UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended February 29, 1996.
Commission file Number 0-2384
International Speedway Corporation
(Exact name of registrant as specified in its charter.)
Florida, U.S.A. 59-0709342
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1801 West International Speedway Boulevard, Daytona Beach, Florida 32114-1243
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 254-2700
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 practical date:
Common Stock, $0.10 Par Value - 2,299,870 shares as of April 5, 1996.
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<PAGE>
PART I. - FINANCIAL INFORMATION
Item 1. - Financial Statements
INTERNATIONAL SPEEDWAY CORPORATION
Condensed Consolidated Balance Sheets
February 29, August 31,
1996 1995
(Unaudited)
_______________________
(In Thousands)
ASSETS
Current Assets:
Cash and cash equivalents........................... $ 16,035 $ 7,871
Short-term investments.............................. 13,574 30,950
Receivables, less allowance of $35.................. 7,844 1,794
Inventories......................................... 1,469 1,158
Prepaid expenses and other current assets........... 1,618 3,122
___________ __________
Total Current Assets.................................. 40,540 44,895
Property and Equipment - at cost - less accumulated
depreciation of $33,328 ($30,692 at August 31)....... 83,513 70,299
Other Assets:
Cash surrender value of life insurance (Note 3)..... 1,228 489
Equity investments (Note 6)......................... 17,080 2,913
Long-term investments............................... 500 747
Other............................................... 210 228
___________ __________
19,018 4,377
___________ __________
Total Assets.......................................... $143,071 $119,571
=========== ==========
See accompanying notes and accountants' review report.
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<PAGE>
February 29, August 31,
1996 1995
(Unaudited)
_______________________
(In Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable..................................... $ 5,428 $ 2,619
Income taxes payable................................. 6,229 324
Deferred income...................................... 21,666 19,852
Other current liabilities............................ 2,300 1,279
__________ __________
Total Current Liabilities.............................. 35,623 24,074
Deferred income taxes.................................. 10,900 10,250
Shareholders' Equity:
Common stock, $.10 par value, 5,000,000 shares
authorized; 3,509,390 and 3,502,585 issued at
February 29 and August 31, respectively............ 351 350
Capital in excess of par value....................... 3,949 2,350
Retained earnings.................................... 100,011 88,942
__________ __________
104,311 91,642
Less: Treasury stock - at cost, 1,209,520 shares..... 5,599 5,599
Unearned compensation - restricted stock
(Note 5)...................................... 2,164 796
__________ __________
Total Shareholders' Equity............................. 96,548 85,247
__________ __________
Total Liabilities and Shareholders' Equity............. $143,071 $119,571
========== ==========
See accompanying notes and accountants' review report.
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<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
Condensed Consolidated Statements of Operations
Three Months ended
February 29, February 28,
1996 1995
(Unaudited) (Unaudited)
_________________________
(In Thousands, Except
for Per Share Amounts)
REVENUES:
Admissions, net.................................... $22,004 $19,117
Motorsports related income......................... 11,255 9,884
Food, beverage and souvenir income................. 6,860 5,895
Other income....................................... 158 126
___________ ___________
40,277 35,022
EXPENSES:
Direct expenses:
Prize and point fund monies
and NASCAR sanction fees....................... 5,623 4,955
Motorsports related expenses..................... 3,919 3,149
Food, beverage and souvenir expenses............. 3,724 2,855
___________ ___________
13,266 10,959
General and administrative expenses................ 5,305 3,961
Depreciation....................................... 1,368 1,160
___________ ___________
19,939 16,080
___________ ___________
Operating Income..................................... 20,338 18,942
Interest income...................................... 185 306
Equity in net loss from equity investments (Note 6).. (654) (290)
___________ ___________
Income before income taxes........................... 19,869 18,958
Income taxes......................................... 7,780 7,286
___________ ___________
Net Income........................................... $12,089 $ 11,672
=========== ===========
Earnings per share (Note 2).......................... $ 5.26 $ 5.09
=========== ===========
Dividends per share.................................. $ -- $ --
=========== ===========
See accompanying notes and accountants' review report.
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<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
Condensed Consolidated Statements of Operations
Six Months ended
February 29, February 28,
1996 1995
(Unaudited) (Unaudited)
_________________________
(In Thousands, Except
for Per Share Amounts)
REVENUES:
Admissions, net.................................... $25,630 $22,102
Motorsports related income......................... 14,284 12,154
Food, beverage and souvenir income................. 8,585 7,196
Other income....................................... 320 264
___________ ___________
48,819 41,716
EXPENSES:
Direct expenses:
Prize and point fund monies
and NASCAR sanction fees....................... 7,065 6,080
Motorsports related expenses..................... 5,685 4,335
Food, beverage and souvenir expenses............. 4,979 3,963
___________ ___________
17,729 14,378
General and administrative expenses................ 9,571 7,741
Depreciation....................................... 2,655 2,262
___________ ___________
29,955 24,381
___________ ___________
Operating Income..................................... 18,864 17,335
Interest income...................................... 475 633
Equity in net loss from equity investments (Note 6).. (808) (421)
___________ ___________
Income before income taxes........................... 18,531 17,547
Income taxes......................................... 7,462 6,746
___________ ___________
Net Income........................................... $11,069 $ 10,801
=========== ===========
Earnings per share (Note 2).......................... $ 4.82 $ 4.72
=========== ===========
Dividends per share.................................. $ -- $ --
=========== ===========
See accompanying notes and accountants' review report.
<PAGE>
<PAGE> International Speedway Corporation
Condensed Consolidated Statements of Shareholders' Equity
Common Unearned
Stock Capital Compen- Total
$.10 In Excess Treas- sation - Share-
Par of Par Retained ury Restricted holders'
Value Value Earnings Stock Stock Equity
___________________________________________________________
(In Thousands)
Balance at
August 31, 1994... $ 350 $1,861 $72,290 $(5,599) $ (625) $68,277
Activity 9/1/94-
2/28/95:
Net Income --
Unaudited...... - - 10,801 - - 10,801
Reacquisition of
previously
issued common
stock
- unaudited.... - - (57) - - (57)
Restricted stock
granted
- unaudited.... - 489 - - (489) -
Amortization of
unearned
compensation
- unaudited.... - - - - 105 105
___________________________________________________________
Balance at
February 28, 1995
- - Unaudited....... 350 2,350 83,034 (5,599) (1,009) 79,126
Activity 3/1/95-
8/31/95:
Net income -
Unaudited...... - - 7,562 - - 7,562
Cash dividends
($.70 per share)
- unaudited... - - (1,605) - - (1,605)
Reacquisition of
previously
issued common
stock
- unaudited.... - - (49) - - (49)
Amortization of
unearned
compensation -
unaudited...... - - - - 213 213
___________________________________________________________
Balance at
August 31, 1995... 350 2,350 88,942 (5,599) (796) 85,247
Activity 9/1/95-
02/29/96:
Net income --
Unaudited...... - - 11,069 - - 11,069
Restricted stock
granted
- unaudited.... 1 1,599 - - (1,600) -
Amortization of
unearned
compensation -
unaudited...... - - - - 232 232
___________________________________________________________
Balance at
February 29, 1996
- - Unaudited....... $351 $3,949 $100,011 $(5,599) $(2,164) $96,548
===========================================================
See accompanying notes and accountants' review report.<PAGE>
<PAGE>
International Speedway Corporation
Condensed Consolidated Statements of Cash Flows
Six Months ended
February 29, February 28,
1996 1995
(Unaudited) (Unaudited)
______________________________
(In Thousands)
OPERATING ACTIVITIES
Net income...................................... $11,069 $10,801
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation................................ 2,655 2,262
Amortization of unearned compensation....... 232 105
Deferred income taxes....................... 650 770
Undistributed loss from equity investments.. 808 421
Gain on disposition of property and
equipment.................................. (8) -
Changes in operating assets and liabilities:
Receivables................................. (6,050) (5,315)
Inventories................................. (311) (76)
Prepaid expenses and other current assets... 1,504 93
Cash surrender value of life insurance...... (739) (17)
Other assets................................ 9 (44)
Accounts payable............................ 2,809 711
Income taxes payable........................ 5,905 5,512
Deferred income............................. 1,814 (429)
Other current liabilities................... 1,021 940
____________ ____________
Net cash provided by operating activities....... 21,368 15,734
INVESTING ACTIVITIES
Acquisition of investments.................... (21,956) (22,181)
Proceeds from maturities of investments....... 39,579 26,700
Capital expenditures.......................... (15,860) (6,379)
Investment in PSH Corp........................ (14,975) -
Proceeds from sale of assets.................. 8 -
____________ ____________
Net cash used in investing activities........... (13,204) (1,860)
FINANCING ACTIVITIES
Reacquisition of previously issued
common stock................................ - (57)
____________ ____________
Net cash used in financing activities........... - (57)
____________ ____________
Net increase in cash and cash equivalents....... 8,164 13,817
Cash and cash equivalents at
beginning of period........................... 7,871 5,227
____________ ____________
Cash and cash equivalents at end of period...... $16,035 $19,044
============ ============
See accompanying notes and accountants' review report.
<PAGE>
<PAGE>
International Speedway Corporation
Notes to Condensed Consolidated Financial Statements
February 29, 1996 and August 31, 1995
(Unaudited - See Accountants' Review Report)
1. Basis of Presentation
The accompanying condensed consolidated financial statements have been
prepared in compliance with Rule 10-01 of Regulation S-X and generally
accepted accounting principles but do not include all of the information and
disclosures required for complete financial statements. The statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's latest annual report on Form 10-K. The
statements have been reviewed by the Company's independent accountants. In
management's opinion, the statements include all adjustments which are
necessary for a fair presentation of the results for the interim periods. All
such adjustments are of a normal recurring nature. Certain reclassifications
have been made to conform to the financial presentation at February 29, 1996.
Because of the seasonal concentration of racing events, the results of
operations for the three-month and six-month periods ended February 29, 1996
and February 28, 1995 are not indicative of the results to be expected for the
year.
2. Earnings Per Share
Earnings per share have been computed on the weighted average total number of
common shares outstanding during the respective periods. Weighted average
shares outstanding for the three-month and six-month periods ended February
29, 1996 were 2,297,552 and 2,295,271, respectively. Weighted average shares
outstanding for the three-month and six-month periods ended February 28, 1995
were 2,291,901 and 2,290,567, respectively.
3. Related Party Disclosures and Transactions
All of the racing events that take place during the Company's fiscal year are
sanctioned by various racing organizations such as the Sports Car Club of
America (SCCA), Automobile Racing Club of America (ARCA), American
Motorcyclist Association (AMA), the Championship Cup Series (CCS),
International Motor Sports Association (IMSA), World Karting Association
(WKA), Federation Internationale de l'Automobile (FIA), Federation
Internationale Motorcycliste (FIM), and the National Association for Stock Car
Auto Racing, Inc. (NASCAR). NASCAR, which sanctions some of the Company's
principal racing events, is a member of the France Family Group which controls
in excess of 60% of the outstanding stock of the Company and some members of
which serve as directors and officers. Standard NASCAR sanction agreements
require racetrack operators to pay sanction fees and prize and point fund
monies for each sanctioned event conducted. The prize and point fund monies
are distributed by NASCAR to participants in the events. Prize and point fund
monies paid by the Company to NASCAR for disbursement to competitors totaled
approximately $5.9 million and $4.7 million for the six-month and three-month
periods ended February 29, 1996, respectively, and approximately $5.2 million
and $4.2 million for the six-month and three-month periods ended February 28,
1995, respectively.
<PAGE>
In October 1995 the Company entered into collateral assignment split-dollar
insurance agreements covering the lives of William C. France and James C.
France and their respective spouses. Pursuant to the agreements, the Company
will advance the annual premiums of approximately $1,205,000 each year for a
period of eight years. Upon surrender of the policies or payment of the death
benefits thereunder, the Company is entitled to repayment of an amount equal
to the cumulative premiums previously paid by the Company. The Company may
cause the agreements to be terminated and the policies surrendered at any time
after the cash surrender value of the policies equals the cumulative premiums
advanced under the agreements. During the six-month and three-month periods
ended February 29, 1996, the Company recorded a net insurance expense of
approximately $187,000 and $106,000, respectively, representing the excess of
the premiums paid over the increase in cash surrender value of the policies
associated with these agreements.
Poe & Brown, Inc., the servicing agent for the split-dollar insurance
agreements, received a commission for its participation in the transactions.
J. Hyatt Brown, President and Chief Executive Officer of Poe & Brown, Inc., is
a Director of the Company.
4. Supplemental Disclosures of Cash Flow Information
Cash paid for income taxes for the six months ended February 29, 1996 and
February 28, 1995 is as follows:
1996 1995
______________________________
(Thousands of Dollars)
Income taxes paid $ 898 $457
==============================
5. Long-Term Incentive Restricted Stock
On January 1, 1996 and 1995, a total of 6,805 and 4,694 restricted shares of
the Company's common stock, respectively, were awarded to certain officers and
managers under the Company's Long Term Incentive Plan. The market value of
shares awarded on January 1, 1996 and 1995 amounted to approximately
$1,599,000 and $489,000, respectively, and has been recorded as unearned
compensation - restricted stock, which is shown as a separate component of
shareholders' equity in the accompanying condensed consolidated balance
sheets. The unearned compensation is being amortized over the vesting period
of the shares. The total expense charged against operations during the six
months ended February 29, 1996 and February 28, 1995 was approximately
$232,000 and $105,000, respectively.
6. Equity Investments
On November 22, 1995, Facility Investments, Inc., a newly formed wholly-owned
subsidiary of the Company, purchased 200 shares of the common stock,
representing 20% of the outstanding shares, of PSH Corp., a newly formed
Delaware corporation, for $14,975,000 in cash. Penske Corporation contributed
100% of the outstanding shares of Penske Speedway, Inc. and its subsidiaries
and the sum of $5,000,000 in cash for an indirect beneficial interest in the
remaining 80% of the outstanding shares of PSH Corp.
<PAGE>
At February 29, 1996, PSH Corp. owned 85% of the outstanding shares of Penske
Motorsports, Inc. The remaining 15% of Penske Motorsports, Inc., represented
by convertible preferred stock, was owned by Kaiser Ventures Inc., for which
Kaiser contributed all of the issued and outstanding stock of Speedway
Development Corporation, its wholly owned subsidiary, which owned
approximately 460 acres of real property near Ontario, California.
At February 29, 1996, Penske Motorsports, Inc. owned 100% of the outstanding
shares of Penske Speedway, Inc., which owned and operated Michigan
International Speedway, owned approximately 85% of Nazareth Speedway in
Pennsylvania, 2% of North Carolina Motor Speedway (Rockingham), 100% of a
racing souvenir retailer called Motorsports International Corp and 100% of The
California Speedway Corporation, which is constructing the California Speedway
on the land formerly owned by Kaiser.
The acquisition of the 20% interest in PSH Corp. is accounted for using the
equity method of accounting and is included in equity investments on the
condensed consolidated balance sheet, along with the Company's equity
investment in Watkins Glen International, Inc. ("WGI"). The Company's share
of the current losses of PSH Corp. and WGI for the six months ended February
29, 1996, were approximately $265,000 and $451,000, respectively. Because of
the seasonal concentration of racing events, the Company's share of
undistributed equity in the earnings of PSH Corp. and WGI for the period ended
February 29, 1996 is not indicative of the results to be expected for the
year.
The Company's investment in PSH Corp. exceeded its share of the underlying net
assets by approximately $7.3 million. The excess is being amortized into
expense by decreasing the equity in income of equity investments using the
straight-line method over twenty years. The amount amortized for the six
months ended February 29, 1996, was approximately $92,000.
7. Subsequent Event - Equity Investment
In March 1996, Penske Motorsports, Inc. (PMI) effected a recapitalization
resulting in PMI ownership of 100% of the outstanding shares of Michigan
International Speedway, Inc. (MIS) (f/k/a Penske Speedways, Inc.),
Pennsylvania International Raceway, Inc., The California Speedway Corporation,
Motorsports International Corp., Competition Tire West, Inc. and Competition
Tire South, Inc. MIS owns 2% of North Carolina Motor Speedway. Also pursuant
to the recapitalization, Kaiser Ventures' preferred stock was automatically
converted into shares of PMI common stock. After giving effect to the
foregoing transactions, but prior to the commencement of the offering
described below, the effective beneficial ownership of the common stock of PMI
by PSH Corp. was 84.1%.
Subsequent to the recapitalization, PMI completed an initial public offering
(IPO) by issuing 3,737,500 shares of common stock at a price to the public of
$24 per share. The proceeds to PMI, after underwriting discounts and
commissions, were approximately $83.6 million. After PMI's IPO, PSH Corp.
owns approximately 59.9% of PMI. As a result of the IPO, in the quarter
ending May 31, 1996 the Company will record an increase in its equity
investment in PSH Corp. of approximately $10 million, and record corresponding
increases in deferred income taxes and capital in excess of par value of
approximately $3.8 million and $6.2 million, respectively.
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Condition
Liquidity
Management believes that a high degree of liquidity is desirable due to the
inherent insurance and weather risks associated with the production of large
outdoor sporting and entertainment events. The trend during the past several
years has been for the Company to have increasing liquidity. This trend has
been due to a general increase in interest in motorsports, reflected in
increased live and broadcast audiences, and generally favorable weather
conditions for the events conducted at the Company's facilities. However, the
Company experienced a decrease in liquidity from August 31, 1995 to February
29, 1996 as it began to utilize its liquid assets for capital projects and
investments as described below under the caption "Capital Resources".
Liquidity is expected to continue to decrease as the Company completes the
Daytona USA (R) and Winston Tower capital projects described below.
The Company's combined position in cash and cash equivalents and short- and
long-term investments at February 29, 1996 decreased from August 31, 1995
primarily as a result of payments made for capital projects and the investment
in PSH Corp., as described below. The decrease was offset in part by cash
flows from its operations.
The Company's working capital at February 29, 1996 decreased from August 31,
1995 due primarily to the use of cash for its investment in PSH Corp. and to
finance capital improvements. Working capital also decreased due to a
decrease in prepaid expenses and other current assets resulting from
recognition of the August 31, 1995 prepaid expenses related to the September
1995 event held at Darlington Raceway, an increase in accounts payable related
to capital improvements and the seasonal concentration of racing events, and
an increase in income taxes payable as a result of income from operations and
the timing of estimated tax deposits. The decrease in working capital is
partially offset by an increase in receivables related primarily to the 1996
Daytona events.
Receivables increased for the six months ended February 29, 1996, as compared
to the six months ended February 28, 1995, primarily due to increases in
billings for promotional fees and facility rentals for the 1996 Daytona racing
season and increases in promotional fees related to future events to be held
at the Company's Darlington and Talladega facilities.
Prepaid expenses and other current assets decreased for the six months ended
February 29, 1996, as compared to the corresponding period of the prior year,
due to the recognition of increased costs of competition prepaid at August 31,
1995 related to the September 1995 Darlington event and a refund of estimated
income tax payments related to fiscal year 1995.
Accounts payable increased for the six months ended February 29, 1996, as
compared to the six months ended February 28, 1995, primarily due to payables
related to capital projects and expenses incurred during the February 1996
Daytona events.
<PAGE>
Deferred revenue increased for the six months ended February 29, 1996, as
compared to the same period of 1995, due to an increase in seating capacity
and certain ticket prices for future motorsports events.
The increase in cash surrender value of life insurance for the six months
ended February 29, 1996, as compared to the six months ended February 28,
1995, is due to collateral assignment split-dollar insurance agreements
entered into by the Company during the first quarter of fiscal 1996. These
agreements cover the lives of the Company's Chief Executive Officer and
President, and their respective spouses. Pursuant to the agreements, the
Company will advance the annual premiums of approximately $1,205,000 each year
for a period of eight years. Upon surrender of the policies or payment of the
death benefits thereunder, the Company is entitled to repayment of an amount
equal to the cumulative premiums previously paid by the Company. The Company
may cause the agreements to be terminated and the policies surrendered at any
time after the cash surrender value of the policies equals the cumulative
premiums advanced under the agreements.
The increase in proceeds from maturities of investments during the six months
ended February 29, 1996, as compared to the corresponding period of 1995, is
the result of the shift in the Company's investment portfolio to short-term,
highly liquid investments. Rather than being reinvested, a significant
portion of the proceeds from maturities of these investments were used to
finance capital projects and the investment in PSH Corp.
The Company intends to continue to maintain the policy of investing excess
cash primarily in short-term investments. The staggered maturities of these
short-term investments would provide the Company with sufficient cash to cover
the expenses arising from a delay, postponement or cancellation of an event
due to poor weather conditions or other contingencies.
Management believes that the Company has the ability to generate adequate
amounts of cash through operations and outside financing, if necessary, to
meet the Company's operational needs on both a long- and short-term basis.
Capital Resources
The Company continues to invest in the general improvement and expansion of
its aging facilities. The amount of capital expenditures, however, can
materially change from year to year based on approved projects and the
availability of working capital resources.
The Company's Board of Directors has approved general improvement and
expansion projects with an estimated cost to complete of approximately $6.9
million at February 29, 1996. These projects consist primarily of additions
and renovations to spectator capacity, administrative facilities, concession
facilities and equipment. Management anticipates the completion of these
projects within the next 24 months based on the availability of working
capital resources.
In addition to the general capital projects described above, the Company's
Board of Directors approved two significant new capital expenditures in
fiscal 1994 - an addition to the Winston Tower at the Daytona International
Speedway and the development of a motor sports themed amusement complex at the
Daytona facility to be called "Daytona USA"(R).
<PAGE>
The Winston Tower addition will encompass additional grandstands and suites,
as well as catering and concession facilities. Construction began in July
1995. The project is expected to be completed in the fall of 1996. The total
estimated cost to complete this project is approximately $6.7 million.
"Daytona USA"(R) will combine interactive mediums, theaters, historical
memorabilia and exhibits to form a motor sports themed amusement complex. The
complex is being constructed adjacent to the existing Visitors Center at
Daytona International Speedway. Construction began in July 1995 and opening is
scheduled for the summer of 1996. Total remaining costs related to this
project are expected to approximate $6.9 million.
Total capital expenditures during the first half of fiscal 1996 increased
approximately $9.5 million over the amount spent in the corresponding period
of the prior year, primarily due to the Daytona USA (R) and Winston Tower
projects, as described above.
Based on the Company's current liquidity, cash and investment positions, as
well as the Company's unused lines of credit of approximately $16 million,
management believes that its present capital resources are sufficient to meet
anticipated financing requirements in fiscal 1996. In management's
opinion, financing resources are available to provide sufficient liquidity
for continuing operations.
Equity investments increased from August 31, 1995 as a result of the purchase
by Facilities Investments, Inc., a newly formed wholly-owned subsidiary of the
Company, of 200 shares of the common stock, representing 20% of the
outstanding shares, of PSH Corp. for $14,975,000 in cash. At February 29,
1996, PSH Corp. owned 85% of the outstanding shares of Penske Motorsports,
Inc. On that date Penske Motorsports, Inc. owned 100% of the outstanding
shares of Penske Speedway, Inc., which owned and operated Michigan
International Speedway, owned approximately 85% of Nazareth Speedway in
Pennsylvania, 2% of North Carolina Motor Speedway (Rockingham), 100% of a
racing souvenir retailer called Motorsports International Corp., and 100% of
The California Speedway Corporation, which is constructing the California
Speedway on 460 acres of land near Ontario, California.
The Company's investment in PSH Corp. exceeded its share of the underlying net
assets of PSH Corp. by approximately $7.3 million. The excess is being
amortized into expense by decreasing the equity in income of equity
investments using the straight-line method over twenty years. The amount
amortized for the three months and six months ended February 29, 1996, was
approximately $92,000.
The increase in equity investments from August 31, 1995 was partially offset
by the recognition of the Company's share of the current losses from
operations of PSH Corp. and Watkins Glen International. The Company uses the
equity method to account for its investments in PSH Corp. and Watkins Glen.
Due to the seasonal concentration of racing events at the subsidiaries of PSH
Corp. and at Watkins Glen, the results at February 29, 1996 are not indicative
of the results to be expected for the year.
In March 1996, Penske Motorsports, Inc. (PMI) effected a recapitalization
resulting in PMI ownership of 100% of the outstanding shares of Michigan
International Speedway, Inc. (MIS) (f/k/a Penske Speedways, Inc.),
<PAGE>
Pennsylvania International Raceway, Inc., The California Speedway Corporation,
Motorsports International Corp., Competition Tire West, Inc. and Competition
Tire South, Inc. MIS owns 2% of North Carolina Motor Speedway. Also pursuant
to the recapitalization, Kaiser Ventures' preferred stock was automatically
converted into shares of PMI common stock. After giving effect to the
foregoing transactions, but prior to the commencement of the offering
described below, the effective beneficial ownership of the common stock of PMI
by PSH Corp. was 84.1%.
Subsequent to the recapitalization, PMI completed an initial public offering
(IPO) by issuing 3,737,500 shares of common stock at a price to the public of
$24 per share. The proceeds to PMI, after underwriting discounts and
commissions, were approximately $83.6 million. After PMI's IPO, PSH Corp.
owns approximately 59.9% of PMI. As a result of the IPO, in the quarter
ending May 31, 1996 the Company will record an increase in its investment in
PSH Corp. of approximately $10 million, and record corresponding increases in
deferred income taxes and capital in excess of par value of approximately $3.8
million and $6.2 million, respectively.
Income Taxes
Due to the seasonal fluctuation of the Company's business, estimated tax
deposits are not required until the third quarter of operations. As a result,
income taxes payable at February 29, 1996 have increased since August 31,
1995.
The deferred income tax liability increased from August 31, 1995 primarily as
a result of differences between financial and tax accounting treatments
relating to depreciation expense.
Inflation
Management does not believe that inflation has had a material impact on
operating costs and earnings of the Company. The Company has demonstrated the
ability to appropriately adjust prices in reaction to changing costs and has
aggressively pursued an ongoing cost improvement effort.
Results of Operations
Revenues
Admission income increased during the three months and six months ended
February 29, 1996, as compared to the corresponding period of the prior year,
primarily due to increases in certain ticket prices.
Increased interest in motorsports is reflected in both live and broadcast
audiences. This continued interest has enabled the Company to successfully
negotiate favorable current year contracts for broadcast rights, promotional
fees and advertising. The combined effect of these contracts accounted for
approximately two-thirds of the increase in motorsports related income for
both the three months and six months ended February 29, 1996, as compared to
the same periods of the preceding year. The remaining increase in motorsports
related income for the three months and six months ended February 29, 1996, as
compared to the prior year is due primarily to increases in parking and
rentals of the Company's hospitality facilities.
<PAGE>
During the three months and six months ended February 29, 1996, the Company's
wholly-owned subsidiary, Americrown Service Corporation, continued to expand
its operations by providing food and beverage services at outdoor sporting
events and entertainment activities unrelated to motorsports events conducted
by International Speedway Corporation. The revenue generated by these new
business opportunities accounted for over two-thirds of the increase in food,
beverage and souvenir income for the three-month and six-month periods ended
February 29, 1996, respectively, as compared to the corresponding periods of
the prior year. The remaining increase in food, beverage and souvenir income
for the three months and six months ended February 29, 1996, as compared to
the three months and six months ended February 28, 1995, is attributed to
increased attendance at the Company's Daytona facility and increases in
certain prices.
The motor sports industry generates significant revenue each year from the
promotion, sponsorship and advertising of various companies and their
products. General economic conditions and government regulation can adversely
impact the availability to motor sports of promotion, sponsorship and
advertising revenue. In August 1995, the U. S. Food and Drug Administration
("FDA") announced proposed regulations that, if implemented, could potentially
restrict tobacco industry sponsorship of sporting events. Revenue generated by
tobacco industry sponsorship of the Company's events accounted for less than
7% and 4% of motorsports related income for the three-month and six-month
periods ended February 29, 1996 and February 28, 1995, respectively.
The lengthy regulatory rulemaking process related to the FDA's proposed
regulations encompasses several phases. The first phase of the process, which
entailed an opportunity for official comment, closed on January 2, 1996.
There are several pending legal challenges by third parties which, the Company
believes, are likely to extend the process. The final outcome of this
regulatory process is uncertain, and the impact on International Speedway
Corporation, if any, is unclear.
Expenses
Standard NASCAR sanction agreements require a percentage of broadcast revenues
be paid as prize money to participants in the events. As a result of increased
broadcast revenues, the Company experienced a corresponding increase in prize
money. This increased prize money, combined with increased point fund money,
accounted for approximately three-quarters of the increase in prize and point
fund monies and NASCAR sanction fees for the three-month and six-month periods
ended February 29, 1996, respectively, as compared to the corresponding
periods of the prior year.
Motorsports related expenses, as a percentage of combined admissions and
motorsports related income, remained relatively constant for the three months
and six months ended February 29, 1996 and February 28,1995, respectively.
As food, beverage and souvenir income increases, the Company experiences a
corresponding increase in related expenses. Personnel related expenses,
product costs and other fees associated with the expanded operations of
Americrown Service Corporation accounted for approximately one-half and
two-thirds of the increase in food, beverage and souvenir expenses for the
three-month and six-month periods ended February 29, 1996, respectively, as
compared with the corresponding periods of the prior year. Personnel costs
associated with the Company's ongoing food, beverage and souvenir operations
accounted for the majority of the remaining increases during both of these
periods.
<PAGE>
General and administrative expenses, as a percentage of total operating
revenues, remained relatively constant for the three months and six months
ended February 29, 1996 and February 28, 1995.
Because of the seasonal concentration of racing events, the results of
operations for the three-month and six-month periods ended February 29, 1996
and February 28, 1995 are not indicative of the results to be expected for the
year.
<PAGE>
<PAGE>
Review Report of Independent Certified Public Accountants
The Board of Directors
International Speedway Corporation
We have reviewed the accompanying condensed consolidated balance sheet of
International Speedway Corporation as of February 29, 1996, and the related
condensed consolidated statements of operations for the three-month and
six-month periods ended February 29, 1996 and February 28, 1995, and the
condensed consolidated statements of shareholders' equity and cash flows for
the six-month periods ended February 29, 1996 and February 28, 1995. These
financial statements are the responsibility of the Company's management.
We conducted our reviews 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 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, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial
statements referred to above 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 International Speedway
Corporation as of August 31, 1995, and the related consolidated statements of
income, shareholders' equity and cash flows for the year then ended (not
presented separately herein) and in our report dated October 20, 1995, we
expressed an unqualified opinion on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of August 31, 1995, is fairly stated in all
material respects, in relation to the consolidated balance sheet from which it
has been derived.
/s/ Ernst & Young, LLP
Jacksonville, Florida
April 5, 1996
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item #6 Exhibits and Reports on Form 8-K
a. Exhibits
I. (27) - Article 5 Fin. Data Schedule for 2nd Qtr 10-Q
B. Reports on Form 8-K
A report on Form 8-K dated November 22, 1995 was filed on December 7, 1995
reporting the acquisition of assets by Facility Investments, Inc., a newly
formed wholly-owned subsidiary of the Company, which purchased 200 shares of
the common stock, representing 20% of the outstanding shares, of PSH Corp., a
newly formed Delaware corporation, for $14,975,000 in cash. The acquisition
of the 20% interest in PSH Corp., which is accounted for by the equity method,
does not result in the direct or indirect acquisition of control of the
underlying assets, including businesses, indirectly controlled by PSH Corp.
<PAGE>
<PAGE>
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.
INTERNATIONAL SPEEDWAY CORPORATION
(Registrant)
Date April 10, 1996 /s/ James C. France
_____________________________________
James C. France, President
Date April 10, 1996 /s/ Susan G. Schandel
_____________________________________
Susan G. Schandel,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE ACCOMPANYING CONDENSED CONSOLIDATED BALANCE SHEET OF INTERNATIONAL
SPEEDWAY CORPORATION AS OF FEBRUARY 29, 1996, AND THE RELATED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE-MONTH AND SIX-MONTH
PERIODS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995, AND THE CONDENSED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND CASH FLOWS FOR THE
SIX-MONTH PERIODS ENDED FEBRUARY 29, 1996 AND FEBRUARY 28, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> Aug-31-1996
<PERIOD-START> Sep-01-1995
<PERIOD-END> Feb-29-1996
<PERIOD-TYPE> 6-MOS
<CASH> 16,035
<SECURITIES> 13,574
<RECEIVABLES> 7,879
<ALLOWANCES> 35
<INVENTORY> 1,469
<CURRENT-ASSETS> 40,540
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<DEPRECIATION> 33,328
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0
0
<COMMON> 351
<OTHER-SE> 96,197
<TOTAL-LIABILITY-AND-EQUITY> 143,071
<SALES> 25,630
<TOTAL-REVENUES> 48,486
<CGS> 17,729
<TOTAL-COSTS> 17,729
<OTHER-EXPENSES> 12,226
<LOSS-PROVISION> 14
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 18,531
<INCOME-TAX> 7,462
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<NET-INCOME> 11,069
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