AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 6, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INTERNATIONAL SPEEDWAY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 59-0709342
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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<TABLE>
<S> <C>
W. GARRETT CROTTY
SECRETARY AND GENERAL COUNSEL
1801 WEST INTERNATIONAL INTERNATIONAL SPEEDWAY CORPORATION
SPEEDWAY BOULEVARD 1801 WEST INTERNATIONAL SPEEDWAY BOULEVARD
DAYTONA BEACH, FLORIDA 32114 DAYTONA BEACH, FLORIDA 32114
(904) 254-2700 (904) 254-2700
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE) INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
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COPIES OF COMMUNICATIONS TO:
BRUCE E. MACDONOUGH DONN A. BELOFF
GREENBERG, TRAURIG, HOFFMAN, HOLLAND & KNIGHT
LIPOFF, ROSEN & QUENTEL, P.A. ONE EAST BROWARD BLVD.
1221 BRICKELL AVENUE FT. LAUDERDALE, FLORIDA
MIAMI, FLORIDA 33131 33301
PHONE: (305) 579-0500 PHONE: (954) 525-1000
FAX: (305) 579-0717 FAX (954) 463-2030
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C>
PROPOSED MAXIMUM
TITLE OF EACH CLASS AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED OFFERING PRICE(1)(2) REGISTRATION FEE
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Class A Common Stock, $.01 par value per share $73,600,000 $25,379
</TABLE>
(1) Includes shares of Class A Common Stock which may be purchased by the
Underwriters pursuant to an over-allotment option.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED SEPTEMBER 6, 1996
P R O S P E C T U S
4,000,000 SHARES
INTERNATIONAL SPEEDWAY CORPORATION
Class A Common Stock
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All of the shares of Class A Common Stock offered hereby are being sold by
International Speedway Corporation (the "Company"). Prior to this Offering,
there has not been a public market for the Class A Common Stock of the Company.
It is currently anticipated that the initial public offering price will be
between $14.00 and $16.00 per share. See "Underwriting" for information relating
to the factors to be considered in determining the initial public offering
price. Application has been made to have the Class A Common Stock listed on the
Nasdaq National Market under the symbol "ISCA."
Upon consummation of this Offering, the Company's authorized capital stock
will include the Class A Common Stock and shares of Class B Common Stock. The
economic rights of the Class A Common Stock and the Class B Common Stock
(collectively the "Common Stock") will be identical, except that each share of
Class A Common Stock will entitle the holder thereof to one-fifth (1/5) vote in
respect of matters submitted for the vote of holders of Common Stock, whereas
each share of Class B Common Stock will entitle the holder thereof to one (1)
vote on such matters. Immediately after this Offering, William C. France, the
Company's Chairman of the Board and Chief Executive Officer, and James C.
France, its President and Chief Operating Officer, will in the aggregate
beneficially own shares of Class B Common Stock representing approximately 51.8%
of the Company's outstanding Common Stock. Commencing on the 91st day after this
Offering, each share of Class B Common Stock will be convertible on a
one-for-one basis at any time at the election of the holder into one fully paid
and nonassessable share of Class A Common Stock. The Class A Common Stock is not
convertible into Class B Common Stock. See "Description of Capital Stock."
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SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE CLASS A COMMON STOCK
OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share $ $ $
Total(3) $ $ $
</TABLE>
(1) For information regarding indemnification of the Underwriters, see
"Underwriting."
(2) Before deducting expenses of the Offering, estimated at $ .
(3) The Company and a Selling Shareholder have granted the Underwriters a
30-day option to purchase up to 600,000 additional shares of Class A
Common Stock solely to cover over-allotments, if any. See "Underwriting."
If such option is exercised, the total Price to Public, Underwriting
Discounts and Commissions, Proceeds to Company and Proceeds to the
Selling Shareholder will be $ , $ , $ and $
, respectively.
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The shares of Class A Common Stock are being offered by the several
Underwriters named herein, subject to prior sale, when, as and if accepted by
them, subject to certain conditions. It is expected that certificates for the
shares of Class A Common Stock offered hereby will be available for delivery
on or about , 1996, at the office of Smith Barney Inc., 333 West
34th Street, New York, New York 10001.
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Smith Barney Inc. Raymond James &
Associates, Inc.
, 1996
<PAGE>
[PHOTOS]
Unless the context otherwise requires, references herein to the "Company"
mean International Speedway Corporation and its wholly owned subsidiaries
considered as one enterprise. "DAYTONA USA/registered trademark/," the "Daytona
500/registered trademark/," "Talladega Superspeedway/registered trademark/,"
"Darlington/registered trademark/" and "World Center of Racing/registered
trademark/" are registered trademarks and service marks of International
Speedway Corporation. "NASCAR/registered trademark/" and "Grand
National/registered trademark/" are registered trademarks and service marks of
the National Association for Stock Car Auto Racing, Inc. ("NASCAR").
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CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING INFORMATION IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE
READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND CONSOLIDATED
FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN
THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, (I) THE INFORMATION IN THIS
PROSPECTUS ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION,
(II) ALL SHARE AND PER SHARE DATA HAS BEEN RETROACTIVELY ADJUSTED TO GIVE
EFFECT TO A RECAPITALIZATION AND RELATED STOCK SPLIT TO BECOME EFFECTIVE
CONCURRENTLY WITH THIS OFFERING AS DESCRIBED IN "THE COMPANY--THE
RECAPITALIZATION," AND (III) A REFERENCE TO A "FISCAL" YEAR MEANS THE TWELVE
MONTHS ENDED AUGUST 31 OF SUCH YEAR. THE COMPANY WILL CHANGE ITS FISCAL YEAR
TO NOVEMBER 30 EFFECTIVE DECEMBER 1, 1996.
THE COMPANY
International Speedway Corporation is a leading promoter of motorsports
activities in the United States. The Company owns and operates three of the
nation's premier superspeedways--Daytona International Speedway in Florida, home
of the Daytona 500, widely recognized as the most prestigious stock car race in
the world; Talladega Superspeedway in Alabama, the fastest stock car track; and
Darlington Raceway in South Carolina, the first stock car superspeedway. The
Company also operates Tucson Raceway Park in Arizona, owns a 50% interest in the
Watkins Glen International road course in New York, and holds a 12% interest in
Penske Motorsports, Inc., which owns and operates Michigan International
Speedway and Pennsylvania's Nazareth Speedway and is constructing The California
Speedway near Los Angeles. In July 1996, the Company opened DAYTONA USA--The
Ultimate Motorsports Attraction, a motorsports-themed entertainment complex that
includes interactive media, theaters, historical memorabilia and exhibits.
The Company, including Watkins Glen, currently promotes over 70 stock car,
sports car, truck, motorcycle and other racing events annually, including seven
Winston Cup races, five Busch Grand National races, the premier sports car
endurance event in the United States (the Rolex 24 at Daytona) and a number of
prestigious motorcycle races. In fiscal 1995 and the nine months ended May 31,
1996, NASCAR-sanctioned races at the Company's facilities accounted for
approximately 79.5% and 77.9%, respectively, of the Company's total revenues.
Based on statistics developed by The Goodyear Tire and Rubber Co. ("Goodyear"),
spectator attendance at NASCAR's Winston Cup and Busch Grand National events
increased at compound annual growth rates of 15.1% and 17.3%, respectively, from
1993 to 1995. Moreover, each of CBS, ABC, ESPN, TBS and TNN has recently
experienced increased ratings for its televised NASCAR Winston Cup events.
Attracted by these increases in spectators and ratings, leading consumer product
and manufacturing companies have expanded their participation in the motorsports
industry. The Company's major sponsors include Pepsi, Anheuser Busch, Sears,
Winston, Gatorade, Pontiac, Ford, Chevrolet, Goodyear, Dupont and Rolex.
The Company attributes its historical increases in revenues and profits to
the increasing popularity of Winston Cup, Busch Grand National and other
motorsports events in the United States, as well as an operating strategy that
emphasizes (i) senior management's long-standing involvement with the
development and growth of the motorsports industry, (ii) capital improvements
and other efforts designed to maximize race spectators' total entertainment
experience, (iii) marketing programs targeting both corporate customers and
consumers, (iv) the development of long-term relationships with sponsors, and
(v) the use of media to increase awareness of the Company's major racing events
and the motorsports industry.
The Company expects to continue to increase its revenues and profitability by
focusing on the key elements of its growth strategy, including (i) expanding the
Company's existing track facilities to satisfy spectator demand, (ii)
capitalizing on the prestige and brand name recognition of the Daytona
International Speedway through projects such as DAYTONA USA and licenses for
video and computer games, publications, toys and apparel, (iii) increasing the
Company's television broadcast revenues, (iv) acquiring and/or developing
additional motorsports facilities in new markets, and (v) expanding the use of
existing resources and facilities.
3
<PAGE>
<TABLE>
<CAPTION>
THE OFFERING
<S> <C>
Class A Common Stock offered............ 4,000,000 shares
Common Stock to be outstanding 4,000,000 shares of Class A Common Stock
after the Offering......................34,423,890 shares of Class B Common Stock
38,423,890 total shares of Common Stock
Use of proceeds.........................Additions and improvements to track
facilities, working capital and other
general corporate purposes.
</TABLE>
Proposed Nasdaq National Market symbol "ISCA"
SUMMARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, (1)
--------------------------
1993 1994
------------ ------------
(IN THOUSANDS, EXCEPT PER
SHARE, SELECTED OPERATING
AND INDUSTRY DATA)
<S> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions, net ........................ $32,078 $36,935
Motorsports related income ............. 16,557 18,764
Food, beverage and souvenir income .... 9,515 12,291
Other income ........................... 1,003 943
------------ ------------
Total revenues ........................ 59,153 68,933
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR
sanction fees ....................... 8,251 9,412
Motorsports related expenses .......... 10,470 11,470
Food, beverage and souvenir expenses . 4,775 7,867
General and administrative expenses ... 13,046 14,307
Depreciation ........................... 3,006 3,828
------------ ------------
Total expenses ........................ 39,548 46,884
Operating income ........................ 19,605 22,049
Net income .............................. 12,763(2) 14,566
Earnings per share ...................... $ .37 $ .42
SELECTED OPERATING DATA:
Operating margin ........................ 33.1% 32.0%
Total admissions ........................ 767,717 848,134
Number of seats(3):
Daytona International Speedway ........ 99,204 103,600
Talladega Superspeedway ................ 67,435 74,793
Darlington Raceway ..................... 32,455 37,281
Watkins Glen ........................... 26,061 26,061
INDUSTRY DATA:
Attendance at Winston Cup events(4) .... 4,020,000 4,896,000
Attendance at Busch Grand
National events(4) .................... 1,165,000 1,302,000
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
NINE MONTHS ENDED MAY 31,
-----------------------
1995 1995 1996
------------ ---------- ----------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions, net ........................ $ 43,274 $ 33,014 $ 37,735
Motorsports related income ............. 24,033 18,657 21,060
Food, beverage and souvenir income .... 14,442 11,165 13,593
Other income ........................... 423 501 607
------------ ---------- ----------
Total revenues ........................ 82,172 63,337 72,995
Expenses:
Direct expenses: .......................
Prize and point fund monies and NASCAR
sanction fees ....................... 11,765 8,752 10,157
Motorsports related expenses .......... 11,604 8,913 10,649
Food, beverage and souvenir expenses . 8,107 6,175 8,093
General and administrative expenses ... 18,202 12,635 14,869
Depreciation ........................... 4,798 3,436 4,133
------------ ---------- ----------
Total expenses ........................ 54,476 39,911 47,901
Operating income ........................ 27,696 23,426 25,094
Net income .............................. 18,363 14,454 14,886
Earnings per share ...................... $ .53 $ .42 $ .43
SELECTED OPERATING DATA:
Operating margin ........................ 33.7% 37.0% 34.4%
Total admissions ........................ 985,739 735,484 756,076
Number of seats(3):
Daytona International Speedway ........ 109,779 109,779 113,149
Talladega Superspeedway ................ 82,671 82,671 95,256
Darlington Raceway ..................... 39,917 39,917 42,553
Watkins Glen ........................... 28,095 28,095 33,221
INDUSTRY DATA:
Attendance at Winston Cup events(4) .... 5,327,000 N/A N/A
Attendance at Busch Grand
National events(4) .................... 1,604,000 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1996
-----------------------------
ACTUAL AS ADJUSTED(5)
------------ ---------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit) . $ (2,810) $ 20,890
Total assets ............... 150,525 206,225
Long-term debt ............. 0 0
Total Shareholders' equity 101,684 157,384
</TABLE>
4
<PAGE>
- --------
(1) The Company will change its fiscal year-end to November 30 effective
December 1, 1996. This will result in a three-month transition period
commencing September 1, 1996 and ending November 30, 1996. See
"Management's Discussion and Analysis of Financial Condition and Results
of Operations--Seasonality and Quarterly Results."
(2) Reflects income of $288,000 attributable to the cumulative effect of a
change in accounting principle.
(3) Consists of seating in grandstands and luxury suites. Excludes infield
admission.
(4) This information relates to the year ended December 31 of the specified
fiscal year and was obtained from public information provided by
Goodyear.
(5) Adjusted to reflect the sale of 4,000,000 shares of Class A Common Stock
by the Company (at an assumed initial public offering price of $15.00 per
share) and the application of the net proceeds therefrom as set forth in
"Use of Proceeds."
5
<PAGE>
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FACTORS SET FORTH
BELOW, AS WELL AS THE OTHER INFORMATION PROVIDED ELSEWHERE IN THIS
PROSPECTUS, IN EVALUATING AN INVESTMENT IN THE COMPANY.
DEPENDENCY UPON NASCAR
The Company's success has been and will remain dependent upon maintaining a
good working relationship with NASCAR, the sanctioning body for Winston Cup,
NASCAR's Busch Series, Grand National Division ("Busch Grand National") and
certain other races promoted by the Company. The Company and Watkins Glen
International, Inc., its 50%-owned subsidiary ("Watkins Glen"), have sanctioning
agreements to promote and market seven Winston Cup races, four Busch Grand
National races and a number of other NASCAR races for the 1997 racing season.
Each NASCAR event sanctioning agreement is awarded on an annual basis. In fiscal
1995 and the nine months ended May 31, 1996, NASCAR-sanctioned races at the
Company's facilities accounted for approximately 79.5% and 77.9%, respectively,
of the Company's total revenues. Although William C. France and James C. France
presently control both the Company and NASCAR and management believes that the
Company will continue to maintain an excellent relationship with NASCAR for the
foreseeable future, NASCAR is under no obligation to continue to enter into
sanctioning agreements with the Company to promote any event. Failure to obtain
a sanctioning agreement for a major NASCAR event would have a material adverse
effect on the Company's financial condition and results of operations. Moreover,
although the Company's general growth strategy includes the possible development
and/or acquisition of additional motorsports facilities, there can be no
assurance that NASCAR will enter into sanctioning agreements with the Company to
promote races at such facilities. See "NASCAR."
DEPENDENCE ON KEY PERSONNEL
The Company's continued success will depend upon the availability and
performance of its senior management team, particularly William C. France, the
Company's Chairman of the Board and Chief Executive Officer, James C. France,
its President and Chief Operating Officer, and Lesa D. Kennedy, its Executive
Vice President (collectively the "France Family Executives"), each of whom
possesses unique and extensive industry knowledge and experience. While the
Company believes that its senior management team has significant depth, the loss
of any of the Company's key personnel or its inability to attract and retain key
employees in the future could have a material adverse effect on the Company's
operations and business plans. See "NASCAR," "Business--Growth Strategy" and
"Management."
POTENTIAL CONFLICTS OF INTEREST
William C. France and James C. France beneficially own all of NASCAR's
capital stock, and each of the France Family Executives, the Company's Vice
President-Administration, the Company's General Counsel and certain other
non-officer employees devote portions of their time to NASCAR's affairs. Each of
the France Family Executives devotes substantial time to the Company's affairs
and all of the Company's other executive officers are available to the Company
on a full-time basis. In addition, the Company strives to ensure, and management
believes, that the terms of the Company's transactions with NASCAR are no less
favorable to the Company than those which could be obtained in arms'-length
negotiations. Nevertheless, certain potential conflicts of interest between the
Company and NASCAR exist with respect to, among other things, (i) the terms of
any sanctioning agreements that may be awarded to the Company by NASCAR, (ii)
the amount of time devoted by the France Family Executives and certain other
Company employees to NASCAR's affairs, and (iii) the amounts charged or paid to
NASCAR for office rental, transportation costs, shared executives,
administrative expenses and similar items. See "NASCAR," "Management" and
"Certain Transactions."
6
<PAGE>
INDUSTRY SPONSORSHIPS AND GOVERNMENT REGULATION
The motorsports industry and the Company generate significant recurring
revenue from the promotion, sponsorship and advertising of various companies and
their products. Government regulation can adversely impact the availability to
motorsports of this promotion, sponsorship and advertising revenue. Advertising
by the tobacco and alcoholic beverage industries is generally subject to greater
governmental regulation than advertising by other sponsors of the Company's
events. In August 1996, the U.S. Food and Drug Administration (the "FDA") issued
regulations concerning advertising and sales of cigarettes and smokeless tobacco
to minors which would, in part, restrict tobacco industry sponsorship of all
sporting events, including motorsports, effective February 1998. The FDA
regulations prohibit the present practice of tobacco product brand name
sponsorship of, or identification with, motorsports events, entries and teams.
If these rules become effective, no assurance can be given that suitable
alternative sponsors for the events, entries and teams could be located.
Management is aware of pending legal challenges, as well as legislative
initiatives, which could change or prevent the scheduled implementation of these
regulations. However, the final outcome of the challenges to the regulations is
uncertain, and the ultimate impact on the motorsports industry and the Company,
if any, is unclear. The Company is not aware of any proposed governmental
regulation which would materially limit the availability to motorsports of
promotion, sponsorship or advertising revenues from the alcoholic beverage
industry. Advertising and sponsorship revenues from the tobacco and alcoholic
beverage industries accounted for approximately 1.6% and 1.9% of the Company's
total revenue in fiscal 1995 and the nine months ended May 31, 1996,
respectively. In addition, the tobacco and alcoholic beverage industries provide
financial support to the motorsports industry through, among other things, their
purchase of advertising time, their sponsorship of racing teams and their
sponsorship of racing series such as NASCAR's Winston Cup and Busch Grand
National series.
COMPETITION
The Company's racing events face competition from other spectator-oriented
sporting events and other leisure and recreational activities. As a result, the
Company's revenues will be affected by the general popularity of motorsports,
the availability of alternative forms of recreation and changing consumer
preferences. The Company's racing events also compete with other racing events
sanctioned by various racing bodies such as NASCAR, Championship Auto Racing
Teams, Inc. ("CART"), the United States Auto Club ("USAC"), the National Hot Rod
Association ("NHRA"), the Sports Car Club of America ("SCCA"), the International
Motor Sports Association ("IMSA"), the Automobile Racing Club of America
("ARCA") and others. Management believes that the primary elements of
competition in attracting motorsports spectators and corporate sponsors to a
racing event and facility are the type and caliber of promoted racing events,
facility location, sight lines, pricing and customer conveniences that
contribute to a total entertainment experience. Many sports and entertainment
businesses have resources that exceed those of the Company. See
"Business--Competition."
IMPACT OF CONSUMER SPENDING ON RESULTS
The success of the Company's operations depends to a significant extent
upon a number of factors relating to discretionary consumer spending,
including economic conditions affecting disposable consumer income such as
employment, business conditions, interest rates and taxation. These factors
can impact both attendance at the Company's events and the financial results
of the motorsports industry's principal sponsors. There can be no assurance
that consumer spending will not be adversely affected by economic conditions,
thereby impacting the Company's growth, revenue and profitability.
UNCERTAIN PROSPECTS OF NEW MOTORSPORTS FACILITIES
The Company's growth strategy includes the potential acquisition and/or
development of new motorsport facilities. The Company's ability to implement
successfully this element of its growth strategy will depend on a number of
factors, including (i) the Company's ability to obtain one or more additional
sanctioning agreements to promote Winston Cup, Busch Grand National or other
major events at these new facilities, (ii) the cooperation of local government
officials, (iii) the Company's capital resources, (iv) the Company's ability to
control construction and operating costs, and (v) the
7
<PAGE>
Company's ability to hire and retain qualified personnel. The Company's
inability to implement its expansion plans for any reason would adversely
affect its business prospects. In addition, expenses associated with
developing, constructing and opening a new facility may have a negative
effect on the Company's financial condition and results of operations in one
or more future reporting periods. See "Business--Growth Strategy."
FINANCIAL IMPACT OF BAD WEATHER
The Company promotes outdoor motorsports events. Weather conditions affect
sales of, among other things, tickets, concessions and souvenirs at these
events. Although the Company sells tickets well in advance of its most popular
events, poor weather conditions could have a material adverse effect on the
Company's results of operations, particularly any interruption of the Company's
February "Speedweeks" events.
LIABILITY FOR PERSONAL INJURIES
Motorsports can be dangerous to participants and to spectators. The Company
maintains insurance policies that provide coverage within limits that management
believes should generally be sufficient to protect the Company from material
financial loss due to liability for personal injuries sustained by persons on
the Company's premises in the ordinary course of Company business. Nevertheless,
there can be no assurance that such insurance will be adequate or available at
all times and in all circumstances. The Company's financial condition and
results of operations would be adversely affected to the extent claims and
associated expenses exceed insurance recoveries.
ENVIRONMENTAL AND ZONING MATTERS
Management believes that the Company's operations are in substantial
compliance with all applicable federal, state and local environmental laws and
regulations. Nonetheless, if damage to persons or property or contamination of
the environment is determined to have been caused or exacerbated by the conduct
of the Company's business or by pollutants, substances, contaminants or wastes
used, generated or disposed of by the Company, or which may be found on the
property of the Company, the Company may be held liable for such damage and may
be required to pay the cost of investigation and/or remediation of such
contamination or any related damage. The amount of such liability as to which
the Company is self-insured could be material. State and local laws relating to
the protection of the environment also include noise abatement laws that may be
applicable to the Company's racing events. Changes in the provisions or
application of federal, state or local environmental laws, regulations or
requirements, or the discovery of theretofore unknown conditions, could also
require additional material expenditures by the Company.
In addition, the development of new motorsports facilities (and, to a lesser
extent, the expansion of existing facilities) requires compliance with
applicable federal, state and local land use planning, zoning and environmental
regulations. Regulations governing the use and development of real estate may
prevent the Company from acquiring or developing prime locations for motorsports
facilities, substantially delay or complicate the process of improving existing
facilities, and/or materially increase the costs of any of such activities.
8
<PAGE>
SEASONALITY AND VARIABILITY OF QUARTERLY RESULTS
The Company derives most of its income from event admissions and related
revenue from a limited number of NASCAR-sanctioned races. As a result, the
Company's business has been, and is expected to remain, highly seasonal based on
the timing of major race events. Historically, the Company has incurred net
losses in the fiscal quarter ending November 30, and achieved its highest net
income in the fiscal quarter ending February 28. Partly in response to this
seasonality and the desire to better conform to the traditional racing season,
the Company will change its fiscal year-end from August 31 to November 30
effective December 1, 1996. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Seasonality and Quarterly
Results."
BROAD DISCRETION REGARDING PROCEEDS OF THE OFFERING
A substantial portion of the net proceeds of this Offering has been allocated
to working capital and general corporate purposes. Accordingly, management will
have broad discretion as to the application of the Offering proceeds. Pending
the Company's use of such proceeds for general corporate purposes, including
improvements to existing facilities and the possible acquisition and/or
development of new facilities, such proceeds will be placed in interest-bearing
investments. It is possible that the return on such investments will be less
than that which would be realized were the Company immediately to use such funds
for other purposes.
EFFECTIVE VOTING CONTROL BY FRANCE FAMILY GROUP AND ANTI-TAKEOVER EFFECT OF
DUAL CLASSES OF STOCK
Holders of Class A Common Stock have per share voting rights that are
one-fifth (1/5th) of the voting rights of holders of Class B Common Stock. One
of the principal purposes of having two classes of Common Stock with different
voting rights is to maintain existing shareholders' control of the Company.
After the closing of this Offering, William C. France, James C. France, members
of their families and affiliates (collectively the "France Family Group") will
in the aggregate beneficially own approximately 55.0% of the Company's
outstanding capital stock and retain approximately 60.0% of the combined voting
power of both classes of the Company's Common Stock. Accordingly, if such
persons vote their shares of Common Stock in the same manner, they will have
sufficient voting power (without the consent of the Company's other
shareholders) to elect the entire Board of Directors of the Company and, in
general, to determine the outcome of various matters submitted to shareholders
for approval, including fundamental corporate transactions.
The members of the France Family Group have advised the Company that they do
not presently intend to convert the shares of Class B Common Stock beneficially
owned by them into shares of Class A Common Stock. To the extent that holders of
Class B Common Stock other than the France Family Group elect to convert such
shares, the relative voting power of the France Family Group will increase.
Voting control by the France Family Group may discourage certain types of
transactions involving an actual or potential change in control of the Company,
including transactions in which the holder of Class A Common Stock might receive
a premium for their shares over prevailing market prices. See "Principal
Shareholders" and "Description of Capital Stock."
POSSIBLE ANTI-TAKEOVER EFFECTS OF FLORIDA LAW, CHARTER PROVISIONS AND
PREFERRED STOCK
Certain provisions of Florida law and the Company's Amended and Restated
Articles of Incorporation ("Articles") may deter or frustrate a takeover attempt
of the Company that a shareholder might consider in its best interest. Among
other things, the Company's Articles (i) divide the Company's Board of Directors
into three classes, each of which serves for different three-year periods, (ii)
provide that special meetings of the shareholders may be called only by the
Board of Directors or upon the written demand of the holders of not less than
50% of the votes entitled to be cast at a special meeting, and (iii) establish
certain advance notice procedures for nomination of candidates for election as
directors and for shareholder proposals to be considered at annual shareholders'
meetings. In addition, upon consummation of this Offering, the Company will be
authorized to issue one million shares of
9
<PAGE>
preferred stock in one or more series, having terms fixed by the Board of
Directors without shareholder approval, including voting, dividend or
liquidation rights that could be greater than or senior to the rights of
holders of Common Stock. Issuance of shares of Preferred Stock could also be
used as an anti-takeover device. The Company has no current intentions or
plans to issue any such Preferred Stock. See "Description of Capital Stock."
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, all of the shares of Class A Common Stock
offered hereby will be eligible for public sale without restriction.
Approximately 13.1 million additional shares of Class A Common Stock issuable
upon conversion of currently outstanding shares of Class B Common Stock will
become eligible for public sale commencing 90 days after the effective date of
this Offering. The holders of the approximately 21.3 million remaining
outstanding shares of Class B Common Stock have agreed not to sell or otherwise
dispose of such shares, without the consent of Smith Barney Inc., until 180 days
after this Offering. After such date, all such shares may be sold subject to the
limitations of Rule 144 of the Securities Act of 1933, as amended (the
"Securities Act"). Future sales of substantial amounts of Common Stock, or the
potential for such sales, could adversely affect prevailing market prices. See
"Shares Eligible for Future Sale."
LACK OF PRIOR PUBLIC MARKET AND VOLATILITY OF STOCK PRICE
Prior to this Offering, there has been no public market for the Company's
Class A Common Stock. Moreover, there can be no assurance that an active trading
market in either class of the Company's Common Stock will develop subsequent to
this Offering or, if developed, that it will be sustained. The initial public
offering price of the Class A Common Stock will be determined by negotiation
among the Company and the Representatives of the Underwriters. See
"Underwriting" for a discussion of the factors to be considered in determining
the initial public offering price. Upon commencement of this Offering, the Class
A Common Stock will be quoted on the Nasdaq National Market, which has
experienced and may continue to experience significant price and volume
fluctuations which could adversely affect the market price of the Class A Common
Stock without regard to the operating performance of the Company. In addition,
the Company believes that factors such as quarterly fluctuations in the
financial results of the Company, earnings below analyst estimates, and the
financial performance and other activities of the Company's principal sponsors
and other publicly traded motorsports companies could cause the price of the
Class A Common Stock to fluctuate substantially.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange Act
of 1934, including statements regarding, among other items, (i) the Company's
growth strategies, (ii) anticipated trends in the motorsports industry and
demographics, and (iii) the Company's ability to enter into contracts with
television networks and sponsors. These forward-looking statements are based
largely on the Company's expectations and are subject to a number of risks and
uncertainties, certain of which are beyond the Company's control. Actual results
could differ materially from these forward-looking statements as a result of the
factors described in "Risk Factors," including, among others, general economic
conditions, governmental regulation and competitive factors. In light of these
risks and uncertainties, there can be no assurance that the forward-looking
information contained in this Prospectus will in fact transpire.
10
<PAGE>
THE COMPANY
THE RECAPITALIZATION
Concurrently with the effectiveness of this Offering, the Company will modify
its authorized capital (the "Recapitalization") to include one million shares of
Preferred Stock, 80 million shares of Class A Common Stock and 40 million shares
of Class B Common Stock. See "Description of Capital Stock." Pursuant to the
Recapitalization, all of the Company's currently outstanding shares of common
stock will automatically be converted, on a 15-for-one basis, into the newly
authorized shares of Class B Common Stock. As a result, after the
Recapitalization and this Offering are effected, the Company will have
outstanding 4,000,000 shares of Class A Common Stock and 34,423,890 shares of
Class B Common Stock. In addition, as part of the recapitalization the Company
retired its then existing treasury stock effective August 31, 1996.
GENERAL
The Company was incorporated in 1953 under the laws of the State of Florida
under the name "Bill France Racing, Inc." and changed its name to "International
Speedway Corporation" in 1968. The Company's principal executive offices are
located at 1801 West International Speedway Boulevard, Daytona Beach, Florida
32114, and its telephone number is (904) 254-2700.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 4,000,000 shares of
Class A Common Stock offered by the Company hereby, assuming an initial public
offering price of $15.00 per share, are estimated to be approximately $55.7
million, after deduction of underwriting discounts and commissions and estimated
expenses of the Offering. The Company intends to use approximately $32.0 million
of such net proceeds to fund the completion of certain additions and
improvements to the Company's motorsports facilities, including additional
suites and grandstand seating at Daytona International Speedway, Talladega
Superspeedway and Darlington Raceway. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations," "Business--Growth Strategy"
and "Business--Motorsports Facilities."
The approximately $23.7 million of remaining net proceeds will be used for
working capital and other general corporate purposes, including potential
acquisitions and continued improvements to and expansion of the Company's
operations. However, the Company does not currently have any understanding or
arrangement regarding any potential acquisition. Pending such uses, the Company
intends to invest the net proceeds of this Offering in money market funds or
other interest-bearing obligations.
DIVIDEND POLICY
The Company has historically paid annual cash dividends on its common stock.
See "Selected Financial Data." However, the Company does not have a formal
dividend policy nor any expectation that comparable dividends will continue to
be paid in the future. Future dividends, if any, will depend upon the Company's
future earnings, capital requirements and financial condition, as well as such
other factors as the Company's Board of Directors may deem relevant.
Accordingly, there can be no assurance that dividends will be paid.
11
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of May
31, 1996, after giving retroactive effect to the Recapitalization (see "The
Company--The Recapitalization"), and as adjusted to give effect to the sale of
the 4,000,000 shares of Class A Common Stock offered by the Company hereby
(assuming an initial public offering price of $15.00 per share) and the
application of the estimated net proceeds therefrom as described under "Use of
Proceeds."
<TABLE>
<CAPTION>
MAY 31, 1996
---------------------------
ACTUAL AS ADJUSTED
----------- --------------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt ......................................................... $ -- $ --
Shareholders' equity:
Preferred Stock, $.01 par value, 1,000,000 shares authorized, no
shares issued and outstanding ....................................... -- --
Class A Common Stock, $.01 par value, 80,000,000 shares authorized, no
shares issued and outstanding, 4,000,000 as adjusted ................ -- 40
Class B Common Stock, $.01 par value, 40,000,000 shares authorized,
34,423,890 shares issued and outstanding ............................ 344 344
Common Stock, $.10 par value, 5,000,000 shares authorized, no shares
issued and outstanding .............................................. --
Additional paid-in capital............................................. 8,127 63,787
Retained earnings ..................................................... 95,190 95,190
Unearned compensation--restricted stock(1) ............................ (1,977) (1,977)
----------- --------------
Total shareholders' equity ........................................... 101,684 157,384
----------- --------------
Total capitalization ................................................. $101,684 $157,384
=========== ==============
</TABLE>
- ----------
(1) See Note 9 of Notes to the Company's Consolidated Financial Statements.
12
<PAGE>
SELECTED FINANCIAL DATA
The following selected historical financial data as of and for each of the
fiscal years ended August 31, 1991 through 1995 have been derived from the
Company's Consolidated Financial Statements which have been audited by Ernst &
Young LLP, independent certified public accountants. The selected financial data
as of and for the nine months ended May 31, 1995 and 1996 have been derived from
the unaudited consolidated financial statements of the Company. In the Company's
opinion, such unaudited consolidated financial statements reflect all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial position and results of operations for such
periods. The results of operations for the nine months ended May 31, 1996 are
not indicative of results that may be expected for the full year. For
comparability, certain prior period results have been reclassified to conform to
the presentation adopted in fiscal 1996. The following selected financial data
should be read in conjunction with the Company's Consolidated Financial
Statements, including the notes thereto, and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31, (1)
--------------------------------------------------
1991 1992 1993 1994
----------- ----------- ----------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions, net ............................ $ 26,489 $ 29,423 $ 32,078 $ 36,935
Motorsports related income ................. 14,004 15,341 16,557 18,764
Food, beverage and souvenir income ........ 3,261 6,048 9,515 12,291
Other income ............................... 2,412 1,476 1,003 943
----------- ----------- ----------- -----------
Total revenues ............................ 46,166 52,288 59,153 68,933
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR
sanction fees ........................ 6,733 7,370 8,251 9,412
Motorsports related expenses .............. 10,166 10,127 10,470 11,470
Food, beverage and souvenir expenses ..... 1,270 2,759 4,775 7,867
General and administrative expenses ....... 10,775 11,816 13,046 14,307
Depreciation ............................... 2,288 2,612 3,006 3,828
----------- ----------- ----------- -----------
Total expenses ............................ 31,232 34,684 39,548 46,884
----------- ----------- ----------- -----------
Operating income ............................ 14,934 17,604 19,605 22,049
Interest income, net ........................ 855 502 724 972
Equity in net income (loss) from equity
investments ............................... 310 300 (27) 207
----------- ----------- ----------- -----------
Income before income taxes .................. 16,099 18,406 20,302 23,228
Income taxes ................................ 5,812 6,712 7,827 8,662
----------- ----------- ----------- -----------
Income before cumulative effect of change in
accounting principle ...................... 10,287 11,694 12,475 14,566
Cumulative effect of change in accounting
principle ................................. -- -- 288 --
----------- ----------- ----------- -----------
Net income .................................. $10,287 $11,694 $12,763 $14,566
=========== =========== =========== ===========
Earnings per share:
Before cumulative effect of change in
accounting principle ................... $ .28 $ .34 $ .36 $ .42
Cumulative effect of change in
accounting principle ..................... -- -- .01 --
----------- ----------- ----------- -----------
Earnings per share .......................... $ .28 $ .34 $ .37 $ .42
=========== =========== =========== ===========
Dividends per share ......................... $ .02 $ .03 $ .03 $ .04
BALANCE SHEET DATA (END OF PERIOD):
Working capital (deficit) ................. $ 7,765 $13,301 $16,356 $11,839
Total assets ................................ 58,317 67,540 78,487 96,401
Long-term debt .............................. 5,100 2,300 -- --
Total shareholders' equity .................. 33,053 43,638 55,236 68,277
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MAY 31,
------------------------
1995 1995 1996
---------- ---------- -----------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions, net ............................ $43,274 $33,014 $37,735
Motorsports related income ................. 24,033 18,657 21,060
Food, beverage and souvenir income ........ 14,442 11,165 13,593
Other income ............................... 423 501 607
---------- ---------- -----------
Total revenues ............................ 82,172 63,337 72,995
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR
sanction fees ........................ 11,765 8,752 10,157
Motorsports related expenses .............. 11,604 8,913 10,649
Food, beverage and souvenir expenses ..... 8,107 6,175 8,093
General and administrative expenses ....... 18,202 12,635 14,869
Depreciation ............................... 4,798 3,436 4,133
---------- ---------- -----------
Total expenses ............................ 54,476 39,911 47,901
---------- ---------- -----------
Operating income ............................ 27,696 23,426 25,094
Interest income, net ........................ 1,436 1,065 754
Equity in net income (loss) from equity
investments ............................... 285 (733) (946)
---------- ---------- -----------
Income before income taxes .................. 29,417 23,758 24,902
Income taxes ................................ 11,054 9,304 10,016
---------- ---------- -----------
Income before cumulative effect of change in
accounting principle ...................... 18,363 14,454 14,886
Cumulative effect of change in accounting
principle ................................. -- -- --
---------- ---------- -----------
Net income .................................. $ 18,363 $ 14,454 $ 14,886
========== ========== ===========
Earnings per share:
Before cumulative effect of change in
accounting principle ................... $ .53 $ .42 $ .43
Cumulative effect of change in
accounting principle ..................... -- -- --
---------- ---------- -----------
Earnings per share .......................... $ .53 $ .42 $ .43
========== ========== ===========
Dividends per share ......................... $ .05 $ .05 $ .05
BALANCE SHEET DATA (END OF PERIOD):
Working capital (deficit) ................. $ 20,821 $ 18,593 $ (2,810)
Total assets ................................ 119,571 119,384 150,525
Long-term debt .............................. -- -- --
Total shareholders' equity .................. 85,247 81,237 101,684
</TABLE>
- ----------
(1) The Company will change its fiscal year-end to November 30 effective
December 1, 1996. This will result in a three-month transition period
commencing September 1, 1996 and ending November 30, 1996. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Seasonality and Quarterly Results."
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for each of the indicated periods, certain
selected income statement data as a percentage of total revenues:
<TABLE>
<CAPTION>
YEAR ENDED AUGUST
31,
--------------------
1993 1994
--------- ---------
<S> <C> <C>
Revenues:
Admissions, net ............................ 54.2% 53.6%
Motorsports related income ................. 28.0 27.2
Food, beverage and souvenir income ........ 16.1 17.8
Other income ............................... 1.7 1.4
Total revenues ............................ 100.0% 100.0%
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR
sanction fees ........................ 13.9 13.7
Motorsports related expenses .............. 17.7 16.6
Food, beverage and souvenir expenses ..... 8.1 11.4
General and administrative expenses ....... 22.1 20.8
Depreciation ............................... 5.1 5.5
--------- ---------
Total expenses ............................ 66.9 68.0
--------- ---------
Operating income ............................ 33.1 32.0
Interest income, net ........................ 1.2 1.4
Equity in net income (loss) from
equity investments ........................ (.0) .3
--------- ---------
Income before income taxes .................. 34.3 33.7
Income taxes ................................ 13.2 12.6
--------- ---------
Income before cumulative effect of change in
accounting principle ...................... 21.1 21.1
Cumulative effect of change in
accounting principle ...................... .5 --
--------- ---------
Net income .................................. 21.6% 21.1%
========= =========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MAY 31,
---------------------
1995 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Admissions, net ............................ 52.7% 52.1% 51.7%
Motorsports related income ................. 29.2 29.5 28.9
Food, beverage and souvenir income ........ 17.6 17.6 18.6
Other income ............................... 0.5 0.8 0.8
Total revenues ............................ 100.0% 100.0% 100.0%
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR
sanction fees ........................ 14.3 13.8 13.9
Motorsports related expenses .............. 14.1 14.1 14.6
Food, beverage and souvenir expenses ..... 9.9 9.7 11.1
General and administrative expenses ....... 22.2 19.9 20.3
Depreciation ............................... 5.8 5.5 5.7
--------- --------- ---------
Total expenses ............................ 66.3 63.0 65.6
--------- --------- ---------
Operating income ............................ 33.7 37.0 34.4
Interest income, net ........................ 1.7 1.7 1.0
Equity in net income (loss) from
equity investments ........................ .3 (1.2) (1.3)
--------- --------- ---------
Income before income taxes .................. 35.7 37.5 34.1
Income taxes ................................ 13.4 14.7 13.7
--------- --------- ---------
Income before cumulative effect of change in
accounting principle ...................... 22.3 22.8 20.4
Cumulative effect of change in
accounting principle ...................... -- -- --
--------- --------- ---------
Net income .................................. 22.3% 22.8% 20.4%
========= ========= =========
</TABLE>
COMPARISON OF NINE MONTHS ENDED MAY 31, 1996 AND NINE MONTHS ENDED MAY 31,
1995
Admission income increased during the nine months ended May 31, 1996, as
compared to the corresponding period of the prior year, primarily due to
increased attendance at the Company's major racing events and increases in
ticket prices for such events. Third quarter increases in attendance and related
admissions income for events conducted at the Company's Darlington and Talladega
facilities were partially offset by the rescheduling of a major motorcycle event
at the Company's Daytona facility due to inclement weather.
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 over
three-quarters of the increase in motorsports related income for the nine months
ended May 31, 1996, as compared to the same period of the preceding year. The
remaining increase in motorsports related income for the nine months ended May
31, 1996, as compared to the prior year, is
14
<PAGE>
due primarily to increases in parking and rentals of the Company's
hospitality facilities in the current year and is partially offset by a
decline in royalty revenues from the Company's trademark license to a single
licensee whose home entertainment products are in the later stages of the
product life cycle.
During the nine months ended May 31, 1996, Americrown Service Corporation, an
indirect wholly owned subsidiary of the Company ("Americrown"), continued to
expand its operations by providing food and beverage services at outdoor
sporting events and entertainment activities unrelated to motorsports events
conducted by the Company. The revenue generated by these new business
opportunities accounted for over two-thirds of the increase in food, beverage
and souvenir income for the nine month period ended May 31, 1996, as compared to
the corresponding period of the prior year. The remaining increase in food,
beverage and souvenir income for the nine months ended May 31, 1996, as compared
to the nine months ended May 31, 1995, is attributed to increased attendance at
motorsports events conducted by the Company and increases in certain prices.
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 nine-month period ended May
31, 1996 as compared to the corresponding period of the prior year.
Motorsports related expenses, as a percentage of combined admissions and
motorsports related income, remained relatively constant for the nine months
ended May 31, 1996 and 1995.
As food, beverage and souvenir income increases, the Company experiences
increases in related product costs and personnel expenses. Personnel related
expenses, product costs and other fees associated with the expanded operations
of Americrown accounted for approximately one-half of the increase in food,
beverage and souvenir expenses for the nine-month period ended May 31, 1996, as
compared with the corresponding period of the prior year. Personnel related
expenses and product costs associated with the Company's ongoing food, beverage
and souvenir operations accounted for the majority of the remaining increase.
General and administrative expenses, as a percentage of total operating
revenues, remained relatively constant for the nine months ended May 31, 1996
and 1995.
Because of the seasonal concentration of racing events, the results of
operations for the nine-month period ended May 31, 1996 are not indicative of
the results to be expected for the full year.
COMPARISON OF FISCAL 1995, FISCAL 1994 AND FISCAL 1993.
Admission income increased during fiscal 1994 and fiscal 1995 due to
increases in attendance and increases in certain ticket prices. Attendance at
NASCAR Winston Cup events conducted at the Company's facilities increased
approximately 9% in fiscal 1995 and fiscal 1994. The increases in attendance in
both years resulted from the continued overall increased interest in motor
sports as well as increased seating capacity at the Company's Daytona, Talladega
and Darlington facilities.
The increased interest in motor sports is reflected in both live and
broadcast audiences. This continued interest has enabled the Company to
successfully negotiate favorable contracts for broadcast rights, promotional
fees and advertising in both fiscal 1994 and 1995. The combined effect of these
contracts accounted for approximately 57% and 78% of the increase in motorsports
related income for fiscal 1995 and fiscal 1994, respectively.
Increased rentals of the Company's hospitality facilities accounted for the
majority of the remaining increase in motorsports related income for fiscal
1994, while approximately 52% of the remaining increase in fiscal 1995 resulted
from royalties received from the Company's trademark licenses. The
15
<PAGE>
majority of the increase in royalties resulted from fees received from a
single licensee which manufactures home entertainment products.
During fiscal 1995, the Company conducted eight events at its Tucson facility
which were promoted as "Winter Heat." Promotional and broadcast revenues related
to these new events accounted for the remaining increase in motorsports related
income for fiscal 1995.
During both fiscal 1994 and fiscal 1995, Americrown expanded its operations
through new business opportunities. During fiscal 1994, Americrown assumed the
catering operations at the Company's Daytona and Talladega facilities. In fiscal
1995, the catering operation at Daytona International Speedway was further
increased. In addition, during fiscal 1995, Americrown expanded its operations
by providing food and beverage services at two outdoor sporting events unrelated
to International Speedway Corporation. The revenue generated by these new
business opportunities accounted for approximately one-quarter of the increase
in food, beverage and souvenir income during fiscal 1995, and over 40% of the
increase in fiscal 1994.
The remaining increase in food, beverage and souvenir income for fiscal 1994
and fiscal 1995 resulted from increases in both food service and souvenir
merchandise revenue. Management believes increased attendance at events
conducted at the Company's facilities contributed to increases in food service
and souvenir merchandise sales in both periods. In addition, per capita food
service revenue increased approximately 16% and 17% during fiscal 1995 and
fiscal 1994, respectively, as a result of changes to menus and pricing, while
strategic merchandising efforts implemented in fiscal 1994 resulted in a per
capita increase in souvenir revenues of approximately 8% in that year.
The Company's average cash balances have increased as operations have
expanded. This increase in average cash balances, combined with generally higher
average interest rates, resulted in increased interest income during fiscal 1994
and fiscal 1995.
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 in both fiscal 1995 and fiscal 1994. This increased prize money,
combined with increased point fund money, accounted for more than 80% of the
increase in prize and point fund monies and NASCAR sanction fees for fiscal 1994
and fiscal 1995.
As food, beverage and souvenir income increase, the Company experiences a
corresponding increase in related product costs and personnel expenses. The
overall cost of sales for food, beverage and souvenirs was reduced by 2% for
fiscal 1995. In addition, during fiscal 1995, the Company discontinued the mail
order catalog developed and distributed during fiscal 1994. The elimination of
promotional costs associated with the catalog reduced food, beverage and
souvenir expenses an additional 2% during fiscal 1995. These decreases accounted
for the majority of the decrease in food, beverage and souvenir expenses as a
percentage of food, beverage and souvenir income in fiscal 1995 as compared to
fiscal 1994.
Substantially all of the increase in food, beverage and souvenir expense for
fiscal 1994 was attributable to increased cost of sales, payroll and personnel
costs, event support costs and travel costs related to the expanded operations
of Americrown, as discussed above.
General and administrative expenses have remained constant at approximately
22% of operating income for each of fiscal 1993, fiscal 1994 and fiscal 1995.
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
16
<PAGE>
facilities. However, the Company experienced a decrease in liquidity from
August 31, 1995 to May 31, 1996 as it began to utilize its liquid assets for
capital projects and investments as described below under "--Capital
Resources". Pending receipt of the proceeds of this Offering, liquidity is
expected to continue to decrease as the Company completes the capital
projects described below.
The Company's combined position in cash and cash equivalents and short-and
long-term investments at May 31, 1996 decreased from August 31, 1995 primarily
as a result of payments made for capital projects, the investment in PSH Corp.,
as described below, and the reacquisition of previously issued common stock. The
decrease was offset in part by cash flows from operations.
The Company's working capital at May 31, 1996 decreased from August 31, 1995
due primarily to the use of cash for its investment in PSH Corp. and to finance
capital projects. 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, an
increase in other current liabilities related to dividends declared but unpaid
as of May 31, 1996, 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 was partially offset by an increase in receivables related
primarily to increases in motorsports related broadcast rights and promotional
fees and Americrown's expanded food and beverage operations.
Receivables increased for the nine months ended May 31, 1996, as compared to
the nine months ended May 31, 1995, primarily due to increases in motorsports
related advertising and promotional revenues and Americrown's expanded food and
beverage operations. These increases were partially offset by the timing of
receipts for promotional fees at the Company's Talladega facility and royalty
revenues accrued in the prior year.
Prepaid expenses and other current assets decreased for the nine months ended
May 31, 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.
Accounts payable increased for the nine months ended May 31, 1996, as
compared to the nine months ended May 31, 1995, primarily due to payables
related to capital projects.
Deferred revenue increased for the nine months ended May 31, 1996, as
compared to the same period of 1995, primarily due to an increase in seating
capacity and certain ticket prices for future motorsports events and sponsorship
of DAYTONA USA.
The increase in cash surrender value of life insurance for the nine months
ended May 31, 1996, as compared to the nine months ended May 31, 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 nine
months ended May 31, 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
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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.
CAPITAL RESOURCES
The Company continues to invest in the expansion and general improvement of
its 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.
In addition to the Winston Tower and DAYTONA USA projects described below,
the Company's Board of Directors has approved expansion projects and general
improvements with an estimated cost to complete of approximately $26.3 million
at May 31, 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 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 the Company's DAYTONA USA motorsports theme amusement complex.
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. At May 31, 1996,
the total estimated cost to complete this project was approximately $4.7
million.
DAYTONA USA combines interactive mediums, theaters, historical memorabilia
and exhibits to form a motorsports-themed entertainment complex. The complex
opened to the public on July 5, 1996, and is located adjacent to the existing
"World Center of Racing" Visitors Center at Daytona International Speedway. As
of May 31, 1996, remaining costs related to this project were approximately $3.0
million.
Total capital expenditures during the first nine months of fiscal 1996
increased approximately $14.7 million over the amount spent in the corresponding
period of the prior year, primarily due to the DAYTONA USA 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 for the balance of fiscal 1996. Moreover, in
management's opinion, financing resources are available to provide sufficient
liquidity for continuing operations on a long-term basis.
Equity investments increased from August 31, 1995 as a result of the purchase
by Facility 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. The remaining 80% of PSH Corp. is
indirectly owned by the privately held Penske Corporation. Prior to March, 1996,
PSH Corp. owned 85% of the outstanding shares of Penske Motorsports, Inc. Penske
Motorsports, Inc. then 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
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equity in income of equity investments using the straight-line method over
twenty years. The amount amortized for the nine months ended May 31, 1996 was
approximately $184,000.
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 Speedway, 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, all of the preferred stock that had been previously issued by
PMI to Kaiser Ventures, Inc. 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 approximately 84%.
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 $83.1 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 recorded an increase in its investment in PSH Corp. of
approximately $7.6 million, and recorded corresponding increases in deferred
income taxes and capital in excess of par value of approximately $2.9 million
and $4.7 million, respectively.
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 May 31, 1996 are not indicative of the results to
be expected for the full year.
The change in income taxes payable at May 31, 1996 as compared to August 31
and May 31, 1995, is due to the seasonal nature of the Company's business and
the timing of estimated tax deposits.
The deferred income tax liability at May 31, 1996, increased from August 31,
1995 primarily as a result of differences between financial and tax accounting
treatments relating to depreciation expense and the Company's equity
investments.
SEASONALITY AND QUARTERLY RESULTS
The Company derives most of its income from event admissions and related
revenue from a limited number of NASCAR-sanctioned races. As a result, the
Company's business has been, and is expected to remain, highly seasonal based on
the timing of major race events. For example, the Mountain Dew Southern 500 is
traditionally held on the Sunday preceding Labor Day. Accordingly, the admission
revenue for that race and/or certain of its supporting events may be recognized
in either the fiscal quarter ending August 31 or the fiscal quarter ending
November 30.
Historically, the Company has incurred net losses in the fiscal quarter
ending November 30, and achieved its highest net income in the fiscal quarter
ending February 28. Partly in response to this seasonality and the desire to
better conform to the traditional racing season, the Company will change its
fiscal year-end from August 31 to November 30 effective December 1, 1996. This
will result in a three-month transition period commencing September 1, 1996 and
ending November 30, 1996. In addition, management anticipates that the date for
the Company's Diehard 500 race will be moved from
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the fiscal quarter ending August 31 to the fiscal quarter ending November 30
commencing in 1997. The following table presents certain unaudited financial
data for each fiscal quarter of the Company's two most recent fiscal years:
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED
-----------------------------------------------------------------------------------------------------
NOVEMBER 30, FEBRUARY 28, MAY 31, AUGUST 31, NOVEMBER 30, FEBRUARY 28, MAY 31,
1994 1995 1995 1995 1995 1996 1996
--------------- --------------- ---------- ------------- --------------- --------------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues ............ $ 6,694 $35,022 $21,621 $18,835 $ 8,542 $40,277 $24,176
Operating income (loss) .. (1,607) 18,942 6,091 4,270 (1,474) 20,338 6,230
Net income (loss) ......... (871) 11,672 3,653 3,909 (1,020) 12,089 3,817
Earnings (loss) per share (.03) .34 .11 .11 (.03) .35 .11
</TABLE>
INFLATION
Management does not believe that inflation has had a material impact on
operating costs and earnings of the Company.
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NASCAR
The National Association for Stock Car Auto Racing, Inc. ("NASCAR") has been
influential in the growth and development of both the Company's operations and
professional stock car racing generally. NASCAR, all of whose capital stock is
beneficially owned by William C. France and James C. France, the Company's
principal shareholders, is widely recognized as the premier official sanctioning
body of professional stock car racing in the United States. See "Principal
Shareholders" and "Certain Transactions." NASCAR conducts all races that
constitute the Winston Cup and Busch Grand National stock car series, as well as
the Craftsman Truck series and a number of other racing series and events. The
Company derived approximately 79.5% and 77.9% of its total revenues from
NASCAR-sanctioned racing events at the Company's facilities in fiscal 1995 and
the nine months ended May 31, 1996, respectively.
OVERVIEW OF STOCK CAR RACING
Professional stock car racing developed in the Southeastern United States in
the 1930's. It began to mature in 1947, when William H.G. France (the father of
the Company's Chairman and President) organized NASCAR. The first
NASCAR-sanctioned race was held in 1948 in Daytona Beach, Florida. In 1959, the
Company completed construction of the Daytona International Speedway and
promoted the first "Daytona 500." The motorsports industry began to gather
momentum in the mid-1960's, when major North American automobile and tire
manufacturers first offered engineering and financial support. In the early
1970's, NASCAR created a more elite circuit focused on the best drivers.
Accordingly, it reduced the number of races in its premier series, now known as
the Winston Cup series, from approximately 50 to approximately 30.
NASCAR events, particularly Winston Cup races, enjoy a large and growing base
of spectator support. Based on information developed independently by Goodyear,
spectator attendance at Winston Cup and Busch Grand National events has
increased at compound annual growth rates of 15.1% and 17.3%, respectively, from
1993 to 1995. Moreover, the entire 1996 Winston Cup series is currently
broadcast to national television audiences by five networks: CBS, ABC, ESPN, TBS
and TNN. In addition, Winston Cup, Busch Grand National and other major
NASCAR-sanctioned races receive extensive national radio coverage, including on
programs produced and syndicated by the Company's MRN Radio network. Management
believes that increased media coverage has led to national recognition of NASCAR
drivers, which has further increased the popularity of the sport, thereby
resulting in (i) record NASCAR race attendance, (ii) increasing payments to
track owners for broadcast rights and sponsorship fees, and (iii) increased
sales of motorsports-related souvenirs. Management believes that the increasing
payments for broadcast rights and sponsorship fees are also the result of the
demographic appeal of the motorsports spectator base to advertisers. See
"--Economics of Stock Car Racing-Spectators." Corporate sponsors of
NASCAR-sanctioned events now include a large number of leading manufacturing and
consumer products companies.
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<PAGE>
GOVERNANCE OF STOCK CAR RACING
NASCAR regulates its membership (including drivers, their crews, team owners
and track owners), the composition of race cars and the sanctioning of races. It
sanctions events by means of one-year agreements executed with track owners,
each of which specifies the race date, the sanctioning fee and the purse. NASCAR
officials control qualifying procedures, the line-up of the cars, the start of
the race, the control of cars throughout the race, the election to stop or delay
a race, "pit" activity, "flagging," the positioning of cars, the assessment of
lap and time penalties and the completion of the race.
By sanctioning an event, NASCAR does not warrant, either expressly or by
implication, nor is it responsible for, the financial or other success of the
sanctioned event or the number or identity of vehicles or competitors
participating in the event. Similarly, no existing NASCAR sanction agreement,
nor anything in the course of dealing between NASCAR and the Company, should be
construed to require NASCAR to enter into a sanction agreement or to issue a
sanction for any other event in the future.
ECONOMICS OF STOCK CAR RACING
The primary participants in the business of stock car racing are spectators,
sponsors, track owners, drivers and team owners.
SPECTATORS. Total attendance at all 1995 Winston Cup, Busch Grand National
and Craftsman Truck Series events exceeded 7.4 million spectators. Moreover,
according to Nielsen Media Research ("Nielsen"), approximately 58 million
households watched televised Winston Cup events in 1995, reflecting an average
of approximately 1.9 million households per event. The Company believes that the
demographic profile of the growing base of spectators has considerable appeal to
track owners, sponsors and advertisers. According to Simmons Market Research
Bureau, Inc. and Performance Research, approximately 38% of NASCAR spectators
are women and 69% are between the ages of 18 and 44. The Company believes that
motorsports spectators are loyal to both the sport of motor racing and to the
sponsors of the sport.
SPONSORS. Drawn to the sport by its attractive demographics, sponsors are
active in all phases of professional stock car racing. In addition to directly
supporting racing teams through the funding of certain costs of their
operations, sponsors support track owners by paying fees associated with
specific name events such as the "Pepsi 400", the "Diehard 500" or the "Busch
Clash of '96." In return, sponsors receive advertising exposure through
television and radio coverage, newspapers, race programs, brochures and
advertising at the track on race day.
TRACK OWNERS. Track owners such as the Company market and promote events at
their facilities. Their principal revenue sources generally include (i)
admissions, (ii) television and radio broadcast fees, (iii) sponsorship fees,
(iv) food and beverage concessions, (v) the sale of merchandise such as
souvenirs, collectibles and apparel, (vi) hospitality fees paid for catering
receptions and private parties, (vii) parking, (viii) luxury suite rentals, and
(ix) advertising on track signage and in souvenir racing programs. Sanction
agreements require race track operators to pay fees to the relevant sanctioning
body for each sanctioned event conducted, including sanction fees and prize
money. With the exception of NASCAR's Craftsman Truck Series, track owners
negotiate directly with television and radio networks for coverage of
NASCAR-sanctioned events.
DRIVERS. Although a majority of drivers contract independently with team
owners, certain drivers own their own teams. Drivers receive income from
contracts with team owners, sponsorship fees and prize money. Successful drivers
may also receive income from personal endorsement fees and souvenir sales. The
success and personality of a driver can be an important marketing advantage for
team owners because it can help attract corporate sponsorships and generate
sales for officially licensed merchandise vendors such as the Company.
TEAM OWNERS. In most instances, team owners bear the financial risk of
placing their teams in competition. They (i) contract with drivers, (ii) acquire
racing vehicles and support equipment, (iii) hire pit crews and mechanics, and
(iv) syndicate sponsorship of their teams.
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<PAGE>
THE WINSTON CUP
The most prominent and well-attended NASCAR-sanctioned events are the Winston
Cup events. According to statistics compiled by Goodyear, total attendance at
Winston Cup events increased from approximately 3.3 million in 1990 to
approximately 5.3 million in 1995.
The Winston Cup Series begins in February with "Speedweeks" (consisting of
the annual "Busch Clash" all star event, the Gatorade 125's and a number of
other premier racing events culminating in the Daytona 500) and concludes with
the "NAPA 500" in November. Including two all star races, 33 races are
sanctioned annually to 18 tracks operating in 15 states. The following table
shows the 1996 Winston Cup schedule (events held at facilities operated by the
Company and Watkins Glen are noted in bold).
DATE TRACK LOCATION RACE
- ---- -------------- ----
FEBRUARY 11 DAYTONA BEACH, FL BUSCH CLASH OF '96*
FEBRUARY 18 DAYTONA BEACH, FL DAYTONA 500
February 25 Rockingham, NC Goodwrench 400
March 3 Richmond, VA Pontiac Excitement 400
March 10 Hampton, GA Purolator 500
MARCH 24 DARLINGTON, SC TRANSOUTH FINANCIAL 400
March 31 Bristol, TN Food City 500
April 14 N. Wilkesboro, NC First Union 400
April 21 Martinsville, VA Goody's Headache Powders 500
APRIL 28 TALLADEGA, AL WINSTON SELECT 500
May 5 Sonoma, CA Save Mart Supermarkets 300
May 18 Concord, NC The Winston Select*
May 26 Concord, NC Coca-Cola 600
June 2 Dover, DE Miller 500
June 16 Long Pond, PA Pocono 500
June 23 Brooklyn, MI Miller 400
JULY 6 DAYTONA BEACH, FL PEPSI 400
July 14 Loudon, NH Slick 50 300
July 21 Long Pond, PA Miller 500
JULY 28 TALLADEGA, AL DIEHARD 500
August 3 Indianapolis, IN The Brickyard 400
AUGUST 11 WATKINS GLEN, NY THE BUD AT THE GLEN
August 18 Brooklyn, MI GM Goodwrench Service 400
August 24 Bristol, TN Goody's Headache Powders 500
SEPTEMBER 1 DARLINGTON, SC MOUNTAIN DEW SOUTHERN 500
September 7 Richmond, VA Miller 400
September 15 Dover, DE MBNA 500
September 22 Martinsville, VA Goody's 500
September 29 N. Wilkesboro, NC Tyson Holly Farms 400
October 6 Concord, NC UAW-GM Quality 500
October 20 Rockingham, NC AC-Delco 400
October 27 Phoenix, AZ Dura-Lube 500
November 10 Hampton, GA NAPA 500
- ----------
* Non-point event.
As the table indicates, no track currently promotes more than two Winston Cup
point events. The Company had sanctioning agreements for two such point events
at each of its three superspeedways, as well as a sanctioning agreement for the
non-point "Busch Clash of '96" all star race at Daytona International Speedway.
In addition, the Company owns 50% of Watkins Glen, which had a sanctioning
agreement for "The Bud at the Glen" Winston Cup race.
23
<PAGE>
THE BUSCH GRAND NATIONAL SERIES AND OTHER NASCAR EVENTS
The NASCAR circuit generally perceived as second in prominence to the Winston
Cup is the Busch Grand National Series. In 1996, 26 Busch Grand National events
will be promoted at over 20 tracks in 16 states. Many track owners, including
the Company, host Busch Grand National events in conjunction with a Winston Cup
event in order to boost overall attendance for a race weekend. The Company and
Watkins Glen had sanctioning agreements for five Busch Grand National races in
1996: the Goody's Headache Powders 300, the Lysol 200, the Humminbird Fishfinder
500K and two Dura-Lube 200s, all of which were televised.
In addition to Winston Cup and Busch Grand National events, NASCAR sanctions
various other stock car racing events and series, including the NASCAR Winston
Racing Series, Craftsman Truck Series, Goody's Dash Series and Winston West
Series.
OTHER MOTORSPORTS
Other motorsports include stock car racing not sanctioned by NASCAR, as well
as "Indy car," "Formula One," sports car, motorcycle and go-kart racing.
STOCK CAR RACING. In addition to NASCAR, the Automobile Racing Club of
America ("ARCA") sanctions a stock car racing circuit. In 1996, the Company
promoted two ARCA races, including the Daytona ARCA 200, the annual
season-opener for the ARCA Bondo/Mar-Hyde Supercar series. The Company also
promoted two of the four races in the International Race of Champions ("IROC")
series, in which a selected field of 12 drivers from different motorsports
disciplines compete in equally prepared Pontiac Firebird Trans-Ams.
INDY CAR RACING. "Indy cars" take their name from cars which race at the
Indianapolis Motor Speedway, which holds the "Indianapolis 500" on the Sunday
before Memorial Day every year. Indy car racing is sanctioned by two
associations: United States Auto Club ("USAC"), which governs the conduct of the
Indianapolis 500 and races comprising the newly formed Indy Racing League; and
Championship Auto Racing Teams, Inc. ("CART"), which was formed by Indy car
owners in 1979. The Company does not currently promote Indy car races.
FORMULA ONE AND SPORTS CAR RACING. Formula One car races are typically held
outside the United States and are sanctioned by the Federation Internationale de
l'Automobile ("FIA"). Although FIA also serves as an umbrella organization for
other sanctioning bodies for Company-promoted races, the Company does not
currently promote Formula One races. Sports car racing is sanctioned in the
United States by the Sports Car Club of America ("SCCA") and by the
International Motor Sports Association ("IMSA"), which sanction races held on
road courses throughout the country. The Company promotes a number of sports car
racing events sanctioned by SCCA and IMSA, including the Rolex 24 at Daytona,
which management believes is the most prestigious endurance sports car event
held in the United States.
MOTORCYCLE AND GO-KART RACING. The American Motorcyclists Association ("AMA")
sanctions motorcycle races and the World Karting Association ("WKA") sanctions
go-kart races. The Company promotes numerous motorcycle and go-kart racing
events at its facilities, including the Daytona 200 by Arai (part of the AMA
Superbike National Championship Series) and the BMW Battle of the Legends, each
of which is conducted in connection with the Company's Camel Motorcycle Week
held each Spring in Daytona Beach.
24
<PAGE>
BUSINESS
The Company is a leading promoter of motorsports activities in the United
States. The Company owns and operates three of the nation's premier
superspeedways--Daytona International Speedway in Florida, home of the Daytona
500, widely recognized as the most prestigious stock car race in the world;
Talladega Superspeedway in Alabama, the fastest stock car track; and Darlington
Raceway in South Carolina, the first stock car superspeedway. The Company also
operates Tucson Raceway Park in Arizona, owns a 50% interest in the Watkins Glen
International road course in New York, and holds a 12% interest in Penske
Motorsports, Inc., which owns and operates Michigan International Speedway and
Pennsylvania's Nazareth Speedway and is constructing The California Speedway
near Los Angeles. In July 1996, the Company opened DAYTONA USA--The Ultimate
Motorsports Attraction, a motorsports themed-entertainment complex that includes
interactive media, theaters, historical memorabilia and exhibits.
The Company, including Watkins Glen, currently promotes over 70 stock car,
sports car, truck, motorcycle and other racing events annually, including seven
Winston Cup races, five Busch Grand National races, the premier sports car
endurance event in the United States (the Rolex 24 at Daytona) and a number of
prestigious motorcycle races. In fiscal 1995 and the nine months ended May 31,
1996, NASCAR-sanctioned races at the Company's facilities accounted for
approximately 79.5% and 77.9%, respectively, of the Company's total revenues.
Based on statistics developed by Goodyear, spectator attendance at NASCAR's
Winston Cup and Busch Grand National events increased at compound annual growth
rates of 15.1% and 17.3%, respectively, from 1993 to 1995. Moreover, each of
CBS, ABC, ESPN, TBS and TNN has recently experienced increased ratings for its
televised NASCAR Winston Cup events. Attracted by these increases in spectators
and ratings, leading consumer product and manufacturing companies have expanded
their participation in the motorsports industry. The Company's major sponsors
include Pepsi, Anheuser Busch, Sears, Winston, Gatorade, Pontiac, Ford,
Chevrolet, Goodyear, Dupont and Rolex.
OPERATING STRATEGY
Key elements of the Company's general operating strategy emphasize (i) senior
management's long-standing involvement with the development and growth of the
motorsports industry, (ii) ongoing capital improvements and other efforts
designed to maximize race spectators' total entertainment experience, (iii)
marketing programs targeting both corporate customers and consumers, (iv) the
development of long-term relationships with sponsors, and (v) the use of media
to increase awareness of the Company's major racing events and the motorsports
industry.
LONG-TERM PERSPECTIVE OF MOTORSPORTS INDUSTRY. Members of the France family
have been involved in senior management positions with the Company since its
formation in 1953. In addition, the France family has been instrumental in the
development of the nation's motorsports industry through their organization and
control of NASCAR. See "NASCAR." The Company believes that senior management's
extensive network of contacts in the motorsports industry, as well as the
Company's reputation as a long-term steward for the sport, frequently enhance
the Company's ability to learn of and pursue new market and other growth
opportunities. The Company also believes that the France family's long-standing
involvement with the Company has provided a number of other significant
competitive advantages, including a reduced risk of disruption in the Company's
operating policies and long-range strategies, which in turn provides an
assurance of continuity to employees, sponsors, sanctioning bodies and other
entities that enter into commitments or relationships with the Company.
Moreover, the experience and expertise of the Company and its senior management
team extend beyond stock car racing to a wide variety of other motorsports
disciplines, including sports cars and motorcycles.
COMMITMENT TO CUSTOMER SATISFACTION. The Company believes that its growth has
to a significant degree resulted from its emphasis on enhancing race spectators'
total entertainment experience. The Company continually strives to increase the
comfort, view and amenities offered to race spectators,
25
<PAGE>
which management believes serves to maximize customer loyalty. To that end,
the Company has in recent years engaged in a series of capital improvements,
including the construction of additional permanent grandstand seating, new
luxury suites, innovative corporate entertainment facilities and a number of
improvements to food and beverage concession, restroom and other customer
convenience facilities. The Company's efforts to improve customer
satisfaction have also included the hiring of an event coordinator
responsible for upgrading the performance of the Company's temporary event
personnel, as well as the establishment of Americrown, the Company's
concessions and catering subsidiary.
EMPHASIS ON MARKETING. Management believes that it is important to market the
Company's scheduled racing events to both corporate customers and consumers. The
Company's marketing and promotional activities include the direct solicitation
of prospective event sponsors and other corporate sponsors by the Company's Vice
President-Marketing, other executive officers, members of the Company's
seven-person marketing staff and marketing personnel at each of the Company's
superspeedways. Sponsorship-related marketing opportunities for a typical race
event include luxury suite rentals, block ticket sales, Company-catered
hospitality, and souvenir race program and track signage advertising. The
Company also markets its events by offering tours of its facilities, advertising
on television and radio, conducting direct mail campaigns and staging a wide
variety of pre-race promotional activities. Moreover, the DAYTONA USA
entertainment complex and the Company's computer and video game, apparel and
other merchandise licenses are intended in part to increase the awareness and
popularity of motorsports with younger spectators and thereby ensure a
foundation for future growth.
DEVELOPMENT OF STRATEGIC ALLIANCES WITH SPONSORS. Management believes that
the promotional and advertising expenditures of major sponsors provide the
Company with a wide variety of indirect marketing and other benefits.
Accordingly, the Company devotes significant resources to developing long-term
relationships with leading consumer products and manufacturing companies.
Although the identities of sponsors and the terms of sponsorships change from
time to time, principal Company sponsors currently include Pepsi, Anheuser
Busch, Winston, Sears and Rolex. Some contracts allow the sponsor to name a
particular racing event, as in the "Diehard 500" and the "Pepsi 400." Other
consideration ranges from official car designation to advertising and
promotional rights in the sponsor's product category. Management believes that
the commitments of Ford, Dupont, Gatorade, Goodyear, STP, Pontiac, Chevrolet,
Circuit City and others as founding sponsors for the Company's DAYTONA USA
entertainment complex demonstrate the opportunities for strategic alliances
available to the Company in today's competitive marketing environment.
UTILIZATION OF MEDIA TO MAXIMIZE EXPOSURE. The Company negotiates directly
with network and cable television companies for live coverage on all of its
races except NASCAR's Craftsman Truck Series. All of the Company's Winston Cup
and Busch Grand National races are televised on CBS, ESPN, TBS and TNN, and
management intends to seek similar arrangements for other racing events when
opportunities arise. The Company also produces and syndicates its Winston Cup,
Busch Grand National and Craftsman Truck series races, as well as other races
promoted by the Company or third parties, over its proprietary Motor Racing
Network ("MRN"), which is currently carried by more than 400 radio stations. See
"--Operations--MRN Radio." Management also seeks to increase the visibility of
its racing events and facilities through local and regional media interaction.
26
<PAGE>
GROWTH STRATEGY
The Company intends to increase its revenues and profitability by
capitalizing on both its existing competitive strengths and the growth and
popularity of motorsports generally. Key components of this growth strategy are
as follows:
EXPAND EXISTING FACILITIES. Management believes that the spectator demand for
its largest events continues to exceed existing seating capacity. Accordingly,
the Company plans to continue its expansion by adding permanent grandstand
seating and luxury suites at each of its superspeedways. During fiscal 1997, the
Company expects to (i) complete its pending addition to Daytona International
Speedway's Winston Tower, which will add 15 new luxury suites seating
approximately 360 spectators and approximately 1,350 premium-level grandstand
seats, (ii) complete construction of approximately 12,500 additional grandstand
seats on Daytona International Speedway's backstretch, (iii) add 10 additional
suites and approximately 6,500 grandstand seats at Talladega Superspeedway, and
(iv) add approximately 7,900 grandstand seats at Darlington Raceway. In the long
term, the Company intends to continue to expand each of its superspeedways based
upon customer demand and available capital.
CAPITALIZE ON "DAYTONA" FRANCHISE. Management believes that the Daytona
International Speedway enjoys international brand name recognition as a result
of its association with the sport's history and development, the prestige and
caliber of the Daytona 500 and other racing events held at the track, as well as
the generally greater speeds resulting from its length and unique, high banked
tri-oval configuration, all of which provide a significant competitive
advantage. In addition, Daytona International Speedway's landmark position as
the "World Center of Racing" is supported by serving as venue for racing events
in a wide variety of motorsports races held on nine different weekends,
including (i) the supercross, vintage, road race and other motorcycle events
held in conjunction with Daytona's annual Camel Motorcycle Week, (ii) the IMSA
sports car endurance races hosted by the Company, including the Rolex 24 at
Daytona, and (iii) the season opener for the IROC series, in which a selected
field of 12 drivers from different motorsports disciplines compete in equally
prepared Pontiac Firebird Trans-Ams.
The Company has recently initiated a number of projects to capitalize on
Daytona's prestige and brand name recognition. In July 1996, the Company opened
DAYTONA USA--The Ultimate Motorsports Attraction. This entertainment complex
includes interactive media, theaters, historical memorabilia and exhibits. See
"--Operations--DAYTONA USA." Management believes that this complex will be able
to capitalize on the year-round tourism generated by Disney World and other
Central Florida attractions, thereby (i) increasing the usage of the Company's
Daytona facility, (ii) expanding the Company's concessions, track tour and
souvenir sales, and (iii) providing greater visibility for the Company's
business and motorsports generally, which in turn is expected to increase
spectator interest. Management also believes that the Company's relationships
with DAYTONA USA's founding sponsors will provide a springboard to expanded
strategic alliances in the future. Other examples of the Company's ability to
take advantage of its brand recognition include Sega Corp.'s popular DAYTONA USA
video arcade and CD ROM computer race games, which have generated both royalty
fees and increased consumer awareness of the Company's motorsports activities,
particularly among the youth market.
INCREASE TELEVISION REVENUES. Motorsports are experiencing significant growth
in television viewership. According to USA Today, the 1995 Winston Cup races
televised by CBS, ABC, ESPN, TBS, and TNN reflected ratings increases of 15%,
16%, 22%, 25% and 28%, respectively. Moreover, according to Nielsen, the
Company's Daytona 500 and Winston Select 500 racing events had the highest
Winston Cup network and cable television ratings, respectively, in 1995 with the
Daytona 500 reaching almost 7.5 million households. This significant growth in
viewership, together with unique market conditions that favor prestigious
"content" providers, is expected to result in higher broadcast rights fees from
television networks in the near future. The Company has an agreement in
principle with CBS with
27
<PAGE>
respect to the television broadcast rights for the 1997 Diehard 500, as well
as the Busch Clash of '97, Gatorade 125's, Daytona 500 and Busch Grand National
race to be held in the 1997 Speedweeks. In addition, the Company has an
agreement with ESPN to televise each of the Company's other 1997 Winston Cup
events, as well as the February 1997 Speedweeks events not being televised by
CBS, including the season openers for the NASCAR Goody's Dash and ARCA
Bondo/Mar-Hyde Supercar series. Moreover, in order to take further advantage of
the heightened media interest in stock car racing and the Company's premier
events, the Company is currently engaged in negotiations that are expected to
lead to multi-year arrangements for the Company's Winston Cup, Busch Grand
National and a number of other racing events.
ACQUIRE OR DEVELOP ADDITIONAL MOTORSPORTS FACILITIES. The Company also
intends to pursue growth through the acquisition and/or development of
motorsports facilities as appropriate opportunities arise. Management believes
that the Company's November 1995 investment in Penske Motorsports exemplifies
the Company's commitment to increasing its motorsports presence. In addition,
the Company recently engaged an independent sports facility consultant to assist
the Company with feasibility analyses and management's contemplated exploration
of public/ private partnerships, all of which activities are intended to lead to
the development of one or more motorsports facilities in new markets. Moreover,
senior management personnel regularly review acquisition prospects that would
augment or complement the Company's existing operations or otherwise offer
significant growth opportunities. However, there can be no assurance that
suitable candidates will be available or, because of competition from other
potential purchasers or other business reasons, that the Company will be able to
consummate acquisitions of additional motorsports facilities on satisfactory
terms. At the present time, the Company does not have any arrangement or
understanding with respect to any acquisition transactions.
EXPAND USE OF EXISTING RESOURCES AND FACILITIES. The Company believes that it
will be able to expand the use of its facilities and resources by providing
outsourcing services to other promoters of large sports and entertainment
events. For example, the Company has been able to capitalize on Americrown's
large fleet of mobile food service equipment by providing concessions and
catering for a number of unaffiliated, outdoor sporting events in the
southeastern United States, including several LPGA golf tournaments and the Indy
200 held at Disney World. Management intends to take similar advantage of its
extensive network of event personnel, including supervisory, security, gate
admission and other employees, by offering turnkey temporary employee services
to third party promoters. In addition, the Company will continue to seek
revenue-producing uses for the Company's track facilities on days not committed
to racing events. Such other uses may include car shows, auto fairs, driving
schools, vehicle testing and settings for television commercials, print
advertisements and motion pictures.
28
<PAGE>
OPERATIONS
The Company's operations consist principally of racing events at its four
tracks. The Company also owns a 50% interest in Watkins Glen and a 12% interest
in Penske Motorsports. In addition, the Company owns and operates the DAYTONA
USA entertainment complex, provides catering and concession services to third
parties and operates the MRN Radio network.
RACING EVENTS
The 1996 race schedule for the Company and Watkins Glen, its 50%-owned
subsidiary, includes eight Winston Cup races (including the Busch Clash of '96
all star event), five Busch Grand National races and various other NASCAR races
and events. In addition, the Company promotes a number of other stock car,
sports car, motorcycle and go-kart racing events, including events sanctioned by
IMSA, ARCA, USAC, SCCA, AMA, WKA, the Championship Cup Series ("CCS"), the
American Historic Racing Motorcycle Association ("AHRMA") and the Sportscar
Vintage Racing Association ("SVRA"). The 1996 racing schedule for events
promoted by the Company and Watkins Glen is as follows:
<TABLE>
<CAPTION>
SANCTIONING
DATE EVENT BODY TRACK
---------- ---------------------------- ----------- ---------
<S> <C> <C> <C>
February 2 90-Minute Endurance IMSA Daytona
Championship
February 3-4 Rolex 24 at Daytona IMSA Daytona
February 10 Busch Pole Day (Daytona 500) NASCAR Daytona
February 11 Busch Clash of '96 NASCAR Daytona
Daytona ARCA 200 ARCA Daytona
February 15 Gatorade 125's NASCAR Daytona
February 16 Daytona USA 200 NASCAR Daytona
True Value Firebird IROC XX NASCAR Daytona
February 17 Goody's Headache Powder 300 NASCAR Daytona
February 18 Daytona 500 NASCAR Daytona
March 1-3 CCS/NASB Weekend CCS Daytona
March 4-5 Classics Days AHRMA Daytona
March 8 750 Supersport Final AMA Daytona
BMW Battle of the Legends AHRMA
International Lightweight 100K AMA
March 9 Daytona Supercross by Honda AMA Daytona
March 10 600 Supersport International AMA Daytona
Challenge 100K
Harley-Davidson Supertwin Final AMA
Daytona 200 By Arai AMA
March 22 Busch Pole Day (TranSouth 400) NASCAR Darlington
March 23 Dura-Lube 200 NASCAR Darlington
March 24 TranSouth Financial 400 NASCAR Darlington
April 6 Opening Night NASCAR Tucson
April 13 NASCAR Super Late Models NASCAR Tucson
April 20 NASCAR Super Late Models NASCAR Tucson
April 26 Toro Pole Day (Winston Select 500) NASCAR Talladega
April 27 NASCAR Super Late Models NASCAR Tucson
Mountain Dew 500k ARCA Talladega
True Value Firebird IROC XX NASCAR Talladega
April 28 Winston Select 500 NASCAR Talladega
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
SANCTIONING
DATE EVENT BODY TRACK
---------- ---------------------------- ----------- ---------
<S> <C> <C> <C>
May 4 NASCAR Super Late Models NASCAR Tucson
SCCA National/Regional SCCA Daytona
May 5 SCCA National/Regional SCCA Daytona
May 11 NASCAR Super Late Models NASCAR Tucson
May 18 NASCAR Super Late Models NASCAR Tucson
May 24-26 SCCA Glen Regional SCCA Watkins Glen
May 25 NAPA 200 NASCAR Tucson
June 1 NASCAR Super Late Models NASCAR Tucson
June 8 NASCAR Super Late Models NASCAR Tucson
3-Hour Endurance Championship IMSA Watkins Glen
June 9 Auto Palace Challenge at the Glen IMSA Watkins Glen
First Union of the Glen IMSA Watkins Glen
Presented by Acxiom
June 15 Valvoline 200 NASCAR Tucson
June 22 NASCAR Super Late Models NASCAR Tucson
June 28-30 Formula Ford 2000 SCCA/USAC Watkins Glen
Barber-Dodge SCCA
Lysol 200 NASCAR
June 29 4th of July Fireworks NASCAR Tucson
July 4 Busch Pole Day (Pepsi 400) NASCAR Daytona
July 6 Pepsi 400 NASCAR Daytona
NASCAR Limited NASCAR Tucson
Late Models
July 13 Larry Branden Memorial NASCAR Tucson
July 13-14 Glen U.S. Nationals SCCA Watkins Glen
July 20 NASCAR Super Late Models NASCAR Tucson
July 26 Dixie Cups & Plates Pole Day NASCAR Talladega
(DieHard 500)
July 27 Humminbird Fishfinder 500k NASCAR Talladega
NASCAR Super Late Models NASCAR Tucson
July 28 DieHard 500 NASCAR Talladega
August 3 NASCAR Super Late Models NASCAR Tucson
August 9 RCA Qualifying Day NASCAR Watkins Glen
(Bud at the Glen)
August 10 Winston 100 NASCAR Tucson
Serengeti Eyewear Trans-Am SCCA Watkins Glen
Burnham Boilers 150 NASCAR Watkins Glen
August 11 Bud at the Glen NASCAR Watkins Glen
August 17 SCCA Regional SCCA Daytona
NASCAR Super Late Models NASCAR Tucson
August 18 SCCA Regional SCCA Daytona
August 23-25 SCCA World Challenge SCCA Watkins Glen
Watkins Glen 100 NASCAR Watkins Glen
Parts America 150 NASCAR Watkins Glen
August 24 Troy Rouse Memorial NASCAR Tucson
August 30 Busch Pole Day (Mountain Dew NASCAR Darlington
Southern 500)
August 31 Dura-Lube 200 Presented by NASCAR Darlington
AutoZone
NASCAR Super Late Models NASCAR Tucson
September 1 Mountain Dew Southern 500 NASCAR Darlington
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
SANCTIONING
DATE EVENT BODY TRACK
---------- ---------------------------- ----------- ---------
<S> <C> <C> <C>
September 6-8 Zippo U.S. Vintage Grand Prix SVRA Watkins Glen
September 7 NASCAR Super Late Models NASCAR Tucson
September 14 NASCAR Super Late Models NASCAR Tucson
September 21 Tucson 125 NASCAR Tucson
September 28 NASCAR Super Late Models NASCAR Tucson
October 5 3-Hour Endurance Championship IMSA Daytona
Bud Shootout NASCAR Tucson
October 6 3-Hour IMSA Finale at Daytona IMSA Daytona
October 17-20 Fall Cycle Scene CCS Daytona
December 26-30 WKA Enduro World Championship WKA Daytona
</TABLE>
PENSKE MOTORSPORTS
The Company indirectly holds an approximately 12% equity interest in Penske
Motorsports, Inc., a publicly traded promoter and marketer of motorsports
events. Penske Motorsports owns and operates Michigan International Speedway in
Brooklyn, Michigan and Nazareth Speedway in Nazareth, Pennsylvania. Penske
Motorsports is also constructing The California Speedway near Los Angeles,
California, which is expected to be completed in the 1997 racing season. Major
racing events promoted by Penske Motorsports in 1996 include two Winston Cup
races, two Busch Grand National races, two Indy car races sanctioned by CART,
two ARCA races, one Craftsman Truck race and one IROC race. Although two of the
Company's directors also serve on the board of directors of Penske Motorsports,
the Company does not control Penske Motorsports. The Company's ownership
interest in Penske Motorsports derives from its 20% interest in PSH Corp., the
record holder of approximately 60% of the outstanding common stock of Penske
Motorsports and an 80%-owned subsidiary of the privately held Penske
Corporation. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and Note 6 of Notes to the Company's Condensed
Consolidated Financial Statements (unaudited) for additional information with
respect to this equity investment.
DAYTONA USA
On July 5, 1996, the Company opened DAYTONA USA--The Ultimate Motorsports
Attraction. This motorsports-themed entertainment complex is located in an
approximately 50,000-square foot facility adjacent to the existing "World Center
of Racing" Visitors Center at Daytona International Speedway. DAYTONA USA
includes (i) a walk-through replica of Daytona International Speedway's famed
twin tunnels, (ii) the Goodyear Heritage of Daytona historical exhibits and
memorabilia, including Malcom Campbell's original Bluebird V (the car which set
the world land speed record on the hard-packed sand of Daytona Beach in 1935), a
replica of the Daytona Beach gas station which "Big Bill" France once owned, and
a display featuring the Daytona Speedway's role in the 1989 filming of "Days of
Thunder" with Tom Cruise, (iii) the Goodyear Great Moments Theater, which
includes a CBS television presentation of highlights from past Daytona 500
races, (iv) a Heroes of the Track video presentation that features the biggest
names in racing, including Richard Petty, Dale Earnhardt, Bill Elliott, Rusty
Wallace and Darrell Waltrip, (v) interactive displays such as the General Motors
Trilon Trivia Tower computer trivia game and "You Broadcast the Race," where
visitors can obtain tapes of their own broadcasting of an exciting race finish,
(vi) Dupont's Technology of Speed, featuring a race car that comes apart
vertically, revealing first the fiberglass skin, then the steel frame and
finally the chassis and motor, (vii) Ford's 16-Second Pit Stop Challenge, in
which audience members participate in a simulated pit stop that tests how fast
they can change tires, pump gas and clean windshields on a real race car, and
(viii) Pepsi Theatre's "The Daytona 500," a film that utilizes a screen 55 feet
wide and 26 feet tall and unique video and sound technologies designed to
provide viewers with a virtual racing experience.
Adjoining DAYTONA USA are (i) Sega Speedway, a high tech arcade using state
of the art video technology and computerized, "virtual" racing simulators, (ii)
Pit Shop, which sells DAYTONA USA,
31
<PAGE>
Daytona International Speedway, NASCAR and race team clothing, books,
collectibles and souvenirs, (iii) the Fourth Turn Grill concessions facility,
and (iv) Western Auto's Speedway Tours, a tram tour of the Speedway's garage
area, pit road and high banked track. Management believes that DAYTONA USA
and these adjoining attractions appeal to individual tourists, tour groups,
conventions and the Company's corporate sponsors.
AMERICROWN
The Company's Americrown subsidiary has conducted the food, beverage and
souvenir concession operations at Daytona International Speedway and Talladega
Superspeedway since September 1992 and at Darlington Raceway since 1989.
Americrown is also responsible for providing catering services to corporate
customers both in suites and entertainment chalets at the Company's
superspeedway facilities. Americrown was initially formed to conduct concessions
operations as part of the Company's ongoing efforts to enhance race spectators'
total entertainment experience. See "--Operating Strategy-- Commitment to
Enhancement of Customer Satisfaction." Beginning in 1995, the Company expanded
Americrown's operations to include food, beverage and other services at
unaffiliated sporting events and thereby capitalize on Americrown's expertise
and mobile concessions equipment. Americrown has provided catering and
concession services for the Indy 200 held at Disney World, catering and
concessions for LPGA golf tournaments held in Atlanta and Daytona Beach, and
catering for events held at the Metro-Dade Homestead Motorsports Facility south
of Miami. Americrown accounted for approximately 15.6% and 16.1% of the
Company's total revenues during fiscal 1995 and the nine months ended May 31,
1996, respectively.
MRN RADIO
The Company's proprietary MRN radio network produces and syndicates Winston
Cup, Busch Grand National and other races promoted by the Company and others.
These programs are currently carried by over 400 radio stations. MRN Radio also
produces daily and weekly NASCAR racing programs, as well as Ned Jarrett's
"World of Racing" program. The Company derives revenue from the sale of
commercial air time on MRN and rights fees paid by affiliates. In addition,
management believes that MRN enhances the Company through increased media
exposure to an expanding radio audience.
OTHER ACTIVITIES
The Company from time to time uses its track facilities for car shows, auto
fairs, vehicle testing and settings for television commercials, print
advertisements and motion pictures. For example, Harley Davidson uses Talladega
Superspeedway as a test facility for its motorcycles. See "-Growth
Strategy--Expand Use of Existing Facilities and Resources." The Company also
operates Talladega Municipal Airport, which is located adjacent to the Talladega
Superspeedway.
MOTORSPORTS FACILITIES
The following table sets forth the track name, location, approximate acreage
and approximate track length of each of the Company's speedway facilities. The
Company's superspeedways host three of the four events included in NASCAR's
"Winston Select Million," a special promotion began in 1985 that pays $1,000,000
to any driver that wins three of the four specified races. The three events
hosted by the Company are (i) the Daytona 500 at Daytona International Speedway,
the most prestigious stock car racing facility, (ii) the Winston Select 500 at
Talladega Superspeedway, the fastest stock car track, and (iii) the Mountain Dew
Southern 500 at Darlington Raceway, the first stock car superspeedway.
<TABLE>
<CAPTION>
APPROXIMATE APPROXIMATE
TRACK NAME LOCATION ACREAGE TRACK LENGTH
- -------------------------------- --------------------------- -------------- ---------------
<S> <C> <C> <C>
Daytona International Speedway Daytona Beach, Florida 440 2.5 miles
Talladega Superspeedway ........ Talladega, Alabama 1,365 2.6 miles
Darlington Raceway ............. Darlington, South Carolina 230 1.3 miles
Tucson Raceway Park ............ Tucson, Arizona 58 .4 miles
Watkins Glen International* ... Watkins Glen, New York 1,100 3.4 miles
<FN>
- --------
* Operated by the Company's 50%-owned subsidiary.
</FN>
</TABLE>
32
<PAGE>
DAYTONA INTERNATIONAL SPEEDWAY. Daytona International Speedway, together with
the Company's current executive offices, are located on approximately 440 acres
of leased land in Daytona Beach, Florida. The Company's lease with the Daytona
Beach Racing and Recreational Authority expires in 2032, including renewal
options. The Company also owns approximately 15 acres of property adjacent to
the Daytona International Speedway. The Daytona International Speedway is a high
banked, asphalt superspeedway which also includes a 3.6 mile road course.
Management believes that this superspeedway, completed in 1959, includes a
number of unique features that provide a significant competitive advantage,
including (i) a tri-oval design which provides optimum viewing for race fans,
(ii) a twin tunnel underground entry system which offers easy access before and
during events, and (iii) 31-degree banking which, when combined with the track's
2.5 mile length, permits exceptionally high lap speeds.
At August 31, 1996, Daytona International Speedway had 109,688 grandstand
seats, 23 suites (including air conditioned luxury sky boxes and Winston Tower
suites that include access to hospitality areas) that include a total of 1,961
additional seats, and 30 "Paddock Club" suites that provide seating for 1,500 in
Daytona's infield. During major events, the Company also uses a chalet village
containing up to 73 hospitality tents that seat up to 9,600. As part of its
ongoing expansion and improvement efforts, in July 1995 the Company began
construction on an addition to its Winston Tower that will add 15 suites seating
approximately 360 spectators, approximately 1,350 premium-level grandstand seats
and catering and concession facilities. This project is expected to be completed
by February 1997. In addition, the Company is currently engaged in constructing
approximately 12,500 additional grandstand seats on Daytona's existing
"backstretch," adding a sports club, expanding Daytona International's
hospitality facilities and improving the track's "victory lane," pit and
recreational vehicle areas.
TALLADEGA SUPERSPEEDWAY. Talladega Superspeedway, which holds the record for
the fastest lap speed attained in stock car racing, is a high banked, tri-oval
track with an infield road course. The facility is located about 1 1/2 hours
from Atlanta, Georgia and 45 minutes from Birmingham, Alabama. The track and
related parking areas are located on approximately 1,365 acres owned by the
Company, most of which is reserved for agricultural uses. The Company also owns
an additional 115 acres of undeveloped property located immediately north of the
entrance to the Talladega track. At August 31, 1996, the facility included
94,056 grandstand seats, 12 luxury suites containing an additional 960 seats, a
Paddock Club Suite for up to 240 spectators, and 65 hospitality chalets
providing seating for approximately 8,600. The facility also includes a 400-acre
campground facility, the International Motorsports Hall of Fame, hospitality and
souvenir villages, as well as ticket and administrative offices. Pending capital
improvement projects at the Talladega Superspeedway include the construction of
10 suites, approximately 6,500 additional grandstand seats and certain other
infrastructure improvements.
33
<PAGE>
DARLINGTON RACEWAY. Darlington Raceway, the first superspeedway to host a
NASCAR-sanctioned race, is a high banked track located on approximately 230
acres owned by the Company. The Darlington facility includes the 1.3 mile track
commonly known as "too tough to tame/registered trademark/," grandstands that
seat 42,038 spectators, four luxury suites containing an additional 515 seats
and 18 hospitality chalets providing seating for 3,800. Pending capital projects
include the construction of approximately 7,900 additional grandstand seats and
the reconfiguration of the track, to "flip" the existing start/finish line and
backstretch.
TUCSON RACEWAY PARK. Tucson Raceway Park includes a progressively banked, 3/8
mile paved oval track, grandstands providing seating for approximately 5,400
spectators, a luxury suite and other spectator facilities located on part of the
Pima County Fairgrounds. The Company's sublease with the fairground manager
expires in 2013, including renewals. The Company has no current plans to expand
this facility.
WATKINS GLEN INTERNATIONAL. Watkins Glen International is a 3.4 mile road
course track located on approximately 1,100 acres owned by Watkins Glen, which
is 50%-owned by the Company. The grandstands at Watkins Glen International seat
33,221 spectators.
OTHER FACILITIES. In addition to its motorsports facilities, the Company (i)
owns concession facilities in Daytona Beach and in Talladega, (ii) leases real
estate and office space in Talladega, and (iii) leases the property and premises
at the Talladega Municipal Airport. The lease for the Company's Talladega
business offices, located within the International Motorsports Hall of Fame,
expires in 1997, including renewals. The Company's lease for the Talladega
Municipal Airport expires in 2022, including renewals.
The Company also owns a 67,000 square foot building located on approximately
nine acres across International Speedway Boulevard from Daytona International
Speedway. The Company is currently renovating this building, which will serve as
its new corporate headquarters upon its expected Spring 1997 completion. At that
time, the Company intends to consolidate the operating personnel of Daytona
International Speedway, DAYTONA USA, MRN Radio and the Company's publications
division in its existing headquarters building.
COMPETITION
Racing events compete not only with other sports and other recreational
events scheduled at the same dates, but with other racing events sanctioned by
various racing bodies such as NASCAR, CART, USAC, SCCA, IMSA, ARCA and others.
Racing events sanctioned by different organizations are often held on the same
dates at separate tracks. Management believes that the type and caliber of
promoted racing events, facility location, sight lines, pricing and level of
customer conveniences are the principal factors that distinguish competing
motorsports facilities. See "Risk Factors--Competition."
EMPLOYEES
As of August 31, 1996, the Company had approximately 325 full-time employees.
The Company also engages a significant number of temporary personnel to assist
during periods of peak attendance at its events. For example, the Daytona
International Speedway engages approximately 1,500 persons during Speedweeks,
some of whom are volunteers. None of the Company's employees are represented by
a labor union. Management believes that the Company enjoys a good relationship
with its employees.
LEGAL PROCEEDINGS
The Company is from time to time a party to routine litigation incidental to
its business. Management does not believe that the resolution of any or all of
such litigation is likely to have a material adverse effect on the Company's
financial condition or results of operations.
34
<PAGE>
ENVIRONMENTAL MATTERS
The Company believes that the facilities operated by it and its subsidiaries
are in material compliance with applicable environmental statutes and
regulations. Nevertheless, if damage to persons or property or contamination of
the environment is determined to have been caused or exacerbated by the conduct
of the Company's business or by pollutants, substances, contaminants or wastes
used, generated or disposed of by the Company, or which may be found on the
property of the Company, the Company may be held liable for such damage and may
be required to pay the cost of investigation and/or remediation of such
contamination or any related damage. The amount of such liability as to which
the Company is self-insured could be material. Changes in federal, state or
local laws, regulations or requirements or the discovery of theretofore unknown
conditions, could also require material expenditures by the Company.
TRADEMARKS AND COPYRIGHTS
The Company has various registered and common law trademark rights to
"DAYTONA USA," the "Daytona 500," "Daytona International Speedway," "Talladega
Superspeedway," "Darlington," "World Center of Racing" and related logos. The
Company also has licenses from NASCAR, various drivers and other businesses to
use names and logos for merchandising programs and product sales. Management's
policy is to protect its intellectual property rights vigorously, through
litigation if necessary, chiefly because of their proprietary value in
merchandise and promotional sales.
35
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
William C. France 63 Chairman of the Board, Chief Executive Officer and Director
James C. France 51 President, Chief Operating Officer and Director
Lesa D. Kennedy 35 Executive Vice President and Director
H. Lee Combs 43 Senior Vice President--Operations and Director
James H. Foster 69 Senior Vice President--Special Projects and Director
Robert E. Smith 64 Vice President--Administration and Director
Susan G. Schandel 32 Treasurer and Chief Financial Officer
Gregory J. Sullivan 41 Vice President-Marketing
John E. Graham, Jr. 48 Vice President
W. Grant Lynch, Jr. 42 Vice President
James H. Hunter 56 Vice President
J. Hyatt Brown 59 Director
John R. Cooper 64 Director
Robert W. Emerick 78 Director
Brian Z. France 32 Director
Christy F. Harris 50 Director
Raymond K. Mason, Jr. 41 Director
Lloyd E. Reuss 59 Director
Chapman Root, II 45 Director
Thomas W. Staed 64 Director
</TABLE>
The Company's Articles provide that the Board of Directors be divided into
three classes, with regular three year staggered terms. Ms. Kennedy and Messrs.
Smith, Brown, Emerick and Staed will hold office until the annual meeting of
shareholders to be held in 1997, Messrs. William C. France, Combs, Foster,
Harris and Root will hold office until the annual meeting of shareholders to be
held in 1998, and Messrs. James C. France, Cooper, Brian Z. France, Mason and
Reuss will hold office until the annual meeting of shareholders to be held in
1999.
William C. France and James C. France are brothers. Lesa D. Kennedy and Brian
Z. France are the children of William C. France. There are no other family
relationships among the Company's executive officers and directors.
Mr. William C. France, a director since 1958, has served as Chairman of the
Board of the Company since 1987 and as Chief Executive Officer since 1981. From
1981 to 1987, Mr. France served as the Company's President. Mr. France also
serves as a director of Penske Motorsports and Outboard Marine Corporation.
Mr. James C. France, a director since 1970, has served as President and Chief
Operating Officer of the Company since 1987.
Ms. Lesa D. Kennedy, a director since 1984, was appointed an Executive Vice
President of the Company in January 1996. Ms. Kennedy served as the Company's
Secretary from 1987 until January 1996 and served as its Treasurer from 1989
until January 1996.
Mr. H. Lee Combs, a director since 1987, was appointed the Company's Senior
Vice President-Operations in January 1996. Mr. Combs served as a Vice President
and the Company's Chief Financial Officer from 1987 until such time. He also
serves as a director of Penske Motorsports.
Mr. James H. Foster, a director since 1968, was appointed the Company's
Senior Vice President -Special Projects in January 1996 upon his retirement as a
full-time employee. Mr. Foster served as
36
<PAGE>
Executive Vice President--Corporate Communications of the Company from 1987
until January 1996 and as President of Daytona International Speedway from
July 1990 until September 1994. From 1970 to 1987, Mr. Foster served as the
Company's Vice President in Charge of Corporate Communications.
Mr. Robert E. Smith, a director since January 1996, has served as Vice
President--Corporate Administration of the Company for more than five years.
Ms. Susan G. Schandel was appointed the Company's Treasurer and Chief
Financial Officer in January 1996. From November 1992 until such time, Ms.
Schandel served as the Company's Controller. From 1988 until 1992, Ms. Schandel
was employed by Ernst & Young LLP, where she most recently served as an audit
manager.
Mr. Gregory G. Sullivan, appointed the Company's Vice-President-Marketing in
November 1994, joined the Company in September 1994. Prior to joining the
Company, Mr. Sullivan was employed by Kraft Foods (a division of Phillip Morris)
for more than five years, where he most recently served as Director of Marketing
Services for Kraft's Maxwell House division.
Mr. John E. Graham, Jr., appointed as a Vice President in November 1994,
joined the Company as President of Daytona International Speedway in September
1994. Prior to joining the Company, Mr. Graham was employed by First Union
National Bank of Florida for more than five years, where he most recently served
as President of First Union National Bank of Volusia and Flagler Counties.
Mr. W. Grant Lynch, Jr. has served as a Vice President and as President of
Talladega Superspeedway since joining the Company in November 1993. Prior to
such time, Mr. Lynch was employed by R.J. Reynolds Tobacco Company, Sports
Marketing Division, where from 1989 until 1993 he served as Senior Operations
and Public Relations Manager for the Winston Cup Racing Program.
Mr. James H. Hunter has served as a Vice President and as President of
Darlington Raceway since joining the Company in November 1993. Prior to joining
the Company, Mr. Hunter served as NASCAR's Vice President of Administration and
Marketing for more than five years.
Mr. J. Hyatt Brown, a director since 1987, serves as the President and Chief
Executive Officer of Poe & Brown, Inc. and has been in the insurance business
with Brown & Brown, Inc., its predecessor, since 1959. Mr. Brown also serves as
a director of Rock Tenn Co, Suntrust Banks, Inc., BellSouth Corporation, and FPL
Group, Inc.
Mr. John R. Cooper, a director since 1987, served as Vice
President--Corporate Development of the Company from December 1987 until July
1994. Since January 1996, Mr. Cooper has served as a special project facilitator
for the Company.
Mr. Robert W. Emerick, a director since 1975, served as General Motors
Corporation's Director of Public Relations, Pontiac Motor Division, prior to his
retirement in 1974.
Mr. Brian Z. France, a director since 1994, has served as NASCAR's Vice
President of Marketing and Corporate Communications since December 1992 and as
the Company's Manager--Group Projects--since February 1994. From 1983 until such
time, Mr. France served in a number of other capacities with NASCAR, including
Winston Racing Series Administrative Assistant and National Tour Director. From
1989 to 1991, Mr. France also served as General Manager of Tucson Raceway Park.
Mr. Christy F. Harris, a director since 1984, has been engaged in the private
practice of business and commercial law with Harris, Midyette & Geary, P.A. for
more than twenty years.
Mr. Raymond K. Mason, Jr., a director since 1981, has served as President of
American Banks of Florida, Inc., Jacksonville, Florida, since 1979.
Mr. Lloyd E. Reuss, a director since January 1996, served as President of
General Motors Corporation from 1990 until his retirement in January 1993. Mr.
Reuss also serves as a director of Handleman Co., Detroit Mortgage and Realty,
Co. and United States Sugar Company.
37
<PAGE>
Mr. Chapman Root, II, a director since 1992, has served as President of the
Root Company, a private investment company, since 1989. Mr. Root also serves as
a director of First Financial Corp. and Terre Haute First National Bank.
Mr. Thomas W. Staed, a director since 1987, has served as President of Oceans
Eleven Resorts, Inc., a hotel/motel business, for more than five years.
DIRECTOR COMPENSATION
The Company pays each non-employee director a monthly retainer of $500, a
$1,000 fee for each meeting of the Board of Directors attended and a $500 fee
for each Board committee meeting attended. The Company also reimburses directors
for all expenses incurred in connection with their activities as directors.
EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid by the Company,
for services rendered during the last three fiscal years, to the Company's Chief
Executive Officer and the Company's other four most highly compensated executive
officers during fiscal 1996 (collectively the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- ----------------
NAME AND FISCAL RESTRICTED ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS STOCK AWARDS(1) COMPENSATION(2)
- ------------------------- --------- ----------- ----------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
William C. France 1996 $278,700 (3) $ 0 $
Chairman and Chief 1995 $241,981 $126,860 $ 0 $ 6,015
Executive Officer 1994 $205,947 $ 86,800 $ 0 $ 3,511
James C. France 1996 $224,778 (3) $ 0 $
President and Chief 1995 $200,121 $ 83,140 $ 0 $12,406
Operating Officer 1994 $173,845 $ 58,640 $ 0 $13,009
John E. Graham 1996 $190,922 (3) $293,750 $
Vice President 1995 $180,462 $110,228 $ 0 $ 1,607
1994 $ 0 $ 0 $ 0 $ 0
Lesa D. Kennedy 1996 $173,553 (3) $149,695 $
Executive Vice President 1995 $109,608 $ 32,573 $ 53,168 $ 8,482
1994 $ 92,976 $ 24,486 $ 98,746 $ 6,618
H. Lee Combs 1996 $172,226 (3) $172,020 $
Senior Vice President-- 1995 $116,972 $ 35,218 $ 60,986 $ 9,581
Operations 1994 $103,066 $ 27,634 $113,490 $11,111
</TABLE>
- ----------
(1) Reflects the aggregate market value of shares awarded under the Company's
1994 Long Term Incentive Plan (calculated by multiplying the average of the
bid and asked prices for the Company's existing common stock by the number
of shares awarded). The indicated awards were made in January with respect
to services rendered in the prior fiscal year. See Note 9 of Notes to the
Company's Consolidated Financial Statements.
(2) The compensation reported in this column consists of (i) payments for
insurance, including life insurance, accidental death and dismemberment
insurance and group health insurance expense, (ii) medical expense
reimbursements, and (iii) contributions to the Company's 401(k) plan. The
amounts applicable to each Named Officer for each category for fiscal
1996 are as follows: William C. France ($ , $ and $ ,
respectively); James C. France ($ , $ and $ , respectively);
John E. Graham ($ , $ and $ , respectively); Lesa D. Kennedy
($ , $ and $ , respectively); and H. Lee Combs ($ ,
$ and $ , respectively).
(3) Bonuses for services rendered in fiscal 1996 have not been determined as
of the date of this Prospectus.
38
<PAGE>
1996 LONG-TERM INCENTIVE PLAN
The Company's 1996 Long-Term Incentive Plan (the "1996 Plan") was adopted by
the Board of Directors in September 1996. The purpose of the 1996 Plan is to
attract and retain key employees and consultants of the Company, to provide an
incentive for them to achieve long-range performance goals, and to enable them
to participate in the long-term growth of the Company.
The 1996 Plan authorizes the grant of stock options (incentive and
nonstatutory), stock appreciation rights ("SARs") and restricted stock to
employees and consultants of the Company capable of contributing to the
Company's performance. The Company has reserved an aggregate of 1,000,000 shares
(subject to adjustment for stock splits and similar capital changes) of Class A
Common Stock for grants under the 1996 Plan. Incentive Stock Options may be
granted only to employees eligible to receive them under the Internal Revenue
Code of 1996, as amended.
The Board of Directors has appointed the Compensation Committee (the
"Committee") to administer the 1996 Plan. Awards under the 1996 Plan will
contain such terms and conditions not inconsistent with the 1996 Plan as the
Committee in its discretion approves. The Committee has discretion to administer
the 1996 Plan in the manner which it determines, from time to time, is in the
best interest of the Company. For example, the Committee will fix the terms of
stock options, SARs and restricted stock grants and determine whether, in the
case of options and SARs, they may be exercised immediately or at a later date
or dates. Awards may also be granted subject to conditions relating to continued
employment and restrictions on transfer. In addition, the Committee may provide,
at the time an award is made or at any time thereafter, for the acceleration of
a participant's rights or cash settlement upon a change in control of the
Company. The terms and conditions of awards need not be the same for each
participant. The foregoing examples illustrate, but do not limit, the manner in
which the Committee may exercise its authority in administering the 1996 Plan.
In addition, all questions of interpretation of the 1996 Plan will be determined
by the Committee.
39
<PAGE>
CERTAIN TRANSACTIONS
NASCAR, which sanctions most of the Company's major racing events, is
controlled by William C. France and James C. France. See "NASCAR," "Management"
and "Principal Shareholders." Standard NASCAR sanction agreements require
racetrack operators to pay various monies to NASCAR for each sanction event
conducted. Included are sanction fees and prize and point fund monies. The prize
and point fund monies are distributed by NASCAR to participants in the events.
The aggregate NASCAR sanction fees and prize and point fund monies paid by the
Company with respect to fiscal 1994, fiscal 1995 and fiscal 1996 were $9.4
million, $11.8 million and $13.8 million, respectively.
In addition, NASCAR and the Company share a variety of expenses in the
ordinary course of business. NASCAR pays rent to the Company for office space
based upon estimated fair market lease rates for comparable facilities.
NASCAR also reimburses the Company for 50% of the compensation paid to
personnel working in the Company's legal and risk management departments, as
well as 50% of the compensation expense associated with receptionists and the
Company's archive departments. The Company's payments to NASCAR for MRN
Radio's broadcast rights to Craftsman Truck Series races represents an
agreed-upon percentage of the Company's advertising revenues attributable to
such race broadcasts. NASCAR's reimbursement for use of the Company's mail
room, graphics and publications departments, and the Company's reimbursement
of NASCAR for use of corporate aircraft, is based on actual usage. The
aggregate amount paid by the Company to NASCAR for shared expenses, net of
the amounts received from NASCAR for shared expenses, totalled $203,000,
$204,000 and $ during fiscal 1994, 1995 and fiscal 1996, respectively.
The Company strives to ensure, and management believes that, the terms of the
Company's transactions with NASCAR are no less favorable to the Company than
could be obtained in arms'-length negotiations.
J. Hyatt Brown, a director of the Company, serves as President and Chief
Executive Officer of Poe & Brown, Inc. ("Poe"). Poe has received commissions
for serving as the Company's insurance broker for several of the Company's
insurance policies, including its property and casualty policy, certain
employee benefit programs and the split-dollar arrangements established for
the benefit of William C. France, James C. France and their respective
spouses. The aggregate commissions received by Poe in connection with Company
policies were approximately $ , $ and $294,240 during fiscal 1994,
fiscal 1995 and fiscal 1996, respectively.
40
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth information with respect to the beneficial
ownership of the Company's outstanding Class B Common Stock by (i) each person
known by the Company to be the beneficial owner of more than 5% of the Class B
Common Stock, (ii) each director or Named Officer of the Company who
beneficially owns any Class B Common Stock, and (iii) all directors and
executive officers of the Company as a group. As described in the notes to the
table, voting and/or investment power with respect to certain shares of Common
Stock is shared by the named individuals. Consequently, such shares may be shown
as beneficially owned by more than one person.
<TABLE>
<CAPTION>
CLASS B COMMON STOCK
BENEFICIALLY OWNED (2)(3)
----------------------------------------------------
PERCENTAGE OF
TOTAL COMMON STOCK
---------------------------------
COMBINED VOTING POWER
OF COMMON STOCK
NAME OF BENEFICIAL OWNER(1) NUMBER OF SHARES BEFORE OFFERING AFTER OFFERING AFTER THE OFFERING
- ---------------------------- ----------------- ---------------- --------------- ----------------------
<S> <C> <C> <C> <C>
France Family Group(4) .... 21,131,685 61.4% 55.0% 60.0%
James C. France(5) ......... 14,836,275 43.1 38.6 42.1
William C. France(6) ....... 14,541,915 42.3 37.8 41.3
Lesa D. Kennedy(7) ......... 364,965 1.1 * 1.0
Raymond K. Mason, Jr.(8) .. 346,740 1.0 * *
Brian Z. France(9) ......... 286,740 * * *
James H. Foster(10) ........ 220,815 * * *
Thomas W. Staed ............ 45,000 * * *
H. Lee Combs(11) ........... 38,055 * * *
John E. Graham, Jr. ........ 18,750 * * *
Robert W. Emerick .......... 15,000 * * *
Chapman J. Root, II ........ 13,500 * * *
Robert E. Smith ............ 10,935 * * *
J. Hyatt Brown(12) ......... 9,000 * * *
John R. Cooper ............. 1,500 * * *
Christy F. Harris .......... 150 * * *
All directors and executive
officers as a group
(20 persons)(13) ......... 21,327,270 62.0% 55.5% 60.5%
</TABLE>
- ----------
* Less than 1%.
(1) The address of each of the beneficial owners identified is c/o the
Company, 1801 West International Speedway Boulevard, Daytona Beach,
Florida 32114.
(2) Unless otherwise indicated, each person has sole voting and investment
power with respect to all such shares.
(3) Prior to this Offering, there were no outstanding shares of Class A
Common Stock. Commencing 90 days after this Offering, each share of
Class B Common Stock will be convertible at the option of the holder
into one share of Class A Common Stock.
(4) Reflects the aggregate of 20,558,205 shares indicated in the table as
beneficially owned by James C. France, William C. France, Lesa D.
Kennedy and Brian Z. France, as well as 573,480 shares held of record by
the adult children of James C. France. See footnotes (5), (6) and (7).
(5) Reflects (i) 267,720 shares held of record by James C. France, (ii)
304,725 shares held of record by Sharon M. France, his spouse, (iii)
286,740 shares held of record by James C. France as custodian for his
minor daughter, Amy Lea, (iv) 7,615,125 shares held of record by Western
Opportunity Limited Partnership ("Western Opportunity"), (v) 4,500,000
shares held of record by Carl Investment Limited Partnership ("Carl"),
and (vi) 1,861,965 shares held of record by White River Investment
Limited Partnership ("White River"). James C. France is the sole
shareholder and director of (x) Principal Investment Company, one of the
two general partners of Western Opportunity, (y) Quaternary Investment
Company, the general partner of Carl, and (z) Secondary Investment
Company, one of the two general partners of White River. Also see
footnote (6). Does not include an aggregate of 573,480 shares held of
record by the adult children of James C. France.
(6) Reflects (i) 265,500 shares held of record by William C. France, (ii)
304,725 shares held of record by Betty Jane France, his spouse, (iii)
7,615,125 shares held of record by Western Opportunity, (iv) 4,500,000
shares held of record by Polk City Limited Partnership ("Polk City"),
and (v) 1,861,965 shares held of record by White River. William C.
France is the sole shareholder and director of each of (x) Sierra
Central Corp., one of the two general partners of Western Opportunity,
41
<PAGE>
(y) Boone County Corporation, the general partner of Polk City, and (z)
Cen Rock Corp., one of the two general partners of White River. Also see
footnote (5). Does not include the aggregate of 651,705 shares shown in
the table as beneficially owned by Lesa D. Kennedy and Brian Z. France,
adult children of William C. France.
(7) Reflects (i) 333,240 shares held of record by Ms. Kennedy, (ii) 15,975
shares held of record by Ms. Kennedy as custodian for her minor son,
Benjamin, and (iii) 15,750 shares held of record as joint tenants with
Bruce S. Kennedy, her spouse.
(8) Includes 150,000 shares owned by American Banks of Florida, Inc. (Mr.
Mason serves as President and a director of, and has an 18% interest in,
this entity), as to which Mr. Mason disclaims beneficial ownership.
(9) Does not reflect the possible sale of up to 50,000 shares pursuant to the
Underwriters' over-allotment option. See "Underwriting."
(10) Reflects (i) 70,815 shares held of record by Mr. Foster, (ii) 75,000
shares held of record by Mr. Foster as trustee, and (iii) 75,000 shares
held of record by Barbara S. Foster, his spouse, as trustee.
(11) Reflects 37,305 shares held of record by Mr. Combs and 750 shares held
of record as joint tenants with Karen Combs, his spouse.
(12) Reflects shares held of record as joint tenants with Cynthia R. Brown,
his spouse.
(13) See footnotes (5) through (12).
42
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital includes 80 million shares of Class A Common
Stock, par value $.01 per share ("Class A Common Stock"), 40 million shares of
Class B Common Stock, par value $.01 per share ("Class B Common Stock"), and one
million shares of preferred stock, par value $.01 per share (the "Preferred
Stock"). As of the date of this Prospectus (assuming consummation of the
Recapitalization), there are 34,423,890 shares of Class B Common Stock
outstanding (which may be converted into Class A Common Stock at any time
commencing 90 days after this Offering). See "The Recapitalization" and
"Principal Shareholders." No shares of Class A Common Stock or Preferred Stock
are outstanding as of the date of this Prospectus.
The Company's Board of Directors and shareholders have approved Articles and
Amended and Restated Bylaws ("Bylaws") to become effective upon this Offering,
and the following discussions describe the provisions of the Company's capital
stock, Articles and Bylaws that will be in effect after this Offering. The
following descriptions of the Company's capital stock do not purport to be
complete and are subject to and qualified in their entirety by the provisions of
the Company's Articles and Bylaws, which are included as exhibits to the
Registration Statement of which this Prospectus is a part, and by the provisions
of applicable law.
COMMON STOCK
The shares of Class A Common Stock and Class B Common Stock are identical in
all respects, except for voting rights and certain dividend and conversion
rights, as described below.
VOTING RIGHTS. Each share of Class A Common Stock entitles the holder to
one-fifth (1/5) vote on each matter submitted to a vote of the Company's
shareholders and each share of Class B Common Stock entitles the holder to one
(1) vote on each such matter, in each case including the election of directors.
Except as required by applicable law, holders of the Class A Common Stock and
Class B Common Stock will vote together on all matters submitted to a vote of
the shareholders. See "Risk Factors--Effective Voting Control by France Family
Group and Anti-Takeover Effect of Dual Classes of Stock." Neither the Class A
Common Stock nor the Class B Common Stock have cumulative voting rights.
Any action that can be taken at a meeting of the shareholders may be taken by
written consent in lieu of the meeting if the Company receives consents signed
by shareholders having the minimum number of votes that would be necessary to
approve the action at a meeting at which all shares entitled to vote on the
matter were present. This could permit the holders of Class B Common Stock to
take all actions required to be taken by the shareholders without providing the
other shareholders the opportunity to make nominations or raise other matters at
a meeting.
DIVIDENDS. Holders of Class A Common Stock and Class B Common Stock are
entitled to receive dividends at the same rate if and when declared by the Board
of Directors out of funds legally available therefrom, subject to the dividend
and liquidation rights of any Preferred Stock that may be issued and
outstanding. No dividend or other distribution (including redemptions or
repurchases of shares of capital stock) may be made if after giving effect to
such distribution, the Company would not be able to pay its debts as they become
due in the usual course of business, or if the Company's total assets would be
less than the sum of its total liabilities plus the amount that would be needed
at the time of a liquidation to satisfy the preferential rights of any holders
of Preferred Stock. See "Dividend Policy."
If a dividend or distribution payable in Class A Common Stock is made on the
Class A Common Stock, the Company must also make a pro rata and simultaneous
dividend or distribution on the Class B Common Stock payable in shares of either
Class A Common Stock or Class B Common Stock. Conversely, if a dividend or
distribution payable in Class B Common Stock is made on the Class B Common
Stock, the Company must also make a pro rata and simultaneous dividend or
distribution on the Class A Common Stock payable solely in shares of Class A
Common Stock.
43
<PAGE>
CONVERSION. Class A Common Stock has no conversion rights. Class B Common
Stock will be convertible into Class A Common Stock, in whole or in part, at any
time and from time to time at the option of the holder commencing 90 days after
this Offering, on the basis of one share of Class A Common Stock for each share
of Class B Common Stock converted. Each share of Class B Common Stock will also
automatically convert into one share of Class A Common Stock if, on the record
date for any meeting of the shareholders, the number of shares of Class B Common
Stock then outstanding is less than 10% of the aggregate number of shares of
Class A Common Stock and Class B Common Stock then outstanding.
LIQUIDATION. In the event of liquidation, after payment of the debts and
other liabilities of the Company and after making provision for the holders of
Preferred Stock, if any, the remaining assets of the Company will be
distributable ratably among the holders of the Class A Common Stock and Class B
Common Stock treated as a single class.
MERGERS AND OTHER BUSINESS COMBINATIONS. Upon the merger or consolidation of
the Company, holders of each class of Common Stock are entitled to receive equal
per share payments or distributions, except that in any transaction in which
shares of capital stock are distributed, such shares may differ as to voting
rights and otherwise to the extent and only to the extent that the Class A
Common Stock and Class B Common Stock differ.
OTHER PROVISIONS. The holders of the Class A Common Stock and Class B Common
Stock are not entitled to preemptive rights. Neither the Class A Common Stock
nor the Class B Common Stock may be subdivided or combined in any manner unless
the other class is subdivided or combined in the same proportion.
TRANSFER AGENT AND REGISTRAR. The Transfer Agent and Registrar for the Class
A Common Stock is SunTrust Bank, Central Florida, N.A.
LISTING. Application has been made to list the Common Stock for quotation on
the Nasdaq National Market under the trading symbol "ISCA."
PREFERRED STOCK
The Board of Directors of the Company is authorized, without further
shareholder action, to divide any or all shares of the authorized Preferred
Stock into series and fix and determine the designations, preferences and
relative rights and qualifications, limitations, or restrictions thereon of any
series so established, including voting powers, dividend rights, liquidation
preferences, redemption rights and conversion privileges. As of the date of this
Prospectus, the Board of Directors has not authorized any series of Preferred
Stock, and there are no plans, agreements or understandings for the
authorization or issuance of any shares of Preferred Stock. The issuance of
Preferred Stock with voting rights or conversion rights may adversely affect the
voting power of the Common Stock, including the loss of voting control to
others.
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF FLORIDA LAW AND
OTHER PROVISIONS OF THE COMPANY'S ARTICLES
The Company is subject to certain anti-takeover provisions under Florida law,
including the "affiliated transactions" and "control-share acquisition"
provisions of the Florida Business Corporation Act. These provisions require,
subject to certain exceptions, that an "affiliated transaction" be approved by
the holders of two-thirds of the voting shares other than those beneficially
owned by an "interested shareholder" or by a majority of disinterested
directors, and that voting rights be conferred on "control shares" acquired in
specified "control share acquisitions" generally only to the extent conferred
through approval by the holders of a majority of all shares, excluding holders
of "interested shares." In addition, certain provisions of the Company's
Articles summarized in the following paragraphs may be deemed to have an
anti-takeover
44
<PAGE>
effect and may delay, defer or prevent a tender offer or takeover attempt
that a shareholder might consider in its best interest, including those
attempts that might result in a premium over the market price for the shares
held by shareholders.
CLASSIFIED BOARD OF DIRECTORS. The Articles provide for the Board of
Directors to be divided into three classes of directors serving staggered
three-year terms. As a result, approximately one-third of the Board of Directors
will be elected each year. These provisions, when coupled with the provision of
the Articles authorizing only the Board of Directors to increase the size of the
Board, may prevent a shareholder from removing incumbent directors and
simultaneously gaining control of the Board of Directors by filling the
vacancies created by such removal with its own nominees.
SPECIAL MEETING OF SHAREHOLDERS. The Articles further provide that special
meetings of shareholders of the Company be called only by the Board of Directors
or holders of not less than 50% of the votes entitled to be cast at the special
meeting.
ADVANCE NOTICE REQUIREMENTS FOR SHAREHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. The Articles provide that shareholders seeking to bring business
before an annual meeting of shareholders, or to nominate candidates for election
as directors at an annual or special meeting of shareholders, must provide
timely notice thereof in writing. To be timely with respect to an annual
meeting, a shareholder's notice must be delivered to or mailed and received at
the principal executive offices of the Company not less than 120 days nor more
than 180 days prior to the first anniversary of the date of the Company's notice
of annual meeting provided with respect to the previous year's meeting. The
Articles also specify certain requirements for a shareholder's notice to be in
proper written form. These provisions may preclude shareholders from bringing
matters before the shareholders at an annual or special meeting or from making
nominations for directors at an annual or special meeting.
AUTHORIZED BUT UNISSUED SHARES. The authorized but unissued shares of Common
Stock and Preferred Stock are available for future issuance without shareholder
approval. These additional shares may be utilized for a variety of corporate
purposes, including future public offerings to raise additional capital,
corporate acquisitions and employee benefit plans. The existence of authorized
but unissued and unreserved Common Stock and Preferred Stock may enable the
Board of Directors to issue shares to persons friendly to current management
which could render more difficult or discourage an attempt to obtain control of
the Company by means of a proxy contest, tender offer, merger or otherwise, and
thereby protect the continuity of the Company's management.
45
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have outstanding 38,423,890
shares of Common Stock. Of these shares, the 4,000,000 shares of Class A Common
Stock sold in the Offering (or a maximum of 4,600,000 shares if the
Underwriters' over-allotment option is exercised in full) will be freely
tradeable by persons other than "affiliates" of the Company without restriction
or further registration under the Securities Act. In addition, all of the
34,423,890 currently outstanding shares of Class B Common Stock are eligible for
resale in the public market, subject to Rule 144 limitations applicable to
affiliates and to the lock-up agreements described below. Such shares of Class B
Common Stock are currently traded over the counter; commencing 90 days after
this Offering, the Class B Common Stock will be convertible into Class A Common
Stock and, subject to such affiliate and lock-up restrictions, freely tradeable
on the Nasdaq National Market.
Persons who are deemed affiliates of the Company are generally entitled under
Rule 144 as currently in effect to sell within any three-month period a number
of shares that does not exceed 1% of the number of shares of the applicable
class of Common Stock then outstanding or the average weekly trading volume of
such class of Common Stock during the four calendar weeks preceding the making
of a filing with the Securities and Exchange Commission (the "Commission") with
respect to such sale. Such sales under Rule 144 are also subject to certain
manner of sale provisions and notice requirements and to the availability of
current public information about the Company. The Company is unable to estimate
accurately the number of shares of Common Stock that ultimately will be sold
under Rule 144 because the number of shares will depend in part on the market
price for the Common Stock, the personal circumstances of the sellers and other
factors. The Company and each of the Company's executive officers and directors
have agreed, subject to certain limitations, not to sell any shares of Common
Stock, or securities convertible into or exchangeable for Common Stock, for a
period of 180 calendar days after the date of this Prospectus without the prior
consent of Smith Barney Inc. See "Underwriting."
Prior to this Offering, there has been no market for the Class A Common
Stock. The Company can make no prediction as to the effect, if any, that sales
of shares of Common Stock, or the availability of such shares for sale, will
have on the market price of Class A Common Stock prevailing from time to time.
Nevertheless, sales of substantial amounts of Common Stock in the public market
could adversely affect prevailing market prices.
46
<PAGE>
UNDERWRITING
Upon the terms and subject to the conditions stated in the Underwriting
Agreement dated the date hereof, each Underwriter named below has severally
agreed to purchase, and the Company has agreed to sell to such Underwriter, the
number of shares of Class A Common Stock set forth opposite the name of such
Underwriter.
NAME NUMBER OF SHARES
- ---- ----------------
Smith Barney Inc. ....................
Raymond James & Associates, Inc. ....
---------------------
Total .............................. 4,000,000
=====================
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Class A Common
Stock offered hereby are subject to approval of certain legal matters by counsel
and to certain other conditions. The Underwriters are obligated to take and pay
for all shares of Class A Common Stock offered hereby (other than those covered
by the over-allotment option described below) if any such shares of Class A
Common Stock are taken.
The Underwriters, for whom Smith Barney Inc. and Raymond James & Associates,
Inc. are acting as the Representatives, propose to offer part of the shares of
Class A Common Stock directly to the public at the public offering price set
forth on the cover page of this Prospectus and part of the shares of Class A
Common Stock to certain dealers at a price which represents a concession not in
excess of $ per share below the public offering price. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per share
to certain other dealers. After the initial offering of the shares of Class A
Common Stock to the public, the public offering price and such concessions may
be changed by the Representatives. The Representatives of the Underwriters have
advised the Company that the Underwriters do not intend to confirm sales to any
accounts over which they exercise discretionary authority.
The Company and the Selling Shareholder have granted to the Underwriters an
option, exercisable for thirty days from the date of this Prospectus, to
purchase in the aggregate up to 600,000 additional shares of Class A Common
Stock at the price to public set forth on the cover page of this Prospectus
minus underwriting discounts and commissions. Of the shares subject to this
option, 550,000 shares will be sold by the Company and 50,000 shares will be
sold by the Selling Shareholder, Brian Z. France. The Underwriters may exercise
such option solely for the purpose of covering over-allotments, if any, in
connection with the offering of the shares of Class A Common Stock. To the
extent such option is exercised, each Underwriter will be obligated, subject to
certain conditions, to purchase approximately the same percentage of such
additional shares as the number of shares of Class A Common Stock set forth
opposite each Underwriter's name in the preceding table bears to the total
number of shares of Class A Common Stock listed in such table.
The Company and the Underwriters have agreed to indemnify each other against
certain liabilities, including liabilities under the Securities Act.
The Company and each of the Company's executive officers and directors, who
beneficially hold an aggregate of approximately 21.3 million shares of Common
Stock, have agreed that, for a period of 180 days following the date of this
Prospectus, they will not, without the prior written consent of Smith Barney
Inc. and subject to certain limited exceptions, offer, sell, contract to sell,
or otherwise dispose of any shares of Class A Common Stock (other than shares
offered pursuant to this Prospectus) or any securities convertible into, or
exercisable or exchangeable for shares of Class A Common Stock.
47
<PAGE>
Prior to this Offering, there has not been any public market for the Class A
Common Stock of the Company. Consequently, the initial public offering price for
the shares of Class A Common Stock included in this Offering will be determined
through negotiations among the Company and the Representatives. Among the
factors to be considered in determining such price are the history of and
prospects for the Company's business and the industry in which it competes, an
assessment of the Company's management and the present state of the Company's
development, the past and present revenues and earnings of the Company, the
prospects for the growth of the Company's revenues and earnings, the current
state of the economy in the United States, the current level of economic
activity in the industry in which the Company competes and in related or
comparable industries, and currently prevailing conditions in the securities
markets, including current market valuations of publicly traded companies that
are comparable to the Company.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed upon
for the Company by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.,
Miami, Florida. Certain legal matters will be passed upon for the Underwriters
by Holland & Knight, Ft. Lauderdale, Florida.
EXPERTS
The consolidated financial statements (including the schedule incorporated by
reference) of International Speedway Corporation at August 31, 1994 and 1995,
and for each of the three years in the period ended August 31, 1995, appearing
in this Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent certified public accountants, as set forth in their reports
thereon appearing and incorporated by reference elsewhere herein, and are
included in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
With respect to the unaudited condensed consolidated interim financial
information for the nine-month periods ended May 31, 1995 and 1996, the
six-month periods ended February 28, 1995 and February 29, 1996, and the
three-month periods ended November 30, 1994 and 1995, appearing in, or
incorporated by reference in, this Prospectus and Registration Statement, Ernst
& Young LLP have reported that they have applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate reports, included in the Company's Quarterly Reports on
Form 10-Q for the quarters ended May 31, 1996, February 29, 1996, and November
30, 1995, and included or incorporated by reference herein, states that they did
not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their reports on such
information should be restricted considering the limited nature of the review
procedures applied. The independent auditors are not subject to the liability
provisions of Section 11 of the Securities Act for their report on the unaudited
interim financial information because that report is not a "report" or a "part"
of the Registration Statement prepared or certified by the auditors within the
meaning of Sections 7 and 11 of the Securities Act.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company may be inspected and copied (at prescribed rates) at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549 and at the Commission's regional office
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
48
<PAGE>
The Company has also filed with the Commission a Registration Statement on
Form S-3 (together with all amendments, exhibits and schedules thereto, the
"Registration Statement") under the Securities Act with respect to the Class A
Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement. For further information
with respect to the Company and the Class A Common Stock offered hereby,
reference is hereby made to such Registration Statement. Statements contained in
this Prospectus as to the contents of any contract or other document are not
necessarily complete and, in each instance, reference is made to the copy of
such contract or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference. Copies of
the Registration Statement may be obtained from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of the
fees prescribed by the Commission, or may be examined, without charge, at the
public reference facilities maintained by the Commission. The Commission
maintains a World Wide Web site on the Internet at http://www.sec.gov that
contains reports, proxy and information statements and other information filed
electronically with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference: (1) the Company's Annual Report on Form 10-K
for the fiscal year ended August 31, 1995; (2) the Company's Quarterly Reports
on Form 10-Q for the quarters ended November 30, 1995, February 28, 1996, and
May 31, 1996; (3) the Company's Current Report on Form 8-K dated November 22,
1995; and (4) the Company's Registration Statement, registering the Company's
common stock under Section 12(g) of the Exchange Act. All documents filed by the
Company with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of
the Exchange Act subsequent to the date hereof and prior to the termination of
this Offering shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing such documents. Any
statements contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that the statement contained herein or in any
other subsequently filed document which also is, or is deemed to be,
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus. The Company will provide
without charge to each person to whom this Prospectus is delivered, upon a
written or oral request of such person, a copy of any or all of the foregoing
documents incorporated by reference into this Prospectus (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
into such documents). Request for such copies should be delivered to W. Garrett
Crotty, Esq., 1801 West International Speedway Boulevard, Daytona Beach, Florida
32114, telephone (904) 254-2700.
49
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants .................................... F-2
Consolidated Balance Sheets as of August 31, 1994 and 1995 ............................ F-3
Consolidated Statements of Income for the years ended
August 31, 1993, 1994 and 1995 ....................................................... F-4
Consolidated Statements of Shareholders' Equity for the years ended
August 31, 1993, 1994 and 1995 ....................................................... F-5
Consolidated Statements of Cash Flows for the years ended
August 31, 1993, 1994 and 1995 ....................................................... F-6
Notes to Consolidated Financial Statements ............................................ F-7
* * * * *
Review Report of Independent Certified Public Accountants ............................. F-14
Condensed Consolidated Balance Sheet as of May 31, 1996 (unaudited) ................... F-15
Condensed Consolidated Statements of Operations for the nine months ended
May 31, 1995 and 1996 (unaudited) .................................................... F-16
Condensed Consolidated Statements of Shareholders' Equity for the nine months ended
May 31, 1995 and 1996 (unaudited) .................................................... F-17
Condensed Consolidated Statements of Cash Flows for the nine months ended
May 31, 1995 and 1996 (unaudited) .................................................... F-18
Notes to Condensed Consolidated Financial Statements (unaudited) ...................... F-19
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders
International Speedway Corporation
We have audited the accompanying consolidated balance sheets of International
Speedway Corporation and subsidiaries as of August 31, 1995 and 1994, and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three years in the period ended August 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
International Speedway Corporation and subsidiaries at August 31, 1995 and 1994,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended August 31, 1995, in conformity with
generally accepted accounting principles.
As discussed in Note 2 to the consolidated financial statements, in 1993 the
Company changed its method of accounting for income taxes.
Ernst & Young LLP
Jacksonville, Florida
October 20, 1995, except as to
Note 12, as to which
the date is September 5, 1996
- -----------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon the completion
of the recapitalization of the Company as described in Note 12 to the financial
statements.
Ernst & Young LLP
Jacksonville, Florida
September 5, 1996
F-2
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AUGUST 31,
-------------------------
1995 1994
------------ -----------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ................................ $ 7,871 $ 5,227
Short-term investments (Notes 2 and 10) .................. 30,950 21,920
Receivables, less allowances of $35 ...................... 1,794 1,347
Inventories .............................................. 1,158 1,069
Prepaid expenses and other current assets ................ 3,122 1,800
------------ -----------
Total Current Assets ...................................... 44,895 31,363
Property and Equipment: ...................................
Land and leasehold improvements .......................... 3,444 3,433
Buildings, grandstands and tracks ........................ 73,216 68,334
Furniture and equipment .................................. 13,110 12,170
Construction in progress ................................. 11,221 2,962
------------ -----------
100,991 86,899
Less: accumulated depreciation ........................... 30,692 28,320
------------ -----------
70,299 58,579
Other Assets:
Cash surrender value of life insurance ................... 489 459
Equity investment (Note 7) ............................... 2,913 2,628
Long-term investments (Notes 2 and 10) ................... 747 3,187
Other .................................................... 228 185
------------ -----------
4,377 6,459
------------ -----------
Total Assets .............................................. $119,571 $96,401
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable ......................................... $ 2,619 $ 1,452
Income taxes payable (Note 3) ............................ 324 52
Deferred income .......................................... 19,852 17,150
Other current liabilities ................................ 1,279 870
------------ -----------
Total Current Liabilities ................................. 24,074 19,524
Deferred income taxes (Note 3) ............................ 10,250 8,600
Commitments and Contingencies (Note 6)
Shareholders' Equity (Notes 5 and 12):
Class B Common Stock, $.01 par value, 40,000,000 shares
authorized; 34,395,975 and 34,338,720 issued and
outstanding in 1995 and 1994, respectively ............. 344 344
Additional paid-in capital................................ 1,853 1,364
Retained earnings ........................................ 83,846 67,194
------------ -----------
86,043 68,902
Less unearned compensation--restricted stock (Note 9) .. 796 625
------------ -----------
Total Shareholders' Equity ................................ 85,247 68,277
------------ -----------
Total Liabilities and Shareholders' Equity ................ $119,571 $96,401
============ ===========
</TABLE>
See accompanying notes.
F-3
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------------
1995 1994 1993
----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Revenues:
Admissions, net .................................... $43,274 $36,935 $32,078
Motorsports related income ......................... 24,033 18,764 16,557
Food, beverage and souvenir income ................. 14,442 12,291 9,515
Other income ....................................... 423 943 1,003
----------- ----------- -----------
Total revenues .................................... 82,172 68,933 59,153
Expenses:
Direct expenses:
Prize and point fund monies
and NASCAR sanction fees ........................ 11,765 9,412 8,251
Motorsports related expenses ...................... 11,604 11,470 10,470
Food, beverage and souvenir expenses .............. 8,107 7,867 4,775
General and administrative expenses ................ 18,202 14,307 13,046
Depreciation ....................................... 4,798 3,828 3,006
----------- ----------- -----------
Total expenses .................................... 54,476 46,884 39,548
----------- ----------- -----------
Operating income ................................... 27,696 22,049 19,605
Interest income, net ............................... 1,436 972 724
Equity in net income (loss) from equity investment 285 207 (27)
----------- ----------- -----------
Income before income taxes. ........................ 29,417 23,228 20,302
Income taxes (Note 3) .............................. 11,054 8,662 7,827
----------- ----------- -----------
Income before cumulative effect
of change in accounting principle ................ 18,363 14,566 12,475
Cumulative effect of change in
accounting principle (Note 2) .................... -- -- 288
----------- ----------- -----------
Net Income ......................................... $18,363 $14,566 $12,763
=========== =========== ===========
Earnings per Share (Note 12):
Before cumulative effect of
change in accounting principle................... $ .53 $ .42 $ .36
Cumulative effect of
change in accounting principle (Note 2).......... -- -- .01
----------- ----------- -----------
Earnings per share ................................. $ .53 $ .42 $ .37
=========== =========== ===========
Dividends per share (Note 12)....................... $ .05 $ .04 $ .03
=========== =========== ===========
</TABLE>
See accompanying notes.
F-4
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
CLASS B
COMMON UNEARNED
STOCK ADDITIONAL COMPENSATION- TOTAL
$.01 PAR PAID IN RETAINED RESTRICTED SHAREHOLDERS'
VALUE CAPITAL EARNINGS STOCK EQUITY
----------- ------------ ----------- ---------------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE AT
AUGUST 31, 1992 ................. $343 $ 606 $ 42,689 $ -- $ 43,638
Net income ....................... -- -- 12,763 -- 12,763
Cash dividends ($.03 per share) . -- -- (1,142) -- (1,142)
Reacquisition of previously
issued common stock (Note 5) ... -- -- (23) -- (23)
----------- ------------ ----------- ---------------- ----------------
BALANCE AT
AUGUST 31, 1993 ................. 343 606 54,287 -- 55,236
Net income ....................... -- -- 14,566 -- 14,566
Cash dividends ($.04 per share) . -- -- (1,374) -- (1,374)
Reacquisition of previously
issued common stock (Note 5) ... -- (1) (285) -- (286)
Restricted stock granted
(Note 9) ....................... 1 759 -- (760) --
Amortization of unearned
compensation (Note 9) .......... -- -- -- 135 135
----------- ------------ ----------- ---------------- ----------------
BALANCE AT
AUGUST 31, 1994 ................. 344 1,364 67,194 (625) 68,277
Net income ....................... -- -- 18,363 -- 18,363
Cash dividends ($.05 per share) . -- -- (1,605) -- (1,605)
Reacquisition of previously
issued common stock (Note 5) ... -- -- (106) -- (106)
Restricted stock granted
(Note 9) ....................... -- 489 -- (489) --
Amortization of unearned
compensation (Note 9) .......... -- -- -- 318 318
----------- ------------ ----------- ---------------- ----------------
BALANCE AT
AUGUST 31, 1995 ................. $ 344 $ 1,853 $ 83,846 $(796) $85,247
=========== ============ =========== ================ ================
</TABLE>
See accompanying notes.
F-5
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------------------
1995 1994 1993
------------ ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income .......................................... $ 18,363 $ 14,566 $ 12,763
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation .................................... 4,798 3,828 3,006
Amortization of unearned compensation .............. 318 135 --
Deferred income taxes .............................. 1,650 1,710 1,003
Undistributed (earnings) loss of affiliate ........ (285) (207) 27
Loss (gain) on disposition of property and
equipment ........................................ 251 (1) (5)
Changes in Operating Assets and Liabilities:
Receivables ....................................... (447) (232) 102
Inventories ....................................... (89) 83 (496)
Prepaid expenses and other current assets ........ (1,322) (402) (81)
Cash surrender value of life insurance ............ (30) (33) (26)
Other assets ...................................... (61) 49 35
Accounts payable .................................. 1,167 546 (89)
Deferred income ................................... 2,702 2,764 2,326
Income taxes payable .............................. 272 (139) 31
Other current liabilities ......................... 409 (8) (22)
------------ ----------- -----------
Net Cash Provided by Operating Activities .......... 27,696 22,659 18,574
INVESTING ACTIVITIES
Acquisition of investments .......................... (125,982) (54,370) (74,762)
Proceeds from maturities of investments ............. 119,392 52,192 74,029
Capital expenditures ................................ (16,831) (19,729) (10,294)
Proceeds from sales of property and equipment ...... 80 12 11
------------ ----------- -----------
Net Cash Used in Investing Activities ............... (23,341) (21,895) (11,016)
FINANCING ACTIVITIES
Reacquisition of previously issued common stock .... (106) (286) (23)
Payments of debt .................................... -- -- (3,900)
Cash dividends paid ................................. (1,605) (1,374) (1,142)
------------ ----------- -----------
Net Cash Used in Financing Activities ............... (1,711) (1,660) (5,065)
------------ ----------- -----------
Net Increase (Decrease) in Cash
and Cash Equivalents .............................. 2,644 (896) 2,493
Cash and Cash Equivalents at
Beginning of Year .................................. 5,227 6,123 3,630
------------ ----------- -----------
Cash and Cash Equivalents at
End of year ........................................ $ 7,871 $ 5,227 $ 6,123
============ =========== ===========
</TABLE>
See accompanying notes.
F-6
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1995, 1994 AND 1993
NOTE 1--ACCOUNTING POLICIES
OPERATIONS: The Company's operations are predominately motor sport racing
activities.
PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial
statements include the accounts of International Speedway Corporation and its
wholly-owned subsidiaries (the "Company"). All material intercompany accounts
and transactions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS: For purposes of reporting cash flows, cash and
cash equivalents include cash on hand, bank demand deposit accounts and money
market accounts at investment firms. Cash and cash equivalents exclude
certificates of deposit, U.S. Treasury Notes and U.S. Treasury Bills, regardless
of original maturity.
INVESTMENTS: Short-term investments consist of certificates of deposit and
securities held-to-maturity which are due in one year or less. Certificates of
deposit are readily convertible to cash and are stated at cost which
approximates market value.
Long-term investments consist of securities held-to-maturity which are due
after one year.
The equity investment represents a 50% ownership interest in a company which
is accounted for using the equity method.
The Company determines the appropriate classification of investments at the
time of purchase and reevaluates such designation as of each balance sheet date.
Debt securities are classified as held-to-maturity based on the Company's
positive intent and ability to hold the securities to maturity. These securities
are stated at cost. Interest and dividends are included in interest income.
INVENTORIES: Inventories of items for resale are stated at the lower of cost,
determined on the first-in, first-out basis, or market.
PROPERTY AND EQUIPMENT: Property and equipment, including improvements to
existing facilities, are stated at cost. Depreciation is provided for financial
reporting purposes using either the straight-line or accelerated methods over
estimated useful lives as follows:
Leasehold improvements ................ 5-75 years
Buildings, grandstands and tracks .... 5-34 years
Furniture and equipment ............... 3-20 years
INCOME TAXES: Effective September 1, 1992, the Company adopted Financial
Accounting Standards Board ("FASB") Statement No. 109, "Accounting for Income
Taxes," as more fully described in Note 2--"Accounting Changes."
ADMISSION INCOME: Admission income and all race-related revenue is earned
upon completion of an event and is stated net of admission and sales taxes
collected. Refundable advance ticket sales and all race-related revenue on
future events are deferred until earned.
EARNINGS PER SHARE: Earnings per share have been computed on the weighted
average total number of common shares outstanding during the respective years.
Weighted average shares outstanding for the years ended August 31, 1995, 1994
and 1993, were 34,378,830; 34,318,170 and 34,267,485 shares, respectively.
F-7
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
AUGUST 31, 1995, 1994 AND 1993
NOTE 1--ACCOUNTING POLICIES--(CONTINUED)
COMPARABILITY: For comparability, certain amounts have been reclassified
where appropriate to conform with the presentation adopted in 1996.
NOTE 2--ACCOUNTING CHANGES
In May 1993 the FASB issued Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities."
The Statement addresses the accounting and reporting for investments in
marketable equity securities that have readily determinable fair values and
for all investments in debt securities. As permitted under the Statement, the
Company adopted the provisions of the standard as of August 31, 1994. The
effect of adopting this Statement was not material to the consolidated
financial statements.
During the fourth quarter of fiscal year 1993, the Company adopted FASB
Statement No. 109, "Accounting for Income Taxes." As permitted under the
Statement, the Company elected not to restate the financial statements of
prior years. The cumulative effect as of September 1, 1992 of adopting
Statement 109 increased net income by approximately $288,000, or $.01 per
share.
Under Statement 109, the liability method is used in accounting for income
taxes. Under this method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will
be in effect when the differences are expected to reverse. Prior to the
adoption of Statement 109, income tax expense was determined using the
deferred method. Deferred tax expense was based on items of income and
expense that were reported in different years in the financial statements and
tax returns and were measured at the tax rate in effect in the year the
difference originated.
NOTE 3--FEDERAL AND STATE INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Substantially all of the deferred tax liability results from the excess of
tax accelerated depreciation over depreciation for financial reporting
purposes.
Significant components of the provision for income taxes for the years
ended August 31 are as follows:
1995 1994 1993
---------- --------- ---------
(IN THOUSANDS)
Current tax expense:
Federal ................... $ 8,247 $6,190 $5,727
State ..................... 1,150 816 810
Deferred tax expense:
Federal ................... 1,369 1,438 1,130
State ..................... 261 218 160
---------- --------- ---------
Provision for income taxes $11,054 $8,662 $7,827
========== ========= =========
F-8
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
AUGUST 31, 1995, 1994 AND 1993
NOTE 3--FEDERAL AND STATE INCOME TAXES--(CONTINUED)
The reconciliation of income tax attributable to continuing operations
computed at the federal statutory tax rates to income tax expense is as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------------------- --------------------- ---------------------
% OF % OF % OF
PRE-TAX PRE-TAX PRE-TAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
---------- ---------- --------- ---------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Income tax computed at federal
statutory rates ......................... $10,296 35.0% $8,129 35.0% $7,045 34.7%
State income taxes, net of federal
tax benefit ............................. 884 3.0 670 2.9 633 3.1
Effect of change in tax rates on beginning
deferred tax liability .................. -- -- -- -- 138 .7
Non-taxable share of (income) loss from
unconsolidated subsidiary ............... (100) (.3) (58) (.3) 8 .1
Other, net ................................ 26 (.1) (79) (.3) 3 --
---------- ---------- --------- ---------- --------- ----------
$11,054 37.6% $8,662 37.3% $7,827 38.6%
========== ========== ========= ========== ========= ==========
</TABLE>
NOTE 4--LINES OF CREDIT
The Company has two lines of credit with financial institutions totaling
$16 million expiring in December 1995.
NOTE 5--REACQUISITION OF PREVIOUSLY ISSUED COMMON STOCK
Pursuant to a Florida statute, shares of previously issued common stock
reacquired on or after July 1, 1990 are classified as authorized but unissued
and are reflected as a reduction in the number of shares issued. Accordingly, at
August 31, 1995, 1994, and 1993 common stock outstanding has been reduced by the
par value of 13,155; 43,260; and 3,510 shares, respectively, reacquired by the
Company during each of those years. In addition, the prorated portion of
additional paid-in capital attributable to these shares was charged as a
reduction of that account, with the remaining excess of the cost over par value
of the shares reacquired charged as a reduction of retained earnings.
NOTE 6--COMMITMENTS AND CONTINGENCIES
A. In 1985, the Company established a salary incentive plan designed to
qualify under Section 401(k) of the Internal Revenue Code. All employees who
have completed 1,000 hours and 12 months continuous service are eligible to
participate in the plan. The Company makes monthly contributions (subject to
certain limits) to a savings trust to match employee contributions. The level of
the Company matching contribution depends upon the amount of the employee
contribution. Employees become 100% vested upon entrance to the plan.
The Company's contribution expense for the plan was approximately $228,000,
$211,000, and $182,000 for the years ended August 31, 1995, 1994 and 1993,
respectively.
F-9
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
AUGUST 31, 1995, 1994 AND 1993
NOTE 6--COMMITMENTS AND CONTINGENCIES--(CONTINUED)
B. In 1990, the Company self-insured its group health plan. The Plan provides
medical benefits for all eligible full-time employees who have completed 30 days
of service, and their eligible dependents. A reserve has been established to
accrue estimated claims on a monthly basis.
In order to limit the Company's liability under the Plan, a reinsurance
policy, purchased jointly with NASCAR, has been provided for specific excess
losses and aggregate excess losses. The Company's maximum liability is limited
to approximately $510,000 for the twelve month period ending December 31, 1995.
The total expense charged against operations for the years ended August 31,
1995, 1994 and 1993 for actual and estimated claims was approximately $469,000,
$396,000 and $357,000, respectively.
C. The estimated cost to complete construction in progress at August 31, 1995
is approximately $28.6 million.
NOTE 7--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), International Motor Sports Association (IMSA), World Karting
Association (WKA), Federation Internationale de l'Automobile (FIA), Federation
Internationale Motocycliste (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 $10.1, $8.2 and $7.2 million for the years ended August 31, 1995,
1994 and 1993, respectively.
At August 31, 1995 and 1994, the Company owned 50% of the outstanding common
stock of Watkins Glen International, Inc. ("WGI"). Included in retained earnings
at August 31, 1995 and 1994 is approximately $1,481,000 and $1,196,000,
respectively, of undistributed equity in the earnings of WGI. In addition, the
$200,000 loan made to this entity during fiscal year 1990, has an outstanding
balance of $40,000 at August 31, 1995 which is reflected in "Other Assets" at
that date. In accordance with the provisions of the loan, this balance plus
accrued interest was fully repaid in September 1995.
F-10
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
AUGUST 31, 1995, 1994 AND 1993
NOTE 8--SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for income taxes and interest for fiscal years ended August 31,
1995, 1994 and 1993 are as follows:
1995 1994 1993
--------- --------- ---------
(IN THOUSANDS)
Income taxes paid $9,806 $7,132 $6,506
========= ========= =========
Interest paid ..... $ -- $ -- $ 229
========= ========= =========
NOTE 9--LONG-TERM INCENTIVE RESTRICTED STOCK PLAN
In November 1993, the Company's Board of Directors and a majority of the
Company' shareholders approved a long-term incentive restricted stock plan for
certain officers and managers of the Company. Under the Plan, up to 750,000
shares of the Company's common stock may be granted as restricted stock at no
cost to Plan participants. Shares awarded under the Plan vest at the rate of 50%
of each award on the third anniversary of the award date and the remaining 50%
on the fifth anniversary of the award date. Shares awarded under the Plan
generally are subject to forfeiture in the event of termination of employment
prior to the vesting dates. The Plan participants own the shares and may vote
and receive dividends, but are subject to restrictions under the plan.
Restrictions include the prohibition of the sale or transfer of the shares
during the period prior to vesting of the shares. The Company also has a right
of first refusal to purchase any shares of stock issued under the Plan which are
offered for sale.
On January 1, 1995 and 1994, a total of 70,410 and 117,615 restricted shares
of the Company's common stock, respectively, were awarded to certain officers
and managers. The market value of shares on January 1, 1995 and 1994 amounted to
approximately $489,000 and $760,000, respectively, and has been recorded as
"Unearned compensation--restricted stock", which is shown as a separate
component of shareholders' equity in the accompanying consolidated balance
sheets. The unearned compensation is being amortized over the vesting period of
the shares. The total expense charged against operations during the years ended
August 31, 1995 and 1994 was approximately $318,000 and $135,000, respectively.
F-11
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
AUGUST 31, 1995, 1994 AND 1993
NOTE 10--INVESTMENTS
The following is a summary of Investments:
<TABLE>
<CAPTION>
AUGUST 31, 1995
-------------------------------------------------------
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ------------- ------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
HELD-TO-MATURITY SECURITIES
U.S. Treasury Bills ....... $ 9,457 $14 $-- $ 9,471
Municipal Securities ..... 10,974 3 57 10,920
---------- ------------- ------------- ------------
20,431 17 57 20,391
CERTIFICATES OF DEPOSIT ... 11,266 -- -- 11,266
---------- ------------- ------------- ------------
$31,697 $17 $57 $31,657
========== ============= ============= ============
</TABLE>
<TABLE>
<CAPTION>
AUGUST 31, 1994
-------------------------------------------------------
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ------------- ------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
HELD-TO-MATURITY SECURITIES
U.S. Treasury Bills ....... $ 4,931 $13 $ -- $ 4,944
Municipal Securities ..... 10,635 6 141 10,500
---------- ------------- ------------- ------------
15,566 19 141 15,444
CERTIFICATES OF DEPOSIT ... 9,541 -- -- 9,541
---------- ------------- ------------- ------------
$25,107 $19 $141 $24,985
========== ============= ============= ============
</TABLE>
The cost and market values of municipal securities include accrued
investment income of approximately $91,000 and $160,000 at August 31, 1995
and 1994, respectively.
The cost and estimated market value of the held-to-maturity securities at
August 31, 1995, by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because the issuers of
certain securities have the right to prepay obligations.
AUGUST 31, 1995
------------------------
ESTIMATED
MARKET
COST VALUE
---------- ------------
(IN THOUSANDS)
HELD-TO-MATURITY SECURITIES
Due in one year or less ................ $19,684 $19,644
Due after one year through three years 247 250
Due after three years .................. 500 497
---------- ------------
$20,431 $20,391
========== ============
F-12
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
AUGUST 31, 1995, 1994 AND 1993
NOTE 11--QUARTERLY DATA (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
For fiscal year 1995, first quarter results were as follows: total revenues,
$6,890; loss before tax, $1,411; net loss, $871; and loss per share, $.03.
Second quarter results were as follows: total revenues, $35,038; income before
tax, $18,958; net income, $11,672; and earnings per share, $.34. Third quarter
results were as follows: total revenues, $21,742; income before tax, $6,211; net
income, $3,653; and earnings per share, $.11. Fourth quarter results were as
follows: total revenues, $20,223; income before tax, $5,659; net income, $3,909;
and earnings per share, $.11
For fiscal year 1994, first quarter results were as follows: total revenues,
$5,694; loss before tax, $1,567; net loss, $998; and loss per share, $.03.
Second quarter results were as follows: total revenues, $29,755; income before
tax, $15,670; net income, $9,655; and earnings per share, $.28. Third quarter
results were as follows: total revenues, $17,203; income before tax, $4,135; net
income, $2,500; and earnings per share, $.07. Fourth quarter results were as
follows: total revenues, $17,460; income before tax, $4,990; net income, $3,409;
and earnings per share, $.10.
For fiscal year 1993, first quarter results were as follows: total revenues,
$5,192; loss before tax, $1,003; loss before cumulative effect of change in
accounting principle (Note 2), $755; net loss, $467; loss per share before
cumulative effect of accounting change (Note 2), $.02; and loss per share, $.01.
Second quarter results were as follows: total revenues, $25,908; income before
tax, $13,771; net income, $8,606; and earnings per share, $.25. Third quarter
results were as follows: total revenues, $13,764; income before tax, $3,213; net
income, $1,930; and earnings per share, $.06. Fourth quarter results were as
follows: total revenues, $15,073; income before tax, $4,321; net income, $2,694;
and earnings per share, $.07.
NOTE 12--RECAPITALIZATION
On September 5, 1996 the Company's Board of Directors approved a
recapitalization of the Company to become effective concurrently with the
effectiveness of the Registration Statement filed with the Securities and
Exchange Commission in connection with the offering of 4,000,000 shares of the
Company's newly authorized Class A Common Stock. The recapitalization will
modify the Company's authorized capital to include one million shares of
Preferred Stock, eighty million shares of Class A Common Stock and forty million
shares of Class B Common Stock. Pursuant to the recapitalization, all of the
Company's existing outstanding shares of Common Stock will automatically be
converted, on a 15-for-one basis, into the newly authorized shares of Class B
Common Stock and the existing shares of Common Stock held as treasury stock will
be retired. Shareholders' equity and all share information and per share data
have been retroactively adjusted to give effect to the recapitalization and
related stock split.
F-13
<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 May 31, 1996, and the related condensed
consolidated statements of operations, shareholders' equity and cash flows for
the nine-month periods ended May 31, 1996 and 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.
Ernst & Young LLP
Jacksonville, Florida
July 5, 1996, except as to
Note 7, as to which
the date is September 5, 1996
- -----------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon the completion
of the recapitalization of the Company as described in Note 7 to the financial
statements.
Ernst & Young LLP
Jacksonville, Florida
September 5, 1996
F-14
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MAY 31,
1996
---------------
(IN THOUSANDS)
ASSETS
Current Assets:
Cash and cash equivalents ............................ $ 7,316
Short-term investments ............................... 17,386
Receivables, less allowance of $35 ................... 4,611
Inventories .......................................... 1,349
Prepaid expenses and other current assets ............ 1,181
---------------
Total Current Assets .................................. 31,843
Property and Equipment--at cost--less
accumulated depreciation of $34,795 ................. 92,182
Other Assets:
Cash surrender value of life insurance (Note 3) ..... 1,229
Equity investments (Note 6) .......................... 24,557
Long-term investments ................................ 500
Other ................................................ 214
---------------
26,500
---------------
Total Assets .......................................... $150,525
===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable ..................................... $ 4,308
Income taxes payable ................................. 647
Deferred income ...................................... 27,478
Other current liabilities ............................ 2,220
---------------
Total Current Liabilities ............................. 34,653
Deferred income taxes ................................. 14,188
Shareholders' Equity (Note 7):
Class B Common Stock, $.01 par value, 40,000,000 shares
authorized; 34,423,890 shares issued and outstanding 344
Additional paid-in capital............................. 8,127
Retained earnings .................................... 95,190
---------------
103,661
Less unearned compensation--restricted stock (Note 5) 1,977
---------------
Total Shareholders' Equity ............................ 101,684
---------------
Total Liabilities and Shareholders' Equity ............ $150,525
===============
See accompanying notes and accountants' review report.
F-15
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED MAY 31,
-----------------------
1996 1995
---------- -----------
(IN THOUSANDS, EXCEPT
FOR PER SHARE AMOUNTS)
<S> <C> <C>
REVENUES:
Admissions, net ...................................... $37,735 $33,014
Motorsports related income ........................... 21,060 18,657
Food, beverage and souvenir income ................... 13,593 11,165
Other income ......................................... 607 501
---------- -----------
72,995 63,337
EXPENSES:
Direct expenses:
Prize and point fund monies and NASCAR sanction fees 10,157 8,752
Motorsports related expenses ........................ 10,649 8,913
Food, beverage and souvenir expenses ................ 8,093 6,175
---------- -----------
28,899 23,840
General and administrative expenses .................. 14,869 12,635
Depreciation ......................................... 4,133 3,436
---------- -----------
47,901 39,911
---------- -----------
Operating Income ...................................... 25,094 23,426
Interest income ....................................... 754 1,065
Equity in net loss from equity investments (Note 6) .. (946) (733)
---------- -----------
Income before income taxes ............................ 24,902 23,758
Income taxes .......................................... 10,016 9,304
---------- -----------
Net Income ............................................ $14,886 $14,454
========== ===========
Earnings per share (Notes 2 and 7)..................... $ .43 $ .42
========== ===========
Dividends per share (Note 7)........................... $ .05 $ .05
========== ===========
</TABLE>
See accompanying notes and accountants' review report.
F-16
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
CLASS B
COMMON UNEARNED
STOCK ADDITIONAL COMPENSATION TOTAL
$.01 PAR PAID IN RETAINED RESTRICTED SHAREHOLDERS'
VALUE CAPITAL EARNINGS STOCK EQUITY
----------- ------------- ----------- --------------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance at August 31, 1994 ............ $344 $1,364 $67,194 $ (625) $ 68,277
Net Income ........................... -- -- 14,454 -- 14,454
Cash dividends ($.05 per share) ..... -- -- (1,605) -- (1,605)
Reacquisition of previously issued
common stock ....................... -- -- (82) -- (82)
Restricted stock granted ............. -- 489 -- (489) --
Amortization of unearned compensation -- -- -- 193 193
----------- ------------- ----------- --------------- ----------------
Balance at May 31, 1995 ............... 344 1,853 79,961 (921) 81,237
Net income ........................... -- -- 3,934 -- 3,934
Reacquisition of previously issued
common stock ....................... -- -- (49) -- (49)
Amortization of unearned compensation -- -- -- 125 125
----------- ------------- ----------- --------------- ----------------
Balance at August 31, 1995 ............ 344 1,853 83,846 (796) 85,247
Net income ........................... -- -- 14,886 -- 14,886
Dividends declared ($.05 per share) . -- -- (1,837) -- (1,837)
Reacquisition of previously issued
common stock ....................... (1) (2) (1,705) -- (1,708)
Restricted stock granted ............. 1 1,599 -- (1,600) --
Amortization of unearned compensation -- -- -- 419 419
Recapitalization of equity investment -- 4,677 -- -- 4,677
----------- ------------- ----------- --------------- ----------------
Balance at May 31, 1996 ............... $344 $8,127 $95,190 $(1,977) $101,684
=========== ============= =========== =============== ================
</TABLE>
See accompanying notes and accountants' review report.
F-17
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED MAY 31,
------------------------
1996 1995
----------- -----------
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income ............................................ $ 14,886 $ 14,454
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ..................................... 4,133 3,436
Amortization of unearned compensation ............... 419 193
Deferred income taxes ............................... 1,000 1,130
Undistributed loss from equity investments ......... 946 733
(Gain) Loss on disposition of property and equipment (11) 7
Changes in operating assets and liabilities:
Receivables ......................................... (2,817) (2,394)
Inventories ......................................... (191) (65)
Prepaid expenses and other current assets .......... 1,941 571
Cash surrender value of life insurance .............. (740) (22)
Other assets ........................................ -- (43)
Accounts payable .................................... 1,689 414
Income taxes payable ................................ 323 1,310
Deferred income ..................................... 7,626 6,179
Other current liabilities ........................... (896) (615)
----------- -----------
Net cash provided by operating activities ............. 28,308 25,288
INVESTING ACTIVITIES
Acquisition of investments ........................... (62,803) (64,735)
Proceeds from maturities of investments .............. 76,614 55,716
Capital expenditures ................................. (26,009) (11,352)
Investment in PSH Corp ............................... (14,975) --
Proceeds from sale of assets ......................... 18 21
----------- -----------
Net cash used in investing activities ................. (27,155) (20,350)
FINANCING ACTIVITIES
Reacquisition of previously issued common stock ..... (1,708) (82)
----------- -----------
Net cash used in financing activities ................. (1,708) (82)
----------- -----------
Net (decrease) increase in cash and cash equivalents . (555) 4,856
Cash and cash equivalents at beginning of period ..... 7,871 5,227
----------- -----------
Cash and cash equivalents at end of period ............ $ 7,316 $ 10,083
=========== ===========
</TABLE>
See accompanying notes and accountants' review report.
F-18
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1996
(UNAUDITED--SEE ACCOUNTANTS' REVIEW REPORT)
NOTE 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. 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 May 31, 1996.
Because of the seasonal concentration of racing events, the results of
operations for the nine-month periods ended May 31, 1996 and 1995 are not
indicative of the results to be expected for the year.
NOTE 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 nine-month periods ended May 31, 1996 and 1995
were 34,446,105 and 34,372,650, respectively.
NOTE 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 $8.3 million for the nine-month period
ended May 31, 1996, and approximately $7.4 million for the nine-month period
ended May 31, 1995.
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 nine-month
period ended May 31, 1996, the Company recorded a net insurance expense of
approximately $250,000 representing the excess of the premiums paid over the
increase in cash surrender value of the policies associated with these
agreements.
F-19
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
MAY 31, 1996
(UNAUDITED--SEE ACCOUNTANTS' REVIEW REPORT)
NOTE 3--RELATED PARTY DISCLOSURES AND TRANSACTIONS--(CONTINUED)
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.
NOTE 4--SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for income taxes for the nine months ended May 31, 1996 and 1995
is as follows:
1996 1995
--------- --------
(IN THOUSANDS OF DOLLARS)
Income taxes paid $8,347 $6,856
========= ========
See Note 6 for discussion of non-cash equity investment transaction.
NOTE 5--LONG-TERM INCENTIVE RESTRICTED STOCK
On January 1, 1996 and 1995, a total of 102,075 and 70,410 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 $1,600,000
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 nine months
ended May 31, 1996 and 1995 was approximately $419,000 and $193,000,
respectively.
NOTE 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. Prior to March 22, 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.
Prior to March 22, 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.
F-20
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
MAY 31, 1996
(UNAUDITED--SEE ACCOUNTANTS' REVIEW REPORT)
NOTE 6--EQUITY INVESTMENTS--(CONTINUED)
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 nine months
ended May 31, 1996, was approximately $184,000.
On March 22, 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 Speedway, 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 $83.1 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 recorded an increase in its equity investment in PSH Corp.
of approximately $7.6 million, and recorded corresponding increases in deferred
income taxes and capital in excess of par value of approximately $2.9 million
and $4.7 million, respectively.
The Company's 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 nine months ended May 31, 1996, were
approximately $23,000 and $739,000, 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 May 31, 1996 is not
indicative of the results to be expected for the year.
NOTE 7--RECAPITALIZATION
On September 5, 1996 the Company's Board of Directors approved a
recapitalization of the Company to become effective concurrently with the
effectiveness of the Registration Statement filed with the Securities and
Exchange Commission in connection with the offering of 4,000,000 shares of the
Company's newly authorized Class A Common Stock. The recapitalization will
modify the Company's authorized capital to include one million shares of
Preferred Stock, eighty million shares of Class A Common Stock and forty million
shares of Class B Common Stock. Pursuant to the recapitalization, all of the
Company's existing outstanding shares of Common Stock will automatically be
converted, on a 15-for-one basis, into the newly authorized shares of Class B
Common Stock and the existing shares of Common Stock held as treasury stock will
be retired. Shareholders' equity and all share information and per share data
have been retroactively adjusted to give effect to the recapitalization and
related stock split.
F-21
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY BY ANY UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY
SECURITIES OTHER THAN THOSE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL
THOSE TO WHICH IT RELATES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFERS IN SUCH STATE, OR SOLICITATION OF, ANY PERSON IN ANY
JURISDICTION WHERE SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. THE DELIVERY OF
THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
----------
TABLE OF CONTENTS
PAGE
---------
Prospectus Summary .................... 3
Risk Factors .......................... 6
The Company ........................... 11
Use of Proceeds ....................... 11
Dividend Policy ....................... 11
Capitalization ........................ 12
Selected Financial Data ............... 13
Management's Discussion and
Analysis of Financial Condition
and Results of Operations ............. 14
NASCAR ................................ 20
Business .............................. 24
Management ............................ 35
Certain Transactions .................. 39
Principal Shareholders ................ 40
Description of Capital Stock .......... 42
Shares Eligible for Future Sale ...... 45
Underwriting .......................... 46
Legal Matters ......................... 47
Experts ............................... 47
Available Information ................. 47
Incorporation of Certain Documents
by Reference .......................... 48
Index to Financial Statements ......... F-1
4,000,000 Shares
INTERNATIONAL
SPEEDWAY
CORPORATION
Class A Common Stock
----------
P R O S P E C T U S
, 1996
----------
Smith Barney Inc.
Raymond James &
Associates, Inc.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Company estimates that expenses payable by it in connection with the
offering described in this registration statement (other than underwriting
discounts and commissions) will be as follows:
Securities and Exchange Commission registration fee, $ 25,379
NASD filing fee .................................... 7,860
Nasdaq National Market listing fee ................. 32,500
Printing expenses .................................. *
Accounting fees and expenses ....................... *
Legal fees and expenses ............................ *
Fees and expenses (including legal fees) for
qualifications under state securities laws ....... *
Registrar and Transfer Agent's fees and expenses .. *
Miscellaneous ...................................... *
------------
Total ............................................. $ *
============
- --------
* To be provided by amendment.
All amounts except the Securities and Exchange Commission registration fee,
the NASD filing fee and the Nasdaq National Market listing fee are estimated.
The Company intends to pay all expenses of registration with respect to
shares being offered hereby, with the exception of underwriting discounts and
commissions.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company has authority under Florida law to indemnify its directors and
officers and officers to the extent provided in such statute. The Articles
provide that the Company shall indemnify its directors to the fullest extent
permitted by law either now or hereafter. The Company has also entered into an
agreement with each of its directors and certain of its officers wherein it has
agreed to indemnify each of them to the fullest extent permitted by law.
At present, there is no pending litigation or proceeding involving a director
or officer of the Company as to which indemnification is being sought, nor is
the Company aware of any threatened litigation that may result in claims for
indemnification by any officer or director.
Pursuant to the Underwriting Agreement filed as Exhibit 1.1 to this
Registration Statement, the Underwriters have agreed to indemnify the directors,
officers and controlling persons of the Company against certain civil
liabilities that may be incurred in connection with this offering, including
certain liabilities under the Securities Act.
Section 607.0850 of the Florida Business Corporation Act permits a Florida
corporation to indemnify a present or former director or officer of the
corporation (and certain other persons serving at the request of the corporation
in related capacities) for liabilities, including legal expenses, arising by
reason of service in such capacity if such person shall have acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and in any criminal proceeding if such person had
no reasonable cause to believe his conduct was unlawful. However, in the case of
actions brought by or in the right of the corporation, no indemnification may be
made with respect to any matter as to which such director or officer shall have
been adjudged liable, except in certain limited circumstances.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
1 Underwriting Agreement*
3.1 Amended and Restated Articles of Incorporation*
3.2 Amended and Restated Bylaws*
4.1 Specimen Class A Common Stock Certificate*
5.1 Opinion of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. as to the validity of the Class
A Common Stock to be registered*
15.1 Letter of Ernst & Young LLP re unaudited interim financial information.**
23.1 Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. (to be included in its opinion
to be filed as Exhibit 5.1)*
23.2 Consent of Ernst & Young LLP**
24.1 Reference is made to the Signatures section of this Registration Statement for the Power of Attorney
contained therein.
27 Financial Data Schedule*
<FN>
- --------
* To be filed by amendment.
** Filed herewith.
</FN>
</TABLE>
ITEM 17. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(b) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(3) For the purpose of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Daytona Beach, State of Florida, on September 5,
1996.
INTERNATIONAL SPEEDWAY CORPORATION
By: /s/ LESA D. KENNEDY
---------------------------------------
Lesa D. Kennedy
Executive Vice President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints W. Garrett Crotty and Glenn R. Padgett his
true and lawful attorneys-in-fact, each acting alone, with full powers of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments, including any
post-effective amendments, to this registration statement, or any registration
statement relating to this offering to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, and to file the same, with exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorneys-in-fact or their substitutes, each acting alone, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ WILLIAM C. FRANCE Chairman of the Board, Chief September 5, 1996
- ----------------------- Executive Officer and Director
William C. France (principal executive officer)
/s/ SUSAN G. SCHANDEL Treasurer and Chief Financial September 5, 1996
- ----------------------- Officer (principal financial officer)
Susan G. Schandel
/s/ DANIEL W. HOUSER Controller (principal accounting September 5, 1996
- ----------------------- officer)
Daniel W. Houser
/s/ JAMES C. FRANCE President, Chief Operating Officer September 5, 1996
- ----------------------- and Director
James C. France
/s/ LESA D. KENNEDY Executive Vice President September 5, 1996
- ----------------------- and Director
Lesa D. Kennedy
/s/ H. LEE COMBS Senior Vice President-- September 5, 1996
- ----------------------- Operations and Director
H. Lee Combs
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JAMES H. FOSTER Senior Vice President-- September 5, 1996
- ----------------------- Special Projects and Director
James H. Foster
/s/ ROBERT E. SMITH Vice President-- September 5, 1996
- ----------------------- Administration and Director
Robert E. Smith
/s/ J. HYATT BROWN Director September 5, 1996
- -----------------------
J. Hyatt Brown
/s/ JOHN R. COOPER Director September 5, 1996
- -----------------------
John R. Cooper
/s/ ROBERT W. EMERICK Director September 5, 1996
- -----------------------
Robert W. Emerick
/s/ BRIAN Z. FRANCE Director September 5, 1996
- -----------------------
Brian Z. France
/s/ CHRISTY F. HARRIS Director September 5, 1996
- -----------------------
Christy F. Harris
/s/ RAYMOND K. MASON, JR. Director September 5, 1996
- -----------------------
Raymond K. Mason, Jr.
/s/ LLOYD E. REUSS Director September 5, 1996
- -----------------------
Lloyd E. Reuss
/s/ CHAPMAN ROOT, II Director September 5, 1996
- -----------------------
Chapman Root, II
/s/ THOMAS W. STAED Director September 5, 1996
- -----------------------
Thomas W. Staed
</TABLE>
II-4
EXHIBIT 15.1
The Board of Directors
International Speedway Corporation
We are aware of the inclusion, or incorporation by reference, in the
Registration Statement (Form S-3) of International Speedway Corporation for the
registration of 4,000,000 shares of its Class A Common Stock of our reports
dated January 10, 1996, April 5, 1996 and July 5, 1996, except as to Note 7, as
to which the date is September 5, 1996, relating to the unaudited condensed
consolidated interim financial statements of International Speedway Corporation
that are included in its Forms 10-Q for the quarters ended November 30, 1995,
February 29, 1996, and May 31, 1996, or elsewhere in the Registration Statement.
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not
a part of the registration statement prepared or certified by accountants
within the meaning of Sections 7 or 11 of the Securities Act of 1933.
Ernst & Young LLP
Jacksonville, Florida
September 5, 1996
- -----------------------------------------------------------------------------
The foregoing letter is in the form that will be signed upon the completion
of the recapitalization of the Company as described in Note 7 to the financial
statements.
Ernst & Young LLP
Jacksonville, Florida
September 5, 1996
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the captions "Experts" and
"Selected Financial Data" and to the use of our report dated October 20, 1995,
except to Note 12, as to which the date is September 5, 1996, in the
Registration Statement (Form S-3) and the related Prospectus of International
Speedway Corporation for the registration of 4,000,000 shares of its Class A
Common Stock.
We also consent to the incorporation by reference therein of our report
dated October 20, 1995 with respect to the financial statement schedule of
International Speedway Corporation for the years ended August 31, 1995, 1994,
and 1993 included in the Annual Report (Form 10-K) for 1995 filed with the
Securities and Exchange Commission.
Ernst & Young LLP
Jacksonville, Florida
September 5, 1996
- -----------------------------------------------------------------------------
The foregoing consent is in the form that will be signed upon the
completion of the recapitalization of the Company as described in Note 12 to
the financial statements.
Ernst & Young LLP
Jacksonville, Florida
September 5, 1996
