AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 29, 1996
REGISTRATION NO. 333-11541
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
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.)
-----------------------
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 (NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OF AGENT FOR SERVICE)
OFFICE)
-------------------------
COPIES OF COMMUNICATIONS TO:
<TABLE>
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<S> <C> <C>
Bruce E. Macdonough
Greenberg, Traurig, Hoffman, Glenn R. Padgett Donn A. Beloff
Lipoff, Rosen & Quentel, P.A. 555 West Granada Blvd. Holland & Knight
1221 Brickell Avenue Suite D-11 One East Broward Blvd.
Miami, Florida 33131 Ormond Beach, Florida 32173 Ft. Lauderdale, Florida 33301
Phone: (305) 579-0500 Phone: (904) 676-9099 Phone: (954) 525-1000
Fax: (305) 579-0717 Fax: (904) 676-1151 Fax (954) 463-2030
</TABLE>
--------------------------
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. [ ]
-------------------------
CALCULATION OF REGISTRATION FEE
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Proposed Maximum
TITLE OF EACH CLASS Aggregate Amount of
OF SECURITIES TO BE REGISTERED Offering Price(1)(2) Registration Fee
- -----------------------------------------------------------------------------------------------------
Class A Common Stock, $.01 par value per share $78,200,000 $23,697(3)
</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.
(3) The registrant has previously paid a fee of $25,379.
-------------------------
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 OCTOBER 29, 1996
P R O S P E C T U S
[ISC LOGO]
INTERNATIONAL SPEEDWAY CORPORATION
4,000,000 Shares Class A Common Stock
--------------------------
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 $15.00 and $17.00 per share. See "Underwriting" for
information relating to the factors to be considered in determining the
initial public offering price. The Class A Common Stock has been approved for
listing 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, the Class A
Common Stock offered hereby will represent approximately 2.3% of the combined
voting power of both classes of Common Stock. William C. France (the
Company's Chairman of the Board and Chief Executive Officer), James C. France
(the Company's President and Chief Operating Officer), members of their
families and affiliates (collectively the "France Family Group") will in the
aggregate beneficially own shares of Class B Common Stock representing
approximately 55.0% of the Company's outstanding Common Stock and
approximately 60.0% of the combined voting power of both classes of 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."
-------------------------
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.
-------------------------
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.
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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Per Share $ $ $
Total(3) $ $ $
<FN>
(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 Selling
Shareholder will be $ , $ , $ and $ ,
respectively.
</FN>
</TABLE>
-------------------------
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>
Inside Flap:
Description of photographs:
Top photograph: Aerial photograph of
Daytona International Speedway
Bottom photograph: Aerial photograph of
Talladega Superspeedway
<PAGE>
Inside Front Cover
Description of photographs:
(Left to Right)
1. Pit row at Daytona International Speedway
2. Pack of stock cars around curve at Daytona International Speedway
3. Kodak car in pit stop at Daytona International Speedway
4. Blurred photo of pack of cars at Daytona International Speedway
5. Cars on Talladega Raceway
6. Victory Lane at Daytona International Speedway
7. Motorcycles in turn at Daytona International Speedway
8. Motorcycles at start line of Supercross at Daytona International Speedway
9. DAYTONA USA Complex, front entrance
10. Sports cars at Rolex 24 Race at Daytona International Speedway
IN 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.
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMPANY'S
COMMON STOCK ON NASDAQ IN ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES
EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
<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-END 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 1996, NASCAR-sanctioned races at the
Company's facilities accounted for approximately 78.3% 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>
THE OFFERING
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.
Nasdaq National Market symbol .... "ISCA"
SUMMARY FINANCIAL INFORMATION
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YEAR ENDED AUGUST 31, (1)
---------------------------------------------------------------------
1992 1993 1994 1995 1996
------------ ------------- ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE, SELECTED OPERATING AND INDUSTRY DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions, net ........................ $29,423 $32,078 $36,935 $43,274 $50,140
Motorsports related income ............. 15,341 16,557 18,764 24,033 27,433
Food, beverage and souvenir income .... 6,048 9,515 12,291 14,442 17,505
Other income ........................... 1,476 1,003 943 423 964
Total revenues ........................ 52,288 59,153 68,933 82,172 96,042
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR
sanction fees ....................... 7,370 8,251 9,412 11,765 13,865
Motorsports related expenses .......... 10,127 10,470 11,470 11,604 15,336
Food, beverage and souvenir expenses . 2,759 4,775 7,867 8,107 10,278
General and administrative expenses ... 11,816 13,046 14,307 18,202 20,930
Depreciation ........................... 2,612 3,006 3,828 4,798 6,302
Total expenses ........................ 34,684 39,548 46,884 54,476 66,711
Operating income ........................ 17,604 19,605 22,049 27,696 29,331
Net income .............................. 11,694 12,763(2) 14,566 18,363 19,681
Earnings per share ...................... $ .34 $ .37 $ .42 $ .53 $ .57
SELECTED OPERATING DATA:
Operating margin ........................ 33.7% 33.1% 32.0% 33.7% 30.5%
Total admissions ........................ 733,600 767,717 848,134 985,739 1,028,970
Number of seats(3):
Daytona International Speedway ........ 98,447 99,204 103,600 109,779 113,149
Talladega Superspeedway ................ 64,352 67,435 74,793 82,671 95,256
Darlington Raceway ..................... 32,455 32,455 37,281 39,917 42,553
Watkins Glen ........................... 26,033 26,061 26,061 28,095 33,221
INDUSTRY DATA:
Attendance at Winston Cup events(4) .... 3,700,000 4,020,000 4,896,000 5,327,000 N/A
Attendance at Busch Grand
National events(4) .................... 1,054,000 1,165,000 1,302,000 1,604,000 N/A
</TABLE>
AUGUST 31, 1996
-----------------------------
ACTUAL AS ADJUSTED(5)
------------ ---------------
BALANCE SHEET DATA:
Working capital (deficit) $ (6,751) $ 17,949
Total assets .............. 152,791 212,291
Long-term debt ............ -- --
Total shareholders' equity 106,667 166,167
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 (.01 per share) 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 $16.00 per
share) and the application of the net proceeds therefrom as set forth in
"Use of Proceeds."
----------------------
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").
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, five 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 fiscal 1996, NASCAR-sanctioned races at the Company's facilities
accounted for approximately 79.5% and 78.3%, 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. Regardless of any potential conflicts
of interest, the Company's officers and directors owe fiduciary duties to the
Company. The Company does not currently have any specific conflict resolution
procedures. 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 August 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 revenue from the alcoholic beverage
industry. Advertising and sponsorship revenue from the tobacco and alcoholic
beverage industries accounted for approximately 1.6% and 1.5% of the Company's
total revenues in fiscal 1995 and fiscal 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
7
<PAGE>
capital resources, (iv) the Company's ability to control construction and
operating costs, and (v) the 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. At the present time, the Company does
not have any arrangement or understanding with respect to any new facility
acquisition or development project. The cost of any such transaction will depend
on a number of factors, including the facility's location, the extent of the
Company's ownership interest and the degree of any municipal or other public
support. Moreover, although management believes that it will be able to obtain
financing to fund the acquisition, development and/or construction of additional
motorsport facilities should the Company implement this element of its growth
strategy, there can be no assurance that adequate debt or equity financing will
be available on satisfactory terms. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources"
and "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. For example, bad weather required the rescheduling
of certain racing events during the Company's 1996 Camel Motorcycle Week,
resulting in reduced revenues and increased expenses.
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.
Immediately after this Offering, the Class A Common Stock offered hereby will
represent approximately 2.3% of the combined voting power of both classes of the
Company's Common Stock. Members of the France Family Group will in the aggregate
beneficially own shares of Class B Common Stock representing approximately 55.0%
of the Company's outstanding capital stock and approximately 60.0% of the
combined voting power of both classes of Common Stock. Accordingly, if such
members of the France Family Group vote their shares of Common Stock in the same
manner, they will have sufficient voting power (without the approval 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'
9
<PAGE>
meetings. In addition, upon consummation of this Offering, the Company will be
authorized to issue one million shares of 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
Management believes that 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 $16.00 per share, are estimated to be approximately $59.5
million, after deduction of underwriting discounts and commissions and estimated
expenses of the Offering. The Company intends to use approximately $26.8 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. Approximately $8.0 million of the net
proceeds of this Offering will be used to repay borrowings incurred under one of
the Company's lines of credit in September 1996 to fund the Company's
acquisition of properties in close proximity to Daytona International Speedway.
Such borrowings bear interest at a variable rate equal to the one-year LIBOR
rate plus .75% (6.9% at September 16, 1996) and mature 30 days after demand by
the lender. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources," "Business--Growth
Strategy" and "Business--Motorsports Facilities."
The approximately $24.7 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 current intention to declare and pay dividends 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 August
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 $16.00 per share) and the
application of the estimated net proceeds therefrom as described under "Use of
Proceeds."
<TABLE>
<CAPTION>
AUGUST 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 67,587
Retained earnings ..................................................... 99,986 99,986
Unearned compensation--restricted stock(1) ............................ (1,790) (1,790)
----------- --------------
Total shareholders' equity ........................................... 106,667 166,167
----------- --------------
Total capitalization ............................................... $106,667 $166,167
=========== ==============
</TABLE>
- -------------------------
(1) See Note 11 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, 1992 through 1996 have been derived from the
Company's Consolidated Financial Statements which have been audited by Ernst &
Young LLP, independent certified public accountants. 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)
--------------------------------------------------------------
1992 1993 1994 1995 1996
----------- ----------- ----------- ---------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions, net .................................... $ 29,423 $ 32,078 $ 36,935 $ 43,274 $ 50,140
Motorsports related income ......................... 15,341 16,557 18,764 24,033 27,433
Food, beverage and souvenir income ................. 6,048 9,515 12,291 14,442 17,505
Other income ....................................... 1,476 1,003 943 423 964
-------- -------- -------- -------- --------
Total revenues .................................... 52,288 59,153 68,933 82,172 96,042
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR sanction
fees ......................................... 7,370 8,251 9,412 11,765 13,865
Motorsports related expenses ...................... 10,127 10,470 11,470 11,604 15,336
Food, beverage and souvenir expenses .............. 2,759 4,775 7,867 8,107 10,278
General and administrative expenses ................ 11,816 13,046 14,307 18,202 20,930
Depreciation ....................................... 2,612 3,006 3,828 4,798 6,302
-------- -------- ------- ------- -------
Total expenses .................................... 34,684 39,548 46,884 54,476 66,711
-------- ------- ------- ------- -------
Operating income .................................... 17,604 19,605 22,049 27,696 29,331
Interest income, net ................................ 502 724 972 1,436 872
Equity in net income (loss) from equity investments 300 (27) 207 285 1,441
-------- ------- ------- ------- -------
Income before income taxes .......................... 18,406 20,302 23,228 29,417 31,644
Income taxes ........................................ 6,712 7,827 8,662 11,054 11,963
-------- ------- ------- ------- -------
Income before cumulative effect of change in
accounting principle .............................. 11,694 12,475 14,566 18,363 19,681
Cumulative effect of change in accounting principle -- 288 -- -- --
-------- -------- ------- ------- -------
Net income .......................................... $11,694 $12,763 $14,566 $ 18,363 $ 19,681
======= ======== ======= ======== ========
Earnings per share:
Before cumulative effect of change in
accounting principle ........................... $ .34 $ .36 $ .42 $ .53 $ .57
Cumulative effect of change in accounting principle -- .01 -- -- --
------- ------- ------- -------- --------
Earnings per share .................................. $ .34 $ .37 $ .42 $ .53 $ .57
======= ======= ======= ======== ========
Dividends per share ................................. $ .03 $ .03 $ .04 $ .05 $ .05
BALANCE SHEET DATA (END OF PERIOD):
Working capital (deficit) ......................... $13,301 $16,356 $11,839 $ 20,821 $ (6,751)
Total assets ........................................ 67,540 78,487 96,401 119,571 152,791
Long-term debt ...................................... 2,300 -- -- -- --
Total shareholders' equity .......................... 43,638 55,236 68,277 85,247 106,667
</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
GENERAL
The Company derives revenues primarily from (i) admissions to racing events
held at its motorsports facilities, (ii) revenue generated in conjunction with
or as a result of motorsports events conducted at the Company's facilities, and
(iii) catering, concession and souvenir sales made during such events.
"Admissions" revenue includes ticket sales for all of the Company's events,
track tours and, since July 1996, DAYTONA USA. Admissions revenue for racing
events is recorded upon completion of the related motorsports event.
"Motorsports related income" includes television and radio broadcast rights
fees, hospitality rentals (including luxury suites and chalets), promotion and
sponsorship fees, track rentals, advertising revenues and royalties from
licenses of the Company's trademarks. The Company negotiates directly with
television and cable networks for coverage of substantially all of its televised
motorsports events. The Company's revenues from corporate sponsorships are paid
in accordance with negotiated contracts, with the identities of sponsors and the
terms of sponsorship changing from time to time.
"Food, beverage and souvenir income" includes revenues from concession
stands, hospitality catering and direct sales of souvenirs, programs and other
merchandise, as well as fees paid by third party vendors for the right to sell
souvenir and concessions at the Company's facilities.
Expenses include (i) prize and point fund monies and NASCAR sanction fees,
(ii) motorsports related expenses, which include costs of competition paid to
sanctioning bodies other than NASCAR, labor, advertising and other expenses
associated with the Company's promotion of its racing events, and (iii) food,
beverage and souvenir expenses, consisting primarily of labor and costs of goods
sold.
14
<PAGE>
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,
-------------------------------
1994 1995 1996
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Admissions, net ...................................... 53.6% 52.7% 52.2%
Motorsports related income ........................... 27.2 29.2 28.6
Food, beverage and souvenir income ................... 17.8 17.6 18.2
Other income ......................................... 1.4 0.5 1.0
--------- --------- ---------
Total revenues ...................................... 100.0% 100.0% 100.0%
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR sanction fees 13.7 14.3 14.4
Motorsports related expenses ........................ 16.6 14.1 16.0
Food, beverage and souvenir expenses ................ 11.4 9.9 10.7
General and administrative expenses .................. 20.8 22.2 21.8
Depreciation ......................................... 5.5 5.8 6.6
--------- --------- ---------
Total expenses ...................................... 68.0 66.3 69.5
--------- --------- ---------
Operating income ...................................... 32.0 33.7 30.5
Interest income, net .................................. 1.4 1.7 0.9
Equity in net income from equity investments ......... .3 .3 1.5
--------- --------- ---------
Income before income taxes ............................ 33.7 35.7 32.9
Income taxes .......................................... 12.6 13.4 12.5
--------- --------- ---------
Net income ............................................ 21.1% 22.3% 20.5%
========= ========= =========
</TABLE>
COMPARISON OF FISCAL 1996 TO FISCAL 1995
Admissions revenue increased approximately $6.9 million, or 15.9%, from
fiscal 1995 to fiscal 1996. Approximately 75% of this increase was attributable
to an increase in the Company's weighted average price of tickets sold. This
increase was the result of general price increases and additional sales of
premium seats. Increased attendance at the Company's racing events accounted for
approximately 13% of the increase in admissions revenue. The remaining increase
was attributable to DAYTONA USA. Management believes that the increases in
weighted average price of tickets sold and admissions reflect the increasing
popularity of motorsports and the Company's continued expansion in seating
capacity at its facilities.
Motorsports related income increased approximately $3.4 million, or 14.1%,
from fiscal 1995 to fiscal 1996. This increase reflected an approximately $1.4
million increase in broadcast rights fees, an approximately $900,000 increase in
promotion and sponsorship fees and an approximately $900,000 increase in
hospitality rentals. This increase was partially offset by an approximately
$800,000 decrease in royalties from the Company's trademark license to a single
licensee.
Food, beverage and souvenir income increased approximately $3.1 million, or
21.2%, from fiscal 1995 to fiscal 1996. Approximately $1.8 million of this
increase was attributable to the expanded activities of Americrown Service
Corporation ("Americrown") in providing food and beverage services at outdoor
sporting events unrelated to the motorsports events promoted by the Company. The
remainder of the increase was primarily attributable to increased attendance at
the Company's racing events and, to a lesser extent, price increases.
Prize and point fund monies and NASCAR sanction fees increased approximately
$2.1 million, or 17.8%, from fiscal 1995 to fiscal 1996. Approximately 75% of
this increase was due to increases in the prize and point fund monies paid by
NASCAR to participants in the Company's motorsports events.
15
<PAGE>
This increase was primarily attributable to increases in the Company's broadcast
revenues as standard NASCAR sanctioning agreements require that a specified
percentage of broadcast revenues be paid as prize money.
Motorsports related expenses increased approximately $3.7 million, or 32.2%,
from fiscal 1995 to fiscal 1996, reflecting increased labor, advertising and
other costs associated with the promotion of the Company's racing events.
Motorsports related expenses as a percentage of combined admissions and
motorsports related income increased from approximately 17.2% in fiscal 1995 to
approximately 19.8% in fiscal 1996, which management attributes primarily to
pre-opening expenses associated with DAYTONA USA, which was open for only two
months in fiscal 1996, as well as the impact of inclement weather on the results
from the Company's 1996 Camel Motorcycle Week events.
Food, beverage and souvenir expenses increased approximately $2.7 million, or
26.8%, from fiscal 1995 to 1996, reflecting increases in labor, product costs
and other expense items attributable to the Company's expanded concessions and
catering operations. Food, beverage and souvenir expenses as a percentage of
food, beverage and souvenir income increased from approximately 56.1% in fiscal
1995 to 58.7% in fiscal 1996, reflecting the lower margins associated with the
expansion of Americrown's concessions and catering operations to third party
events.
General and administrative expenses increased approximately $2.7 million, or
15.0%, from fiscal 1995 to fiscal 1996. The increase was primarily due to
increases in life insurance, travel expenses, wages and other compensation,
professional fees, as well as a wide variety of other expense items. General and
administrative expenses as a percentage of total revenues decreased from
approximately 22.2% in fiscal 1995 to 21.8% in fiscal 1996.
The Company's depreciation expense increased approximately $1.5 million, or
31.3%, primarily as a result of the ongoing expansion of the Company's
motorsports facilities and the opening of DAYTONA USA in July 1996.
The approximately $550,000 decrease in the Company's net interest income was
primarily attributable to lower average investment balances resulting from the
funding of construction of DAYTONA USA, the Company's indirect investment in
Penske Motorsports and a variety of facility expansion and improvement projects.
The approximately $1.2 million increase in net income from equity investments
was attributable to the Company's indirect investment in Penske Motorsports and,
to a lesser extent, an increase in Watkins Glen net income.
As a result of the foregoing, the Company's net income increased $1.3
million, or 7.2%, from $18.4 million in fiscal 1995 to $19.7 million in fiscal
1996.
COMPARISON OF FISCAL 1995 TO FISCAL 1994
The Company's admissions revenue increased approximately $6.3 million, or
17.3%, from fiscal 1994 to fiscal 1995. Approximately half of this increase was
attributable to increased attendance at the Company's racing events, with the
balance due to an increase in the Company's weighted average price of tickets
sold. Management believes that these increases in turn reflected the increased
popularity of motorsports and the Company's expansion in seating capacity at its
facilities.
Motorsports related income increased approximately $5.3 million, or 28.1%,
from fiscal 1994 to fiscal 1995. This increase was primarily due to an
approximately $1.8 million increase in broadcast rights fees, an approximately
$1.2 million increase in royalties from the Company's trademark licenses, an
approximately $900,000 increase in advertising revenues and an approximately
$700,000 increase in promotion and sponsorship fees.
Food, beverage and souvenir income increased approximately $2.2 million, or
17.5%, from fiscal 1995 to fiscal 1996. Approximately $650,000 of this increase
was attributable to the expanded activities
16
<PAGE>
of Americrown in providing catering services at the Company's Daytona and
Talladega facilities and food and beverage services at outdoor sporting events
unrelated to the motorsports events promoted by the Company. The remainder of
the increase was primarily attributable to increased attendance at the Company's
racing events and, to a lesser extent, price increases.
Prize and point fund monies and NASCAR sanction fees increased approximately
$2.4 million, or 25.0%, from fiscal 1994 to fiscal 1995. Approximately 82% of
this increase was due to increases in the prize and point fund monies paid to
participants in the Company's motorsports events. This increase was primarily
attributable to increases in the Company's broadcast revenues.
Motorsports related expenses remained relatively constant, increasing
approximately $134,000, or 1.2%, from fiscal 1994 to fiscal 1995. Motorsports
related expenses as a percentage of combined admissions and motorsports related
income decreased from approximately 20.5% in fiscal 1994 to approximately 17.2%
in fiscal 1995, reflecting the increase in the Company's revenues and the
resulting economies of scale.
Food, beverage and souvenir expenses increased approximately $240,000, or
3.0%, from fiscal 1994 to 1995, reflecting increases in labor, product costs and
other expense items attributable to the Company's expanded concessions and
catering operations. Food, beverage and souvenir expenses as a percentage of
food, beverage and souvenir income decreased from approximately 64.0% in fiscal
1994 to 56.1% in fiscal 1995, reflecting the elimination of promotional costs
associated with a discontinued mail order catalog developed and distributed in
fiscal 1994, a reduction of product costs, and economies of scale attributable
to the increase in food, beverage and souvenir income.
General and administrative expenses increased approximately $3.9 million, or
27.2%, from fiscal 1994 to fiscal 1995. The increase was primarily due to
increases in wages and compensation, professional fees and other administrative
expenses. General and administrative expenses as a percentage of total revenues
increased from approximately 20.8% in fiscal 1994 to 22.2% in fiscal 1995.
The Company's depreciation expense increased approximately $970,000, or
25.3%, from fiscal 1994 to fiscal 1995, primarily as a result of the ongoing
expansion of the Company's motorsports facilities.
The approximately $450,000 increase in the Company's net interest income was
primarily attributable to an increase in average investment balances from fiscal
1994 to fiscal 1995.
As a result of the foregoing, the Company's net income increased $3.8
million, or 26.1%, from $14.6 million in fiscal 1994 to $18.4 million in fiscal
1995.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
The Company has historically generated sufficient cash flow from operations
to fund its capital expenditures, investments and working capital needs, as well
as to pay annual cash dividends. At August 31, 1996, the Company had a working
capital deficit of $6.7 million, compared to working capital of $20.8 million at
August 31, 1995, which was primarily attributable to the funding of DAYTONA
USA's construction, the Company's indirect investment in Penske Motorsports and
various expansion and improvement projects as described under "--Cash Flows" and
"--Capital Expenditures."
The Company also has two lines of credit with financial institutions
totalling $16.0 million. One of the $8.0 million lines of credit expires in
December 1996, and the other expires in September 1997. Borrowings under the
credit facilities bear interest at the one-year LIBOR rate plus .75%. See Note
13 of Notes to the Company's Consolidated Financial Statements.
CASH FLOWS
Net cash provided by operating activities was approximately $32.7 million in
fiscal 1996, compared to $27.7 million in fiscal 1995. The difference between
the Company's fiscal 1996 net income of $19.7
17
<PAGE>
million and the $32.7 million of operating cash flow was primarily attributable
to $6.3 million of depreciation, a $6.1 million increase in deferred income, a
$1.4 million increase in deferred income taxes and a $1.2 million increase in
accounts payable, partially offset by a $1.7 million increase in receivables and
$1.4 million in undistributed income from equity investments.
Net cash used in investing activities was $28.0 million in fiscal 1996,
compared to $23.4 million in fiscal 1995. The Company's fiscal 1996 cash flow
reflects $34.8 million in capital expenditures and the Company's $15.3 million
indirect investment in Penske Motorsports, as well as $22.8 million of net
proceeds from investments. See "--Capital Expenditures,"
"Business--Operations--Penske Motorsports" and Note 2 of Notes to the Company's
Consolidated Financial Statements.
Net cash used in financing activities was approximately $3.5 million in
fiscal 1996, compared to $1.7 million in fiscal 1995. The Company's fiscal 1996
cash flow reflects $1.8 million of cash dividends and $1.7 million attributable
to the repurchase of previously outstanding common stock.
CAPITAL EXPENDITURES
Capital expenditures totalled approximately $34.8 million in fiscal 1996,
compared to $16.8 million in fiscal 1995 and $19.7 million in fiscal 1994. The
Company's fiscal 1996 capital expenditures related primarily to DAYTONA USA, the
Company's addition to Daytona International Speedway's Winston Tower and other
additions and improvements to the Company's motorsports facilities.
The Company currently expects to make approximately $35.4 million of capital
expenditures during the 15 months ending November 30, 1997 to complete the
Winston Tower addition, to increase seating capacity as described in
"Business--Growth Strategy--Expand Existing Facilities," and for a number of
other improvements to the Company's motorsports facilities. The estimated amount
of capital expenditures also includes $5.4 million attributable to the current
renovation of the Company's new corporate headquarters facility and $8.0 million
attributable to the Company's September 1996 purchase of real property in close
proximity to Daytona International Speedway. See "Business--Motorsports
Facilities."
FUTURE LIQUIDITY
The Company believes that the proceeds of this Offering together with funds
generated from operations will be sufficient to satisfy the Company's working
capital requirements through at least fiscal 1997, as well as the Company's
planned capital expenditures described in the preceding paragraph.
The Company also believes that it will be able to obtain financing to fund
the acquisition, development and/or construction of additional motorsports
facilities should the Company implement this element of its growth strategy.
However, there can be no assurance that adequate debt or equity financing will
be available on satisfactory terms. See "Risk Factors--Uncertain Prospects of
New Motorsports Facilities."
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 and expenses 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
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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, the date for the Company's Diehard
500 race will be moved from the fiscal quarter ending August 31 to the fiscal
quarter ending November 30 in 1997. The following table presents certain
unaudited financial data for each fiscal quarter of fiscal 1995 and fiscal 1996
(in thousands, except per share amounts):
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED
-----------------------------------------------------------
NOVEMBER 30, FEBRUARY 28, MAY 31, AUGUST 31,
1994 1995 1995 1995
--------------- --------------- ---------- -------------
<S> <C> <C> <C> <C>
Total revenues ............ $ 6,694 $35,022 $21,621 $18,835
Operating income (loss) .. (1,607) 18,942 6,091 4,270
Net income (loss) ......... (871) 11,672 3,653 3,909
Earnings (loss) per share.. (.03) .34 .11 .11
FISCAL QUARTER ENDED
-----------------------------------------------------------
NOVEMBER 30, FEBRUARY 28, MAY 31, AUGUST 31,
1995 1996 1996 1996
--------------- --------------- ---------- -------------
<S> <C> <C> <C> <C>
Total revenues ............ $ 8,542 $40,277 $24,176 $23,047
Operating income (loss) .. (1,474) 20,338 6,230 4,237
Net income (loss) ......... (1,020) 12,089 3,817 4,795
Earnings (loss) per share.. (.03) .35 .11 .14
</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 78.3% of its total revenues from NASCAR-sanctioned
racing events at the Company's facilities in fiscal 1996.
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.
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.
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<PAGE>
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.
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<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 or have plans to 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,
the premier sports car endurance 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.
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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 1996, NASCAR-sanctioned races at the
Company's facilities accounted for approximately 78.3% 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, which management
believes serves to maximize customer loyalty. To that end, the Company has in
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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 fiscal 1996 capital expenditures attributable to such
improvement projects totalled approximately $12.7 million. 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 MRN Radio, its proprietary motor
racing network. MRN Radio programs are 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.
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
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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. These expansion projects are expected to require an
aggregate of approximately $22.0 million of capital expenditures during the
15 months ending November 30, 1997. See "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources." 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 approximately $20.0
million 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 recently signed an agreement
with CBS with 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, although a definitive contract has not
been executed, the Company has an agreement in principle with CBS to broadcast
the Daytona 500, the 300 mile Busch Grand National race held
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during Speedweeks, the Pepsi 400, the Busch Clash and the Gatorade 125's from
1998 through 2001. The Company also has an agreement in principle with ESPN
to broadcast five Winston Cup races, four Busch Grand National races and one
ARCA race to be promoted by the Company from 1998 through 2001.
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 or the financing
thereof. See "Risk Factors--Uncertain Prospects of New Motorsports Facilities."
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.
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.
Approximately $75 million, or 78.3%, of the Company's fiscal 1996 revenues
were attributable to NASCAR-sanctioned races at the Company's facilities,
including applicable admissions, luxury suite rental, sponsorship, television
and MRN Radio broadcast, food and beverage concession and catering, souvenir,
advertising and other revenues. Winston Cup and Busch Grand National races
accounted for approximately 84.5% and 11.7%, respectively, of such fiscal 1996
NASCAR-sanctioned race event revenues, with the approximately 3.8% balance
attributable to Craftsman Truck, Goody's Dash and other NASCAR racing series.
The Company's fiscal 1996 revenues that were not attributable to
NASCAR-sanctioned races at the Company's facilities were derived from a number
of various sources, including (i) admission and luxury suite rental revenue from
racing events sanctioned by bodies other than NASCAR, (ii) broadcast and
sponsorship fees for such non-NASCAR racing events, (iii) MRN Radio's revenues
from the sale of advertising and rights fees paid by broadcast affiliates with
respect to events other than NASCAR-sanctioned races at the Company's
facilities, (iv) Americrown's catering and concession revenues for the Company's
non-NASCAR racing events, as well as unaffiliated sporting events, (v)
admissions and sponsorship fees attributable to DAYTONA USA, and (vi) other
revenues unrelated to racing events such as hangar rentals and gas sales at the
Talladega Municipal Airport. None of foregoing non-NASCAR revenue sources
accounted for over 5% of the Company's fiscal 1996 revenues.
27
<PAGE>
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 Daytona
International Lightweight 100K AMA Daytona
March 9 Daytona Supercross by Honda AMA Daytona
March 10 600 Supersport International AMA Daytona
Challenge 100K
Harley-Davidson Supertwin Final AMA Daytona
Daytona 200 By Arai AMA Daytona
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
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
28
<PAGE>
SANCTIONING
DATE EVENT BODY TRACK
- -------------------------------------------------------------------------------------------
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 Watkins Glen
Lysol 200 NASCAR Watkins Glen
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 Late Models NASCAR Tucson
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
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>
29
<PAGE>
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"). 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.
As shown in the chart below, 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 Note 2 of
Notes to the Company's Consolidated Financial Statements for additional
information with respect to this equity investment.
<TABLE>
<S> <C>
- ------------------------------------------------------ ---------------------------------------------
PENSKE CORPORATION INTERNATIONAL SPEEDWAY CORPORATION
- ------------------------------------------------------ ---------------------------------------------
100% 100%
------------------------------------------ -----------------------------------
PENSKE PERFORMANCE, INC. FACILITY INVESTMENTS, INC.
------------------------------------------ -----------------------------------
80% 20%
---------------------- -----------------
----------------------------
PSH CORP.
----------------------------
=60%
---------------------------------------
PENSKE MOTORSPORTS, INC.
---------------------------------------
</TABLE>
Although two of the Company's directors serve on the Board of Penske
Motorsports, the Company does not control Penske Motorsports. Pursuant to the
Investment and Development Agreement, dated as of November 22, 1995, as amended,
between the Company and Penske Corporation (the "Investment and Development
Agreement"), as long as PSH Corp. owns a majority of the issued and outstanding
voting stock of Penske Motorsports, the Company is permitted to designate a
percentage of the members of the Board of Directors of each of Penske
Motorsports and certain of its subsidiaries equal to the greater of (i) 20.0% or
(ii) the percentage of stock ownership of the Company in PSH Corp. as adjusted
to reflect changes in such percentage; provided, however, that the Company may
designate at least two such persons to each such Board so long as the Company
owns at least 10.0% of the outstanding Common Stock of PSH Corp., and one person
to each such Board so long as the Company owns at least 2.0% of the outstanding
Common Stock of PSH Corp. Messrs. France and Combs are the current Company
designees for each such Board. As long as the Company is permitted to have at
least two designees to a Board, at least one designee shall serve on any
executive or similar committee that may be created by the applicable Board. If
PSH Corp. no longer owns a majority of the issued and outstanding voting stock
of Penske Motorsports, the foregoing obligations of Penske Corporation are to be
met on a "best efforts" basis.
Pursuant to the Shareholders Agreement, dated as of November 22, 1995,
as amended, among Penske Performance, Inc., Facility Investments, Inc., and PSH
Corp., if either Penske Performance, Inc. or Facility Investments, Inc. desires
to transfer any shares of capital stock of PSH Corp. to an unrelated third
party, it first must offer such shares to the other shareholder on the same
terms and conditions as the proposed transfer. Pursuant to the Shareholders
Agreement, also dated as of November 22, 1995, as amended, among PSH Corp.,
Kaiser Resources, Inc. and Penske Motorsports, and the Investment and
Development Agreement if Kaiser Resources, Inc. desires to transfer any of the
shares of Penske Motorsports it owns for consideration to an unrelated party,
Kaiser must offer such shares on the same terms and conditions as the proposed
transfer, first to the Company and if the Company elects not to purchase such
shares, then to PSH Corp.
30
<PAGE>
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, 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.
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.
MRN Radio also produces daily and weekly NASCAR racing programs, as well as Ned
Jarrett's "World of Racing" program. MRN Radio programs are currently carried by
over 400 radio stations. The Company derives revenue from the sale of
advertising on MRN Radio and rights fees paid by broadcast affiliates. In
addition, management believes that MRN Radio enhances the Company through
increased media exposure to an expanding radio audience.
31
<PAGE>
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
- -------------------
* Operated by the Company's 50%-owned subsidiary.
</TABLE>
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
32
<PAGE>
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.
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.
In September 1996, the Company purchased approximately 14 acres of real
property, including three buildings containing an aggregate of approximately
180,000 square feet, located in close proximity to Daytona International
Speedway and the Company's new corporate headquarters facility. The purchase
price was $8.0 million. Such buildings are currently leased to unaffiliated
third parties.
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."
33
<PAGE>
EMPLOYEES
As of August 31, 1996, the Company had approximately 315 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.
On October 21, 1996, Americrown was served with a Class Action Complaint
filed in the Circuit Court of Talladega County, Alabama by Howard Padgett, Bill
Lutz and Tommy Jones. The complaint was filed in September 1996 and alleges,
among other things, that Americrown engaged in price-fixing activities in
connection with the sale of racing souvenirs and merchandise at the Talladega
Superspeedway. The complaint seeks at least $500 for each member of the class
(persons buying racing souvenirs at Talladega Superspeedway since September
1992), but does not otherwise seek to recover compensatory or punitive damages
or statutory attorneys' fees. Americrown disputes the allegations and intends to
defend the action fully and vigorously.
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
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.
34
<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 Direc-
tor
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 84 Director
Brian Z. France 32 Director
Christy F. Harris 50 Director
Raymond K. Mason, Jr. 41 Director
Lloyd E. Reuss 60 Director
Chapman Root, II 45 Director
Thomas W. Staed 65 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 1994 upon his retirement as a
full-time employee. Mr. Foster served as
35
<PAGE>
President of Daytona International Speedway from 1988 until 1994 and as
Executive Vice President--Corporate Communications of the Company from 1984
until 1988. From 1970 to 1988, 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 1990 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 Chairman and
President of American Banks of Florida, Inc., Jacksonville, Florida, since 1978.
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.
36
<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 COMMITTEES
The Company's Board of Directors has an Audit Committee, a Compensation
Committee and a Growth Strategy Committee.
The functions of the Audit Committee (which presently consists of Messrs.
Brown, Emerick and Mason) include (i) meeting with auditors to discuss the
scope, fees, timing and results of the annual audit, (ii) reviewing the
Company's consolidated financial statements, and (iii) performing other duties
deemed appropriate by the Board. The Audit Committee met once during fiscal
1996.
The functions of the Compensation Committee (which presently consists of
Messrs. Reuss, Root and Staed) include (i) reviewing existing compensation
levels of executive officers, (ii) making compensation recommendations to
management and the Board, and (iii) performing other duties deemed appropriate
by the Board. The Compensation Committee met five times during fiscal 1996.
In July 1996, the Board appointed Messrs. Harris, Brown, Mason and Reuss to
serve as members of the Growth Strategy Committee. Such committee was asked to
review the Recapitalization and recommend to the Board whether or not to
proceed. The Growth Strategy Committee did not first meet until September 1996.
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 aggregate retainers and fees paid
to directors with respect to fiscal 1996 services totalled $99,000. The Company
also reimburses directors for all expenses incurred in connection with their
activities as directors.
37
<PAGE>
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 $278,707 (3) $ 0 $754,972
Chairman and Chief 1995 $241,981 $126,850 $ 0 $ 6,015
Executive Officer 1994 $205,947 $ 86,800 $ 0 $ 3,511
James C. France 1996 $224,778 (3) $ 0 $464,378
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 $ 65,806 $293,750 $ 7,724
Vice President 1995 $180,462 $110,228 $ 0 $ 1,607
1994 $ 0 $ 0 $ 0 $ 0
H. Lee Combs 1996 $172,226 $ 72,179 $172,020 $ 11,102
Senior Vice President-- 1995 $116,972 $ 35,218 $ 60,986 $ 9,581
Operations 1994 $104,575 $ 27,364 $113,490 $ 11,112
Lesa D. Kennedy 1996 $173,553 $ 69,223 $149,695 $ 8,648
Executive Vice President 1995 $109,608 $ 32,573 $ 53,168 $ 8,482
1994 $ 92,976 $ 24,486 $ 98,746 $ 6,618
</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 premium payments and related expense for
split-dollar and other life insurance, accidental death and dismemberment
insurance and group health insurance, (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 ($751,724, $3,248 and $0,
respectively); James C. France ($456,724, $1,219 and $6,435,
respectively); John E. Graham ($1,724, $0 and $6,000, respectively); Lesa
D. Kennedy ($1,724, $0 and $6,924, respectively); and H. Lee Combs
($1,724, $2,667 and $6,711, respectively). Pursuant to the Company's
split-dollar life insurance arrangements, the premiums will be repaid to
the Company in future periods. See Note 9 of Notes to the Company's
Consolidated Financial Statements.
(3) Bonuses for services rendered in fiscal 1996 have not been determined as
of the date of this Prospectus.
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
38
<PAGE>
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.
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 approximately $62,000, $71,000 and $359,000 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 $70,000, $80,000 and $294,000 during fiscal 1994, fiscal 1995 and
fiscal 1996, respectively.
39
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of October 31, 1996,
immediately prior to the Offering 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
--------------------------------- PERCENTAGE
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) ......... 15,299,535 44.4 39.8 43.4
William C. France(6) ....... 15,297,315 44.4 39.8 43.4
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(12) ........ 10,230 * * *
J. Hyatt Brown(13) ......... 9,000 * * *
John R. Cooper ............. 1,500 * * *
Christy F. Harris .......... 150 * * *
All directors and executive
officers as a group
(20 persons)(14) ......... 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 20,271,465 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 860,220 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)
9,115,125 shares held of record by Western Opportu115y Limited Partnership
("Western Opportunity"), (iv) 3,750,000 shares held of record by Carl
Investment Limited Partnership ("Carl"), and (v) 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 860,220
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)
9,115,125 shares held of record by Western Opportunity, (iv) 3,750,000
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
40
<PAGE>
shareholder and director of each of (x) Sierra Central Corp., one of the
two general partners of Western Opportunity, (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 9,435 shares held of record by Mr. Smith and 795 shares held of
record as joint tenants with his spouse.
(13) Reflects shares held of record as joint tenants with Cynthia R. Brown,
his spouse.
(14) See footnotes (5) through (13).
41
<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
accurately describe all material provisions of the Company's Articles and
Bylaws. However, such descriptions are not necessarily complete and, in each
instance, reference is made to the copies of the Company's Articles and
Bylaws which are included as exhibits to the Registration Statement of which
this Prospectus is a part.
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.
42
<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. The Class A Common Stock has been approved for listing 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 effect and may delay, defer or prevent
a tender offer or takeover attempt that a
43
<PAGE>
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, 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.
44
<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.
45
<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.
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
---- ----------------
<S> <C>
Smith Barney Inc. ....................
Raymond James & Associates, Inc. ....
----------------
Total .............................. 4,000,000
================
</TABLE>
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 rules of the Commission generally prohibit the Underwriters from
making a market in the existing common stock of the Company during the two
business days prior to commencement of sales in this Offering (the "Cooling
Off Period"). The Commission has, however, adopted Rule 10b-6A under the
Securities Exchange Act of 1934 ("Rule 10b-6A") which provides an exemption
from such
46
<PAGE>
prohibition for certain passive market making transactions. Such passive
market making transctions must comply with applicable price and volume limits
and must be identified as passive market making transactions. In general,
pursuant to Rule 10b-6A, a passive market maker must display its bid for a
security at a price not in excess of the highest independent bid for the
security. If all independent bids are lowered below the passive maker's bid,
however, such bid must be then lowered when certain purchase limits are
exceeded. Further, net purchases by a passive market maker on each day are
generally limited to a specified percentage of the passive market maker's
average daily trading volume in a security during a specified prior period
and must be discontinued when such limit is reached. Pursuant to the
exemption provided by Rule 10b-6A, certain of the Underwriters and selling
group members may engage in passive market making in the existing common
stock of the Company during the Cooling Off Period. Passive market making may
stabilize the market price of the Class A Common Stock at a level above that
which might otherwise prevail, and, if commenced, may be discontinued at any
time.
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.
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 as of August 31, 1995 and
1996, and for each of the three years in the period ended August 31, 1996,
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, incorporated by
reference in this Prospectus and Amendment No. 2 to the Registration
Statement, Ernst & Young LLP
47
<PAGE>
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, incorporated by reference herein, state 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.
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 filed
as an exhibit to the Registration Statement accurately describe the material
terms of such contracts and documents. However, such statements 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 Reports on Form 8-K dated
November 22, 1995, September 5, 1996 and October 21, 1996 as amended; 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
48
<PAGE>
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>
<CAPTION>
<S> <C>
Report of Independent Certified Public Accountants .................... F-2
Consolidated Balance Sheets as of August 31, 1995 and 1996 ........... F-3
Consolidated Statements of Income for the years ended
August 31, 1994, 1995 and 1996 ....................................... F-4
Consolidated Statements of Shareholders' Equity for the years ended
August 31, 1994, 1995 and 1996 ....................................... F-5
Consolidated Statements of Cash Flows for the years ended
August 31, 1994, 1995 and 1996 ....................................... F-6
Notes to Consolidated Financial Statements ............................ F-7
</TABLE>
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
1996, and the related consolidated statements of income, shareholders' equity
and cash flows for each of the three years in the period ended August 31,
1996. 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
1996, and the consolidated results of their operations and their cash flows
for each of the three years in the period ended August 31, 1996, in
conformity with generally accepted accounting principles.
Ernst & Young LLP
Jacksonville, Florida
September 27, 1996,
except as to the fifth paragraph
of Note 1, as to which the
date is October, 1996 and as
to Note 8D, as to which the date
is October 21, 1996
- -----------------------------------------------------------------------------
The foregoing report is in the form that will be signed upon the
completion of the recapitalization of the Company as described in the fifth
paragraph of Note 1 to the financial statements.
Ernst & Young LLP
Jacksonville, Florida
October 29, 1996
F-2
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AUGUST 31,
--------------------------
1995 1996
------------ -------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ................................... $ 7,871 $ 9,042
Short-term investments (Note 3) ............................. 30,950 8,369
Receivables, less allowances of $35 ......................... 1,794 3,455
Inventories ................................................. 1,158 1,409
Prepaid expenses and other current assets ................... 3,122 2,410
------------ ------------
Total Current Assets ......................................... 44,895 24,685
Property and Equipment: ......................................
Land and leasehold improvements ............................. 3,444 3,588
Buildings, grandstands and tracks ........................... 73,216 95,873
Furniture and equipment ..................................... 13,110 26,980
Construction in progress .................................... 11,221 9,306
------------ ------------
100,991 135,747
Less: accumulated depreciation .............................. 30,692 36,912
------------ ------------
70,299 98,835
Other Assets:
Cash surrender value of life insurance ...................... 489 1,214
Equity investments (Note 2) ................................. 2,913 27,256
Long-term investments (Note 3) .............................. 747 500
Other ....................................................... 228 301
------------ ------------
4,377 29,271
------------ ------------
Total Assets ................................................. $119,571 $152,791
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable ............................................ $ 2,619 $ 3,820
Income taxes payable (Note 4) ............................... 324 57
Deferred income ............................................. 19,852 25,963
Other current liabilities ................................... 1,279 1,596
------------ ------------
Total Current Liabilities .................................... 24,074 31,436
Deferred income taxes (Note 4) ............................... 10,250 14,688
Commitments and Contingencies (Note 8)
Shareholders' Equity (Notes 1, 6 and 7):
Class B Common Stock, $.01 par value, 40,000,000 shares
authorized; 34,395,975 and 34,423,890 issued in 1995 and
1996, respectively ........................................ 344 344
Additional paid-in capital .................................. 1,853 8,127
Retained earnings ........................................... 83,846 99,986
------------ ------------
86,043 108,457
Less unearned compensation--restricted stock (Note 11) ...... 796 1,790
------------ ------------
Total Shareholders' Equity ................................... 85,247 106,667
------------ ------------
Total Liabilities and Shareholders' Equity ................... $ 119,571 $152,791
============ ============
</TABLE>
See accompanying notes.
F-3
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
---------------------------------------
1994 1995 1996
------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Revenues:
Admissions, net ............................ $ 36,935 $ 43,274 $ 50,140
Motorsports related income ................. 18,764 24,033 27,433
Food, beverage and souvenir income ........ 12,291 14,442 17,505
Other income ............................... 943 423 964
------------ ------------ ------------
68,933 82,172 96,042
Expenses:
Direct expenses:
Prize and point fund monies
and NASCAR sanction fees ................ 9,412 11,765 13,865
Motorsports related expenses .............. 11,470 11,604 15,336
Food, beverage and souvenir expenses ..... 7,867 8,107 10,278
General and administrative expenses ....... 14,307 18,202 20,930
Depreciation ............................... 3,828 4,798 6,302
------------ ------------ ------------
46,884 54,476 66,711
------------ ------------ ------------
Operating income ............................ 22,049 27,696 29,331
Interest income, net ........................ 972 1,436 872
Equity in net income from equity investments 207 285 1,441
------------ ------------ ------------
Income before income taxes. ................. 23,228 29,417 31,644
Income taxes (Note 4) ....................... 8,662 11,054 11,963
------------ ------------ ------------
Net income .................................. $ 14,566 $ 18,363 $ 19,681
============ ============ ============
Earnings per share (Note 1) ................. $ .42 $ .53 $ .57
============ ============ ============
Dividends per share (Note 1) ................ 4.0/cent/ 4.7/cent/ 5.3/cent/
============ ============ ============
</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, 1993 ............ $343 $ 606 $54,287 $ -- $ 55,236
Net income ........................... -- -- 14,566 -- 14,566
Cash dividends (4.0/cent/ per share) -- -- (1,374) -- (1,374)
Reacquisition of previously issued
common stock (Note 7) .............. -- (1) (285) -- (286)
Restricted stock granted
(Note 11) .......................... 1 759 -- (760) --
Amortization of unearned compensation
(Note 11) .......................... -- -- -- 135 135
----------- ------------- ----------- ---------------- ----------------
BALANCE AT AUGUST 31, 1994 ............ 344 1,364 67,194 (625) 68,277
Net income ........................... -- -- 18,363 -- 18,363
Cash dividends (4.7/cent/ per share) -- -- (1,605) -- (1,605)
Reacquisition of previously issued
common stock (Note 7) .............. -- -- (106) -- (106)
Restricted stock granted
(Note 11) .......................... -- 489 -- (489) --
Amortization of unearned compensation
(Note 11) .......................... -- -- -- 318 318
----------- ------------- ----------- ---------------- ----------------
BALANCE AT AUGUST 31, 1995 ............ 344 1,853 83,846 (796) 85,247
Net income ........................... -- -- 19,681 -- 19,681
Cash dividends (5.3/cent/ per share) -- -- (1,836) -- (1,836)
Reacquisition of previously issued
common stock (Note 7) .............. (1) (2) (1,705) -- (1,708)
Restricted stock granted
(Note 11) .......................... 1 1,599 -- (1,600) --
Amortization of unearned compensation
(Note 11) .......................... -- -- -- 606 606
Recapitalization of equity investment
(Note 2) ........................... -- 4,677 -- -- 4,677
----------- ------------- ----------- ---------------- ----------------
BALANCE AT AUGUST 31, 1996 ............ $344 $8,127 $99,986 $(1,790) $106,667
=========== ============= =========== ================ ================
</TABLE>
See accompanying notes.
F-5
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
--------------------------------------
1994 1995 1996
----------- ------------ ------------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income .......................................... $ 14,566 $ 18,363 $ 19,681
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ....................................... 3,828 4,798 6,302
Amortization of unearned compensation .............. 135 318 606
Deferred income taxes .............................. 1,710 1,650 1,500
Undistributed income from equity investments ...... (207) (285) (1,441)
Gain (loss) on disposition of property and
equipment ............................................ (1) 251 (13)
Changes in Operating Assets and Liabilities:
Receivables ....................................... (232) (447) (1,661)
Inventories ....................................... 83 (89) (251)
Prepaid expenses and other current assets ........ (402) (1,322) 712
Other assets ...................................... 49 (61) (127)
Accounts payable .................................. 546 1,167 1,201
Deferred income ................................... 2,764 2,702 6,111
Income taxes payable .............................. (139) 272 (267)
Other current liabilities ......................... (8) 409 317
----------- ------------ ------------
Net Cash Provided by Operating Activities ............ 22,692 27,726 32,670
INVESTING ACTIVITIES
Acquisition of investments .......................... (54,370) (125,982) (83,502)
Proceeds from maturities of investments ............. 52,192 119,392 106,330
Capital expenditures ................................ (19,729) (16,831) (34,792)
Investment in PSH Corp .............................. -- -- (15,287)
Cash surrender value of life insurance .............. (33) (30) (725)
Proceeds from sales of property and equipment ...... 12 80 21
----------- ------------ ------------
Net Cash Used in Investing Activities ................ (21,928) (23,371) (27,955)
FINANCING ACTIVITIES
Reacquisition of previously issued common stock .... (286) (106) (1,708)
Cash dividends paid ................................. (1,374) (1,605) (1,836)
----------- ------------ ------------
Net Cash Used in Financing Activities ................ (1,660) (1,711) (3,544)
----------- ------------ ------------
Net (Decrease) Increase in Cash
and Cash Equivalents ............................... (896) 2,644 1,171
Cash and Cash Equivalents at
Beginning of Year .................................. 6,123 5,227 7,871
----------- ------------ ------------
Cash and Cash Equivalents at
End of year ........................................ $ 6,227 $ 7,871 $ 9,042
=========== ============ =============
</TABLE>
See accompanying notes.
F-6
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994, 1995 AND 1996
NOTE 1--DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS: International Speedway Corporation and its
wholly-owned subsidiaries (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,
a 2.5 mile, tri-oval track located in Daytona Beach, Florida; Talladega
Superspeedway, a 2.6 mile, tri-oval track located in Talladega, Alabama; and
Darlington Raceway, a 1.3 mile track located in Darlington, South Carolina.
The Company also operates Tucson Raceway Park in Pima County Arizona, owns a
50% interest in the Watkins Glen International road course in New York, and
holds a 12% indirect 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 theme-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 and a number of
prestigious sports car and motorcycle races.
Americrown Service Corporation ("Americrown"), one of the Company's
wholly-owned subsidiaries, conducts the food, beverage and souvenir
concession operations at the Daytona, Talladega and Darlington facilities.
Americrown is also responsible for providing catering services to corporate
customers both in suites and entertainment chalets at these facilities.
Beginning in 1995, the Company expanded Americrown's operations to include
food, beverage and other services at unaffiliated sporting events.
The Company's proprietary MRN radio network produces and syndicates
Winston Cup, Busch Grand National and other races promoted by the Company and
others. MRN Radio also produces daily and weekly NASCAR racing programs.
BASIS OF PRESENTATION: 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 on
September 6, 1996 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 (discussed below). The recapitalization modifies 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 were automatically converted, on a
15-for-one basis, into the newly authorized shares of Class B Common Stock
and the shares of Common Stock previously held as treasury stock were
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.
Effective December 1, 1996, the Company will change its fiscal year-end
from August 31 to November 30. This will result in a three-month transition
period commencing September 1, 1996 and ending November 30, 1996.
F-7
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994, 1995 AND 1996-(CONTINUED)
NOTE 1--DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)
SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial
statements include the accounts of International Speedway Corporation and its
wholly owned subsidiaries. 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 (NOTE 3): The Company accounts for investments in accordance
with Statement of Financial Accounting Standard (SFAS) No. 115, "Accounting
for Certain Investments in Debt and Equity Securities".
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.
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.
Long-term investments consist of securities held-to-maturity which are due
after one year and are stated at cost.
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:
Buildings, grandstands and tracks .... 5-34 years
Furniture and equipment ............... 3-20 years
EQUITY INVESTMENTS (NOTE 2): Equity investments represent a 50% ownership
interest in Watkins Glen International, Inc., (WGI) and a 20% ownership
interest in PSH Corp. These investments are accounted for using the equity
method of accounting. The Company's equity in the net income from the equity
investments is recorded as income with a corresponding increase in the
investment. Dividends received and amortization of the Company's investment
in excess of its prorata share of the underlying assets reduce the
investment. The Company recognizes the effects of transactions involving the
sale by an equity investee of its common stock as capital transactions (Note
2).
FAIR VALUE OF FINANCIAL INSTRUMENTS: The Company's financial instruments
consist of cash, short-and long-term investments, accounts receivable and
accounts payable. The carrying value of these financial instruments
approximates their fair value at August 31, 1996.
F-8
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994, 1995 AND 1996-(CONTINUED)
NOTE 1--DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)
INCOME TAXES (NOTE 4): Income taxes have been provided using the liability
method in accordance with SFAS No. 109, "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.
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,
1994, 1995 and 1996, were 34,318,170; 34,378,830 and 34,440,525 shares,
respectively.
USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS: In 1995, the Financial
Accounting Standards Board released SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
which requires recognition of impairment of long-lived assets in the event
the net book value of such assets exceeds the future undiscounted cash flows
attributable to such assets. SFAS No. 121 is effective for fiscal years
beginning after December 15, 1995. Adoption of SFAS No. 121 is not expected
to have a material impact on the Company's financial position or results of
operations.
The Company accounts for its long-term incentive restricted stock plan in
accordance with provisions of Accounting Principles Board Opinion No. 25 (APB
25), "Accounting for Stock Issued to Employees". In October 1995, the
Financial Accounting Standards Board released SFAS No. 123, "Accounting for
Stock Based Compensation". SFAS No. 123 provides an alternative to APB 25 and
is effective for fiscal years beginning after December 15, 1995. The Company
has not made a final determination as to adoption of SFAS No. 123.
COMPARABILITY: For comparability, certain 1994 and 1995 amounts have been
reclassified where appropriate to conform with the presentation adopted in
1996.
NOTE 2--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
F-9
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994, 1995 AND 1996-(CONTINUED)
NOTE 2--EQUITY INVESTMENTS-(CONTINUED)
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. The
Company's investment in PSH Corp. exceeded its share of the underlying net
assets by approximately $7.6 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 was
approximately $288,000 for the year ended August 31, 1996.
Prior to March 22, 1996, PSH Corp. owned 85% of the outstanding shares of
Penske Motorsports, Inc.("PMI"). The remaining 15% of PMI represented by
convertible preferred stock, was owned by Kaiser Ventures Inc. ("Kaiser"),
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, PMI 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.
On March 22, 1996, 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's 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, 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
additional paid-in capital 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
consolidated balance sheet, along with the Company's equity investment in
Watkins Glen International, Inc.("WGI"). The acquisition of the 20% interest
in PSH Corp. does not result in the direct or indirect acquisition of control
of the underlying assets, including businesses, indirectly controlled by PSH
Corp.
The Company's share of undistributed equity in the earnings from equity
investments included in retained earnings at August 31, 1995 and 1996 was
approximately $1,481,000 and $3,210,000, respectively.
F-10
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994, 1995 AND 1996-(CONTINUED)
NOTE 2--EQUITY INVESTMENTS-(CONTINUED)
Summarized financial information for 1996 for the Company's affiliated
companies accounted for by the equity method (PSH Corp. and WGI) is as
follows (in thousands):
Current assets ........ $79,900
Noncurrent assets .... 97,100
Current liabilities .. 26,000
Noncurrent liabilities 12,500
Minority interests ... 52,900
Net revenues .......... 58,900
Operating income ...... 20,500
Net income ............ 7,500
In addition to the net income reflected above, PSH Corp. recorded its
share of the increased equity from the PMI initial public offering. As
described above, the Company has accounted for its pro rata share of the
increased equity from the PMI initial public offering, net of deferred taxes,
as additional paid-in capital.
NOTE 3--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, 1996
-----------------------------------------------------
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ------------- ------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
HELD-TO-MATURITY SECURITIES
Municipal Securities ..... $6,983 $ 3 $ 3 $6,983
CERTIFICATES OF DEPOSIT ... 1,886 -- -- 1,886
--------- ------------- ------------- -------------
$8,869 $ 3 $ 3 $8,869
========= ============= ============= =============
</TABLE>
The cost and market values of municipal securities include accrued
investment income of approximately $91,000 and $27,000 at August 31, 1995 and
1996, respectively.
F-11
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994, 1995 AND 1996-(CONTINUED)
NOTE 3--INVESTMENTS-(CONTINUED)
The cost and estimated market value of the held-to-maturity securities at
August 31, 1996, 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, 1996
--------------------------
ESTIMATED
COST MARKET VALUE
--------- ---------------
(IN THOUSANDS)
HELD-TO-MATURITY SECURITIES
Due in one year or less ................ $6,483 $6,486
Due after one year through three years -- --
Due after three years .................. 500 497
--------- ---------------
$6,983 $6,983
========= ===============
NOTE 4--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 and from different bases in the equity investments for tax and
financial reporting purposes.
Significant components of the provision for income taxes for the years
ended August 31 are as follows:
1994 1995 1996
--------- ---------- ---------
(IN THOUSANDS)
Current tax expense:
Federal ................... $6,190 $ 8,274 $ 9,117
State ..................... 816 1,150 1,310
Deferred tax expense:
Federal ................... 1,438 1,369 1,341
State ..................... 218 261 195
--------- ---------- ---------
PROVISION FOR INCOME TAXES $8,662 $11,054 $11,963
========= ========== =========
The reconciliation of income tax computed at the federal statutory tax
rates to income tax expense is as follows:
F-12
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994, 1995 AND 1996-(CONTINUED)
NOTE 4--FEDERAL AND STATE INCOME TAXES-(CONTINUED)
1994 1995 1996
--------------------- ---------------------- -----------------------
% 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 ................ $8,129 35.0% $10,296 35.0% $11,075 35.0%
State income taxes, net of
federal
tax benefit .................... 670 2.9 884 3.0 977 3.1
Non-taxable share of income from
unconsolidated affiliates ...... (58) (.3) (100) (.3) (504) (1.6)
Officers' life insurance expense (4) .0 (2) .0 162 .5
Other, net ....................... (75) (.3) (24) (.1) 253 .8
--------- ---------- ---------- ---------- ---------- ----------
$8,662 37.3% $11,054 37.6% $11,963 37.8%
========= ========== ========== ========== ========== ==========
</TABLE>
NOTE 5--LINES OF CREDIT
The Company has two lines of credit with financial institutions totaling
$16 million expiring in December 1996. Subsequent to year-end, one of the
Company's $8 million lines of credit was renewed and will expire in September
1997.
NOTE 6--CAPITAL STOCK
The Company's authorized capital includes 80 million shares of Class A
Common Stock, par value $.01 ("Class A Common Stock"), 40 million shares of
Class B Common Stock, par value $.01 ("Class B Common Stock"), and one million
shares of Preferred Stock, par value $.01 (the "Preferred 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. 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. 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. Class A Common Stock has no
conversion rights. Class B Common Stock is 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 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.
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,
F-13
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994, 1995 AND 1996-(CONTINUED)
NOTE 6--CAPITAL STOCK-(CONTINUED)
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. 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.
No shares of Class A Common Stock or Preferred Stock are outstanding. See
also Note 1--Basis of Presentation.
NOTE 7--REACQUISITION OF PREVIOUSLY ISSUED COMMON STOCK
Shares of previously issued Class B Common Stock which have been
reacquired are classified as authorized but unissued and are reflected as a
reduction in the number of shares issued. Accordingly, at August 31, 1994,
1995, and 1996 Class B Common Stock outstanding has been reduced by the par
value of 43,260; 13,155 and 74,160 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 8--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
$211,000, $228,000, and $307,000 for the years ended August 31, 1994, 1995
and 1996, respectively.
B. The Company is self-insured for 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 $638,000 for the twelve month period ending December
31, 1996.
The total expense charged against operations for the years ended August
31, 1994, 1995 and 1996 for actual and estimated claims was approximately
$396,000, $469,000 and $419,000, respectively.
C. The estimated cost to complete construction in progress at August 31,
1996 is approximately $23.5 million.
F-14
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994, 1995 AND 1996-(CONTINUED)
D. On October 21, 1996, the Company's Americrown subsidiary was served with
a Class Action Complaint filed in the Circuit Court of Talladega County, Alabama
by Howard Padgett, Bill Lutz and Tommy Jones. The complaint was filed in
September 1996 and alleges, among other things, that Americrown engaged in
price-fixing activities in connection with the sale of racing souvenirs and
merchandise at the Talladega Superspeedway. The complaint seeks at least $500
for each member of the class (persons buying racing souvenirs at Talladega
Superspeedway since September 1992), but does not otherwise seek to recover
compensatory or punitive damages or statutory attorneys' fees. Americrown
disputes the allegations and intends to defend the action fully and vigorously.
NOTE 9--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 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 $8.2, $10.1 and $11.6 million for the years
ended August 31, 1994, 1995 and 1996, respectively.
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. The Company recorded a
net insurance expense of approximately $450,000 representing the excess of
the premiums paid over the increase in cash surrender value of the policies
associated with these agreements for the year ended August 31, 1996.
Poe & Brown, Inc., the servicing agent for the split-dollar insurance
agreements, received a commission from an insurance company 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 10--SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for income taxes for fiscal years ended August 31, 1994, 1995
and 1996 is as follows:
1994 1995 1996
--------- --------- ---------
(IN THOUSANDS)
INCOME TAXES PAID $7,132 $9,806 $10,763
========= ========= =========
F-15
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994, 1995 AND 1996-(CONTINUED)
NOTE 10--SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION-(CONTINUED)
See Note 2 for discussion of a non-cash equity investment transaction.
NOTE 11--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 Class B Common Stock were authorized to 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
NOTE 11--LONG-TERM INCENTIVE RESTRICTED STOCK PLAN-(CONTINUED)
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, 1994, 1995 and 1996, a total of 117,615, 70,410 and 102,075
restricted shares of the Company's Class B Common Stock, respectively, were
awarded to certain officers and managers. The market value of shares on
January 1, 1994, 1995 and 1996 amounted to approximately $760,000, $489,000
and $1,600,000, 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, 1994, 1995 and 1996 was approximately $135,000, $318,000 and
$606,000, respectively.
In September 1996, the Company and the Board of Directors adopted a new
Long-Term Incentive Plan (the "1996 Plan") for certain employees and
consultants of the Company. Under the 1996 Plan up to 1,000,000 shares of
Class A Common Stock may be granted as stock options (incentive and
nonstatutory), stock appreciation rights (SARS) and restricted stock. No
grants have been made under the 1996 Plan.
NOTE 12--QUARTERLY DATA (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED
-----------------------------------------------------------
NOVEMBER 30, FEBRUARY 28, MAY 31, AUGUST 31,
1994 1995 1995 1995
--------------- --------------- ---------- ---------------
<S> <C> <C> <C> <C>
Total revenues ........... $ 6,694 $35,022 $21,621 $18,835
Operating Income (loss) . (1,607) 18,942 6,091 4,270
Net income (loss) ........ (871) 11,672 3,653 3,909
Earnings (loss) per share (.03) .34 .11 .11
</TABLE>
F-16
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1994, 1995 AND 1996-(CONTINUED)
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED
-----------------------------------------------------------
NOVEMBER 30, FEBRUARY 29, MAY 31, AUGUST 31,
1995 1996 1996 1996
--------------- --------------- ---------- ---------------
<S> <C> <C> <C> <C>
Total revenues ........... $ 8,542 $40,277 $24,176 $23,047
Operating Income (loss) . (1,474) 20,338 6,230 4,237
Net income (loss) ........ (1,020) 12,089 3,817 4,795
Earnings (loss) per share (.03) .35 .11 .14
</TABLE>
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 in November, and achieved its highest
net income in the fiscal quarter ending in February.
P
NOTE 13--SUBSEQUENT EVENT:
On September 16, 1996, the Company purchased land and buildings in close
proximity to its Daytona facility for approximately $8 million. The purchase
was financed with an existing line of credit at an interest rate based on the
one year LIBOR rate plus .75% (6.9% at September 16, 1996) with interest
payable monthly commencing October 1996. Principal is payable 30 days after
demand.
F-17
<PAGE>
Inside Back Cover Photographs:
Top Photograph: Aerial photograph of
Darlington Raceway
Bottom Photograph: Aerial photograph of
Watkins Glen International Road course
<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 ................. 48
Incorporation of Certain Documents
by Reference .......................... 48
Index to Financial Statements ......... F-1
4,000,000 Shares
[ISC LOGO]
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 .................................. 90,000
Accounting fees and expenses ....................... 90,000
Legal fees and expenses ............................ 200,000
Fees and expenses (including legal fees) for
qualifications under state securities laws ....... 10,000
Registrar and Transfer Agent's fees and expenses .. 2,500
Miscellaneous ...................................... 41,761
----------
Total ............................................. $500,000
==========
--------
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>
1.1 Form of 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. (included in its opinion 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 as initially filed for the
Power of Attorney contained therein.
24.2 Secretary's Certificate as to resolutions of Board of Directors*
27 Financial Data Schedule*
- --------
<FN>
* Previously filed.
** 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 filing this Amendment No. 2 to 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 October 29,
1996.
INTERNATIONAL SPEEDWAY CORPORATION
By: /s/ LESA D. KENNEDY*
----------------------------------
Lesa D. Kennedy
Executive Vice President
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 October 29, 1996
- ---------------------- Executive Officer and Director
William C. France (principal executive officer)
/s/ SUSAN G. SCHANDEL* Treasurer and Chief Financial October 29, 1996
- ---------------------- Officer (principal financial officer)
Susan G. Schandel
/s/ DANIEL W. HOUSER* Controller (principal accounting October 29, 1996
- ---------------------- officer)
Daniel W. Houser
/s/ JAMES C. FRANCE* President, Chief Operating Officer October 29, 1996
- ---------------------- and Director
James C. France
/s/ LESA D. KENNEDY* Executive Vice President October 29, 1996
- ---------------------- and Director
Lesa D. Kennedy
/s/ H. LEE COMBS* Senior Vice President-- October 29, 1996
- ---------------------- Operations and Director
H. Lee Combs
/s/ JAMES H. FOSTER* Senior Vice President-- October 29, 1996
- ---------------------- Special Projects and Director
James H. Foster
/s/ ROBERT E. SMITH* Vice President-- October 29, 1996
- ---------------------- Administration and Director
Robert E. Smith
/s/ J. HYATT BROWN* Director October 29, 1996
- ----------------------
J. Hyatt Brown
/s/ JOHN R. COOPER* Director October 29, 1996
- ----------------------
John R. Cooper
/s/ ROBERT W. EMERICK* Director October 29, 1996
- ----------------------
Robert W. Emerick
II-3
<PAGE>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ BRIAN Z. FRANCE* Director October 29, 1996
- ----------------------
Brian Z. France
/s/ CHRISTY F. HARRIS* Director October 29, 1996
- ----------------------
Christy F. Harris
/s/ RAYMOND K. MASON, JR.* Director October 29, 1996
- -------------------------
Raymond K. Mason, Jr.
/s/ LLOYD E. REUSS* Director October 29, 1996
- -------------------------
Lloyd E. Reuss
/s/ CHAPMAN ROOT, II* Director October 29, 1996
- -------------------------
Chapman Root, II
/s/ THOMAS W. STAED* Director October 29, 1996
- -------------------------
Thomas W. Staed
</TABLE>
- -------------
*BY: /S/ GLENN R. PADGETT
- --------------------------
Glenn R. Padgett,
Attorney-in-fact
II-4
EXHIBIT 15.1
The Board of Directors
International Speedway Corporation
We are aware of the incorporation by reference in Amendment No. 2 to 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 29, 1996, April 5, 1996 and July 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.
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
October 29, 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 September 27,
1996, except as to the fifth paragraph of Note 1, as to which the date is
October 31, 1996 and as to Note 8D as to which the date is October 21, 1996, in
Amendment No. 2 to 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 consolidated financial statements
and schedule of International Speedway Corporation included in the Annual
Report (Form 10-K) for the years ended August 31, 1995, 1994, and 1993, filed
with the Securities and Exchange Commission.
Ernst & Young LLP
Jacksonville, Florida
October 29, 1996
- -----------------------------------------------------------------------------
The foregoing consent is in the form that will be signed upon the
completion of the recapitalization of the Company as described in the fifth
paragraph of Note 1 to the financial statements.
Ernst & Young LLP
Jacksonville, Florida
October 29, 1996
