<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 1998.
( ) Transition report pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934 for the transition period to .
--- ---
Commission File No. 0-28044
PENSKE MOTORSPORTS, INC.
------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 51-0369517
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
13400 OUTER DRIVE WEST, DETROIT, MICHIGAN 48239-4001
- ----------------------------------------- ----------
(Address of principal executive offices) (including zip code)
313-592-8255
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
COMMON STOCK $0.01 PAR VALUE 14,208,898 SHARES
---------------------------- -----------------
CLASS OUTSTANDING AT MAY 13, 1998
This report contains 31 pages.
<PAGE> 2
Penske Motorsports, Inc. Form 10-Q (continued)
TABLE OF CONTENTS
PAGE NO.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Consolidated Balance Sheets 3
Consolidated Statements of Operations 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Independent Accountants' Review Report 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 8
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 13
Signature 14
2
<PAGE> 3
Penske Motorsports, Inc. Form 10-Q (continued)
PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------------- --------------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,018 $ 249
Receivables 13,533 4,787
Inventories 2,452 2,433
Prepaid expenses and other assets 2,585 2,082
------------------- --------------------
TOTAL CURRENT ASSETS 19,588 9,551
PROPERTY AND EQUIPMENT, net 230,817 224,666
INVESTMENTS 14,572 15,366
GOODWILL, net 40,088 40,112
OTHER ASSETS 2,593 2,077
------------------- --------------------
TOTAL $ 307,658 $ 291,772
=================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 607 $ 1,017
Accounts payable 5,984 3,868
Accrued expenses 2,424 2,343
Other payables 150 9,956
Deferred revenues, net 43,085 22,529
------------------- --------------------
TOTAL CURRENT LIABILITIES 52,250 39,713
LONG-TERM DEBT, less current portion 50,129 47,278
DEFERRED REVENUES, net 738 738
DEFERRED TAXES 15,495 13,349
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, par value $.01 share:
Authorized 50,000,000 shares
Issued and outstanding 14,208,898
shares in 1998 and 1997 142 142
Additional paid-in-capital 159,371 159,371
Retained earnings 29,533 31,181
------------------- --------------------
TOTAL STOCKHOLDERS' EQUITY 189,046 190,694
------------------- --------------------
TOTAL $ 307,658 $ 291,772
=================== ====================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
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Penske Motorsports, Inc. Form 10-Q (continued)
PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-------------------------------------------------
1998 1997
--------------------- --------------------
<S> <C> <C>
REVENUES:
Speedway admissions $ 3,238
Other speedway revenues 2,953
Merchandise, tires and accessories 3,946 $ 5,375
--------------------- --------------------
TOTAL REVENUES 10,137 5,375
EXPENSES:
Operating 6,190 2,286
Cost of sales 2,462 3,176
Depreciation and amortization 2,675 789
Selling, general and administrative 2,252 1,730
--------------------- --------------------
OPERATING EXPENSES 13,579 7,981
--------------------- --------------------
OPERATING LOSS (3,442) (2,606)
EQUITY IN INCOME OF AFFILIATES 512
GAIN ON SALE OF INVESTMENT 1,108
INTEREST INCOME (EXPENSE), net (859) 125
--------------------- --------------------
LOSS BEFORE INCOME TAXES (2,681) (2,481)
INCOME TAX BENEFIT 1,033 970
--------------------- --------------------
NET LOSS $ (1,648) $ (1,511)
====================== =====================
BASIC NET LOSS PER SHARE $ (.12) $ (.11)
====================== =====================
DILUTED NET LOSS PER SHARE $ (.12) $ (.11)
====================== =====================
BASIC WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 14,208,898 13,241,798
====================== =====================
DILUTED WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 14,216,214 13,245,112
====================== =====================
</TABLE>
See accompanying notes to unaudited consolidated financial statements
4
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Penske Motorsports, Inc. Form 10-Q (continued)
PENSKE MOTORSPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------------------
1998 1997
----------------- ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,648) $ (1,511)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 2,675 789
Equity in income of affiliates (512)
Gain on sale of investment (1,108)
Changes in assets and liabilities which provided (used) cash:
Receivables (8,746) (6,004)
Inventories, prepaid expenses and other assets (1,351) (2,513)
Accounts payable and accrued liabilities (7,609) 1,818
Deferred taxes 2,459 838
Deferred revenue 20,556 22,747
----------------- ------------------
Net cash provided by operating activities 4,716 16,164
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions of property and equipment, net (8,567) (30,058)
Acquisitions of equity interests in affiliates and subsidiaries (241)
Proceeds from sale of investment 5,270
----------------- ------------------
Net cash used in investing activities (3,538) (30,058)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (409) (796)
----------------- ------------------
Net cash used in financing activities (409) (796)
----------------- ------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 769 (14,690)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 249 27,862
----------------- ------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,018 $ 13,172
================= ==================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for interest $ 932 $ 298
Cash paid (refunded) during the period for taxes, net $ (1,971)
</TABLE>
See accompanying notes to unaudited consolidated financial statements
5
<PAGE> 6
Penske Motorsports, Inc. Form 10-Q (continued)
PENSKE MOTORSPORTS, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - FINANCIAL STATEMENTS. The consolidated financial statements include the
accounts of Penske Motorsports, Inc. (the "Company") and its wholly-owned
subsidiaries, Michigan International Speedway, Inc., Pennsylvania International
Raceway, Inc., California Speedway Corporation, North Carolina Speedway,
Inc., Motorsports International Corp., Competition Tire West, Inc. and
Competition Tire South, Inc. The Company also owns 45% of the ownership
interests of Homestead-Miami Speedway, LLC ("HMS"), which is recorded using the
equity method of accounting. All material intercompany balances and
transactions have been eliminated.
The consolidated financial statements should be read in conjunction with the
consolidated financial statements included in the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission. The 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 financial position of the Company as of March 31, 1998 and
December 31, 1997, and the results of operations and cash flows of the Company
for the three months ended March 31, 1998 and 1997.
Because of the seasonal concentration of racing events, the results of
operations for the three months ended March 31, 1998 and 1997 are not indicative
of the results to be expected for the year.
NOTE 2 - PROPERTY AND EQUIPMENT, NET. Property and equipment consists of the
following :
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
-------------------- -------------------
(In thousands)
<S> <C> <C>
Land and land improvements $ 101,803 $ 100,653
Buildings and improvements 130,839 124,622
Equipment 22,175 21,360
-------------------- -------------------
254,817 246,635
Less accumulated depreciation 24,000 21,969
-------------------- -------------------
$ 230,817 $ 224,666
==================== ===================
</TABLE>
NOTE 3 - EQUITY INVESTMENTS. In March 1998, the Company acquired an additional
5% of HMS for $2.85 million in exchange for a note payable on December 31, 2001,
with interest payable at 7.5%. The borrower has the option of calling $500,000
of this note on December 31, 2000 or January 1, 2001. The acquisition increased
the Company's ownership of HMS to 45%.
In March 1998, the Company sold its equity interest in Grand Prix Association of
Long Beach, Inc. for $5.3 million. The Company acquired this investment during a
series of transactions in 1997 with a total cost of $4.2 million.
6
<PAGE> 7
Penske Motorsports, Inc. 10-Q (continued)
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors and Stockholders
Penske Motorsports, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of Penske
Motorsports, Inc. and subsidiaries (the "Company") as of March 31, 1998 and the
related condensed consolidated statements of operations and of cash flows for
the three-month periods ended March 31, 1998 and 1997 included in the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998. These
consolidated financial statements are the responsibility of Company's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is an
expression of an opinion regarding the consolidated financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of the Company as of December 31,
1997, and the related consolidated statements of income, changes in
stockholders' equity and of cash flows, for the year then ended (not presented
herein); and in our report dated January 30, 1998, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the condensed consolidated balance sheet at December
31, 1997 included in the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998 is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which such information has been derived.
/s/ Deloitte & Touche LLP
April 30, 1998
Detroit, Michigan
7
<PAGE> 8
Penske Motorsports, Inc. 10-Q (continued)
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
OVERVIEW
Penske Motorsports, Inc. (the "Company") is a leading promoter and marketer of
professional motorsports in the United States. The Company owns and operates,
through its subsidiaries, Michigan Speedway in Brooklyn, Michigan, Nazareth
Speedway in Nazareth, Pennsylvania, California Speedway in Fontana, California,
and North Carolina Speedway in Rockingham, North Carolina. In addition, the
Company owns 45% of the ownership interests of Homestead-Miami Speedway, LLC
("HMS"), which operates Miami-Dade Homestead Motorsports Complex in Homestead,
Florida. The Company also sells motorsports-related merchandise such as apparel,
souvenirs and collectibles through its subsidiary Motorsports International
Corp. ("MIC") and Goodyear brand racing tires and accessories through its
subsidiaries Competition Tire West, Inc. ("CTW") and Competition Tire South,
Inc. ("CTS") in the midwest and southeastern regions of the United States.
The Company classifies its revenues as speedway admissions, other speedway
revenues, and merchandise, tires and accessories revenues. Speedway admissions
includes ticket sales for racing events held at the Company's wholly-owned
speedways. Other speedway revenues includes revenues from concession sales,
corporate hospitality and sponsorship, broadcast rights, billboard and program
advertising and other promotional activities. Speedway admissions and other
speedway revenues are generally collected in advance and recorded as deferred
revenues until the completion of the related event. Merchandise, tires and
accessories revenues include sales of motorsports-related merchandise and
revenues from showcar appearance fees by MIC and sales of racing tires and
accessories by CTW and CTS. Revenues from sales of merchandise, tires and
accessories are recorded as income at the time of the sale.
The Company classifies its expenses as operating, cost of sales, depreciation
and amortization and selling, general and administrative expenses. Operating
expenses consist primarily of costs associated with conducting race events, such
as sanction fees and wages. Cost of sales relates entirely to sales of
merchandise, tires and accessories.
Revenues for the three months ended March 31, 1998 were $10.1 million, compared
to $5.4 million for the three months ended March 31, 1997. The Company recorded
a net loss of $1.6 million, or $.12 per basic share, for the three months ended
March 31, 1998, compared to a net loss of $1.5 million, or $.11 per basic share,
for the three months ended March 31, 1997. The increase in revenues in 1998 is
due primarily to the addition to the Company's consolidated results of an event
at North Carolina Speedway, which was acquired in transactions occurring in May
and December, 1997. The net loss in 1998 increased due primarily to operating
and depreciation expenses at California Speedway and increased interest expense,
net of operating income at North Carolina Speedway from hosting a February
event, the Company's equity investments and a gain on the sale of the Company's
investment in Grand Prix Association of Long Beach, Inc. ("GPLB").
8
<PAGE> 9
Penske Motorsports, Inc. 10-Q (continued)
In March 1998, the Company acquired an additional 5% of HMS for $2.85 million,
in exchange for a note payable on December 31, 2001, with interest payable at
7.5%. The borrower has the option of calling $500,000 of this note on December
31, 2000 or January 1, 2001.
Also in March 1998, the Company sold its interest in GPLB for $5.3 million. The
Company acquired this investment during a series of transactions in 1997 with a
total cost of $4.2 million.
RESULTS OF OPERATIONS
The percentage relationships between revenues and other elements of the
Company's Consolidated Statements of Operations for the three months ended March
31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
----------------- ----------------
<S> <C> <C>
REVENUES:
Speedway admissions 31.9%
Other speedway revenues 29.1
Merchandise, tires and accessories 39.0 100.0%
----------------- ----------------
TOTAL REVENUES 100.0 100.0
EXPENSES:
Operating 61.1 42.5
Cost of sales 24.3 59.1
Depreciation and amortization 26.4 14.7
Selling, general and administrative 22.2 32.2
----------------- ----------------
TOTAL EXPENSES 134.0 148.5
----------------- ----------------
OPERATING LOSS (34.0%) (48.5%)
================= ================
</TABLE>
SEASONALITY AND QUARTERLY RESULTS
Prior to 1997, the Company's weekend race events were held during the months
from April to August. As a result, the Company's business has historically been
highly seasonal. In 1997, in addition to the events in April through August, the
Company hosted events in June, September and October at California Speedway and
in October at North Carolina Speedway. The 1998 racing schedule includes events
at California Speedway in May, July and November and at North Carolina Speedway
in February and November. The Company expects that the addition of California
Speedway and North Carolina Speedway and the investment in HMS will lessen the
impact of seasonality on the Company's results of operations.
9
<PAGE> 10
Penske Motorsports, Inc. 10-Q (continued)
Set forth below is summary information with respect to the Company's operations.
<TABLE>
<CAPTION>
($ in thousands) 1998 1997 1996
---------- ----------------------------------------- -----------------------------------------
FIRST FIRST SECOND THIRD FOURTH FIRST SECOND THIRD FOURTH
----- ----- ------ ----- ------ ----- ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES $10,137 $ 5,375 $46,296 $43,974 $14,171 $3,642 $24,614 $23,962 $2,957
NET INCOME (LOSS) (1,648) (1,511) 10,929 8,845 (1,818) (990) 6,717 6,499 (1,346)
NUMBER OF EVENT
WEEKENDS 1 - 5 3 2 - 4 2 -
</TABLE>
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
Revenues - Revenues for the three months ended March 31, 1998 were $10.1
million, an increase of $4.7 million, or 88.6% compared to the same period in
1997. Speedway admissions was $3.2 million and other speedway revenues were $3.0
million in 1998, primarily as a result of the acquisition of North Carolina
Speedway, which hosted an event in February.
Merchandise, tires and accessories revenues decreased $1.5 million, from $5.4
million in the first quarter of 1997 to $3.9 million in 1998, primarily as a
result of the December 1997 sale of the licensing rights for Rusty Wallace
merchandise.
Operating Expenses - Operating expenses for the three months ended March 31,
1998 were $6.2 million, an increase of $3.9 million, or 170.8% over the same
period in 1997 due to the addition of North Carolina Speedway, which hosted an
event in February 1998, and California Speedway, which commenced operations in
the second quarter of 1997.
Cost of Sales - Cost of sales for the three months ended March 31, 1998 was $2.5
million, or 62.4% of merchandise, tires and accessories revenues, compared to
$3.2 million, or 59.1% of those same revenues, for the corresponding period of
1997. The decrease in cost of sales of $.7 million and the increase in the
percentage of cost of sales to merchandise, tires and accessories revenues from
1997 to 1998 resulted primarily from the December 1997 sale of the licensing
rights for Rusty Wallace merchandise. This sale resulted in the product mix
changing so that a higher portion of the revenues resulted from tires and
accessories sales, which carry a lower margin.
Depreciation and Amortization - Depreciation and amortization expense increased
from $.8 million for the three months ended March 31, 1997 to $2.7 million in
1998 due to depreciation expense at California Speedway, which held its first
event in June 1997, and depreciation expense and goodwill amortization at North
Carolina Speedway.
Selling, General and Administrative - Selling, general and administrative
expenses of $2.3 million for the three months ended March 31, 1998 increased $.6
million, or 30.2%, from the same period in 1997. This increase is due primarily
to the addition of North Carolina Speedway, which was not included in the
consolidated results during the first quarter of 1997.
10
<PAGE> 11
Penske Motorsports, Inc. 10-Q (continued)
Equity in Income of Affiliates - The equity in income of affiliates reflects the
Company's pro rata share of the operating results of its investments in HMS and
GPLB, both of which were acquired after the first quarter of 1997.
Gain on Sale of Investment - The gain on sale of investment resulted from the
March 1998 sale of the Company's common stock of GPLB for $5.3 million. The
Company acquired this investment during a series of transactions in 1997 with a
total cost of $4.2 million.
Interest - The Company recorded net interest expense for the three months ended
March 31, 1998 of $859,000, compared to net interest income of $125,000 in 1997.
The interest income in 1997 resulted from temporarily investing the proceeds of
the Company's March 1996 initial public offering. These funds were fully
utilized during the second quarter of 1997 to pay for construction at California
Speedway. The Company has borrowed on its line of credit to fund the completion
of California Speedway, other capital improvements, to make the investment in
HMS and to complete the acquisition of North Carolina Speedway.
Income Tax Expense - Income tax expense is reported during the interim reporting
periods on the basis of the Company's estimated annual effective tax rate for
the taxable jurisdictions in which the Company operates. The effective tax rate
for the three months ended March 31, 1998 is 38.5%, compared to 39.1% in 1997.
Net Loss - The net loss for the three months ended March 31, 1998 was $1.6
million, or $.12 per basic share, compared to a net loss of $1.5 million, or
$.11 per basic share in 1997. The increase in the net loss for 1998 primarily
reflects higher expenses associated with operating California Speedway and North
Carolina Speedway and higher interest expense, net of revenues at North Carolina
Speedway from hosting a February event, equity income from the Company's
investments and the gain on the sale of GPLB.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has relied on cash flows from operating activities
supplemented, as necessary, by bank borrowings to finance working capital,
investments and capital expenditures. The Company used the proceeds of its
initial public offering in March 1996 to repay debt and to fund construction of
California Speedway.
The Company has a $100 million unsecured revolving line of credit that matures
in the year 2002, of which $54.5 million was available as of March 31, 1998. The
outstanding debt of $45.5 million on this line of credit resulted from
expenditures for the completion of construction at California Speedway, other
capital expenditures, to make the investment in HMS and to complete the
acquisition of North Carolina Speedway. The remaining line of credit is
available for general working capital needs and other capital expenditures. The
Company is in compliance with all covenants in the loan agreement, and
management believes the Company would continue to be in compliance if the entire
amount of available credit was outstanding.
11
<PAGE> 12
Penske Motorsports, Inc. 10-Q (continued)
The Company expects to make approximately $25.0 million in capital expenditures
during 1998, consisting primarily of additional seating and other facility
upgrades at its speedways. The Company paid for $8.6 million of capital
expenditures during the first quarter of 1997.
The Company is considering the development of a new speedway near Denver,
Colorado, and will continue to pursue other growth opportunities, including
acquisition and development, in other markets. Future acquisitions or
development will be funded through available credit under existing debt
facilities and, if necessary, under other financing arrangements through the
capital or financial markets, depending on market conditions. The Company
believes that it has the ability to obtain funds through these markets, however,
there can be no assurance that adequate debt or equity financing will be
available on satisfactory terms.
For the three months ended March 31, 1998, the Company generated cash flows of
$4.7 million from operating activities, compared to $16.2 million in 1997. The
Company used $3.5 million in investing activities, including additions of
property and equipment of $8.6 million, net of the proceeds from the sale of the
investment in GPLB of $5.3 million. The Company used $409,000 for financing
activities to repay debt.
The Company believes it has sufficient resources from existing cash balances and
from operating activities and, if necessary, from borrowing under its line of
credit to satisfy ongoing cash requirements for the next twelve months.
YEAR 2000
The Company continues to evaluate the potential impact to its computer systems
and computerized equipment from the change from the year 1999 to the year 2000.
This involves a comprehensive assessment of the Company's computer and
equipment vendors to determine whether there are significant year 2000 issues
regarding the Company's management information systems. Recent additions to
the Company's management information systems are year 2000 compliant.
Although this evaluation has not yet been completed, based upon preliminary
information the Company does not expect the cost of potential changes to be
material.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for the historical information contained herein, certain matters
discussed in this report are forward-looking statements which involve risks and
uncertainties including, but not limited to, the Company's ability to maintain
good working relationships with the sanctioning bodies for its events, as well
as other risks and uncertainties affecting the Company's operations, such as
competition, environmental, industry sponsorships, governmental regulation,
dependence on key personnel, the Company's ability to control construction and
operational costs, the impact of bad weather at the Company's events and those
other factors discussed in the Company's filings with the Securities and
Exchange Commission.
12
<PAGE> 13
Penske Motorsports, Inc. 10-Q (continued)
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibit Number and Description Page Number
------------------------------ -----------
(a) 10.16 Amended and Restated Penske Motorsports,
Inc. 1996 Stock Incentive Plan
15.1 Letter RE: unaudited interim financial
information.
27 Financial Data Schedules
(b) The Company was not required to file a Form 8-K
during the three months ended March 31, 1998.
13
<PAGE> 14
Penske Motorsports, Inc. 10-Q (continued)
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 thereunto duly authorized.
PENSKE MOTORSPORTS, INC.
Date: May 14, 1998 By: /s/ James H. Harris
-----------------------------------
Its: Senior Vice President and Treasurer
(Principal Financial Officer)
14
<PAGE> 15
EXHIBITS INDEX
Exhibit Number and Description Page Number
------------------------------ -----------
10.16 Amended and Restated Penske Motorsports,
Inc. 1996 Stock Incentive Plan
15.1 Letter RE: unaudited interim financial
information.
27 Financial Data Schedules
<PAGE> 1
Amended and Restated
PENSKE MOTORSPORTS, INC.
1996 STOCK INCENTIVE PLAN
1. DEFINITIONS: As used herein, the following definitions shall
apply:
(a) "Board of Directors" shall mean the Board of Directors of
the Corporation.
(b) "Committee" shall mean the Compensation Committee
designated by the Board of Directors of the Corporation,
or such other committee as shall be specified by the
Board of Directors to perform the functions and duties of
the Committee under the Plan; provided, however, that the
Committee shall comply with the requirements of (i) Rule
16b-3 of the Rules and Regulations under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),
and (ii) Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations
thereunder.
(c) "Corporation" shall mean Penske Motorsports, Inc., a
Delaware corporation, or any successor thereof.
(d) "Discretion" shall mean in the sole discretion of the
Committee, with no requirement whatsoever that the
Committee follow past practices, act in a manner
consistent with past practices, or treat a key employee,
consultant or advisor in a manner consistent with the
treatment afforded other key employees, consultants or
advisors with respect to the Plan.
(e) "Incentive Option" shall mean an option to purchase
Common Stock of the Corporation which meets the
requirements set forth in the Plan and also meets the
definition of an incentive stock option within the
meaning of Section 422 of the Code; provided, however,
that Incentive Options may only be granted to persons who
are employees of the Corporation or of a subsidiary
corporation in which the Corporation owns, directly or
indirectly, 50% or more of the combined voting power of
all classes of stock of the subsidiary
<PAGE> 2
corporation. The stock option agreement for an Incentive
Option shall state that the option is intended to be an
Incentive Option.
(f) "Nonqualified Option" shall mean an option to purchase
Common Stock of the Corporation which meets the
requirements set forth in the Plan but does not meet the
definition of an incentive stock option within the
meaning of Section 422 of the Code. The stock option
agreement for a Nonqualified Option shall state that the
option is intended to be a Nonqualified Option.
(g) "Participant" shall mean any individual designated by the
Committee under Paragraph 6 for participation in the
Plan.
(h) "Plan" shall mean this Amended and Restated Penske
Motorsports, Inc. 1996 Stock Incentive Plan.
(i) "Restricted stock award" shall mean a grant of Common
Stock of the Corporation which is subject to forfeiture,
restrictions against transfer, and such other terms and
conditions determined by the Committee, as provided in
Paragraph 18.
(j) "Stock appreciation right" shall mean a right to receive
the appreciation in value, or a portion of the
appreciation in value, of a specified number of shares of
the Common Stock of the Corporation, as provided in
Paragraph 12.
(k) "Subsidiary" shall mean any corporation or similar entity
in which the Corporation owns, directly or indirectly,
stock or other equity interest ("Stock") possessing more
than 25% of the combined voting power of all classes of
Stock; provided, however, that an Incentive Option may be
granted to an employee of a Subsidiary only if the
Subsidiary is a corporation and the Corporation owns,
directly or indirectly, 50% or more of the total combined
voting power of all classes of Stock of the Subsidiary.
2. PURPOSE OF PLAN: The purpose of the Plan is to provide key
employees (including officers and directors who are also key
employees), consultants and advisors of the Corporation and
its Subsidiaries with an increased incentive to make
significant and extraordinary contributions to the long-term
performance and growth of the Corporation and its
Subsidiaries, to join the interests of key employees,
consultants and advisors with the interests of the
shareholders of the Corporation, and to facilitate attracting
and retaining key employees, consultants and advisors of
exceptional ability.
<PAGE> 3
3. ADMINISTRATION: The Plan shall be administered by the
Committee. Subject to the provisions of the Plan, the
Committee shall determine, from those eligible to be
Participants under the Plan, the persons to be granted stock
options, stock appreciation rights and restricted stock, the
amount of stock or rights to be optioned or granted to each
such person, and the terms and conditions of any stock
options, stock appreciation rights and restricted stock.
Subject to the provisions of the Plan, the Committee is
authorized to interpret the Plan, to make, amend and rescind
rules and regulations relating to the Plan and to make all
other determinations necessary or advisable for the Plan's
administration. Interpretation and construction of any
provision of the Plan by the Committee shall, unless otherwise
determined by the Board of Directors of the Corporation, be
final and conclusive. A majority of the Committee shall
constitute a quorum, and the acts approved by a majority of
the members present at any meeting at which a quorum is
present, or acts approved in writing by a majority of the
Committee, shall be the acts of the Committee.
4. INDEMNIFICATION OF COMMITTEE MEMBERS: In addition to such
other rights of indemnification as they may have, the members
of the Committee shall be indemnified by the Corporation in
connection with any claim, action, suit or proceeding relating
to any action taken or failure to act under or in connection
with the Plan or any option, stock appreciation right or
restricted stock granted hereunder to the full extent provided
for under the Corporation's Bylaws with respect to
indemnification of directors of the Corporation.
5. MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN: The maximum number
of shares with respect to which stock options or stock
appreciation rights may be granted or which may be awarded as
restricted stock under the Plan shall be 720,000 shares in the
aggregate of Common Stock of the Corporation. The number of
shares with respect to which a stock appreciation right is
granted, but not the number of shares which the Corporation
delivers or could deliver to a Participant upon exercise of a
stock appreciation right, shall be charged against the
aggregate number of shares remaining available under the Plan;
provided, however, that in the case of a stock appreciation
right granted in conjunction with a stock option under
circumstances in which the exercise of the stock appreciation
right results in termination of the stock option and vice
versa, only the number of shares subject to the stock option
shall be charged
-3-
<PAGE> 4
against the aggregate number of shares remaining available
under the Plan. If a stock option or stock appreciation right
expires or terminates for any reason (other than termination
as a result of the exercise of a related right) without having
been fully exercised, or if shares of restricted stock are
forfeited, the number of shares with respect to which the
stock option or stock appreciation right was not exercised at
the time of its expiration or termination, and the number of
forfeited shares of restricted stock, shall again become
available for the grant of stock options or stock appreciation
rights, or the award of restricted stock, under the Plan,
unless the Plan shall have been terminated.
Notwithstanding any other provision in this Plan, no employee,
consultant or advisor of the Corporation or a Subsidiary may
receive options, stock appreciation rights, restricted stock
or any combination thereof for more than 200,000 shares of
Common Stock of the Corporation over the term of the Plan, as
provided in Paragraph 23. For purposes of this 200,000 share
per-person limitation, there shall be taken into account all
shares covered by stock options and stock appreciation rights
granted, and all restricted shares awarded, to an employee
regardless of whether such stock options or stock appreciation
rights expire or terminate without being fully exercised or
whether such restricted shares are forfeited back to the
Corporation. The number of shares subject to each outstanding
stock option, stock appreciation right or restricted stock
award, the option price with respect to outstanding stock
options, the grant value with respect to outstanding stock
appreciation rights, the aggregate number of shares remaining
available under the Plan and the 200,000 share per-person
limitation shall be subject to such adjustment as the
Committee, in its Discretion, deems appropriate to reflect
such events as stock dividends, stock splits,
recapitalizations, mergers, consolidations or reorganizations
of or by the Corporation; provided, however, that no
fractional shares shall be issued pursuant to the Plan, no
rights may be granted under the Plan with respect to
fractional shares, and any fractional shares resulting from
such adjustments shall be eliminated from any outstanding
stock option, stock appreciation right, or restricted stock
award.
6. PARTICIPANTS: The Committee shall determine and designate from
time to time, in its Discretion, those key employees,
consultants or advisors of the Corporation or any Subsidiary
to receive stock options,
-4-
<PAGE> 5
stock appreciation rights, or restricted stock who, in the
judgment of the Committee, are or will become responsible for
the direction and financial success of the Corporation or any
Subsidiary; provided, however, that Incentive Options may be
granted only to persons who are key employees of the
Corporation or a Subsidiary, and in the case of a Subsidiary
only if (i) the Corporation owns, directly or indirectly, 50%
or more of the total combined voting power of all classes of
Stock of the Subsidiary and (ii) the Subsidiary is a
corporation. For the purposes of the Plan, key employees shall
include officers and directors who are also key employees of
the Corporation or any Subsidiary.
7. WRITTEN AGREEMENT: Each stock option, stock appreciation right
and restricted stock award shall be evidenced by a written
agreement (each a "Corporation-Participant Agreement")
containing such provisions as may be approved by the
Committee. Each such Corporation-Participant Agreement shall
constitute a binding contract between the Corporation and the
Participant and every Participant, upon acceptance of such
Agreement, shall be bound by the terms and restrictions of the
Plan and of such Agreement. The terms of each such
Corporation-Participant Agreement shall be in accordance with
the Plan, but each Agreement may include such additional
provisions and restrictions determined by the Committee, in
its Discretion, provided that such additional provisions and
restrictions are not inconsistent with the terms of the Plan.
8. ALLOTMENT OF SHARES: The Committee shall determine and fix, in
its Discretion, the number of shares of Common Stock with
respect to which a Participant may be granted stock options
and stock appreciation rights and the number of shares of
restricted stock which a Participant may be awarded; provided,
however, that no Incentive Option may be granted under the
Plan to any one Participant which would result in the
aggregate fair market value, determined as of the date the
option is granted, of underlying stock with respect to which
incentive stock options are exercisable for the first time by
such Participant during any calendar year under any plan
maintained by the Corporation (or any parent or subsidiary
corporation of the Corporation) exceeding $100,000.
9. STOCK OPTIONS: Subject to the terms of the Plan, the
Committee, in its Discretion, may grant to Participants either
Incentive Options or Nonqualified Options or any combination
thereof. Each option granted under the
-5-
<PAGE> 6
Plan shall designate the number of shares covered thereby, if
any, with respect to which the option is an Incentive Option,
and the number of shares covered thereby, if any, with respect
to which the option is a Nonqualified Option.
10. STOCK OPTION PRICE: Subject to the rules set forth in this
Paragraph 10, at the time any stock option is granted, the
Committee, in its Discretion, shall establish the price per
share for which the shares covered by the option may be
purchased. With respect to an Incentive Option, such option
price shall not be less than 100% of the fair market value of
the stock on the date on which such option is granted;
provided, however, that with respect to an Incentive Option
granted to an employee who at the time of the grant owns
(after applying the attribution rules of Section 424(d) of the
Code) more than 10% of the total combined voting stock of the
Corporation or of any parent or subsidiary, the option price
shall not be less than 110% of the fair market value of the
stock on the date such option is granted. With respect to a
Nonqualified Option, the option price shall not be less than
50% of the fair market value of the stock on the date upon
which such option is granted. Fair market value of a share
shall be determined by the Committee and may be determined by
taking the mean between the highest and lowest quoted selling
prices of the Corporation's Common Stock on any exchange or
other market on which the shares of Common Stock of the
Corporation shall be traded on such date, or if there are no
sales on such date, on the next following day on which there
are sales. The option price shall be subject to adjustment in
accordance with the provisions of paragraph 5 of the Plan.
11. PAYMENT OF STOCK OPTION PRICE: To exercise in whole or in part
any stock option granted hereunder, payment of the option
price in full in cash or, with the consent of the Committee,
in Common Stock of the Corporation or by a promissory note
payable to the order of the Corporation in a form acceptable
to the Committee, shall be made by the Participant for all
shares so purchased. Such payment may, with the consent of the
Committee, also consist of a cash down payment and delivery of
such promissory note in the amount of the unpaid exercise
price. In the Discretion of and subject to such conditions as
may be established by the Committee, payment of the option
price may also be made by the Corporation retaining from the
shares to be delivered upon exercise of the stock option that
number of shares having a fair market value on the date of
exercise equal to the option price of the number of
-6-
<PAGE> 7
shares with respect to which the Participant exercises the
stock option. Such payment may also be made in such other
manner as the Committee determines is appropriate, in its
Discretion. No Participant shall have any of the rights of a
shareholder of the Corporation under any stock option until
the actual issuance of shares to said Participant, and prior
to such issuance no adjustment shall be made for dividends,
distributions or other rights in respect of such shares,
except as provided in Paragraph 5.
12. STOCK APPRECIATION RIGHTS: Subject to the terms of the Plan,
the Committee may grant stock appreciation rights to
Participants either in conjunction with, or independently of,
any stock options granted under the Plan. A stock appreciation
right granted in conjunction with a stock option may be an
alternative right wherein the exercise of the stock option
terminates the stock appreciation right to the extent of the
number of shares purchased upon exercise of the stock option
and, correspondingly, the exercise of the stock appreciation
right terminates the stock option to the extent of the number
of shares with respect to which the stock appreciation right
is exercised. Alternatively, a stock appreciation right
granted in conjunction with a stock option may be an
additional right wherein both the stock appreciation right and
the stock option may be exercised. A stock appreciation right
may not be granted in conjunction with an Incentive Option
under circumstances in which the exercise of the stock
appreciation right affects the right to exercise the Incentive
Option or vice versa, unless the stock appreciation right, by
its terms, meets all of the following requirements:
(a) the stock appreciation right will expire no later than
the Incentive Option;
(b) the stock appreciation right may be for no more than the
difference between the option price of the Incentive
Option and the fair market value of the shares subject to
the Incentive Option at the time the stock appreciation
right is exercised;
(c) the stock appreciation right is transferable only when
the Incentive Option is transferable, and under the same
conditions;
(d) the stock appreciation right may be exercised only when
the Incentive Option is eligible to be exercised; and
(e) the stock appreciation right may be exercised only
-7-
<PAGE> 8
when the fair market value of the shares subject to the
Incentive Option exceeds the option price of the
Incentive Option.
Upon exercise of a stock appreciation right, a Participant
shall be entitled to receive, without payment to the
Corporation (except for applicable withholding taxes), an
amount equal to the excess of or, in the Discretion of the
Committee if provided in the Corporation-Participant
Agreement, a portion of the excess of (i) the then aggregate
fair market value of the number of shares with respect to
which the Participant exercises the stock appreciation right,
over (ii) the aggregate fair market value of such number of
shares at the time the stock appreciation right was granted.
This amount shall be payable by the Corporation, in the
Discretion of the Committee, in cash or in shares of Common
Stock of the Corporation or any combination thereof.
13. GRANTING AND EXERCISING OF STOCK OPTIONS AND STOCK
APPRECIATION RIGHTS: Subject to the provisions of this
Paragraph 13, each stock option and stock appreciation right
granted hereunder shall be exercisable at any such time or
times or in any such installments as may be determined by the
Committee at the time of the grant; provided, however, no
stock option or stock appreciation right may be exercisable
prior to the expiration of six months from the date of grant
unless the Participant dies or becomes disabled prior thereto.
Moreover, if a Participant who is granted a stock appreciation
right is a person who is regularly required to report his or
her ownership and changes in ownership of Common Stock of the
Corporation to the Securities and Exchange Commission and is
subject to short-swing profit liability under the provisions
of Section 16(b) of the Exchange Act, then any election to
exercise as well as any actual exercise of such Participant's
stock appreciation right shall be made only during the period
beginning on the third business day and ending on the twelfth
business day following the release for publication by the
Corporation of quarterly or annual summary statements of sales
and earnings. Notwithstanding anything contained in the Plan
to the contrary, stock appreciation rights shall always be
granted and exercised in such a manner as to conform to the
provisions of Rule 16b-3(e), or any replacement rule, adopted
pursuant to the provisions of the Exchange Act. In addition,
the aggregate fair market value (determined at the time the
option is granted) of the Common Stock with respect to which
Incentive Options are exercisable for the first time by a
Participant during any calendar year shall not exceed
$100,000.
-8-
<PAGE> 9
A Participant may exercise a stock option or stock
appreciation right, if then exercisable, in whole or in part
by delivery to the Corporation of written notice of the
exercise, in such form as the Committee may prescribe,
accompanied, in the case of a stock option, by (i) payment for
the shares with respect to which the stock option is exercised
in accordance with Paragraph 11, or (ii) in the Discretion of
the Committee, irrevocable instructions to a stock broker to
promptly deliver to the Corporation full payment for the
shares with respect to which the stock option is exercised
from the proceeds of the stock broker's sale of or loan
against the shares. Except as provided in Paragraph 17, stock
options and stock appreciation rights granted to a Participant
may be exercised only while the Participant is an employee of
the Corporation or a Subsidiary.
Successive stock options and stock appreciation rights may be
granted to the same Participant, whether or not the stock
option(s) and stock appreciation right(s) previously granted
to such Participant remain unexercised. A Participant may
exercise a stock option or a stock appreciation right, if then
exercisable, notwithstanding that stock options and stock
appreciation rights previously granted to such Participant
remain unexercised.
14. NON-TRANSFERABILITY OF STOCK OPTIONS AND STOCK APPRECIATION
RIGHTS: No stock option or stock appreciation right granted
under the Plan to a Participant shall be transferable by such
Participant otherwise than by will or by the laws of descent
and distribution, and stock options and stock appreciation
rights shall be exercisable, during the lifetime of the
Participant, only by the Participant.
15. TERM OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS: If not
sooner terminated, each stock option and stock appreciation
right granted hereunder shall expire not more than 10 years
from the date of the granting thereof; provided, however, that
with respect to an Incentive Option or a related stock
appreciation right granted to a Participant who, at the time
of the grant, owns (after applying the attribution rules of
Section 424(d) of the Code) more than 10% of the total
combined voting stock of all classes of stock of the
Corporation or of any parent or subsidiary, such option and
stock appreciation right shall expire not more than five (5)
years after the date of granting thereof.
16. CONTINUATION OF EMPLOYMENT: The Committee may require,
-9-
<PAGE> 10
in its Discretion, that any Participant under the Plan to whom
a stock option or stock appreciation right shall be granted
shall agree in writing as a condition of the granting of such
stock option or stock appreciation right to remain in the
employ of the Corporation or a Subsidiary as an employee,
consultant or advisor for a designed minimum period from the
date of the granting of such stock option or stock
appreciation right as shall be fixed by the Committee.
17. TERMINATION OF EMPLOYMENT: If the employment or consultancy of
a Participant by the Corporation or a Subsidiary shall
terminate, the Committee may, in its Discretion, permit the
exercise of stock options and stock appreciation rights
granted to such Participant (i) for a period not to exceed
three months following termination of employment with respect
to Incentive Options or related stock appreciation rights if
termination of employment is not due to death or permanent
disability of the Participant, (ii) for a period not to exceed
one year following termination of employment with respect to
Incentive Options or related stock appreciation rights if
termination of employment is due to the death or permanent
disability of the Participant, and (iii) for a period not to
extend beyond the expiration date with respect to Nonqualified
Options or related or independently granted stock appreciation
rights. In no event, however, shall a stock option or stock
appreciation right be exercisable subsequent to its expiration
date and, furthermore, unless the Committee in its Discretion
determine otherwise, a stock option or stock appreciation
right may only be exercised after termination of a
Participant's employment or consultancy to the extent
exercisable on the date of such termination or to the extent
exercisable as a result of the reason for such termination.
The period of time, if any, a Participant shall have to
exercise stock options or stock appreciation rights upon
termination of employment or consultancy shall be set forth in
the Corporation-Participant Agreement, subject to extension of
such time period by the Committee in its Discretion.
18. RESTRICTED STOCK AWARDS: Subject to the terms of the Plan, the
Committee may award shares of restricted stock to
Participants. All shares of restricted stock granted to
Participants under the Plan shall be subject to the following
terms and conditions (and to such other terms and conditions
prescribed by the Committee):
(a) At the time of each award of restricted shares, there
shall be established for the shares a
-10-
<PAGE> 11
restricted period, which shall be no less than six months
and no greater than five years. Such restricted period
may differ among Participants and may have different
expiration dates with respect to portions of shares
covered by the same award.
(b) Shares of restricted stock awarded to Participants may
not be sold, assigned, transferred, pledged, hypothecated
or otherwise encumbered during the restricted period
applicable to such shares. Except for such restrictions
on transfer, a Participant shall have all of the rights
of a shareholder in respect of restricted shares awarded
to him or her including, but not limited to, the right to
receive any dividends on, and the right to vote, the
shares.
(c) If the employment of a Participant as an employee,
consultant or advisor of the Corporation or a Subsidiary
terminates for any reason (voluntary or involuntary, and
with or without cause) other than death or permanent
disability, all shares theretofore awarded to the
Participant which are still subject to the restrictions
imposed by Paragraph 18(b) shall upon such termination of
employment be forfeited and transferred back to the
Corporation, without payment of any consideration by the
Corporation. In the event such employment is terminated
by action of the Corporation or a Subsidiary without
cause or by agreement between the Corporation or a
Subsidiary and the Participant, however, the Committee
may, in its Discretion, release some or all of the shares
from the restrictions.
(d) If the employment of a Participant as an employee,
consultant or advisor of the Corporation or a Subsidiary
terminates by reason of death or permanent disability,
the restrictions imposed by Paragraph 18(b) shall lapse
with respect to shares then subject to such restrictions,
unless otherwise determined by the Committee.
(e) Stock certificates shall be issued in respect of shares
of restricted stock awarded hereunder and shall be
registered in the name of the Participant. Such
certificates shall be deposited with the Corporation or
its designee, together with a stock power endorsed in
blank, and, in the Discretion of the Committee, a legend
shall be placed upon such certificates reflecting that
the shares represented thereby are subject to
-11-
<PAGE> 12
restrictions against transfer and forfeiture.
(f) At the expiration of the restricted period applicable to
the shares, the Corporation shall deliver to the
Participant or the legal representative of the
Participant's estate the stock certificates deposited
with it or its designee and as to which the restricted
period has expired. If a legend has been placed on such
certificates, the Corporation shall cause such
certificates to be reissued without the legend.
In the case of events such as stock dividends, stock splits,
recapitalizations, mergers, consolidations or reorganizations
of or by the Corporation, any stock, securities or other
property which a Participant receives or is entitled to
receive by reason of his or her ownership of restricted shares
shall, unless otherwise determined by the Committee, be
subject to the same restrictions applicable to the restricted
shares and shall be deposited with the Corporation or its
designee.
19. INVESTMENT PURPOSE: If the Committee in its Discretion
determines that as a matter of law such procedure is or may be
desirable, it may require a Participant, upon any acquisition
of Common Stock hereunder (whether by reason of the exercise
of stock options or stock appreciation rights or the award of
restricted stock) and as a condition to the Corporation's
obligation to issue or deliver certificates representing such
shares, to execute and deliver to the Corporation a written
statement, in form satisfactory to the Committee, representing
and warranting that the Participant's acquisition of shares of
stock shall be for such person's own account, for investment
and not with a view to the resale or distribution thereof and
that any subsequent offer for sale or sale of any such shares
shall be made either pursuant to (a) a registration statement
on an appropriate form under the Securities Act of 1933, as
amended (the "Securities Act"), which registration statement
has become effective and is current with respect to the shares
being offered and sold, or (b) a specific exemption from the
registration requirements of the Securities Act, but in
claiming such exemption the Participant shall, prior to any
offer for sale or sale of such shares, obtain a favorable
written opinion from counsel for or approved by the
Corporation as to the availability of such exemption. The
Corporation may endorse an appropriate legend referring to the
foregoing restriction upon the certificate or certificates
representing any shares issued or transferred to a Participant
under the Plan.
-12-
<PAGE> 13
20. RIGHTS TO CONTINUED EMPLOYMENT: Nothing contained in the Plan
or in any stock option, stock appreciation right or restricted
stock granted or awarded pursuant to the Plan, nor any action
taken by the Committee hereunder, shall confer upon any
Participant any right with respect to continuation of
employment as an employee, consultant or advisor of the
Corporation or a Subsidiary nor interfere in any way with the
right of the Corporation or a Subsidiary to terminate such
person's employment at any time.
21. WITHHOLDING PAYMENTS: If upon the exercise of a Nonqualified
Option or stock appreciation right, or upon the award of
restricted stock or the expiration of restrictions applicable
to restricted stock, or upon a disqualifying disposition
(within the meaning of Section 422 of the Code) of shares
acquired upon exercise of an Incentive Option, there shall be
payable by the Corporation or a Subsidiary any amount for
income tax withholding, in the Committee's Discretion, either
the Corporation shall appropriately reduce the amount of
Common Stock or cash to be delivered or paid to the
Participant or the Participant shall pay such amount to the
Corporation or Subsidiary to reimburse it for such income tax
withholding. The Committee may, in its Discretion, permit
Participants to satisfy such withholding obligations, in whole
or in part, by electing to have the amount of Common Stock
delivered or deliverable by the Corporation upon exercise of a
stock option or stock appreciation right or upon award of
restricted stock appropriately reduced, or by electing to
tender Common Stock back to the Corporation subsequent to
exercise of a stock option or stock appreciation right or
award of restricted stock, to reimburse the Corporation or a
Subsidiary for such income tax withholding (any such election
being irrevocable), subject to such rules and regulations as
the Committee may adopt, including such rules as it determines
appropriate with respect to Participants subject to the
reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), to
effect such tax withholding in compliance with the Rules
established by the Securities and Exchange Commission (the
"Commission") under Section 16 to the Exchange Act and the
positions of the staff of the Commission thereunder expressed
in no-action letters exempting such tax withholding from
liability under Section 16(b) of the Exchange Act. The
Committee may make such other arrangements with respect to
income tax withholding as it shall determine.
22. EFFECTIVENESS OF PLAN: The Plan shall be effective on the date
the Board of Directors of the Corporation
-13-
<PAGE> 14
adopts the Plan, provided that the shareholders of the
Corporation approve the Plan within 12 months of its adoption
by the Board of Directors. Stock options, stock appreciation
rights and restricted stock may be granted or awarded prior to
shareholder approval of the Plan, but each such stock option,
stock appreciation right or restricted stock grant or award
shall be subject to shareholder approval of the Plan. No stock
option or stock appreciation right may be exercised prior to
shareholder approval, and any restricted stock awarded is
subject to forfeiture if such shareholder approval is not
obtained.
23. TERMINATION, DURATION AND AMENDMENTS OF PLAN: The Plan may be
abandoned or terminated at any time by the Board of Directors
of the Corporation. Unless sooner terminated, the Plan shall
terminate on the date ten years after its adoption by the
Board of Directors, and no stock options, stock appreciation
rights or restricted stock may be granted or awarded
thereafter. The termination of the Plan shall not affect the
validity of any stock option, stock appreciation right or
restricted stock outstanding on the date of termination.
For the purpose of conforming to any changes in applicable law
or governmental regulations, or for any other lawful purpose,
the Board of Directors shall have the right, with or without
approval of the shareholders of the Corporation, to amend or
revise the terms of the Plan at any time; provided, however,
that no such amendment or revision shall (i) without approval
or ratification of the shareholders of the Corporation (A)
increase the maximum number of shares in the aggregate which
are subject to the Plan (subject, however, to the provisions
of Paragraph 5), (B) increase the maximum number of shares for
which any Participant may be granted stock options, stock
appreciation rights or awarded restricted stock under the Plan
(except as contemplated by Paragraph 5), (C) change the class
of persons eligible to be Participants under the Plan, or (D)
materially increase the benefits accruing to Participants
under the Plan, or (ii) without the consent of the holder
thereof, change the stock option price (except as contemplated
by Paragraph 5) or alter or impair any stock option, stock
appreciation right or restricted stock which shall have been
previously granted or awarded under the Plan.
As adopted by the Board of Directors on March 21, 1996.
As amended by the Board of Directors on February 2, 1998.
<PAGE> 1
Penske Motorsports, Inc. 10-Q
Penske Motorsports, Inc.
Detroit, Michigan
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Penske Motorsports, Inc. for the periods ended March 31, 1998 and
1997, as indicated in our report dated April 30, 1998; because we did not
perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998, is
incorporated by reference in Registration Statement No. 333-692 on Form S-8.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/ Deloitte & Touche LLP
May 14, 1998
Detroit, Michigan
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING CONDENSED CONSOLIDATED BALANCE SHEET OF PENSKE MOTORSPORTS, INC. AS
OF MARCH 31, 1998 AND THE RELATED CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR
THE THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,018
<SECURITIES> 0
<RECEIVABLES> 13,533
<ALLOWANCES> 0
<INVENTORY> 2,452
<CURRENT-ASSETS> 19,588
<PP&E> 254,817
<DEPRECIATION> 24,000
<TOTAL-ASSETS> 307,658
<CURRENT-LIABILITIES> 51,643
<BONDS> 50,736
0
0
<COMMON> 142
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<CGS> 2,462
<TOTAL-COSTS> 13,579
<OTHER-EXPENSES> (1,620)
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<INTEREST-EXPENSE> 859
<INCOME-PRETAX> (2,681)
<INCOME-TAX> (1,033)
<INCOME-CONTINUING> (1,648)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,648)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
