reference to Exhibit A to the Companys Proxy Statement filed on March 29, 2004).                                                                      
|      | 
|10.27 |  | Form of Incentive Stock Option Agreement Used with Dover Motorsports, Inc. 2004 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Quarterly Report on Form 10-Q
dated November 3, 2004).             
|      | 
|10.28 |  | Form of Restricted Stock Grant Agreement Used with Dover Motorsports, Inc. 2004 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q
dated November 3, 2004).             
|      | 
|21.1  |  | Subsidiaries                                                                                                                                                                                                                     
|      | 
|23.1  |  | Consent of Independent Registered Public Accounting Firm                                                                                                                                                                         
|      | 
|31.1  |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a)                                                                                                                                                              
|      | 
|31.2  |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a)                                                                                                                                                              
|      | 
|32.1  |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Sec. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                   
|      | 
|32.2  |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Sec. 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                   
|      | 
|99.1  |  | Audit Committee Charter of Dover Motorsports, Inc. (incorporated herein by reference to Exhibit B to the Companys Proxy Statement filed on March 29, 2004).                                                                     



27



---

Signatures



Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.



|                      |  |                         |  |                                      
|--------------------- |  | ----------------------- |  | -------------------------------------
|DATED: March 11, 2005 |  | Dover Motorsports, Inc.
|                      |  | Registrant             
|                      |  |                        
|                      |  | BY:                     |  | /s/ Denis McGlynn                    
|                      |  |                         |  | Denis McGlynn                        
|                      |  |                         |  | President and Chief Executive Officer
|                      |  |                         |  | and Director                         



Pursuant to the
requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:



|                         |  |                                                        |  |               
|------------------------ |  | ------------------------------------------------------ |  | --------------
|/s/ Patrick J. Bagley    |  | Sr. Vice President-Finance and Chief
Financial Officer |  | March 11, 2005
|Patrick J. Bagley        |  |                                                        | 
|                         |  |                                                       
|/s/ Henry B. Tippie      |  | Chairman of the Board                                  |  | March 11, 2005
|Henry B. Tippie          |  |                                                        |  |               
|                         |  |                                                       
|/s/ Kenneth K. Chalmers  |  | Director and Chairman of the Audit
Committee           |  | March 11, 2005
|Kenneth K. Chalmers      |  |                                                        | 
|                         |  |                                                       
|/s/ John W. Rollins, Jr. |  | Director                                               |  | March 11, 2005
|John W. Rollins, Jr.     |  |                                                        |  |               
|                         |  |                                                       
|/s/ Jeffrey W. Rollins   |  | Director                                               |  | March 11, 2005
|Jeffrey W. Rollins       |  |                                                        |  |               
|                         |  |                                                       
|/s/ Melvin L. Joseph     |  | Director                                               |  | March 11, 2005
|Melvin L. Joseph         |  |                                                        |  |               
|                         |  |                                                       
|/s/ R. Randall Rollins   |  | Director                                               |  | March 11, 2005
|R. Randall Rollins       |  |                                                        |  |               
|                         |  |                                                       
|/s/ Eugene W. Weaver     |  | Director                                               |  | March 11, 2005
|Eugene W. Weaver         |  |                                                        |  |               



28



---

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



|                                                                                                                   |  |     
|------------------------------------------------------------------------------------------------------------------ |  | ----
|                                                                                                                   |  | Page
|Statement of Management Responsibility                                                                             |  | 30  
|                                                                                                                   | 
|Report of Independent Registered Public Accounting Firm                                                            |  | 31  
|                                                                                                                   | 
|Consolidated Statement of Earnings and Comprehensive Earnings for the years ended December 31, 2004, 2003 and 2002 |  | 32  
|                                                                                                                   | 
|Consolidated Balance Sheet at December 31, 2004 and 2003                                                           |  | 33  
|                                                                                                                   | 
|Consolidated Statement of Cash Flows for the years ended December 31, 2004, 2003 and 2002                          |  | 34  
|                                                                                                                   | 
|Notes to the Consolidated Financial Statements                                                                     |  | 35  



29



---

STATEMENT OF MANAGEMENT RESPONSIBILITY



Dover Motorsports, Inc. and subsidiaries (the Companys) management is responsible for the preparation, integrity and objectivity of the consolidated financial statements and other financial information included in the
Companys 2004 Annual Report on Form 10-K. The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles and reflect the effects of certain estimates and judgments made by management.



The Companys management maintains an effective system of
internal controls designed to provide reasonable assurance that assets are safeguarded and transactions are properly recorded and executed in accordance with managements authorization. The system is regularly monitored by direct management
review and by internal auditors who conduct an extensive program of audits throughout the Company. The Director of Internal Audit reports directly to the Audit Committee of the Board of Directors. We have confidence in our financial reporting, the
underlying system of internal controls, and our people, who are objective in their responsibilities and operate under the Companys Code of Business Conduct and the highest level of ethical standards. These standards are a key element of the
Companys control system.



The Company conducted an
evaluation of the effectiveness of its internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the
Companys evaluation under the framework in Internal ControlIntegrated Framework, management of the Company has assessed the Companys internal control over financial reporting to be effective as of December 31, 2004. There
have not been any changes in the Companys internal control over financial reporting identified in the fourth quarter of 2004 that have materially affected, or are reasonably likely to materially affect, the Companys internal control over
financial reporting.



The Audit Committee of the Board of
Directors, which is composed entirely of independent directors, has direct and private access to and meets regularly with management, the internal auditors and the independent auditors to review accounting, reporting, auditing and internal control
matters.



|                              |  |                             
|----------------------------- |  | ----------------------------
|/s/ Denis McGlynn             |  | /s/ Patrick J. Bagley       
|Denis McGlynn                 |  | Patrick J. Bagley           
|President and Chief Executive |  | Sr. Vice President  Finance
|Officer and Director          |  | and Chief Financial Officer 



30



---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Directors and Stockholders

Dover Motorsports, Inc.:



We have audited the accompanying consolidated balance sheets of Dover
Motorsports, Inc. and subsidiaries (the Company) as of December 31, 2004 and 2003, and the related consolidated statements of earnings and comprehensive earnings and cash flows for each of the years in the three-year period ended December 31, 2004.
These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.



We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Dover Motorsports, Inc. and subsidiaries as of December 31, 2004 and 2003,
and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.



As discussed in Note 3 to the consolidated financial statements, effective
January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.



We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Dover
Motorsports, Inc.s internal control over financial reporting as of December 31, 2004, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), and our report dated March 8, 2005 expressed an unqualified opinion on managements assessment of, and the effective operation of, internal control over financial reporting.



KPMG LLP



Philadelphia, Pennsylvania

March 8, 2005



31



---

DOVER MOTORSPORTS, INC.



CONSOLIDATED STATEMENT
OF EARNINGS

AND COMPREHENSIVE EARNINGS



|                                                                                                                            |  |                          |            |   |      |   |             |      |  |   |             |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                                                                                            |  | Years ended December 31, |           
|                                                                                                                            |  | 2004                     |            |   | 2003 |   |             | 2002 | 
|Revenues:                                                                                                                   |  |                          |            |   |      |   |             |      |  |   |             |  
|Admissions                                                                                                                  |  | $                        | 37,230,000 |   |      | $ | 38,874,000  |      |  | $ | 41,979,000  |  
|Event-related revenue                                                                                                       |  |                          | 32,277,000 |   |      |   | 34,724,000  |      |  |   | 34,455,000  |  
|Broadcasting revenue                                                                                                        |  |                          | 22,229,000 |   |      |   | 18,250,000  |      |  |   | 15,909,000  |  
|Other revenue                                                                                                               |  |                          | 1,881,000  |   |      |   | 1,778,000   |      |  |   | 1,388,000   |  
|                                                                                                                            |  |                          |            |   |      |   |             |      |  |   |             |  
|                                                                                                                            |  |                          | 93,617,000 |   |      |   | 93,626,000  |      |  |   | 93,731,000  |  
|                                                                                                                            |  |                          |           
|Expenses:                                                                                                                   |  |                          |            |   |      |   |             |      |  |   |             |  
|Operating and marketing                                                                                                     |  |                          | 59,392,000 |   |      |   | 65,824,000  |      |  |   | 61,062,000  |  
|Impairment charges                                                                                                          |  |                          |           |   |      |   | 21,331,000  |      |  |   |            |  
|General and administrative                                                                                                  |  |                          | 15,414,000 |   |      |   | 15,151,000  |      |  |   | 16,113,000  |  
|Depreciation and amortization                                                                                               |  |                          | 9,635,000  |   |      |   | 10,594,000  |      |  |   | 9,786,000   |  
|                                                                                                                            |  |                          |            |   |      |   |             |      |  |   |             |  
|                                                                                                                            |  |                          | 84,441,000 |   |      |   | 112,900,000 |      |  |   | 86,961,000  |  
|                                                                                                                            |  |                          |            |   |      |   |             |      |  |   |             |  
|Operating earnings (loss)                                                                                                   |  |                          | 9,176,000  |   |      |   | (19,274,000 | )    |  |   | 6,770,000   |  
|                                                                                                                            |  |                          |           
|Interest income                                                                                                             |  |                          | 488,000    |   |      |   | 165,000     |      |  |   | 53,000      |  
|Interest expense                                                                                                            |  |                          | (3,915,000 | ) |      |   | (5,254,000  | )    |  |   | (4,560,000  | )
|                                                                                                                            |  |                          |            |   |      |   |             |      |  |   |             |  
|Earnings (loss) from continuing operations before income tax provision (benefit) and cumulative effect of accounting change |  |                          | 5,749,000  |   |      |   | (24,363,000 | )    |  |   | 2,263,000   |  
|                                                                                                                            |  |                          |           
|Income tax provision (benefit)                                                                                              |  |                          | 3,309,000  |   |      |   | (2,225,000  | )    |  |   | 852,000     |  
|                                                                                                                            |  |                          |            |   |      |   |             |      |  |   |             |  
|Earnings (loss) from continuing operations before cumulative effect of accounting change                                    |  |                          | 2,440,000  |   |      |   | (22,138,000 | )    |  |   | 1,411,000   |  
|                                                                                                                            |  |                          |           
|Earnings from discontinued operation, net of income tax provision of $3,542,000 in 2002                                     |  |                          |           |   |      |   |            |      |  |   | 5,168,000   |  
|                                                                                                                            |  |                          |           
|Direct costs of spin-off, net of income tax benefit of $90,000                                                              |  |                          |           |   |      |   |            |      |  |   | (691,000    | )
|                                                                                                                            |  |                          |            |   |      |   |             |      |  |   |             |  
|Earnings (loss) before cumulative effect of accounting change                                                               |  |                          | 2,440,000  |   |      |   | (22,138,000 | )    |  |   | 5,888,000   |  
|                                                                                                                            |  |                          |           
|Cumulative effect of accounting change for goodwill impairment                                                              |  |                          |           |   |      |   |            |      |  |   | (28,606,000 | )
|                                                                                                                            |  |                          |            |   |      |   |             |      |  |   |             |  
|Net earnings (loss)                                                                                                         |  |                          | 2,440,000  |   |      |   | (22,138,000 | )    |  |   | (22,718,000 | )
|                                                                                                                            |  |                          |           
|Change in minimum pension liability, net of income tax provision                                                            |  |                          | (117,000   | ) |      |   | (80,000     | )    |  |   | (330,000    | )
|                                                                                                                            |  |                          |            |   |      |   |             |      |  |   |             |  
|Comprehensive earnings (loss)                                                                                               |  | $                        | 2,323,000  |   |      | $ | (22,218,000 | )    |  | $ | (23,048,000 | )
|                                                                                                                            |  |                          |            |   |      |   |             |      |  |   |             |  
|Net earnings (loss) per common share  basic:                                                                               |  |                          |            |   |      |   |             |      |  |   |             |  
|Continuing operations before accounting change                                                                              |  | $                        | 0.06       |   |      | $ | (0.56       | )    |  | $ | 0.04        |  
|Discontinued operation                                                                                                      |  |                          |           |   |      |   |            |      |  |   | 0.11        |  
|Accounting change                                                                                                           |  |                          |           |   |      |   |            |      |  |   | (0.74       | )
|                                                                                                                            |  |                          |            |   |      |   |             |      |  |   |             |  
|Net earnings (loss)                                                                                                         |  | $                        | 0.06       |   |      | $ | (0.56       | )    |  | $ | (0.59       | )
|                                                                                                                            |  |                          |            |   |      |   |             |      |  |   |             |  
|Net earnings (loss) per common share  diluted:                                                                             |  |                          |            |   |      |   |             |      |  |   |             |  
|Continuing operations before accounting change                                                                              |  | $                        | 0.06       |   |      | $ | (0.56       | )    |  | $ | 0.04        |  
|Discontinued operation                                                                                                      |  |                          |           |   |      |   |            |      |  |   | 0.11        |  
|Accounting change                                                                                                           |  |                          |           |   |      |   |            |      |  |   | (0.73       | )
|                                                                                                                            |  |                          |            |   |      |   |             |      |  |   |             |  
|Net earnings (loss)                                                                                                         |  | $                        | 0.06       |   |      | $ | (0.56       | )    |  | $ | (0.58       | )
|                                                                                                                            |  |                          |            |   |      |   |             |      |  |   |             |  



The Notes to the
Consolidated Financial Statements are an integral part of these consolidated statements.



32



---

DOVER MOTORSPORTS, INC.



CONSOLIDATED BALANCE
SHEET



|                                                                                                                                                        |  |              |             |   |      |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ----------- | - | ---- | - | ----------- | -
|                                                                                                                                                        |  | December 31, |            
|                                                                                                                                                        |  | 2004         |             |   | 2003 |  
|ASSETS                                                                                                                                                  |  |              |             |   |      |   |             |  
|Current assets:                                                                                                                                         |  |              |             |   |      |   |             |  
|Cash and cash equivalents                                                                                                                               |  | $            | 134,000     |   |      | $ | 3,348,000   |  
|Accounts receivable                                                                                                                                     |  |              | 3,894,000   |   |      |   | 2,643,000   |  
|Inventories                                                                                                                                             |  |              | 223,000     |   |      |   | 259,000     |  
|Prepaid expenses and other                                                                                                                              |  |              | 2,727,000   |   |      |   | 1,691,000   |  
|Receivable from Dover Downs Gaming & Entertainment, Inc.                                                                                                |  |              |            |   |      |   | 96,000      |  
|Income taxes receivable                                                                                                                                 |  |              |            |   |      |   | 5,819,000   |  
|Deferred income taxes                                                                                                                                   |  |              | 781,000     |   |      |   | 548,000     |  
|                                                                                                                                                        |  |              |             |   |      |   |             |  
|Total current assets                                                                                                                                    |  |              | 7,759,000   |   |      |   | 14,404,000  |  
|                                                                                                                                                        |  |             
|Property and equipment, net                                                                                                                             |  |              | 224,973,000 |   |      |   | 229,603,000 |  
|Restricted cash                                                                                                                                         |  |              | 3,571,000   |   |      |   | 3,433,000   |  
|Other assets, net                                                                                                                                       |  |              | 1,385,000   |   |      |   | 1,434,000   |  
|Deferred income taxes                                                                                                                                   |  |              | 46,000      |   |      |   | 90,000      |  
|Goodwill                                                                                                                                                |  |              | 8,521,000   |   |      |   | 8,521,000   |  
|                                                                                                                                                        |  |              |             |   |      |   |             |  
|Total assets                                                                                                                                            |  | $            | 246,255,000 |   |      | $ | 257,485,000 |  
|                                                                                                                                                        |  |              |             |   |      |   |             |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                    |  |              |             |   |      |   |             |  
|Current liabilities:                                                                                                                                    |  |              |             |   |      |   |             |  
|Accounts payable                                                                                                                                        |  | $            | 1,947,000   |   |      | $ | 3,333,000   |  
|Accrued liabilities                                                                                                                                     |  |              | 5,550,000   |   |      |   | 4,587,000   |  
|Payable to Dover Downs Gaming & Entertainment, Inc.                                                                                                     |  |              | 2,000       |   |      |   |            |  
|Income taxes payable                                                                                                                                    |  |              | 324,000     |   |      |   |            |  
|Current portion of long-term debt                                                                                                                       |  |              | 805,000     |   |      |   | 745,000     |  
|Deferred revenue                                                                                                                                        |  |              | 11,663,000  |   |      |   | 11,304,000  |  
|                                                                                                                                                        |  |              |             |   |      |   |             |  
|Total current liabilities                                                                                                                               |  |              | 20,291,000  |   |      |   | 19,969,000  |  
|                                                                                                                                                        |  |             
|Notes payable to banks                                                                                                                                  |  |              | 27,000,000  |   |      |   | 43,045,000  |  
|Long-term debt                                                                                                                                          |  |              | 17,684,000  |   |      |   | 18,487,000  |  
|Other liabilities                                                                                                                                       |  |              | 64,000      |   |      |   | 85,000      |  
|Deferred income taxes                                                                                                                                   |  |              | 42,750,000  |   |      |   | 38,527,000  |  
|                                                                                                                                                        |  |             
|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: December 31, 2004-16,946,426 shares; 2003-16,557,898
shares         |  |              | 1,695,000   |   |      |   | 1,656,000   |  
|Class A common stock, $.10 par value; 55,000,000 shares authorized; issued and outstanding: December 31, 2004-23,240,185 shares;
2003-23,436,185 shares |  |              | 2,324,000   |   |      |   | 2,344,000   |  
|Additional paid-in capital                                                                                                                              |  |              | 128,542,000 |   |      |   | 127,783,000 |  
|Retained earnings                                                                                                                                       |  |              | 6,834,000   |   |      |   | 5,999,000   |  
|Accumulated other comprehensive loss                                                                                                                    |  |              | (527,000    | ) |      |   | (410,000    | )
|Deferred compensation                                                                                                                                   |  |              | (402,000    | ) |      |   |            |  
|                                                                                                                                                        |  |              |             |   |      |   |             |  
|Total stockholders equity                                                                                                                              |  |              | 138,466,000 |   |      |   | 137,372,000 |  
|                                                                                                                                                        |  |              |             |   |      |   |             |  
|Total liabilities and stockholders equity                                                                                                              |  | $            | 246,255,000 |   |      | $ | 257,485,000 |  
|                                                                                                                                                        |  |              |             |   |      |   |             |  



The Notes to the
Consolidated Financial Statements are an integral part of these consolidated statements.



33



---

DOVER MOTORSPORTS, INC.



CONSOLIDATED STATEMENT
OF CASH FLOWS



|                                                                                           |  |                          |             |   |      |   |             |      |  |   |              |  
|------------------------------------------------------------------------------------------ |  | ------------------------ | ----------- | - | ---- | - | ----------- | ---- |  | - | ------------ | -
|                                                                                           |  | Years ended December 31, |            
|                                                                                           |  | 2004                     |             |   | 2003 |   |             | 2002 | 
|Operating activities:                                                                      |  |                          |             |   |      |   |             |      |  |   |              |  
|Net earnings (loss)                                                                        |  | $                        | 2,440,000   |   |      | $ | (22,138,000 | )    |  | $ | (22,718,000  | )
|Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: |  |                          |             |   |      |   |             |      |  |   |              |  
|Depreciation and amortization                                                              |  |                          | 9,635,000   |   |      |   | 10,594,000  |      |  |   | 9,786,000    |  
|Amortization and write-off of credit facility fees                                         |  |                          | 275,000     |   |      |   | 1,161,000   |      |  |   | 225,000      |  
|Amortization of deferred compensation                                                      |  |                          | 51,000      |   |      |   |            |      |  |   |             |  
|Impairment charges                                                                         |  |                          |            |   |      |   | 21,331,000  |      |  |   |             |  
|Earnings from discontinued operation, net                                                  |  |                          |            |   |      |   |            |      |  |   | (5,168,000   | )
|Cumulative effect of accounting change                                                     |  |                          |            |   |      |   |            |      |  |   | 28,606,000   |  
|Tax benefit of options exercised                                                           |  |                          | 6,000       |   |      |   | 500,000     |      |  |   | 93,000       |  
|Deferred income taxes                                                                      |  |                          | 1,608,000   |   |      |   | 2,253,000   |      |  |   | 7,962,000    |  
|Changes in assets and liabilities:                                                         |  |                          |             |   |      |   |             |      |  |   |              |  
|Accounts receivable                                                                        |  |                          | (1,251,000  | ) |      |   | 883,000     |      |  |   | 644,000      |  
|Inventories                                                                                |  |                          | 36,000      |   |      |   | 123,000     |      |  |   | 41,000       |  
|Prepaid expenses and other                                                                 |  |                          | (1,015,000  | ) |      |   | 1,776,000   |      |  |   | (1,026,000   | )
|Accounts payable                                                                           |  |                          | (1,386,000  | ) |      |   | 891,000     |      |  |   | 1,418,000    |  
|Accrued liabilities                                                                        |  |                          | 767,000     |   |      |   | (885,000    | )    |  |   | 2,102,000    |  
|Payable to/receivable from Dover Downs Gaming & Entertainment, Inc.                        |  |                          | 98,000      |   |      |   | (371,000    | )    |  |   | 793,000      |  
|Income taxes payable/receivable                                                            |  |                          | 8,653,000   |   |      |   | 278,000     |      |  |   | 883,000      |  
|Deferred revenue                                                                           |  |                          | 359,000     |   |      |   | (776,000    | )    |  |   | (832,000     | )
|Other assets and liabilities                                                               |  |                          | (21,000     | ) |      |   | (22,000     | )    |  |   | (24,000      | )
|                                                                                           |  |                          |             |   |      |   |             |      |  |   |              |  
|Net cash provided by continuing operations                                                 |  |                          | 20,255,000  |   |      |   | 15,598,000  |      |  |   | 22,785,000   |  
|                                                                                           |  |                          |             |   |      |   |             |      |  |   |              |  
|Investing activities:                                                                      |  |                          |             |   |      |   |             |      |  |   |              |  
|Capital expenditures                                                                       |  |                          | (4,920,000  | ) |      |   | (3,117,000  | )    |  |   | (9,167,000   | )
|Restricted cash                                                                            |  |                          | (138,000    | ) |      |   | 250,000     |      |  |   | (522,000     | )
|Other                                                                                      |  |                          |            |   |      |   | 283,000     |      |  |   |             |  
|                                                                                           |  |                          |             |   |      |   |             |      |  |   |              |  
|Net cash used in investing activities of continuing operations                             |  |                          | (5,058,000  | ) |      |   | (2,584,000  | )    |  |   | (9,689,000   | )
|                                                                                           |  |                          |             |   |      |   |             |      |  |   |              |  
|Financing activities:                                                                      |  |                          |             |   |      |   |             |      |  |   |              |  
|Borrowings from notes payable to banks                                                     |  |                          | 73,895,000  |   |      |   | 48,165,000  |      |  |   | 153,544,000  |  
|Repayments on notes payable to banks                                                       |  |                          | (89,940,000 | ) |      |   | (56,635,000 | )    |  |   | (212,639,000 | )
|Debt paid down by Dover Downs Gaming & Entertainment, Inc.                                 |  |                          |            |   |      |   |            |      |  |   | 45,000,000   |  
|Repayments of long-term debt                                                               |  |                          | (743,000    | ) |      |   | (682,000    | )    |  |   | (626,000     | )
|Repayment of shareholder loan                                                              |  |                          |            |   |      |   |            |      |  |   | 92,000       |  
|Proceeds from sale of common stock, net                                                    |  |                          |            |   |      |   |            |      |  |   | 6,203,000    |  
|Proceeds from stock options exercised                                                      |  |                          | 319,000     |   |      |   | 155,000     |      |  |   | 67,000       |  
|Credit facility origination and amendment fees                                             |  |                          | (337,000    | ) |      |   | (556,000    | )    |  |   | (839,000     | )
|Dividends paid                                                                             |  |                          | (1,605,000  | ) |      |   | (1,598,000  | )    |  |   | (3,631,000   | )
|                                                                                           |  |                          |             |   |      |   |             |      |  |   |              |  
|Net cash used in financing activities of continuing operations                             |  |                          | (18,411,000 | ) |      |   | (11,151,000 | )    |  |   | (12,829,000  | )
|                                                                                           |  |                          |             |   |      |   |             |      |  |   |              |  
|Net cash used in discontinued operation                                                    |  |                          |            |   |      |   |            |      |  |   | (1,730,000   | )
|                                                                                           |  |                          |             |   |      |   |             |      |  |   |              |  
|Net (decrease) increase in cash and cash equivalents                                       |  |                          | (3,214,000  | ) |      |   | 1,863,000   |      |  |   | (1,463,000   | )
|Cash and cash equivalents, beginning of year                                               |  |                          | 3,348,000   |   |      |   | 1,485,000   |      |  |   | 2,948,000    |  
|                                                                                           |  |                          |             |   |      |   |             |      |  |   |              |  
|Cash and cash equivalents, end of year                                                     |  | $                        | 134,000     |   |      | $ | 3,348,000   |      |  | $ | 1,485,000    |  
|                                                                                           |  |                          |             |   |      |   |             |      |  |   |              |  
|Supplemental information:                                                                  |  |                          |             |   |      |   |             |      |  |   |              |  
|Interest paid                                                                              |  | $                        | 3,494,000   |   |      | $ | 4,233,000   |      |  | $ | 4,977,000    |  
|                                                                                           |  |                          |             |   |      |   |             |      |  |   |              |  
|Income tax refunds, net of payments                                                        |  | $                        | (6,962,000  | ) |      | $ | (5,779,000  | )    |  | $ | (6,961,000   | )
|                                                                                           |  |                          |             |   |      |   |             |      |  |   |              |  



The Notes to the
Consolidated Financial Statements are an integral part of these consolidated statements.



34



---

DOVER MOTORSPORTS, INC.



NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1  Business Operations



References in these footnotes to the Company,
DVD, we, us, and our mean Dover Motorsports, Inc. and its wholly owned subsidiaries.



Dover Motorsports, Inc. is a leading marketer and promoter of motorsports entertainment in the United States. Its motorsports subsidiaries operate five
motorsports tracks (four permanent facilities and one temporary circuit) in four states and promoted 16 major events during 2004 under the auspices of four of the premier sanctioning bodies in motorsports - the National Association for Stock Car
Auto Racing (NASCAR), the Indy Racing League (IRL), the National Hot Rod Association (NHRA) and the Champ Car World Series (CCWS) (f/k/a Championship Auto Racing Teams  CART). 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 in Memphis, Tennessee. The Company
also organizes and promotes the Toyota Grand Prix of Long Beach in California.



In 2004, the Company promoted the following major events:



| |  | 2 NASCAR NEXTEL Cup Series events;
|- |  | ----------------------------------



| |  | 6 NASCAR Busch Series, Grand National Division events;
|- |  | ------------------------------------------------------



| |  | 4 NASCAR Craftsman Truck Series events;
|- |  | ---------------------------------------



| |  | 1 Champ Car World Series events;
|- |  | --------------------------------



| |  | 1 IRL Indy Car Series events; and
|- |  | ---------------------------------



| |  | 2 NHRA national events.
|- |  | -----------------------



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 accompanying consolidated financial statements. 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 is 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. See NOTE 2  Discontinued Operation for
further discussion.



NOTE 2  Discontinued Operation



The Companys former gaming segment has been accounted for as a
discontinued operation and, accordingly, the accompanying consolidated financial statements have been reclassified to report separately the operating results of this discontinued operation. The historical financial statements also include an
allocation of interest expense to Gaming of $351,000 for the year ended December 31, 2002, which has been allocated based upon each companys earnings before interest, taxes, depreciation and amortization, income tax payments and capital
expenditures. Management believes this is a reasonable method of allocating interest expense.



35



---

A summary of the operating results of this discontinued operation, which are included in the net loss of
DVD for the year ended December 31, 2002, is as follows (the Companys tax-free spin-off of its gaming business was effective March 31, 2002, therefore there were no earnings from the discontinued operation after March 31, 2002):



|                                     |  |   |           
|------------------------------------ |  | - | ----------
|Net revenues                         |  | $ | 49,780,000
|Operating earnings                   |  | $ | 8,710,000 
|Earnings before income tax provision |  | $ | 8,710,000 
|Income tax provision                 |  | $ | 3,542,000 
|Net earnings                         |  | $ | 5,168,000 



In conjunction with
the spin-off, the Company and Gaming entered into various agreements that addressed the allocation of assets and liabilities between the two companies and that define the companies relationship after the separation. These are the Agreement
Regarding Distribution and Plan of Reorganization, the Real Property Agreement, the Employee Benefits Agreement, the Transition Support Services Agreement, and the Tax Sharing Agreement.



The Agreement Regarding Distribution and Plan of Reorganization set forth the principal corporate transactions required to
effect the separation of the gaming business from the motorsports business, and the continuation of the gaming business following such separation, including the allocation between the Company and Gaming of certain assets and liabilities, and the
distribution of shares of Gaming common stock and Class A common stock. As a result of the spin-off, all assets and liabilities relating to the gaming business were assumed and are owned by Gaming or its subsidiaries, and all assets and liabilities
relating to the motorsports business were assumed and are owned by the Company or its subsidiaries.



The Real Property Agreement governs certain real property transfers, leases and easements affecting the Companys Dover, Delaware facility.



The Employee Benefits Agreement provided for the transfer of
Gaming employees from employee benefits under plans or programs sponsored by the Company to those sponsored by Gaming. In connection with the spin-off and pursuant to the terms of the Employee Benefits Agreement, the Company arranged for the
transfer to Gaming of the assets and liabilities associated with the Companys defined-benefit pension plan and the 401(k) plan sponsored by the Company with respect to employees who became employees of Gaming (or remain employed by Dover
Downs, Inc.) after the spin-off.



The Transition Support
Services Agreement provides for each of the Company and Gaming to provide each other with certain administrative and operational services. The party receiving the services is required to pay for them within 30 business days after receipt of an
invoice at rates agreed upon by the Company and Gaming. The agreement may be terminated in whole or in part 90 days after the request of the party receiving the services or 180 days after the request of the party providing the services.



The Tax Sharing Agreement provides for, among other things, the treatment
of income tax matters for periods beginning before and including the date of the spin-off and any taxes resulting from transactions effected in connection with the spin-off. With respect to any period ending on or before the spin-off or any tax
period in which the spin-off occurs, the Company:



| |  | continues to be the sole and exclusive agent for Gaming in all matters relating to the income, franchise, property, sales and use tax liabilities of Gaming;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | subject to Gamings obligation to pay for items relating to its gaming business, bears any costs relating to tax audits, including tax assessments and any related interest and
penalties and any legal, litigation, accounting or consulting expenses;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | continues to have the sole and exclusive responsibility for the preparation and filing of consolidated federal and consolidated state income tax returns; and
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



36



---

| |  | subject to the right and authority of Gaming to direct the Company in the defense or prosecution of the portion of a tax contest directly and exclusively related to any Gaming tax
adjustment, generally has the powers, in the Companys sole discretion, to contest or compromise any claim or refund on Gamings behalf.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Refer to NOTE 11  Related Party Transactions for further discussion.



NOTE 3  Summary of Significant Accounting Policies



Basis of consolidation and presentationThe accompanying
consolidated financial statements include the accounts of DVD and its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated.



Cash and cash equivalentsThe Company considers as cash equivalents all highly-liquid investments with an original maturity of three months or
less.



Accounts receivableAccounts
receivable are stated at their estimated collectible amount and do not bear interest.



InventoriesInventories of items for resale are stated at the lower of cost or market with cost being determined on the first-in, first-out basis.



Property and equipmentProperty and equipment is stated at cost.
Depreciation is provided for financial reporting purposes using the straight-line method over the following estimated useful lives:



|                                  |  |            
|--------------------------------- |  | -----------
|Facilities                        |  | 10-40 years
|Furniture, fixtures and equipment |  | 5-10 years 



GoodwillGoodwill resulting from acquisitions made prior to July 1, 2001 represents the excess of the purchase price over the fair value of net assets acquired. Prior to 2002, goodwill was amortized using the straight-line
method principally over a period of 40 years. In June 2001, the Financial Accounting Standards Board (FASB) issued Statement No. 142, Goodwill and Other Intangible Assets, which requires that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually in accordance with the provisions of Statement No. 142. The Company adopted the provisions of Statement No. 142 effective January 1, 2002, at
which time the Company ceased to record amortization expense related to its goodwill. To comply with the transitional provisions of Statement No. 142, the Company determined its reporting units and assigned goodwill and other net assets to those
reporting units. Goodwill attributable to each of the Companys reporting units at January 1, 2002 was tested for impairment by comparing the fair value of each reporting unit with its carrying value. To the extent fair value was determined to
be less than the carrying value, fair value was then allocated to identifiable tangible and intangible assets resulting in an implied valuation of the goodwill associated with the reporting unit. Based on this analysis of goodwill, the Company
recorded a non-cash charge of $28,606,000 associated with the goodwill of Grand Prix Association of Long Beach, Inc. (Grand Prix), a wholly owned subsidiary, as a cumulative effect of an accounting change for the write-off of goodwill in
2002.



Additionally, the Company completed its annual
assessment of goodwill in November 2003 which resulted in the impairment of $13,362,000 of additional goodwill associated with Grand Prix. This impairment loss resulted primarily from the uncertainties surrounding CART, leading to its bankruptcy
announcement in December 2003, and is included in impairment charges in the consolidated statement of earnings for the year ended December 31, 2003. Fair value for the 2002 and 2003 impairment assessments was primarily determined through the use of
a discounted cash flow methodology from an independent appraisal. The Company completed its 2004 annual assessment of goodwill in November 2004 and determined that there was no impairment loss related to goodwill as of that date. Therefore, no
impairment loss was recorded in 2004. Goodwill associated with Grand Prix, which was acquired through a tax-free merger, is not deductible for income tax purposes and represents a permanent difference for which no current or deferred income tax
liabilities are recorded. As such, no income tax benefit was recognized from the impairment losses.



37



---

Impairment of long-lived assetsThe Company evaluates its long-lived assets other than
goodwill in accordance with the provisions of FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Long-lived assets other than goodwill are assessed for impairment whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. To analyze recoverability for assets to be held and used, the Company projects undiscounted net future cash flows expected to be generated by the asset over the remaining life of
such assets. If these projected cash flows are less than the carrying value, an impairment loss would be recognized equal to the difference between the carrying value and the fair value of the assets. See NOTE 7  Impairment Charges for further
discussion.



Income taxesDeferred income taxes are
provided in accordance with the provisions of FASB Statement No. 109, Accounting for Income Taxes, on all differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements based
upon enacted statutory tax rates in effect at the balance sheet date. The Company records a valuation allowance to reduce its deferred tax assets when uncertainty regarding their realizability exists. In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income
during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.



Revenue recognitionThe Company classifies its revenues as
admissions, event-related revenue, broadcasting revenue and other revenue. Admissions includes ticket sales for all Company events. Event-related revenue includes amounts received from sponsorship fees, which includes tickets
provided to sponsors; luxury suite rentals; hospitality tent rentals and catering; concessions and souvenir sales and vendor commissions for the right to sell concessions and souvenirs at our facilities; sales of programs; track rentals and other
event-related revenues. Broadcasting revenue includes rights fees obtained for television and radio broadcasts of events held at the Companys speedways and ancillary rights fees. Other revenue includes revenues from the
Companys grandstand rental business and other miscellaneous revenues.



Revenues pertaining to specific events are deferred until the event is held. Concession revenue from concession stand sales and sales of souvenirs are recorded at the time of sale. Revenues and related expenses from
barter transactions in which the Company receives advertising or other goods or services in exchange for sponsorships of motorsports events are recorded at fair value in accordance with Emerging Issues Task Force (EITF) Issue No. 99-17,
Accounting for Advertising Barter Transactions. Barter transactions accounted for $1,703,000, $2,154,000 and $1,450,000 of total revenues for the years ended December 31, 2004, 2003 and 2002, respectively.



We derive a substantial portion of our motorsports revenues from admissions
and event-related revenue attributable to six NASCAR-sanctioned events at Dover, Delaware which are currently held in June and September.



Under the terms of the Companys sanction agreements, NASCAR retains 10% of the gross broadcast rights fees allocated to each NASCAR NEXTEL Cup
Series (f/k/a Winston Cup) or NASCAR Busch Series event as a component of its sanction fees and remits the remaining 90% to the event promoter, which the Company records as revenue. The event promoter is required to pay 25% of the gross broadcast
rights fees to the event as part of the awards to the competitors, which the Company records as operating expenses.



Expense recognitionCertain direct expenses pertaining to specific events, including prize and point fund monies and sanction fees paid to
various sanctioning bodies, including NASCAR, advertising and other expenses associated with the promotion of our racing events are deferred until the event is held, at which point they are expensed.



The cost of non-event related advertising, promotion and marketing programs
are expensed as incurred.



Advertising expenses were
$3,093,000, $4,455,000 and $4,245,000 in 2004, 2003 and 2002, respectively.



38



---

Earnings per shareBasic and diluted earnings per share (EPS) are calculated in
accordance with FASB Statement No. 128, Earnings Per Share. Weighted average shares used in computing basic and diluted EPS are as follows:



|                              |  |                          |  |            |  |           
|----------------------------- |  | ------------------------ |  | ---------- |  | ----------
|                              |  | Years ended December 31,
|                              |  | 2004                     |  | 2003       |  | 2002      
|Basic EPS                     |  | 40,024,000               |  | 39,880,000 |  | 38,634,000
|Effect of dilutive securities |  | 32,000                   |  |           |  | 346,000   
|                              |  |                          |  |            |  |           
|Diluted EPS                   |  | 40,056,000               |  | 39,880,000 |  | 38,980,000
|                              |  |                          |  |            |  |           



Dilutive securities
include stock options and unvested restricted stock awards.



For the years ended December 31, 2004 and 2002, options to purchase approximately 1,036,000 and 536,000 shares of common stock, respectively, were outstanding, but were not included in the computation of diluted EPS because the
options exercise prices were greater than the average market price of the common stock during the period.



For the year ended December 31, 2003, options to purchase approximately 1,389,000 shares of common stock were outstanding, but were not included in the
computation of diluted EPS because the Company had a net loss and all outstanding options would have been anti-dilutive.



Accounting for stock-based compensationThe Company has a stock incentive plan which provides for the grant of stock options and/or
restricted stock to officers and key employees. The Company accounts for stock options in accordance with FASB Statement No. 123, Accounting for Stock-Based Compensation, as amended by FASB Statement No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure  an Amendment of FASB Statement No. 123. Statement No. 123 defines a fair-value based method of accounting for stock-based compensation plans; however, it allows the continued use of the
intrinsic value method under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. The Company has elected to continue to use the intrinsic value method and based
on this method, did not record any stock-based compensation expense related to its stock options during the years ended December 31, 2004, 2003 and 2002. The Companys restricted stock vests based on continued employment with the Company.
Restricted stock awards result in compensation expense as discussed in NOTE 10  Stockholders Equity.



The following table illustrates the effect on net earnings (loss) and net earnings (loss) per common share if the Company had applied the fair-value
recognition provisions of Statement No. 123 to stock-based employee compensation:



|                                                                                                                                            |  |                          |           |   |      |   |             |      |  |   |             |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | --------- | - | ---- | - | ----------- | ---- |  | - | ----------- | -
|                                                                                                                                            |  | Years ended December 31, |          
|                                                                                                                                            |  | 2004                     |           |   | 2003 |   |             | 2002 | 
|Net earnings (loss), as reported                                                                                                            |  | $                        | 2,440,000 |   |      | $ | (22,138,000 | )    |  | $ | (22,718,000 | )
|Add: Stock-based employee compensation expense included in reported net earnings (loss), net of related tax effects                         |  |                          | 51,000    |   |      |   |            |      |  |   |            |  
|Deduct: Total stock-based employee compensation expense determined under fair-value based method for all awards, net of related tax
effects |  |                          | (667,000  | ) |      |   | (685,000    | )    |  |   | (819,000    | )
|                                                                                                                                            |  |                          |           |   |      |   |             |      |  |   |             |  
|Pro forma net earnings (loss)                                                                                                               |  | $                        | 1,824,000 |   |      | $ | (22,823,000 | )    |  | $ | (23,537,000 | )
|                                                                                                                                            |  |                          |           |   |      |   |             |      |  |   |             |  
|Net earnings (loss) per common share:                                                                                                       |  |                          |           |   |      |   |             |      |  |   |             |  
|Basic  as reported                                                                                                                         |  | $                        | 0.06      |   |      | $ | (0.56       | )    |  | $ | (0.59       | )
|Basic  pro forma                                                                                                                           |  | $                        | 0.05      |   |      | $ | (0.57       | )    |  | $ | (0.61       | )
|                                                                                                                                            |  |                          |          
|Diluted  as reported                                                                                                                       |  | $                        | 0.06      |   |      | $ | (0.56       | )    |  | $ | (0.58       | )
|Diluted  pro forma                                                                                                                         |  | $                        | 0.05      |   |      | $ | (0.57       | )    |  | $ | (0.60       | )



39



---

For disclosure purposes, the Company determined compensation cost for its stock options based upon the
fair value at the grant date using the Black-Scholes option-pricing model with the following assumptions:



|                         |  |           |  |      |   |  |      |   |  | 
|------------------------ |  | --------- |  | ---- | - |  | ---- | - |  | 
|                         |  | December, | 
|                         |  | 2004      |  | 2003 |   |  | 2002 |  
|Risk-free interest rate  |  | n/a       |  | 3.75 | % |  | 4.86 | %
|Volatility               |  | n/a       |  | 45   | % |  | 67   | %
|Expected dividend yield  |  | n/a       |  | 0.85 | % |  | 0.55 | %
|Expected life (in years) |  | n/a       |  | 7.5  |   |  | 7.5  |  



The weighted-average
fair value of options granted during the years ended December 31, 2003 and 2002, was $2.22 and $4.83, respectively. No stock options were granted during the year ended December 31, 2004. The fair value of restricted stock awards granted during the
year ended December 31, 2004 was $4.16.



Use of
estimatesThe preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



Fair value of financial instrumentsThe carrying amount reported
in the balance sheet for current assets and current liabilities approximates their fair value because of the short maturity of these instruments. The carrying value of notes payable to banks at December 31, 2004 and 2003 approximates its fair value
based on interest rates available on similar borrowings. At December 31, 2004 and 2003, the Companys long-term debt had carrying values of $18,489,000 and $19,232,000, respectively, and estimated fair values of $20,596,000 and $22,195,000,
respectively. The fair values were determined through the use of a discounted cash flow methodology applying interest rates available to the Company for issues with similar terms.



Segment informationThe Company accounts for its operating segment in accordance with FASB Statement No. 131,
Disclosures About Segments of an Enterprise and Related Information. Statement No. 131 establishes guidelines for public companies in determining operating segments based on those used for internal reporting to management. Based on these
guidelines, the Company reports information under a single motorsports segment.



ReclassificationsCertain reclassifications have been made to the prior years consolidated financial statements to conform to the current year presentation. These reclassifications had no effect on net
earnings (loss).



Recent accounting
pronouncementsIn December 2004, the FASB issued Statement No. 123 (Revised 2004) Share-Based Payment. Statement No. 123R addresses all forms of share-based payment awards, including shares issued under employee stock purchase
plans, stock options, restricted stock and stock appreciation rights. It will require companies to recognize in the statement of earnings the grant-date fair value of stock options and other equity-based compensation issued to employees, but
expresses no preference for a type of valuation model. The statement eliminates the intrinsic value-based method prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations, that the Company
currently uses. The Company is required to adopt Statement No. 123R beginning in the third quarter of 2005. The Company has not yet determined the impact of applying the various provisions of the statement; however, adoption of the statement is
expected to increase the amount the Company records as compensation expense in 2005.



40



---

NOTE 4  Property and Equipment



Property and equipment consists of the following as of December 31:



|                                  |  |      |             |   |      |   |             |  
|--------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                  |  | 2004 |             |   | 2003 |  
|Land                              |  | $    | 27,192,000  |   |      | $ | 27,192,000  |  
|Facilities                        |  |      | 232,304,000 |   |      |   | 230,158,000 |  
|Furniture, fixtures and equipment |  |      | 19,707,000  |   |      |   | 19,053,000  |  
|Construction in progress          |  |      | 2,376,000   |   |      |   | 319,000     |  
|                                  |  |      |             |   |      |   |             |  
|                                  |  |      | 281,579,000 |   |      |   | 276,722,000 |  
|Less accumulated depreciation     |  |      | (56,606,000 | ) |      |   | (47,119,000 | )
|                                  |  |      |             |   |      |   |             |  
|                                  |  | $    | 224,973,000 |   |      | $ | 229,603,000 |  
|                                  |  |      |             |   |      |   |             |  



Depreciation expense
was $9,550,000, $10,509,000 and $9,706,000 for the years ended December 31, 2004, 2003 and 2002, respectively.



NOTE 5  Accrued Liabilities



Accrued liabilities consists of the following as of December 31:



|                          |  |      |           |      |   |          
|------------------------- |  | ---- | --------- | ---- | - | ---------
|                          |  | 2004 |           | 2003
|Payroll and related items |  | $    | 1,225,000 |      | $ | 588,000  
|Real estate taxes         |  |      | 1,215,000 |      |   | 1,127,000
|Other                     |  |      | 3,110,000 |      |   | 2,872,000
|                          |  |      |           |      |   |          
|                          |  | $    | 5,550,000 |      | $ | 4,587,000
|                          |  |      |           |      |   |          



NOTE 6  Indebtedness



Long-term debt consists of the following as of December
31:



|                       |  |      |            |   |      |   |            |  
|---------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                       |  | 2004 |            |   | 2003 |  
|Notes payable to banks |  | $    | 27,000,000 |   |      | $ | 43,045,000 |  
|SWIDA bonds            |  |      | 18,489,000 |   |      |   | 19,232,000 |  
|                       |  |      |            |   |      |   |            |  
|                       |  |      | 45,489,000 |   |      |   | 62,277,000 |  
|Less current portion   |  |      | (805,000   | ) |      |   | (745,000   | )
|                       |  |      |            |   |      |   |            |  
|                       |  | $    | 44,684,000 |   |      | $ | 61,532,000 |  
|                       |  |      |            |   |      |   |            |  



Effective February 19,
2004, the Company and all of its wholly owned subsidiaries, as co-borrowers, entered into a $70,000,000 revolving credit agreement with a bank group that expires February 19, 2007. Provisions of the credit facility adjust the commitment to
$67,000,000 on November 1, 2004, to $64,000,000 on November 1, 2005 and to $60,000,000 on November 1, 2006. The facility, which replaced the Companys previous revolving credit facility, provides for seasonal funding needs, capital
improvements, letter of credit requirements and other general corporate purposes. Interest is based, at the Companys option, upon LIBOR plus a margin that varies between 210 and 510 basis points depending on the funded debt to earnings before
interest, taxes, depreciation and amortization ratio (the leverage ratio) or the base rate (the greater of the prime rate or the federal funds rate plus 0.5%) plus a margin that varies between 37.5 and 237.5 basis points depending on the
leverage ratio.



The terms of the credit facility, as amended
effective February 16, 2005, contain certain covenants including minimum tangible net worth, fixed charge coverage and maximum funded debt to EBITDA. The credit facility is secured by a first priority perfected security interest and lien on all
available assets owned by the Company and its subsidiaries. The credit facility also provides that a default by the Company or any of its wholly owned subsidiaries under any other loan agreement would constitute a default under this credit facility.
At December 31, 2004, the Company was in compliance with the terms of the facility. Material adverse changes in the Companys results of operations could impact its ability to maintain financial ratios necessary to satisfy these requirements.
There was $27,000,000 outstanding under the facility at December 31, 2004, at a weighted average interest rate of 5.45%. After consideration of stand-by letters of credit outstanding, borrowings of $15,089,000 were available pursuant to the facility
at December 31, 2004. Based on operating results to date and projected future results, the Company is expected to be in compliance with all of the covenants for all measurement periods in 2005.



41



---

In 1996, the Companys wholly owned subsidiary, Grand Prix, entered into an agreement (the
SWIDA loan) with Southwestern Illinois Development Authority (SWIDA) to receive the proceeds from the Taxable Sports Facility Revenue Bonds, Series 1996 (Gateway International Motorsports Corporation Project), a
Municipal Bond Offering, in the aggregate principal amount of $21,500,000, of which $18,489,000 was outstanding at December 31, 2004. SWIDA loaned all of the proceeds from the Municipal Bond Offering to Grand Prix for the purpose of the
redevelopment, construction and expansion of Gateway International Raceway (Gateway), and the proceeds of the SWIDA loan were irrevocably committed to complete construction of Gateway, to fund interest, to create a debt service reserve
fund and to pay for the cost of issuance of the bonds. The repayment terms and debt service reserve requirements of the bonds issued in the Municipal Bond Offering correspond to the terms of the SWIDA loan.



The Company has established certain restricted cash funds to meet debt
service as required by the SWIDA loan, which are held by the trustee (BNY Trust Company of Missouri). At December 31, 2004, $3,571,000 of the Companys cash balance was restricted by the SWIDA loan and is appropriately classified as a
non-current asset in the accompanying consolidated balance sheet. The SWIDA loan is secured by a first mortgage lien on all the real property owned and a security interest in all property leased by Gateway. Also, the SWIDA loan is unconditionally
guaranteed by Grand Prix. The SWIDA loan bears interest at varying rates ranging from 8.75% to 9.25% with an effective rate of approximately 8.91%. Interest expense related to the SWIDA loan was $1,696,000, $1,761,000 and $1,818,000 for the years
ended December 31, 2004, 2003 and 2002, respectively. The structure of the bonds permits amortization from February 1997 through February 2017 with debt service beginning in 2000. A stand-by letter of credit for $2,502,000, which is secured by a
trust deed on the Companys facilities in Memphis, Tennessee, also was obtained to satisfy debt service reserve fund obligations. In addition, a portion of the property taxes to be paid by Gateway (if any) to the City of Madison Tax Incremental
Fund have been pledged to the annual retirement of debt and payment of interest. Refer to NOTE 12  Commitments and Contingencies.



The scheduled maturities of long-term debt outstanding at December 31, 2004 are as follows: 2005-$805,000; 2006-$875,000; 2007-$955,000; 2008-$1,040,000;
2009-$1,130,000; and thereafter-$13,684,000.



NOTE 7  Impairment
Charges



During the fourth quarter of 2003, the Company
recorded non-cash impairment charges of $21,331,000 to write-down the carrying value of goodwill and certain property and equipment. Of the total impairment charges, $13,362,000 related to the impairment of goodwill in connection with the
Companys annual assessment of goodwill. See NOTE 3  Summary of Significant Accounting Policies for further discussion.



Of the remaining $7,969,000 of impairment charges recorded in the fourth quarter of 2003, $2,867,000 related to the write-down of assets used to promote
and run the Grand Prix of St. Petersburg event. On December 1, 2003, the Company announced that Grand Prix had reached an agreement with CART, the sanctioning body of the event, to terminate its agreement with CART relative to the organization and
promotion of the event. 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, the entity which in 2004 purchased most of CARTs assets in
connection with CARTs 2003 bankruptcy proceedings, proved unsuccessful. Based on the foregoing information and the fact that advance ticket and sponsorship sales for the February 2004 Grand Prix of St. Petersburg event were significantly below
budget, the Company analyzed the carrying value of the assets associated with the event for recoverability and recorded an impairment charge to write them off.



A total of $4,309,000 of the impairment charges related to the write-down of assets used to promote and run 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 fair value of assets associated with the Grand Prix of Denver was
zero. On March 25, 2004, Grand Prix reached an agreement with CCWS, to transfer to CCWS certain assets and rights that Grand Prix had relative to the organization and promotion of the Grand Prix of Denver. Grand Prix had a multi-year agreement with
the City of Denver pursuant to which it was entitled to stage an annual auto racing event in and around the PepsiCenter in Denver. Grand Prix assigned to CCWS its rights in this agreement and the City consented to the assignment on July 27, 2004.



42



---

The remainder of the impairment charges during the fourth quarter of 2003 of $793,000 was to reduce the
carrying value of other equipment to be disposed of to fair value.



NOTE 8
 Income Taxes



The current and deferred income tax
provisions (benefits) from continuing operations are as follows:



|                                     |  |                          |           |      |   |            |      |  |   |            |  
|------------------------------------ |  | ------------------------ | --------- | ---- | - | ---------- | ---- |  | - | ---------- | -
|                                     |  | Years ended December 31, |          
|                                     |  | 2004                     |           | 2003 |   |            | 2002 | 
|Current:                             |  |                          |           |      |   |            |      |  |   |            |  
|Federal                              |  | $                        |          |      | $ | (5,978,000 | )    |  | $ | (8,259,000 | )
|State                                |  |                          | 1,701,000 |      |   | 1,500,000  |      |  |   | 1,149,000  |  
|                                     |  |                          |           |      |   |            |      |  |   |            |  
|                                     |  |                          | 1,701,000 |      |   | (4,478,000 | )    |  |   | (7,110,000 | )
|                                     |  |                          |           |      |   |            |      |  |   |            |  
|Deferred:                            |  |                          |           |      |   |            |      |  |   |            |  
|Federal                              |  |                          | 1,322,000 |      |   | (140,000   | )    |  |   | 9,208,000  |  
|State                                |  |                          | 286,000   |      |   | 2,393,000  |      |  |   | (1,246,000 | )
|                                     |  |                          |           |      |   |            |      |  |   |            |  
|                                     |  |                          | 1,608,000 |      |   | 2,253,000  |      |  |   | 7,962,000  |  
|                                     |  |                          |           |      |   |            |      |  |   |            |  
|Total income tax provision (benefit) |  | $                        | 3,309,000 |      | $ | (2,225,000 | )    |  | $ | 852,000    |  
|                                     |  |                          |           |      |   |            |      |  |   |            |  



Deferred tax assets
and liabilities are comprised of the following as of December 31:



|                                                   |  |      |             |   |      |   |             |  
|-------------------------------------------------- |  | ---- | ----------- | - | ---- | - | ----------- | -
|                                                   |  | 2004 |             |   | 2003 |  
|Deferred tax assets:                               |  |      |             |   |      |   |             |  
|Accruals not currently deductible for income taxes |  | $    | 781,000     |   |      | $ | 548,000     |  
|Net operating loss carry-forwards                  |  |      | 14,466,000  |   |      |   | 9,437,000   |  
|                                                   |  |      |             |   |      |   |             |  
|Total deferred tax assets                          |  |      | 15,247,000  |   |      |   | 9,985,000   |  
|                                                   |  |      |             |   |      |   |             |  
|Deferred tax liabilities:                          |  |      |             |   |      |   |             |  
|Depreciation                                       |  |      | (53,614,000 | ) |      |   | (45,044,000 | )
|                                                   |  |      |             |   |      |   |             |  
|                                                   |  |      | (38,367,000 | ) |      |   | (35,059,000 | )
|Valuation allowance                                |  |      | (3,556,000  | ) |      |   | (2,830,000  | )
|                                                   |  |      |             |   |      |   |             |  
|Net deferred tax liability                         |  | $    | (41,923,000 | ) |      | $ | (37,889,000 | )
|                                                   |  |      |             |   |      |   |             |  



Deferred income taxes
relate to the temporary differences between financial accounting income and taxable income and are primarily attributable to differences between the book and tax basis of property and equipment and net operating loss carry-forwards (expiring through
2024). At December 31, 2004, the Company has available federal and state net operating loss carryforwards of $19,630,000 and $165,257,000, respectively. Valuation allowances of $726,000 and $2,667,000, net of federal tax benefit, were recorded in
2004 and 2003, respectively, relating to state net operating loss carry-forwards that may expire prior to being realized. The Company believes that it is more likely than not that the remaining deferred tax assets will be realized based upon
reversals of existing taxable temporary differences.



A
reconciliation of the effective income tax rate with the applicable statutory federal income tax rate is as follows:



|                                    |  |                          |   |  |       |    |  |      |   
|----------------------------------- |  | ------------------------ | - |  | ----- | -- |  | ---- | --
|                                    |  | Years ended December 31, |  
|                                    |  | 2004                     |   |  | 2003  |    |  | 2002 |   
|Federal tax at statutory rate       |  | 35.0                     | % |  | 35.0  | %  |  | 35.0 | % 
|State taxes, net of federal benefit |  | 7.3                      | % |  | (16.2 | %) |  | 8.3  | % 
|Non-deductible goodwill and other   |  |                         |   |  | (15.5 | %) |  | (1.8 | %)
|Valuation allowance                 |  | 15.3                     | % |  | 5.8   | %  |  | (3.9 | %)
|                                    |  |                          |   |  |       |    |  |      |   
|Effective income tax rate           |  | 57.6                     | % |  | 9.1   | %  |  | 37.6 | % 
|                                    |  |                          |   |  |       |    |  |      |   



43



---

Prior to the spin-off, Gaming was included as part of the Companys consolidated federal income tax
return; however, the income tax expense presented in the consolidated financial statements has been computed on a separate return basis. The Company and Gaming have entered into a Tax Sharing Agreement to reflect each companys rights and
obligations relating to payments and refunds of taxes that are attributable to periods beginning before and including the date of the spin-off described in NOTE 2  Discontinued Operation. The agreement provides for payments between the
companies to reflect tax liabilities that may arise before, after and because of the spin-off. During the third quarter of 2002, pursuant to the Tax Sharing Agreement, Gaming paid the Company $2,700,000 for its portion of the 2002 consolidated
federal income tax liability. Since the spin-off was effective on March 31, 2002, the Companys 2002 federal income tax return included the operations of Gaming for the first quarter of the year.



For the year ended December 31, 2003, the Company reported a net operating
loss for federal income tax purposes. The loss was carried back to 2001, a period prior to the spin-off, which generated an alternative minimum tax credit carryforward, a portion of which is required to be paid by Gaming under the Tax Sharing
Agreement; therefore, during the fourth quarter of 2003 the Company recorded a $330,000 receivable from Gaming for its portion of the carryforward. We received payment of the amount in the first quarter of 2004.



NOTE 9  Pension Plan



The Company maintains a non-contributory tax qualified defined benefit
pension plan. All of DVDs full time employees are eligible to participate in the plan. Benefits provided by the Dover Motorsports, Inc. pension plan are based on years of service and employees remuneration over their employment with the
Company. Pension costs are funded in accordance with the provisions of the Internal Revenue Code. The Company also maintains a non-qualified, noncontributory defined benefit pension plan for certain employees to restore pension benefits reduced by
federal income tax regulations. The cost associated with the plan is determined using the same actuarial methods and assumptions as those used for the Companys qualified pension plan.



The following table sets forth the plans funded status and amounts
recognized in the Companys consolidated balance sheet as of December 31:



|                                               |  |      |            |   |      |   |            |  
|---------------------------------------------- |  | ---- | ---------- | - | ---- | - | ---------- | -
|                                               |  | 2004 |            |   | 2003 |  
|Change in benefit obligation:                  |  |      |            |   |      |   |            |  
|Benefit obligation at beginning of year        |  | $    | 3,733,000  |   |      | $ | 2,874,000  |  
|Service cost                                   |  |      | 302,000    |   |      |   | 228,000    |  
|Interest cost                                  |  |      | 249,000    |   |      |   | 211,000    |  
|Actuarial loss                                 |  |      | 286,000    |   |      |   | 463,000    |  
|Benefits paid                                  |  |      | (38,000    | ) |      |   | (43,000    | )
|                                               |  |      |            |   |      |   |            |  
|Benefit obligation at end of year              |  |      | 4,532,000  |   |      |   | 3,733,000  |  
|                                               |  |      |            |   |      |   |            |  
|Change in plan assets:                         |  |      |            |   |      |   |            |  
|Fair value of plan assets at beginning of year |  |      | 2,372,000  |   |      |   | 1,852,000  |  
|Actual return on plan assets                   |  |      | 180,000    |   |      |   | 323,000    |  
|Employer contribution                          |  |      | 592,000    |   |      |   | 240,000    |  
|Benefits paid                                  |  |      | (38,000    | ) |      |   | (43,000    | )
|                                               |  |      |            |   |      |   |            |  
|Fair value of plan assets at end of year       |  |      | 3,106,000  |   |      |   | 2,372,000  |  
|                                               |  |      |            |   |      |   |            |  
|Unfunded status                                |  |      | (1,426,000 | ) |      |   | (1,361,000 | )
|Unrecognized net loss                          |  |      | 1,499,000  |   |      |   | 1,242,000  |  
|Unrecognized prior service cost                |  |      | 196,000    |   |      |   | 219,000    |  
|                                               |  |      |            |   |      |   |            |  
|Net amount recognized                          |  | $    | 269,000    |   |      | $ | 100,000    |  
|                                               |  |      |            |   |      |   |            |  



44



---

The following table presents the amounts recognized in the Companys consolidated balance sheet as
of December 31:



|                                     |  |      |          |   |      |   |          |  
|------------------------------------ |  | ---- | -------- | - | ---- | - | -------- | -
|                                     |  | 2004 |          |   | 2003 |  
|Accrued benefit cost                 |  | $    | (685,000 | ) |      | $ | (665,000 | )
|Intangible asset                     |  |      | 39,000   |   |      |   | 44,000   |  
|Deferred income taxes                |  |      | 388,000  |   |      |   | 311,000  |  
|Accumulated other comprehensive loss |  |      | 527,000  |   |      |   | 410,000  |  
|                                     |  |      |          |   |      |   |          |  
|                                     |  | $    | 269,000  |   |      | $ | 100,000  |  
|                                     |  |      |          |   |      |   |          |  



The projected benefit
obligation, accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $4,532,000, $3,894,000 and $3,106,000, respectively, as of December 31, 2004 and
$3,733,000, $3,163,000 and $2,372,000 respectively, as of December 31, 2003.



The Company plans to contribute approximately $400,000 to its pension plans in 2005.



Benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:



|          |  |   |          
|--------- |  | - | ---------
|2005      |  | $ | 60,000   
|2006      |  | $ | 76,000   
|2007      |  | $ | 81,000   
|2008      |  | $ | 119,000  
|2009      |  | $ | 143,000  
|2010-2014 |  | $ | 1,244,000



Since the actuarial
present value of accumulated benefits exceeds plan assets and accrued pension liabilities, the Company was required to record a minimum pension liability in its consolidated balance sheet at December 31, 2002. The effect of this adjustment was to
increase pension liabilities by $618,000, increase intangible assets by $49,000, increase deferred income tax assets by $239,000 and recognize other comprehensive loss of $330,000. In 2003, the Company was required to record an additional minimum
pension liability that increased pension liabilities by $147,000, decreased intangible assets by $5,000, increased deferred income tax assets by $72,000 and recognized other comprehensive loss of $80,000. In 2004, the Company was required to record
an additional minimum pension liability that increased pension liabilities by $196,000, decreased intangible assets by $5,000, increased deferred income tax assets by $84,000 and recognized other comprehensive loss of $117,000. Because these
adjustments had no cash impact, the effect has been excluded from the accompanying consolidated statement of cash flows.



The components of net periodic pension cost are as follows:



|                               |  |                          |          |   |      |   |          |      |  |   |          |  
|------------------------------ |  | ------------------------ | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                               |  | Years ended December 31, |         
|                               |  | 2004                     |          |   | 2003 |   |          | 2002 | 
|Service cost                   |  | $                        | 302,000  |   |      | $ | 228,000  |      |  | $ | 287,000  |  
|Interest cost                  |  |                          | 249,000  |   |      |   | 211,000  |      |  |   | 210,000  |  
|Expected return on plan assets |  |                          | (243,000 | ) |      |   | (173,000 | )    |  |   | (190,000 | )
|Recognized net actuarial loss  |  |                          | 92,000   |   |      |   | 90,000   |      |  |   | 28,000   |  
|Net amortization               |  |                          | 23,000   |   |      |   | 23,000   |      |  |   | 25,000   |  
|                               |  |                          |          |   |      |   |          |      |  |   |          |  
|                               |  | $                        | 423,000  |   |      | $ | 379,000  |      |  | $ | 360,000  |  
|                               |  |                          |          |   |      |   |          |      |  |   |          |  



The principal
assumptions used to determine the net periodic pension cost for the years ended December 31, 2004, 2003 and 2002, and the actuarial value of the projected benefit obligation at December 31, 2004 and 2003 (the measurement dates) for the
Companys pension plans are as follows:



|                                                 |  |                           |   |  |                              |   |  |      |   |  |      |   |  |      |  
|------------------------------------------------ |  | ------------------------- | - |  | ---------------------------- | - |  | ---- | - |  | ---- | - |  | ---- | -
|                                                 |  | Net Periodic Pension Cost |   |  | Projected Benefit Obligation |  
|                                                 |  | 2004                      |   |  | 2003                         |   |  | 2002 |   |  | 2004 |   |  | 2003 |  
|Weighted-average discount rate                   |  | 6.25                      | % |  | 6.50                         | % |  | 7.00 | % |  | 6.25 | % |  | 6.25 | %
|Weighted-average rate of compensation increase   |  | 4.00                      | % |  | 5.00                         | % |  | 5.00 | % |  | 4.00 | % |  | 4.00 | %
|Expected long-term rate of return on plan assets |  | 9.00                      | % |  | 9.00                         | % |  | 9.00 | % |  | n/a  |   |  | n/a  |  



45



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For 2004, the Company assumed a long-term rate of return on plan assets of 9.00%. In developing the 9.00%
expected long-term rate of return assumption, the Company considered its historical compounded return and reviewed asset class return expectations and long-term inflation assumptions.



The Companys pension plan asset allocation at December 31, 2004 and 2003, and target allocation for 2005 are as
follows:



|                                  |  |                           |   |  |                        |   |  |     |  
|--------------------------------- |  | ------------------------- | - |  | ---------------------- | - |  | --- | -
|                                  |  | Percentage of Plan Assets |   |  | Target Allocation 2005 |  
|Asset Category                    |  | 2004                      |   |  | 2003                   |   | 
|Equity securities                 |  | 66                        | % |  | 61                     | % |  | 70  | %
|Debt securities                   |  | 20                        | % |  | 24                     | % |  | 20  | %
|Other (money market mutual funds) |  | 14                        | % |  | 15                     | % |  | 10  | %
|                                  |  |                           |   |  |                        |   |  |     |  
|Total                             |  | 100                       | % |  | 100                    | % |  | 100 | %
|                                  |  |                           |   |  |                        |   |  |     |  



The Companys
investment goals are to maximize returns subject to specific risk management policies. Its risk management policies permit investments in mutual funds, and prohibit direct investments in debt and equity securities and derivative financial
instruments. The Company addresses diversification by the use of mutual fund investments whose underlying investments are in domestic and international equity and fixed income securities. These mutual funds are readily marketable and can be sold to
fund benefit payment obligations as they become payable.



The
Company also maintains a defined contribution 401(k) plan that permits participation by substantially all employees.



Pursuant to the terms of the Employee Benefits Agreement entered into between the Company and Gaming, the Company arranged for the transfer to Gaming of
the assets and liabilities associated with the Companys defined benefit pension plans and 401(k) plan with respect to employees who are Gaming employees after the spin-off.



46



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NOTE 10  Stockholders Equity



Changes in the components of stockholders equity are as follows (in thousands, except per share amounts):



|                                                                         |  |              |       |                      |   |       |                            |  |                   |         |  |                                      |          |   |                       |   |      |   |  |   |      |  
|------------------------------------------------------------------------ |  | ------------ | ----- | -------------------- | - | ----- | -------------------------- |  | ----------------- | ------- |  | ------------------------------------ | -------- | - | --------------------- | - | ---- | - |  | - | ---- | -
|                                                                         |  | Common Stock |       | Class A Common Stock |   |       | Additional Paid-in Capital |  | Retained Earnings |         |  | Accumulated Other Comprehensive Loss |          |   | Deferred Compensation |  
|Balance at December 31, 2001                                             |  | $            | 1,428 |                      | $ | 2,376 |                            |  | $                 | 120,080 |  | $                                    | 128,425  |   |                       | $ |     |   |  | $ |     |  
|Net loss                                                                 |  |              |      |                      |   |      |                            |  |                   |        |  |                                      | (22,718  | ) |                       |   |     |   |  |   |     |  
|Repayment of shareholder loan                                            |  |              |      |                      |   |      |                            |  |                   | 92      |  |                                      |         |   |                       |   |     |   |  |   |     |  
|Proceeds from stock options exercised                                    |  |              | 9     |                      |   |      |                            |  |                   | 58      |  |                                      |         |   |                       |   |     |   |  |   |     |  
|Proceeds from the sale of common stock, net                              |  |              | 146   |                      |   |      |                            |  |                   | 6,057   |  |                                      |         |   |                       |   |     |   |  |   |     |  
|Dividends paid, $0.095 per share                                         |  |              |      |                      |   |      |                            |  |                   |        |  |                                      | (3,631   | ) |                       |   |     |   |  |   |     |  
|Tax benefit of exercised stock options                                   |  |              |      |                      |   |      |                            |  |                   | 93      |  |                                      |         |   |                       |   |     |   |  |   |     |  
|Transfer of pension liability to Gaming                                  |  |              |      |                      |   |      |                            |  |                   | 789     |  |                                      |         |   |                       |   |     |   |  |   |     |  
|Change in minimum pension liability, net of income tax provision of $239 |  |              |      |                      |   |      |                            |  |                   |        |  |                                      |         |   |                       |   | (330 | ) |  |   |     |  
|Conversion of Class A common stock to common stock                       |  |              | 31    |                      |   | (31   | )                          |  |                   |        |  |                                      |         |   |                       |   |     |   |  |   |     |  
|Cancellation of Gaming receivable                                        |  |              |      |                      |   |      |                            |  |                   |        |  |                                      | (9,520   | ) |                       |   |     |   |  |   |     |  
|Debt paid down by Gaming at spin-off                                     |  |              |      |                      |   |      |                            |  |                   |        |  |                                      | 45,000   |   |                       |   |     |   |  |   |     |  
|Spin-off transaction                                                     |  |              |      |                      |   |      |                            |  |                   |        |  |                                      | (107,821 | ) |                       |   |     |   |  |   |     |  
|                                                                         |  |              |       |                      |   |       |                            |  |                   |         |  |                                      |          |   |                       |   |      |   |  |   |      |  
|Balance at December 31, 2002                                             |  |              | 1,614 |                      |   | 2,345 |                            |  |                   | 127,169 |  |                                      | 29,735   |   |                       |   | (330 | ) |  |   |     |  
|Net loss                                                                 |  |              |      |                      |   |      |                            |  |                   |        |  |                                      | (22,138  | ) |                       |   |     |   |  |   |     |  
|Proceeds from stock options exercised                                    |  |              | 41    |                      |   |      |                            |  |                   | 114     |  |                                      |         |   |                       |   |     |   |  |   |     |  
|Dividends paid, $0.04 per share                                          |  |              |      |                      |   |      |                            |  |                   |        |  |                                      | (1,598   | ) |                       |   |     |   |  |   |     |  
|Tax benefit of exercised stock options                                   |  |              |      |                      |   |      |                            |  |                   | 500     |  |                                      |         |   |                       |   |     |   |  |   |     |  
|Change in minimum pension liability, net of income tax provision of $72  |  |              |      |                      |   |      |                            |  |                   |        |  |                                      |         |   |                       |   | (80  | ) |  |   |     |  
|Conversion of Class A common stock to common stock                       |  |              | 1     |                      |   | (1    | )                          |  |                   |        |  |                                      |         |   |                       |   |     |   |  |   |     |  
|                                                                         |  |              |       |                      |   |       |                            |  |                   |         |  |                                      |          |   |                       |   |      |   |  |   |      |  
|Balance at December 31, 2003                                             |  |              | 1,656 |                      |   | 2,344 |                            |  |                   | 127,783 |  |                                      | 5,999    |   |                       |   | (410 | ) |  |   |     |  
|Net earnings                                                             |  |              |      |                      |   |      |                            |  |                   |        |  |                                      | 2,440    |   |                       |   |     |   |  |   |     |  
|Dividends paid, $0.04 per share                                          |  |              |      |                      |   |      |                            |  |                   |        |  |                                      | (1,605   | ) |                       |   |     |   |  |   |     |  
|Proceeds from stock options exercised                                    |  |              | 8     |                      |   |      |                            |  |                   | 311     |  |                                      |         |   |                       |   |     |   |  |   |     |  
|Tax benefit of exercised stock options                                   |  |              |      |                      |   |      |                            |  |                   | 6       |  |                                      |         |   |                       |   |     |   |  |   |     |  
|Issuance of restricted stock awards                                      |  |              | 11    |                      |   |      |                            |  |                   | 442     |  |                                      |         |   |                       |   |     |   |  |   | (453 | )
|Amortization of deferred compensation                                    |  |              |      |                      |   |      |                            |  |                   |        |  |                                      |         |   |                       |   |     |   |  |   | 51   |  
|Adjusted tax effect of change in minimum pension liability               |  |              |      |                      |   |      |                            |  |                   |        |  |                                      |         |   |                       |   | (117 | ) |  |   |     |  
|Conversion of Class A common stock to common stock                       |  |              | 20    |                      |   | (20   | )                          |  |                   |        |  |                                      |         |   |                       |   |     |   |  |   |     |  
|                                                                         |  |              |       |                      |   |       |                            |  |                   |         |  |                                      |          |   |                       |   |      |   |  |   |      |  
|Balance at December 31, 2004                                             |  | $            | 1,695 |                      | $ | 2,324 |                            |  | $                 | 128,542 |  | $                                    | 6,834    |   |                       | $ | (527 | ) |  | $ | (402 | )
|                                                                         |  |              |       |                      |   |       |                            |  |                   |         |  |                                      |          |   |                       |   |      |   |  |   |      |  



Holders of common
stock have one vote per share and holders of Class A common stock have ten votes per share. There is no cumulative voting. Shares of Class A common stock are convertible at any time into shares of common stock on a share for share basis at the
option of the holder thereof. Dividends on Class A common stock cannot exceed dividends on common stock on a per share basis. Dividends on common stock may be paid at a higher rate than dividends on Class A common stock. The terms and conditions of
each issue of preferred stock are determined by the Companys Board of Directors. No preferred shares have been issued.



47



---

The Company has adopted a rights plan with respect to its common stock and Class A common stock which
includes the distribution of rights to holders of such stock. The rights entitle the holder, upon the occurrence of certain events, to purchase additional stock of the Company. The rights are exercisable if a person, company or group acquires 10% or
more of the outstanding combined equity of common stock and Class A common stock or engages in a tender offer. The Company is entitled to redeem each right for $.005.



In August 2002, certain existing shareholders of the Company, including two directors, acquired from the Company 1,453,500
shares of its common stock for net proceeds of $6,203,000. The shares of common stock were sold in an unregistered private offering to accredited investors at fair value based on the closing market price of the Companys common stock on the day
preceding the sale which was $4.30 per share. The Company used the proceeds of the sale of common stock to pay-down a portion of borrowings under its revolving credit agreement.



On July 28, 2004, the Companys Board of Directors authorized the repurchase of up to 2,000,000 shares of the
Companys outstanding common stock. The purchases may be made in the open market or in privately negotiated transactions as conditions warrant. The repurchase authorization does not obligate the Company to acquire any specific number of shares
and may be suspended at any time. As of December 31, 2004, there have been no repurchases of outstanding common stock pursuant to the authorization.



On January 26, 2005, the Companys Board of Directors declared a quarterly cash dividend on both classes of common stock of $0.01 per share. The
dividend was paid on March 10, 2005 to shareholders of record at the close of business on February 10, 2005.



The Company has a 1996 stock option plan (the 1996 Plan) which provided for the grant of stock options to its officers and key employees.
Under the 1996 Plan, option grants must have an exercise price of not less than 100% of the fair market value of the underlying shares of common stock at the date of the grant. Stock options for 1,179,801 shares of common stock were outstanding
under the 1996 Plan as of December 31, 2004. The options have eight-year terms and generally vest equally over a period of six years from the date of grant. The Companys Board of Directors has frozen the 1996 Plan and no additional option
grants may be made under the 1996 Plan.



In April 2004, the
Company established the 2004 Stock Incentive Plan (the 2004 Plan) which provides for the grant of up to 1,500,000 shares of our common stock to our officers and key employees through stock options and/or awards, such as restricted stock
awards, valued in whole or in part by reference to our common stock. The restricted stock vests an aggregate of twenty percent each year beginning on the second anniversary date of the grant. During the year ended December 31, 2004, the Company
issued 109,000 shares of restricted stock to certain officers and key employees. The aggregate market value of the restricted stock at the date of issuance was recorded as deferred compensation, a separate component of stockholders equity, and
is being amortized on a straight-line basis over the six-year service period. As of December 31, 2004, there were 1,391,000 shares available for granting options or stock awards under the 2004 Plan.



Historically, certain Gaming employees participated in the Companys
stock option plan. In conjunction with the spin-off from the Company, Gaming adopted a stock option plan for its employees. Following the spin-off, grants to purchase 125,000 shares of common stock under the Companys plan held by Gaming
employees were cancelled and replaced with Gaming stock option grants. Additionally, all of the Companys outstanding stock options were adjusted to obtain the same relative ratio of the exercise price to market value on a post spin-off basis.
Vesting provisions, option periods and all other applicable terms and conditions remained the same.



48



---

Option activity related to the 1996 Plan was as follows:



|                                 |  |              |           |   |      |   |           |      |  |   |           |  
|-------------------------------- |  | ------------ | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                 |  | December 31, |          
|                                 |  | 2004         |           |   | 2003 |   |           | 2002 | 
|Number of options:               |  |              |           |   |      |   |           |      |  |   |           |  
|Outstanding at beginning of year |  |              | 1,445,560 |   |      |   | 1,575,922 |      |  |   | 962,742   |  
|Granted                          |  |              |          |   |      |   | 382,000   |      |  |   | 331,000   |  
|Exercised                        |  |              | (83,528   | ) |      |   | (402,246  | )    |  |   | (85,000   | )
|Expired                          |  |              | (182,231  | ) |      |   | (110,116  | )    |  |   | (66,000   | )
|Cancelled                        |  |              |          |   |      |   |          |      |  |   | (125,000  | )
|Spin-off adjustments             |  |              |          |   |      |   |          |      |  |   | 558,180   |  
|                                 |  |              |           |   |      |   |           |      |  |   |           |  
|Outstanding at end of year       |  |              | 1,179,801 |   |      |   | 1,445,560 |      |  |   | 1,575,922 |  
|                                 |  |              |           |   |      |   |           |      |  |   |           |  
|Exercisable at end of year       |  |              | 550,447   |   |      |   | 584,605   |      |  |   | 941,804   |  
|                                 |  |              |           |   |      |   |           |      |  |   |           |  
|Weighted average exercise price: |  |              |           |   |      |   |           |      |  |   |           |  
|Options granted                  |  | $            |          |   |      | $ | 4.63      |      |  | $ | 7.17      |  
|Options exercised                |  | $            | 3.82      |   |      | $ | 0.38      |      |  | $ | 0.78      |  
|Options outstanding              |  | $            | 5.70      |   |      | $ | 5.39      |      |  | $ | 4.16      |  
|Options exercisable              |  | $            | 5.81      |   |      | $ | 5.14      |      |  | $ | 2.79      |  



As of December 31,
2004, 2003 and 2002, there were 460,661, 278,430 and 550,314 shares, respectively, available under the 1996 Plan for granting stock options.



The following table summarizes information about the stock options outstanding under the 1996 Plan as of December 31, 2004:



|                         |  |                    |  |                                 |      |                                             |         |                    |         |                                 |   |     
|------------------------ |  | ------------------ |  | ------------------------------- | ---- | ------------------------------------------- | ------- | ------------------ | ------- | ------------------------------- | - | ----
|Range of Exercise Prices |  | Number Outstanding |  | Weighted Average Exercise Price |      | Weighted Average Remaining Contractual Life |         | Number Exercisable |         | Weighted Average Exercise Price
|$3.47-$5.45              |  | 751,201            |  | $                               | 4.92 |                                             | 4.25yrs |                    | 322,650 |                                 | $ | 5.04
|$6.56-$7.24              |  | 428,600            |  | $                               | 7.06 |                                             | 4.19yrs |                    | 227,797 |                                 | $ | 6.91
|                         |  |                    |  |                                 |      |                                             |         |                    |         |                                 |   |     
|                         |  | 1,179,801          |  | $                               | 5.70 |                                             | 4.23yrs |                    | 550,447 |                                 | $ | 5.81
|                         |  |                    |  |                                 |      |                                             |         |                    |         |                                 |   |     



NOTE 11  Related Party
Transactions



During the years ended December 31, 2004,
2003 and 2002, Gaming allocated costs of $1,241,000, $1,969,000 and $495,000, respectively, to DVD for certain administrative and operating services, including DVDs use of office space. Additionally, DVD allocated costs of $116,000 to Gaming
for the year ended December 31, 2004. The allocations were based on an analysis of each companys share of the costs. In connection with the Companys 2004 and 2003 NASCAR event weekends at Dover International Speedway, Gaming provided
certain catering services for which the Company was invoiced $933,000 and $443,000, respectively. The Company invoiced Gaming $238,000 and $206,000 during 2004 and 2003, respectively, for tickets purchased to the events and other event related
items. As of December 31, 2004 and 2003, DVDs consolidated balance sheet includes a $2,000 payable to and $96,000 receivable from Gaming, respectively, for the aforementioned items. The Company has since settled the payable in the first
quarter of 2005. The net costs incurred by each company for these services are not necessarily indicative of the costs that would have been incurred if the companies had been unrelated entities and/or had otherwise independently managed these
functions; however, management believes that these costs are reasonable.



During the year ended December 31, 2003, the Company purchased certain paving, site work and construction services involving total payments of $413,000 from a company wholly owned by Melvin Joseph, a director.



For the year ended December 31, 2003, the Company reported a
net operating loss for federal income tax purposes. The loss was carried back to 2001, a period prior to the spin-off, which generated an alternative minimum tax credit carryforward, a portion of which is required to be paid by Gaming under the Tax
Sharing Agreement (see below); therefore, during the fourth quarter of 2003 the Company recorded a $330,000 receivable from Gaming for its portion of the carryforward. We received payment of the amount in the first quarter of 2004.



49



---

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.



In conjunction with the spin-off of Gaming by the Company, the two companies entered into various agreements that addressed the allocation of assets and liabilities between the companies and that define the
companies relationship after the separation. These are the Agreement Regarding Distribution and Plan of Reorganization, the Real Property Agreement, the Employee Benefits Agreement, the Transition Support Services Agreement and the Tax Sharing
Agreement. The companies have several common directors and officers. Refer to NOTE 2  Discontinued Operation for further discussion.



During the third quarter of 2002, under the Tax Sharing Agreement, Gaming paid the Company $2,700,000 for its portion of the 2002 consolidated federal
income tax liability. Since the spin-off was effective on March 31, 2002, the Companys 2002 federal income tax return included the operations of Gaming for the first quarter of the year.



In August 2002, certain existing shareholders of the Company, including two
directors, acquired from the Company 1,453,500 shares of its common stock for net proceeds of $6,203,000. The shares of common stock were sold in an unregistered private offering to accredited investors at fair value based on the closing market
price of the Companys common stock on the day preceding the sale which was $4.30 per share.



At the date of the acquisition of Grand Prix, $299,000 was due to Grand Prix from certain shareholders/officers for outstanding loans made for the purpose
of purchasing Grand Prix common stock. As of December 31, 2001, $92,000 was outstanding from a director of the Company. This remaining balance was repaid in full in January 2002.



NOTE 12  Commitments and Contingencies



The Company leases certain land at Gateway with leases expiring at various dates through 2070. The Company also leases
certain land, buildings and equipment at its other facilities with leases expiring at various dates through 2010. Some of the leases are subject to annual adjustments based on increases in the consumer price index. Total rental payments charged to
operations amounted to $578,000, $460,000 and $327,000 for the years ended December 31, 2004, 2003 and 2002, respectively. The minimum lease payments due under these leases are as follows:



|           |  |   |          
|---------- |  | - | ---------
|2005       |  | $ | 513,000  
|2006       |  | $ | 311,000  
|2007       |  | $ | 279,000  
|2008       |  | $ | 191,000  
|2009       |  | $ | 174,000  
|Thereafter |  | $ | 4,070,000



In September 1999, the
Sports Authority of the County of Wilson (Tennessee) issued $25,900,000 in Variable Rate Tax Exempt Infrastructure Revenue Bonds, Series 1999, to acquire, construct and develop certain public infrastructure improvements which benefit the operation
of Nashville Superspeedway, of which $24,500,000 was outstanding at December 31, 2004. Principal payments range from $500,000 in September 2005 to $1,600,000 in 2029 and are payable solely from sales taxes and incremental property taxes generated
from the facility. These bonds are direct obligations of the Sports Authority and are therefore not recorded on the accompanying consolidated balance sheet. If the sales taxes and incremental property taxes are insufficient for the payment of
principal and interest on the bonds, the Company would become responsible for the difference. In the event the Company was unable to make the payments, they would be made pursuant to a $24,911,000 irrevocable direct-pay letter of credit issued by
the existing bank group.



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The Company believes that the sales taxes and incremental property taxes generated from the facility will
continue to satisfy the necessary debt service requirements of the bonds. As of December 31, 2004 and 2003, $936,000 and $1,135,000, respectively, was available in the sales and incremental property tax fund maintained by the Sports Authority to pay
the remaining principal and interest due under the bonds. During the year ended December 31, 2004, $1,558,000 was paid by the Company into the sales and incremental property tax fund and $1,757,000 was deducted from the fund for principal and
interest payments. If the debt service is not satisfied from the sales and incremental property taxes generated from the facility, the bonds would become a liability of the Company. If we fail to maintain the letter of credit that secures the bonds
or we allow an uncured event of default to exist under our reimbursement agreement relative to the letter of credit, the bonds would be immediately redeemable.



The Company has employment, severance and noncompete agreements with certain of its officers and directors under which certain change of control,
severance and noncompete payments and benefits might become payable but only in the event of a change in control of the Company, defined to include a tender offer or the closing of a merger or similar corporate transactions. In the event of such a
change in control of the Company and the subsequent termination of employment of all employees covered under these agreements, the maximum contingent liability would be $7,315,000.



The Company is also 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.



NOTE 13  Quarterly Results  (unaudited)



|                                               |  |          |            |   |         |   |              |  |                 |            |  |   |             |  
|---------------------------------------------- |  | -------- | ---------- | - | ------- | - | ------------ |  | --------------- | ---------- |  | - | ----------- | -
|                                               |  | March 31 |            |   | June 30 |   | September 30 |  | December 31 (a) |           
|Year Ended December 31, 2004                   |  |          |            |   |         |   |              |  |                 |            |  |   |             |  
|Revenues                                       |  | $        | 1,160,000  |   |         | $ | 50,888,000   |  | $               | 38,402,000 |  | $ | 3,167,000   |  
|Operating (loss) earnings                      |  | $        | (7,250,000 | ) |         | $ | 13,565,000   |  | $               | 11,393,000 |  | $ | (8,532,000  | )
|Net (loss) earnings                            |  | $        | (3,186,000 | ) |         | $ | 5,163,000    |  | $               | 4,136,000  |  | $ | (3,673,000  | )
|Net (loss) earnings per common share  basic   |  | $        | (0.08      | ) |         | $ | 0.13         |  | $               | 0.10       |  | $ | (0.09       | )
|                                               |  |          |            |   |         |   |              |  |                 |            |  |   |             |  
|Net (loss) earnings per common share  diluted |  | $        | (0.08      | ) |         | $ | 0.13         |  | $               | 0.10       |  | $ | (0.09       | )
|                                               |  |          |            |   |         |   |              |  |                 |            |  |   |             |  
|Year Ended December 31, 2003                   |  |          |            |   |         |   |              |  |                 |            |  |   |             |  
|Revenues                                       |  | $        | 3,967,000  |   |         | $ | 47,849,000   |  | $               | 38,207,000 |  | $ | 3,603,000   |  
|Operating (loss) earnings                      |  | $        | (8,740,000 | ) |         | $ | 11,531,000   |  | $               | 7,302,000  |  | $ | (29,367,000 | )
|Net (loss) earnings                            |  | $        | (4,993,000 | ) |         | $ | 5,023,000    |  | $               | 4,465,000  |  | $ | (26,633,000 | )
|Net (loss) earnings per common share  basic   |  | $        | (0.13      | ) |         | $ | 0.13         |  | $               | 0.11       |  | $ | (0.67       | )
|                                               |  |          |            |   |         |   |              |  |                 |            |  |   |             |  
|Net (loss) earnings per common share  diluted |  | $        | (0.13      | ) |         | $ | 0.13         |  | $               | 0.11       |  | $ | (0.67       | )
|                                               |  |          |            |   |         |   |              |  |                 |            |  |   |             |  

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|(a) | The Company recorded $900,000 related to the settlement of a contractual dispute with a vendor in the fourth quarter of 2003. Additionally, the Company recorded impairment charges
of $21,331,000 in the fourth quarter of 2003. Of the total, $13,362,000 related to the impairment of goodwill and $7,969,000 related to the impairment of long-lived assets other than goodwill.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Per share data amounts for the quarters have each been calculated separately.
Accordingly, quarterly amounts may not add to the annual amounts because of differences in the average common shares outstanding during each period.



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