<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): DECEMBER 2, 1997
PENSKE MOTORSPORTS, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
DELAWARE 0-28044 51-0369517
-------- ------- ----------
<S> <C> <C>
(State or Other Jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification Number)
13400 WEST OUTER DRIVE 48239-4001
DETROIT, MI (Including Zip Code)
-------------
(Address of Principal Executive Offices)
</TABLE>
313-592-8255
------------
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
--------------
(Former Name or Address, If Changed From Last Report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
The merger (the "Merger") of North Carolina Motor Speedway, Inc., a North
Carolina corporation ("NCMS"), with and into Penske Acquisition, Inc., a North
Carolina corporation ("Acquisition"), which is a wholly owned subsidiary of
Penske Motorsports, Inc., a Delaware corporation ("Parent"), became effective
on December 2, 1997, (the "Effective Time") pursuant to the Agreement and Plan
of Merger, dated as of August 5, 1997, among Parent, Acquisition and NCMS (the
"Merger Agreement"). Immediately prior to the Effective Time, Parent was the
owner of approximately 1,563,478 shares of common stock, par value $0.25 per
share, of NCMS (the "Shares") representing approximately 70% of the Shares. At
the Effective Time, the separate corporate existence of NCMS was terminated and
Acquisition, as the surviving corporation in the Merger, remained as a
wholly-owned subsidiary of Parent. At the Effective Time, Jo DeWitt Wilson, a
director of the Parent, was the owner of 7,100 Shares, which was less than one
percent of the outstanding Shares.
Under the terms and conditions of the Merger Agreement and applicable
provisions of North Carolina law, each Share ceased to be outstanding at the
Effective Time, and each Share now represents solely a right to either, at the
holder's option, (i) an amount, in cash, without interest, equal to $19.61 per
NCMS Share, or (ii) $19.61 worth of common stock, par value $0.01 per share, of
Penske Motorsports, Inc. ("PMI Stock") with the PMI Stock being valued at
$27.25 per share in accordance with the terms of the Merger Agreement (the
"Merger Consideration"). In addition to the payment of the Merger
Consideration, if the holder of any Shares seeking to exercise dissenter's
rights under North Carolina law ("Dissenting Shares") becomes entitled to an
amount in excess of $19.61 as a result of exercising his dissenter's rights,
and such holder of Dissenting Shares owned more than 5% of the outstanding
common stock of NCMS immediately before the Effective Time, Parent will
promptly pay in cash to each holder of common stock of NCMS outstanding
immediately before the Effective Time (other than the Dissenting Shares) an
additional amount per share equal to such excess, less any amount per share
received as described in the next sentence. In addition, if Parent, during the
one-year period following the Effective Time, sells all of the outstanding
common stock of the surviving corporation or all or substantially all of the
assets of the surviving corporation to any person other than Parent or its
affiliates, Parent shall promptly pay in cash to each holder of common stock of
NCMS immediately before the Effective Time (other than Dissenting Shares) an
additional amount equal to the difference between (i) such holder's
proportionate share (based on such holder's percentage ownership of the common
stock of NCMS immediately before the Effective Time) of the net sales price
received by Parent from such sale, less the Merger Consideration paid to such
holder, and (ii) any amount received by such holder pursuant to the immediately
preceding sentence. Payment of the Merger Consideration in cash will be paid by
the Parent from existing availability under
<PAGE> 3
its line of credit with First Union National Bank, as Agent and NationsBank,
N.A. as Co-Agent on behalf of the various banks.
The description of the terms of the acquisition set forth above is qualified in
all respects by reference to the Merger Agreement, a copy of which is filed
herewith as an exhibit.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS:
Financial Statements are incorporated by reference from the Company's
Registration Statement filed on Form S-4, Registration Number 333-34923,
with the Securities Exchange Commission, insofar as such report relates
to the financial statements of North Carolina Motor Speedway, Inc. for
the year ended August 31, 1997.
(b) PRO FORMA FINANCIAL INFORMATION:
Pro Forma financial information is incorporated by reference from the
Company's Registration Statement filed on Form S-4, Registration Number
333-34923, with the Securities Exchange Commission, insofar as such report
relates to the financial statements of North Carolina Motor Speedway,
Inc. for the year ended August 31, 1997.
(c) EXHIBITS:
Exhibit 2.1 - Agreement and Plan of Merger dated August 5, 1997, by and
among North Carolina Motor Speedway, Inc., Penske Motorsports, Inc. and
Penske Acquisition, Inc. incorporated by reference from Exhibit 2.1 of
the Company's Registration Statement filed on Form S-4, Registration
Number 333-34923 with the Securities and Exchange Commission.
Exhibit 23.1 - Consent of Deloitte & Touche, LLP to incorporation by
reference of their report included in PMI's Registration Statement filed
on Form S-4, Registration Number 333-34923 with the Securities and
Exchange Commission.
Exhibit 99.1 - Balance sheets of North Carolina Motor Speedway, Inc. as of
August 31, 1997 and 1996 and the related statements of income and
retained earnings and of cash flows for the years then ended and for the
seven months ended August 31, 1995 and the year ended January 31, 1995
Exhibit 99.2 - Unaudited pro forma financial data of Penske Motorsports,
Inc. and subsidiaries as of June 30, 1997 and for the six months ended
June 30, 1997 and the year ended December 31, 1996.
The Company agrees to furnish supplementally to the Commission upon request any
schedule or exhibit to Exhibit 2.1 which has been omitted.
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 16, 1997 PENSKE MOTORSPORTS, INC.
By: /s/ JAMES H. HARRIS
-----------------------------
JAMES H. HARRIS
Its: SENIOR VICE PRESIDENT AND TREASURER
(PRINCIPAL FINANCIAL OFFICER)
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION OF EXHIBIT SEQUENTIAL PAGE
------- ---------------------- ---------------
NUMBER NUMBER
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<S> <C> <C>
EXHIBIT 2.1 Agreement and Plan of Merger dated August 5, 1997, by
and among North Carolina Motor Speedway, Inc., Penske
Motorsports, Inc. and Penske Acquisition, Inc.
incorporated by reference from Exhibit 2.1 of the
Company's Registration Statement filed on Form S-4,
Registration Number 333-34923 with the Securities and
Exchange Commission.
EXHIBIT 23.1 Consent of Deloitte & Touche, LLP to incorporation by
reference of their report included in PMI's
Registration Statement filed on Form S-4, Registration
Number 333-34923 with the Securities and Exchange
Commission.
Exhibit 99.1 - Balance sheets of North Carolina Motor Speedway, Inc.
as of August 31, 1997 and 1996 and the related
statements of income and retained earnings and of cash
flows for the years then ended and for the seven
months ended August 31, 1995 and the year ended
January 31, 1995
Exhibit 99.2 - Unaudited pro forma financial data of Penske
Motorsports, Inc. and subsidiaries as of June 30,
1997, and for the six months ended June 30, 1997 and
the year ended December 31, 1996.
</TABLE>
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Current Report on Form 8-K
under the Securities Exchange Act of 1934 of Penske Motorsports, Inc. dated
December 2, 1997 of our report on North Carolina Motor Speedway, Inc. dated
September 23, 1997 and contained in Registration Statement No. 333-34923 of
Penske Motorsports, Inc. on Form S-4 under the Securities Act of 1993 insofar
as such report relates to the financial statements of North Carolina Motor
Speedway, Inc. for the year ended August 31, 1997.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Detroit, Michigan
December 15, 1997
<PAGE> 1
EXHIBIT 99.1
NORTH CAROLINA MOTOR SPEEDWAY, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
AUGUST 31,
------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 2 $ 599
Receivables:
Trade.................................................. 186 383
Related party.......................................... 140
Inventories............................................... 96 57
Prepaid expenses.......................................... 97 15
------- -------
Total Current Assets................................... 521 1,054
Property and Equipment, net................................. 15,144 11,019
Deferred Taxes.............................................. 225
Other Assets................................................ 400
------- -------
Total....................................................... $15,890 $12,473
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt......................... $ 857 $ 428
Accounts payable and accrued expenses..................... 498 247
Deferred revenues, net.................................... 3,490 2,623
------- -------
Total Current Liabilities.............................. 4,845 3,298
Long-Term Debt, less current portion........................ 3,367 3,549
Deferred Revenues........................................... 922
Deferred Taxes.............................................. 228
Commitments and Contingencies
SHAREHOLDERS' EQUITY:
Common stock, par value $ .25 share:
Authorized 8,000,000 shares
Issued and outstanding 2,236,705 shares in 1997 and
1996.................................................. 559 559
Retained earnings......................................... 6,197 4,839
------- -------
Total Shareholders' Equity............................. 6,756 5,398
------- -------
Total....................................................... $15,890 $12,473
======= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE> 2
NORTH CAROLINA MOTOR SPEEDWAY, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
<TABLE>
<CAPTION>
SEVEN
YEAR ENDED MONTHS YEAR ENDED
AUGUST 31, ENDED JANUARY 31,
---------------------- AUGUST 31, -----------
1997 1996 1995 1995
---- ---- ---------- ----
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C>
REVENUES:
Speedway admissions............................ $5,592 $4,615 $1,996 $4,016
Other speedway revenues........................ 4,504 4,132 1,879 2,801
--------- --------- --------- ---------
Total Revenues................................. 10,096 8,747 3,875 6,817
EXPENSES:
Operating expenses............................. 6,378 5,836 2,722 4,984
Depreciation................................... 424 264 133 256
Selling, general and administrative............ 654 591 421 348
--------- --------- --------- ---------
Total Expenses................................. 7,456 6,691 3,276 5,588
Operating Income................................. 2,640 2,056 599 1,229
Interest Income (Expense), net................... (332) 27 69 53
--------- --------- --------- ---------
Income Before Income Taxes....................... 2,308 2,083 668 1,282
Income Taxes..................................... 905 823 248 481
--------- --------- --------- ---------
Net Income....................................... 1,403 1,260 420 801
Retained Earnings, beginning of period........... 4,839 3,624 3,249 2,560
Dividends Paid................................... (45) (45) (45) (112)
--------- --------- --------- ---------
Retained Earnings, end of period................. $6,197 $4,839 $3,624 $3,249
========= ========= ========= =========
Net Income Per Share............................. $.63 $.56 $.19 $.36
========= ========= ========= =========
Weighted Average Shares Outstanding.............. 2,236,705 2,236,705 2,236,705 2,236,705
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 3
NORTH CAROLINA MOTOR SPEEDWAY, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED SEVEN MONTHS YEAR ENDED
AUGUST 31, ENDED JANUARY 31,
----------------- AUGUST 31, -----------
1997 1996 1995 1995
---- ---- ------------ ----
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income....................................... $ 1,403 $ 1,260 $ 420 $ 801
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation.................................. 424 264 133 256
Changes in assets and liabilities which
provided (used) cash:
Receivables................................. 57 (247) (135)
Inventories, prepaid expenses and other
assets................................... (121) 8 (25) 16
Accounts payable and accrued liabilities.... 251 38 143 (89)
Deferred taxes.............................. (453) 57
Deferred revenue............................ 1,789 890 481 607
------- ------- ------- -----
Net cash provided by operating activities..... 3,350 2,270 1,017 1,591
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of property and equipment, net......... (4,549) (6,480) (1,069) (610)
Payments received on notes receivable............ 400 50 50
------- ------- ------- -----
Net cash used in investing activities......... (4,149) (6,430) (1,019) (610)
CASH FLOWS FROM FINANCING ACTIVITIES:
Loan proceeds.................................... 2,176 3,977
Payments on debt................................. (1,929)
Dividends........................................ (45) (45) (45) (112)
------- ------- ------- -----
Net cash provided by (used in) financing
activities.................................. 202 3,932 (45) (112)
------- ------- ------- -----
Net Increase (Decrease) in Cash and Cash
Equivalents...................................... (597) (228) (47) 869
Cash and Cash Equivalents at Beginning of Period... 599 827 874 5
------- ------- ------- -----
Cash and Cash Equivalents at End of Period......... $ 2 $ 599 $ 827 $ 874
======= ======= ======= =====
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for interest......... $ 357 $ 48 $ 1
======= ======= =====
Cash paid during the period for taxes............ $ 1,361 $ 833 $ 201 $ 482
======= ======= ======= =====
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
NORTH CAROLINA MOTOR SPEEDWAY, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS
The financial statements include the accounts of NCMS, which owns and
operates North Carolina Motor Speedway near Rockingham, North Carolina. NCMS
promotes race weekends in February and October of each year featuring a NASCAR
Busch Series Grand National Division event and a NASCAR Winston Cup Series
event. NCMS also hosts the annual UNOCAL 76/Rockingham Pit Crew World
Championship during the October event weekend.
The accompanying unaudited financial statements have been prepared by
management and, in the opinion of management, contain all adjustments,
consisting of normal recurring adjustments, necessary to present fairly the
results of operations and cash flows of NCMS for the seven months ended August
31, 1995 and for the year ended January 31, 1995.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents -- NCMS considers all investments with a maturity
of three months or less, at purchase, as cash equivalents.
Inventories -- Inventories are stated at the lower of cost or market value,
with cost determined primarily by the first in, first out (FIFO) method.
Property and Equipment -- Property and equipment is carried at cost less
accumulated depreciation. Depreciation is computed using the straight-line
method over estimated useful lives ranging from three to forty years. The
carrying values of fixed assets are evaluated annually for impairment.
Revenue Recognition -- Race related revenues and expenses are recognized
upon completion of an event. Deferred revenues represents advance race related
revenues, net of expenses, on future races.
Income Taxes -- Deferred taxes reflect the impact of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results will likely differ from those which are estimated, however such
differences are not expected to be material.
Reclassifications -- Certain reclassifications have been made to prior
period financial statements to conform with the 1997 presentation.
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
AUGUST 31,
-----------------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Land and improvements....................................... $ 209 $ 209
Buildings and improvements.................................. 17,741 13,228
Equipment................................................... 839 803
------- -------
18,789 14,240
Less accumulated depreciation............................... 3,645 3,221
------- -------
$15,144 $11,019
======= =======
</TABLE>
<PAGE> 5
NORTH CAROLINA MOTOR SPEEDWAY, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
As of August 31, 1997, NCMS had $1.2 million in construction in progress
relating primarily to the construction of a new grandstand and related
facilities with an estimated total cost of $1.5 million. As of August 31, 1996,
NCMS had $4.0 million in construction in progress relating to the construction
of a multipurpose structure above the main grandstand.
4. LONG-TERM DEBT
Long-term debt at August 31, 1997 and 1996 consists of a note payable
bearing interest at 2.7% over the average 91-day Treasury rate (7.76% and 7.87%
at August 31, 1997 and 1996, respectively) secured by all assets of NCMS and
guaranteed by PMI. The note is to be repaid in fourteen semi-annual payments of
$429,000 with the final payment in 2003. NCMS also has lines of credit of $2.1
million at the same rate as above, of which $1.9 million was available as of
August 31, 1997. As of August 31, 1997, the carrying value of the debt
approximated fair value.
5. EMPLOYEE BENEFIT PLANS
NCMS participates in a non-contributory, discretionary profit-sharing plan
which covers employees who meet certain length of service requirements.
Contributions of approximately $75,000, $57,000, $35,000 (unaudited) and $48,000
(unaudited), respectively were made to the plan during the years ended August
31, 1997 and 1996, the seven months ended August 31, 1995 and the year ended
January 31, 1995.
Employees are also provided a defined contribution retirement plan, whereby
NCMS contributes 10% of each eligible employee's annual salary to the plan. The
expense related to this plan was $50,000, $38,000, $23,000 (unaudited) and
$32,000 (unaudited), respectively during the years ended August 31, 1997 and
1996, the seven months ended August 31, 1995 and the year ended January 31,
1995.
6. TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
YEAR ENDED SEVEN MONTHS YEAR
AUGUST 31, ENDED ENDED
------------- AUGUST 31, JANUARY 31,
1997 1996 1995 1995
---- ---- ------------ -----------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Current................................................ $1,358 $766 $224 $444
Deferred............................................... (453) 57 24 37
------ ---- ---- ----
Total............................................. $ 905 $823 $248 $481
====== ==== ==== ====
</TABLE>
A reconciliation of taxes computed at the federal statutory rate and the
effective rate is as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEVEN MONTHS YEAR
AUGUST 31, ENDED ENDED
--------------- AUGUST 31, JANUARY 31,
1997 1996 1995 1995
---- ---- ------------ -----------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Income before income taxes........................... $2,308 $2,083 $668 $1,282
------ ------ ---- ------
Taxes computed at statutory rate..................... 785 $ 708 $227 $ 436
State taxes, net of federal.......................... 120 115 21 45
------ ------ ---- ------
Total income tax expense........................ $ 905 $ 823 $248 $ 481
====== ====== ==== ======
Effective tax rate................................... 39.2% 39.5% 37.1% 37.5%
====== ====== ==== ======
</TABLE>
<PAGE> 6
NORTH CAROLINA MOTOR SPEEDWAY, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
Temporary differences which give rise to deferred tax assets and
(liabilities) are as follows:
<TABLE>
<CAPTION>
AUGUST 31,
-----------------
1997 1996
---- ----
(IN THOUSANDS)
<S> <C> <C>
Depreciation................................................ $(262) $(192)
State taxes................................................. 48 (36)
Deferred revenues........................................... 439
----- -----
Total.................................................. $ 225 $(228)
===== =====
</TABLE>
7. CHANGE IN CONTROL
In May, 1997, PMI purchased the common stock of NCMS held by the majority
shareholder, increasing its ownership interest to approximately 69.9%. A
proposal to merge PMI and NCMS was approved by the NCMS Board of Directors in
August, 1997. This merger proposal, which offers NCMS shareholders cash of
$19.61 per share or an equivalent amount of PMI Stock, will be presented to the
shareholders of NCMS at a meeting to be held in the fourth quarter of 1997.
Subsequent to the approval of the merger by the NCMS Board of Directors, O.
Bruton Smith, a minority shareholder of NCMS, sued NCMS, PMI and certain
directors of NCMS in an effort to enjoin the completion of the merger.
<PAGE> 7
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
North Carolina Motor Speedway
Rockingham, North Carolina
We have audited the accompanying balance sheets of North Carolina Motor
Speedway as of August 31, 1997 and 1996 and the related statements of income and
retained earnings and of cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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, such financial statements present fairly, in all material
respects, the financial position of the Company as of August 31, 1997 and 1996,
and the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Detroit, Michigan
September 23, 1997
<PAGE> 1
EXHIBIT 99.2
PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data ("the Unaudited Pro Forma
Financial Data") as of June 30, 1997, for the six months ended June 30, 1997 and
for the year ended December 31, 1996 have been derived by the application of pro
forma adjustments to the financial statements of PMI incorporated by reference
in this Prospectus and the applicable financial statements of NCMS. The
unaudited consolidated financial statements of PMI include NCMS as of June 30,
1997 and for the period from June 1, 1997 (the effective date of approximately
69.9% control of NCMS) to June 30, 1997. The pro forma statements of income for
the year ended December 31, 1996 and for the six months ended June 30, 1997
account for NCMS as if it was a wholly-owned subsidiary as of January 1, 1996
and January 1, 1997, respectively. The pro forma balance sheet gives effect to
the acquisition of the minority interest of NCMS as if such acquisition had
occurred on June 30, 1997. The adjustments are described in the accompanying
notes. The pro forma financial data assumes that the minority shares of NCMS are
acquired using PMI common shares. See Notes C and E of the Notes to Pro Forma
Financial Statements for the impact on pro forma net income and pro forma net
income per share assuming that 50% and 100% of the NCMS shareholders elect to
receive cash. The Unaudited Pro Forma Financial Data do not purport to represent
what the Company's results of operations actually would have been if the
acquisition had been consummated on the date or for the periods indicated, or
what such results will be for any future date or for any future period. The
Unaudited Pro Forma Financial Data should be read in conjunction with 1) the
"PMI Selected Financial Data", "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the financial statements set
forth in PMI's Annual Report on Form 10-K for the year ended December 31, 1996
and Quarterly Report on Form 10-Q for the quarter ended June 30, 1997 which are
incorporated herein by reference and 2) "NCMS Selected Financial Data",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of NCMS" and the financial statements included elsewhere in this
Prospectus.
<PAGE> 2
PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF INCOME
SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
NCMS
JANUARY 1 - PRO FORMA COMBINED
PMI MAY 31, 1997 ADJUSTMENTS PRO FORMA
--- ------------ ----------- ---------
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
REVENUES:
Speedway admissions......................... $19,696 $2,668 $22,364
Other speedway revenues..................... 15,750 2,150 17,900
Merchandise, tires and accessories.......... 16,225 16,225
---------- --------- ----------
Total Revenues.............................. 51,671 4,818 56,489
EXPENSES:
Operating expenses.......................... 16,314 3,077 19,391
Cost of sales............................... 9,402 9,402
Depreciation and amortization............... 2,313 185 $ 486 A 2,984
Selling, general and administrative......... 8,309 343 8,652
---------- --------- ----- ----------
Total Expenses.............................. 36,338 3,605 486 40,429
Operating Income.............................. 15,333 1,213 (486) 16,060
Interest Income (Expense), net................ 77 (136) (59)
---------- --------- ----- ----------
Income Before Income Taxes.................... 15,410 1,077 (486) 16,001
Income Taxes.................................. 6,018 466 6,484
Minority Interest............................. (26) 26 B
---------- --------- ----- ----------
Net Income.................................... $ 9,418 $ 611 $(512) $ 9,517 C
========== ========= ===== ==========
Net Income Per Share.......................... $.70 $.27 $. 65 C
========== ========= ==========
Weighted Average Number of Shares
Outstanding................................. 13,457,164 2,236,705 14,561,340 C
========== ========= ==========
</TABLE>
See accompanying notes to unaudited pro forma financial statements.
<PAGE> 3
PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRO FORMA COMBINED
PMI NCMS ADJUSTMENTS PRO FORMA
--- ---- ----------- ---------
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
REVENUES:
Speedway admissions........................ $20,248 $5,205 $25,453
Other speedway revenues.................... 13,041 4,365 17,406
Merchandise, tires and accessories......... 21,886 21,886
---------- --------- ----------
Total Revenues............................. 55,175 9,570 64,745
EXPENSES:
Operating expenses......................... 18,067 6,097 24,164
Cost of sales.............................. 12,834 12,834
Depreciation and amortization.............. 3,167 285 $ 1,068 D 4,520
Selling, general and administrative........ 6,185 742 6,927
---------- --------- ------- ----------
Total Expenses............................. 40,253 7,124 1,068 48,445
Operating Income............................. 14,922 2,446 (1,068) 16,300
Interest Income (Expense), net............... 1,950 (97) 1,853
---------- --------- ------- ----------
Income Before Income Taxes................... 16,872 2,349 (1,068) 18,153
Income Taxes................................. 5,992 940 6,932
---------- --------- ------- ----------
Net Income................................... $10,880 $1,409 $(1,068) $11,221 E
========== ========= ======= ==========
Net Income Per Share......................... $.90 $.63 $.83 E
========== ========= ==========
Weighted Average Number of Shares
Outstanding................................ 12,128,920 2,236,705 13,448,462 E
========== ========= ==========
</TABLE>
See accompanying notes to unaudited pro forma financial statements.
<PAGE> 4
PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA BALANCE SHEET
JUNE 30, 1997
<TABLE>
<CAPTION>
PRO FORMA
PMI ADJUSTMENTS TOTAL
--- ----------- -----
($ IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents............................ $ 6,973 $ 6,973
Receivables.......................................... 12,135 12,135
Inventories.......................................... 4,432 4,432
Prepaid.............................................. 1,254 1,254
-------- --------
Total Current Assets............................ 24,794 24,794
Property and Equipment, net............................ 209,771 209,771
Goodwill, net.......................................... 30,099 $11,400 F 41,499
Other Assets........................................... 2,146 2,146
-------- ------- --------
Total.................................................. $266,810 $11,400 $278,210
======== ======= ========
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt.................... $ 13,620 $ 13,620
Accounts payable..................................... 18,026 18,026
Accrued expenses..................................... 10,661 10,661
Deferred revenues, net............................... 25,189 25,189
-------- --------
Total Current Liabilities....................... 67,496 67,496
Long-Term Debt, less current portion................... 5,287 5,287
Deferred Taxes......................................... 9,910 9,910
Minority Interest...................................... 2,101 $(2,101)G --
Commitments and Contingencies
SHAREHOLDERS' EQUITY:
Common stock......................................... 141 4 H 145
Additional paid-in capital........................... 157,721 13,497 I 171,218
Retained earnings.................................... 24,154 24,154
-------- ------- --------
Total Shareholders' Equity...................... 182,016 13,501 195,517
-------- ------- --------
Total.................................................. $266,810 $11,400 $278,210
======== ======= ========
</TABLE>
See accompanying notes to unaudited pro forma financial statements.
<PAGE> 5
PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
JUNE 30, 1997 PRO FORMA INCOME STATEMENT
A. To record: 1) amortization expense of $243,000, using an amortization
period of 40 years, for the period from January 1 to May 31 on $23.3 million,
which represents the excess purchase price of the majority interest in NCMS over
the fair value of the net assets acquired; 2) amortization expense of $143,000,
using an amortization period of 40 years, for the period from January 1 to June
30, 1997 on $11.4 million, which represents the excess purchase price of the
minority interest over the fair value of the net assets acquired; and 3)
additional depreciation expense of $100,000 on the increased valuation of the
NCMS fixed assets as a result of purchase accounting adjustments.
B. To reverse the minority interest expense recorded in the PMI
consolidated statement of income for the six months ended June 30, 1997,
reflecting the ownership by PMI of all of the NCMS Stock.
C. The unaudited pro forma statement of income reflects the acquisition of
the minority interest of NCMS assuming that all NCMS shareholders elect to
receive PMI common shares. If 50% of the NCMS shareholders elect to receive
cash, net income would be reduced by $133,000 and there would be no impact on
net income per share for the six months ended June 30, 1997. If 100% of the NCMS
shareholders elect to receive cash, net income would decrease by $266,000 and
there would be no impact on net income per share for the six months ended June
30, 1997. The reduction in net income reflects additional interest expense, net
of tax, on the cash payment to the NCMS shareholders.
DECEMBER 31, 1996 PRO FORMA INCOME STATEMENT
D. To record: 1) amortization expense of $868,000, using an amortization
period of 40 years, for the year ended December 31, 1996 on $34.7 million, which
represents the excess purchase price over the fair value of the net assets
acquired; and 2) additional depreciation expense of $200,000 on the increased
valuation of the NCMS fixed assets as a result of purchase accounting
adjustments.
E. The unaudited pro forma statement of income reflects the acquisition of
the minority interest of NCMS assuming that all NCMS shareholders elect to
receive PMI common shares. If 50% of the NCMS shareholders elect to receive
cash, net income would be reduced by $266,000 and there would be no impact on
net income per share for the year ended December 31, 1996. If 100% of the NCMS
shareholders elect to receive cash, net income would decrease by $532,000 and
net income per share would decrease by $.01 for the year ended December 31,
1996. The reduction in net income reflects additional interest expense, net of
tax, on the cash payment to the NCMS shareholders.
JUNE 30, 1997 PRO FORMA BALANCE SHEET
F. To record the purchase of 673,227 shares at a value of $19.61 per share,
plus estimated acquisition costs. The goodwill recorded is the excess of this
amount over the fair value of the NCMS net assets acquired.
G. To eliminate the minority interest recorded on the books of PMI at June
30, 1997.
H. To reflect the issuance of 413,000 shares of PMI's common stock in
exchange for 673,227 shares of NCMS stock. The NCMS stock is valued at $19.61
per share and converted to PMI Stock using an estimated average price of PMI's
common stock of $32 per share.
I. To record the increase in additional paid-in capital resulting from the
purchase of the minority shares of NCMS.
