UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period ended November 30, 1996.
Commission file Number 0-2384
International Speedway Corporation
(Exact name of registrant as specified in its charter.)
Florida, U.S.A. 59-0709342
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1801 West International Speedway Boulevard, Daytona Beach, Florida 32114-1243
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 254-2700
Indicate by check mark whether the registrant(1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practical date:
Class A Common Stock, - 4,000,000 shares as of December 31, 1996.
Class B Common Stock, - 34,406,325 shares as of December 31, 1996.<PAGE>
<PAGE>
PART I. - FINANCIAL INFORMATION
Item 1. - Financial Statements
INTERNATIONAL SPEEDWAY CORPORATION
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
August 31,
November 30,
1996
1996
(unaudited)
------------
- -------------
(IN
THOUSANDS)
<S> <C>
<C>
ASSETS
Current Assets:
Cash and cash equivalents ................................... $ 9,042
$ 8,057
Short-term investments ...................................... 8,369
75,557
Receivables, less allowances of $35 ......................... 3,455
4,860
Inventories ................................................. 1,409
1,253
Prepaid expenses and other current assets ................... 2,410
1,759
Deferred income taxes ....................................... 0
1,147
------------
- ------------
Total Current Assets ......................................... 24,685
92,633
Property and Equipment - at cost - less accumulated
depreciation of $39,258 ($36,912 at August 31) .............. 98,835
111,353
Other Assets:
Cash surrender value of life insurance (Note 3).............. 1,214
2,337
Equity investments .......................................... 27,256
26,952
Long-term investments ....................................... 500
500
Other ....................................................... 301
294
------------
- ------------
29,271
30,083
------------
- ------------
Total Assets ................................................. $152,791
$234,069
============
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable ............................................ $ 3,820
$ 3,306
Income taxes payable ........................................ 57
87
Deferred income ............................................. 25,963
35,760
Other current liabilities ................................... 1,596
558
------------
- ------------
Total Current Liabilities .................................... 31,436
39,711
Deferred income taxes ........................................ 14,688
15,069
Commitments and Contingencies
Shareholders' Equity (Notes 1 and 5)
Class A Common Stock, $.01 par value, 80,000,000 shares
authorized; 0 and 4,000,000 issued at August 31
and November 30, respectively.............................. 0
40
Class B Common Stock, $.01 par value, 40,000,000 shares
authorized; 34,423,890 and 34,406,325 issued at August 31
and November 30, respectively.............................. 344
344
Additional paid-in capital .................................. 8,127
82,236
Retained earnings ........................................... 99,986
98,119
------------
- ------------
108,457
180,739
Less unearned compensation--restricted stock ................. 1,790
1,450
------------
- ------------
Total Shareholders' Equity ................................... 106,667
179,289
------------
- ------------
Total Liabilities and Shareholders' Equity ................... $152,791
$ 234,069
============
============
</TABLE>
See accompanying notes and accountants' review report.
<PAGE>
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
Condensed Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months ended
November 30,
1995 1996
(Unaudited) (Unaudited)
_________________________
(In Thousands, Except
Per Share Data)
<S> <C> <C>
REVENUES:
Admissions, net.................................... $ 3,626 $ 4,191
Motorsports related income......................... 3,029 3,972
Food, beverage and souvenir income................. 1,725 1,943
Other income....................................... 162 390
___________ ___________
8,542 10,496
EXPENSES:
Direct expenses:
Prize and point fund monies
and NASCAR sanction fees....................... 1,442 1,301
Motorsports related expenses..................... 1,766 2,814
Food, beverage and souvenir expenses............. 1,255 1,536
General and administrative expenses................ 4,266 5,057
Depreciation....................................... 1,287 2,353
___________ ___________
10,016 13,061
___________ ___________
Operating loss ...................................... (1,474) (2,565)
Interest income, net ................................ 290 261
Equity in net loss from equity investments (Note 6).. (154) (304)
___________ ___________
(1,338) (2,608)
Income tax benefit .................................. (318) (741)
___________ ___________
Net Loss ............................................ ($ 1,020) ($ 1,867)
=========== ===========
Loss per share (Note 2).............................. ($ 0.03) ($ 0.05)
=========== ===========
Dividends per share.................................. $ --- $ ---
=========== ===========
</TABLE>
See accompanying notes and accountants' review report.<PAGE>
<PAGE> International Speedway Corporation
Condensed Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
CLASS A Class B
COMMON COMMON
UNEARNED
STOCK STOCK ADDITIONAL
COMPENSATION- TOTAL
$.01 PAR $.01 PAR PAID-IN
RETAINED RESTRICTED SHAREHOLDERS'
VALUE VALUE CAPITAL
EARNINGS STOCK EQUITY
--------- --------- -----------
- -------- --------------- --------------
(IN
THOUSANDS)
<S> <C> <C> <C>
<C> <C> <C>
BALANCE AT AUGUST 31, 1995 ............ $ -- $ 344 $1,853
$83,846 $ (796) $ 85,247
Activity 9/1/95 - 11/30/95:
Net Loss - Unaudited................. -- --
(1,020) -- (1,020)
Amortization of unearned compensation
- unaudited......................... -- --
-- 80 80
--------- --------- -----------
- -------- --------------- --------------
BALANCE AT NOVEMBER 30, 1995 unaudited 344 1,853
82,826 (716) 84,307
Activity 12/1/95 - 8/31/96:
Net income - unaudited................ -- -- --
20,701 -- 20,701
Cash dividends paid - unaudited....... -- -- --
(1,836) -- (1,836)
Reacquisition of previously issued
common stock - unaudited............. -- (1) (2)
(1,705) -- (1,708)
Restricted stock granted - unaudited.. -- 1 1,599
-- (1,600) --
Amortization of unearned compensation
- unaudited.......................... -- -- --
-- 526 526
Recapitalization of equity investment
- unaudited......................... -- -- 4,677
-- -- 4,677
--------- --------- -----------
- -------- --------------- --------------
BALANCE AT AUGUST 31, 1996 ............. 344 8,127
99,986 (1,790) 106,667
Activity 9/1/96 - 11/30/96:
Net loss - unaudited.................. -- -- --
(1,867) -- (1,867)
Public offering -Class A Common Stock 40 -- 74,327
-- -- 74,367
Forfeiture of restricted shares -- -- (218)
-- 218 --
Amortization of unearned compensation -- -- --
-- 122 122
--------- --------- -----------
- -------- --------------- --------------
Balance at November 30, 1996 - unaudited $ 40 $344 $82,236
$98,119 $(1,450) $179,289
========= ========= ============
======== =============== ==============
</TABLE>
See accompanying notes and accountants' review report.<PAGE>
<PAGE>
International Speedway Corporation
Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months ended
November 30
1995 1996
(Unaudited) (Unaudited)
______________________________
(In Thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net loss........................................ $(1,020) $ (1,867)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation................................ 1,287 2,353
Amortization of unearned compensation....... 80 122
Deferred income taxes....................... (448) (766)
Undistributed loss from equity investments . 116 304
Gain on disposition of property and
equipment.................................. (8) -
Changes in operating assets and liabilities:
Receivables................................. (1,862) (1,405)
Inventories................................. 127 156
Prepaid expenses and other current assets... 1,121 651
Other assets................................ 6 -
Accounts payable............................ (35) (514)
Income taxes payable........................ (218) 30
Deferred income............................. 5,220 9,797
Other current liabilities................... (693) (1,038)
______________________________
Net cash provided by operating activities....... 3,673 7,823
INVESTING ACTIVITIES
Acquisition of investments.................... (12,987) (70,959)
Proceeds from maturities of investments....... 34,040 3,771
Capital expenditures.......................... (8,229) (14,864)
Investment in PSH Corp........................ (14,975) -
Cash surrender value of life insurance........ (740) (1,123)
Proceeds from sale of assets.................. 8 -
______________________________
Net cash used in investing activities........... (2,883) (83,175)
FINANCING ACTIVITIES
Issuance of Class A Common Stock.............. - 74,367
Short-term borrowings.......................... - 7,800
Repayment of short-term borrowings............ - (7,800)
______________________________
Net cash provided by financing activities....... - 74,367
Net increase (decease) in cash and cash
equivalents................................... 790 (985)
Cash and cash equivalents at beginning of period 7,871 9,042
______________________________
Cash and cash equivalents at end of period ...... $8,661 $8,057
==============================
</TABLE>
See accompanying notes and accountants' review report.<PAGE>
<PAGE>
International Speedway Corporation
Notes to Condensed Consolidated Financial Statements
August 31, 1996 and November 30, 1996
(Unaudited - See Accountants' Review Report)
1. Basis of Presentation
The accompanying condensed consolidated financial statements have been
prepared in compliance with Rule 10-01 of Regulation S-X and generally
accepted accounting principles but do not include all of the information and
disclosures required for complete financial statements. The statements should
be read in conjunction with the consolidated financial statements and notes
thereto included in the Company's latest annual report on Form 10-K. In
management's opinion, the statements include all adjustments which are
necessary for a fair presentation of the results for the interim periods. All
such adjustments are of a normal recurring nature. Certain reclassifications
have been made to conform to the financial presentation at November 30, 1996.
On September 5, 1996 the Company's Board of Directors approved a
recapitalization of the Company which became effective on November 4, 1996,
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 modified 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 adjusted to give effect to the recapitalization and related stock
split.
Effective December 1, 1996, the Company changed its fiscal year-end
from August 31 to November 30. This resulted in a three-month transition
period commencing September 1, 1996 and ending November 30, 1996.
Because of the seasonal concentration of racing events, the results of
operations for the three-month periods ended November 30, 1995 and 1996 are
not
indicative of the results to be expected for the year.
2. Loss Per Share
Loss per share has been computed on the weighted average total number of
common shares outstanding during the respective periods. Weighted average
shares outstanding for the three-month periods ended November 30, 1995 and
1996
were 34,395,975 and 35,610,510 respectively.
3. Related Party Disclosures and Transactions
All of the racing events that take place during the Company's fiscal year are
sanctioned by various racing organizations such as the Sports Car Club of
America (SCCA), Automobile Racing Club of America (ARCA), American
Motorcyclist Association (AMA), the Championship Cup Series (CCS),
International Motor Sports Association (IMSA), World Karting Association
(WKA), Federation Internationale de l'Automobile (FIA), Federation
Internationale Motorcycliste (FIM), and the National Association for Stock Car
Auto Racing, Inc. (NASCAR). NASCAR, which sanctions some of the Company's
principal racing events, is a member of the France Family Group which controls
in excess of 60% of the outstanding stock of the Company and some members of
which serve as directors and officers. Standard NASCAR sanction agreements
require racetrack operators to pay sanction fees and prize and point fund
monies for each sanctioned event conducted. The prize and point fund monies
are distributed by NASCAR to participants in the events. Prize and point fund
monies paid by the Company to NASCAR for disbursement to competitors totaled
approximately $1,218,000 and $1,101,000 for the three-month periods
ended November 30, 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. During the three-month periods ended November
30, 1995 and 1996, the Company recorded a net insurance expense of
approximately
$81,000 and $38,000 respectively, representing the excess of the premiums paid
over the increase in cash surrender value of the policies associated with
these
agreements.
4. Supplemental Disclosures of Cash Flow Information
Cash paid for income taxes and interest for the three months ended November
30,
1995 and 1996 is as follows:
1995 1996
________________________________
(Thousands of Dollars)
Income taxes paid $347 $185
================================
Interest paid $ -- $ 69
================================
<PAGE>
5. Class A Common Stock Offering
On November 4, 1996 the Company sold 4,000,000 shares of its newly created
Class
A Common Stock in an underwritten public offering. The price to the public
was
$20 per share. The net proceeds to the Company from the sale of the stock
sold
by the Company in the Offering were approximately $74.4 million, after
deduction
of underwriting discounts and commissions and expenses of the Offering. The
Company intends to use approximately $40 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 $7.8 million of the net proceeds of this Offering were 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. The approximately $26.6 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 has invested the net proceeds of
the Offering in money market funds or other interest-bearing obligations, the
carrying value of which approximates their fair value at November 30, 1996.
6. Legal Proceedings
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 has removed the suit from
the
state court to the Federal District Court for the Northern District of Alabama
- -
Eastern Division. The plaintiffs oppose the removal to Federal District Court
and have filed a motion with the Federal District Court seeking to have the
suit
remanded to the Circuit Court of Talladega County, Alabama. The Federal
District Court has not yet ruled on the motion for remand. Americrown
disputes
the allegations and intends to defend the action fully and vigorously.
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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 from 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
souvenirs 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.
The following table sets forth, for each of the indicated periods, certain
selected income statement data as a percentage of total revenues:<PAGE>
Three Months ended
November 30,
1995 1996
(Unaudited) (Unaudited)
_______________________
Revenues:
Admissions, net.................................... 42.4% 39.9%
Motorsports related income......................... 35.5 37.9
Food, beverage and souvenir income................. 20.2 18.5
Other income....................................... 1.9 3.7
___________ ___________
Total revenues .................................. 100.0% 100.0%
Expenses:
Direct expenses:
Prize and point fund monies
and NASCAR sanction fees....................... 16.9 12.4
Motorsports related expenses..................... 20.7 26.8
Food, beverage and souvenir expenses............. 14.7 14.6
General and administrative expenses................ 49.9 48.2
Depreciation....................................... 15.1 22.4
___________ ___________
Total expenses .................................. 117.3 124.4
___________ ___________
Operating loss ...................................... (17.3) (24.4)
Interest income, net ................................ 3.4 2.5
Equity in net loss from equity investments (Note 6).. (1.8) (2.9)
___________ ___________
Loss before income taxes ............................ (15.7) (24.8)
Income tax benefit .................................. (3.7) (7.0)
___________ ___________
Net loss ............................................ (12.0%)
(17.8%)
Admissions revenue increased approximately $600,000, or 15.6%, for the three
months ended November 30, 1996 as compared to the three months ended November
30, 1995. DAYTONA USA accounted for substantially all of the increase. The
remainder of the increase was due to the new IMSA Finale event held at the
Company's Daytona facility. Increased seating capacity at the September 1996
NASCAR Winston Cup event conducted at the Company's Darlington facility offset
the impact of the timing of the Labor Day NASCAR Busch Grand National event
held
at Darlington Raceway, which was conducted in August of 1996 and in September
of
1995.
Motorsports related income increased approximately $900,000, or 31.1% during
the
three months ended November 30, 1996 as compared to the three months ended
November 30, 1995. This increase resulted primarily from an increase in
promotion and sponsorship fees from DAYTONA USA of approximately $500,000, and
increases in advertising and royalties approximating $300,000.
Food, beverage and souvenir income increased approximately $200,000, or 12.6%,
during the three months ended November 30, 1996 as compared to the three
months
ended November 30, 1995. This increase is primarily attributable to increased
revenues from direct sales of souvenirs at the gift shop located adjacent to
DAYTONA USA as well as fees paid by third party vendors for the right to sell
souvenirs and concessions at the September NASCAR Winston Cup event conducted
at
the Company's Darlington facility.
Other income increased by approximately $200,000, or 140.7%, for the quarter
ended November 30, 1996 in comparison to the same period of the prior year.
This increase is primarily attributable to rental income from the Company's
September 1996 purchase of real property in close proximity to Daytona
International Speedway. It is uncertain whether rental income will continue
at
this level in the future.
Prize and point fund monies and NASCAR sanction fees decreased by
approximately
$100,000, or 9.8%, during the quarter ended November 30, 1996 as compared to
the
quarter ended November 30, 1995. This decrease in costs of competition is due
to the timing of the Labor Day NASCAR Busch Grand National event held at the
Company's Darlington facility in September of 1995 and in August of 1996, and
is
partially offset by an increase in costs of competition for the NASCAR Winston
Cup event held at Darlington Raceway in September 1996.
Motorsports related expenses increased approximately $1 million, or 59.3%, for
the three months ended November 30, 1996 as compared to the three months ended
November 30, 1995. Labor, advertising and other costs associated with the
operation of the new DAYTONA USA and the new IMSA Finale event held at the
Company's Daytona facility accounted for approximately $600,000 and $300,000
of
the increase in motorsports related expenses, respectively.
As food, beverage and souvenir income increases, the Company experiences a
corresponding increase in related expenses. Food, beverage and souvenir
expenses increased approximately $300,000 during the three months ending
November 30, 1996 as compared with the same period of the prior year.
Increased
personnel related expenses accounted for approximately $200,000 of the
increase.
The remaining increase is due primarily to the incremental increase in product
costs at margins consistent with the same period of the prior year.
General and administrative expenses increased approximately $800,000, or
18.5%,
during the three months ended November 30, 1996, as compared to the three
months
ended November 30, 1995, due primarily to increases in wages and compensation
costs related to the September 1996 purchase of real property. General and
administrative expenses remained relatively constant as a percentage of total
revenue during the three months ended November 30, 1996 and 1995.
The Company's depreciation expense increased approximately $1.1 million, or
82.8%, during the three months ended November 30, 1996, as compared to the
same
period of the prior year, primarily as a result of the new DAYTONA USA
facility
and the ongoing expansion of the Company's motorsports facilities.
Equity in net loss from equity investments represents the Company's prorata
share of the current losses from its 50% investment in Watkins Glen,
International (WGI) and its 20% investment in PSH Corp. accounted for using
the
equity method of accounting.
As a result of the foregoing, the Company's net loss increased approximately
$850,000, or 83.0%, for the three months ended November 30, 1996 as compared
to
the same period of the prior year.
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 November 30, 1996, the Company had working
capital of $52.9 million, compared to a working capital deficit of $6.7
million
at August 31, 1996, which is primarily attributable to the November 4, 1996
offering of 4 million shares of the Company's newly authorized Class A Common
Stock as described under "Cash Flows." The Company expects to experience a
decrease in working capital as it utilizes the net proceeds of the Offering
for
capital projects as described below under the caption "Capital Expenditures".
The Company also has two lines of credit with financial institutions totaling
$16.0 million. One of the $8.0 million lines of credit expires in September
1997, and the other expires in December 1997. Borrowings under the credit
facility of $7.8 million during the quarter ended November 30, 1996 were
repaid
during the same period. See "Cash Flows."
Cash Flows
Net cash provided by operating activities was approximately $7.8 million for
the
three months ended November 30, 1996, as compared to $3.7 million for the
three
months ended November 30, 1995. The difference between the Company's November
30, 1996 net loss of $1.9 million and the $7.8 million of operating cash flow
was primarily attributable to $2.4 million of depreciation and a $9.8 million
increase in deferred income, partially offset by a $1.4 million increase in
receivables and a $1 million decrease in other current liabilities.
Net cash used in investing activities was $83.2 million for the three months
ended November 30, 1996, compared to $2.9 million for the three months ended
November 30, 1995. The $67.2 million in net acquisitions of investments is
primarily attributable to the investment of $67.4 million of the proceeds from
the Class A Common Stock offering in short-term government agency securities.
Cash flows used in investing activities for the three months ended November
30,
1996 also included $14.9 million in capital expenditures (see "Capital
Expenditures) and a $1.1 million dollar increase in the cash surrender value
of
officers life insurance primarily attributable to the payment of annual
premiums
under the collateral assignment split-dollar insurance agreements covering the
lives of the Company's CEO, COO and their respective spouses.
Net cash provided by financing activities for the three months ended November
30, 1996 of $74.4 million is attributable to the proceeds of the issuance of 4
million shares of the Company's newly authorized Class A Common Stock on
November 4, 1996. The proceeds to the Company of the 4 million shares of
Class
A Common Stock, offered at a price to the public of $20 per share, are net of
$4.8 million in underwriting discounts and commissions and approximately
$800,000 of other expenses of issuance and distribution. Borrowings under the
credit facility of $7.8 million in September 1996 to finance the purchase of
land and buildings in close proximity to the Company's Daytona facility were
repaid in November 1996 from the net proceeds of the Class A Common Stock
offering.
Capital Expenditures
Capital expenditures totaled $14.9 million for the three months ended November
30, 1996, compared to $8.2 million for the three months ended November 30,
1995.
Capital expenditures during the three months ended November 30, 1996 related
primarily to the purchase of real property in close proximity to Daytona
International Speedway, ongoing construction related to the Winston Tower
addition, additions to spectator capacity at the Company's Daytona and
Talladega
facilities and renovation of the Company's new corporate headquarters.
The Company expects to make approximately $40.0 million of capital
expenditures
within the next 24 months including approximately $16.4 million to increase
seating and construct luxury suites along the "Superstretch" between turns two
and three at Daytona International Speedway, approximately $2.4 million to
complete the Winston Tower addition at the Daytona facility, approximately
$10.1
million to increase seating capacity and construct luxury suites at the
Company's Talladega and Darlington facilities, and approximately $4.4 million
attributable to the current renovation of the Company's new corporate
headquarters.
Future Liquidity
The Company believes that the remaining $66.6 million in net proceeds of the
Class A Common Stock 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 above.
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.
Income Taxes
The Company incurs a net operating loss during its first quarter due to the
seasonal fluctuation of its business. As a result, the financial statements
reflect a deferred income tax asset for the tax benefit of the loss
carryforward. The first quarter is not indicative of the results to be
expected
for the year and, therefore, management believes the operations of the Company
during the remainder of the fiscal year will eliminate this deferred income
tax
asset.
The deferred income tax liability increased from August 31, 1996 primarily as
a
result of differences between financial and tax accounting treatments relating
to depreciation expense.
Inflation
Management does not believe that inflation has had a material impact on
operating costs and earnings of the Company.
Factors That May Affect Operating Results
Statements contained in this Report that state the Company's or Management's
anticipations, beliefs, expectations, hopes, intentions, predictions and/or
strategies which are not purely historical fact or which apply prospectively
are
"forward-looking" statements within the meaning of Section 27A of the
Securities
Act of 1933 and Section 21 of the Securities Exchange Act of 1934. All
forward-
looking statements contained in this document are based on information
available
to the Company on the date hereof, and the Company assumes no obligation to
update any such forward-looking statements. It is important to note that the
Company's actual results could differ materially from those contained or
projected in, or even implied by, such forward-looking statements. Some of
the
factors that could cause the actual results to differ materially are set forth
below. Additional information concerning factors that could cause actual
results to differ materially from those in the forward-looking statements is
contained from time to time in the Company's SEC filings. Copies of those
filings are available from the Company and/or the SEC.
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 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.
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.
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 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.
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 motorsports facilities. The Company's ability to implement
successfully this element of its growth strategy will depend on a number of
factors, including (i) the Company's ability to obtain one or more additional
sanctioning agreements to promote Winston Cup, Busch Grand National or other
major events at these new facilities, (ii) the cooperation of local government
officials, (iii) the Company's capital resources, (iv) the Company's ability
to
control construction and operating costs, and (v) the 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 motorsports 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.
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.
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 changed its fiscal year-end from August 31 to November 30
effective December 1, 1996.
<PAGE>
<PAGE>
Review Report of Independent Certified Public Accountants
The Board of Directors
International Speedway Corporation
We have reviewed the accompanying condensed consolidated balance sheet of
International Speedway Corporation as of November 30, 1996, and the related
condensed consolidated statements of operations, shareholders' equity and cash
flows for the three-month periods ended November 30, 1996 and 1995. These
financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial
statements referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of International Speedway
Corporation as of August 31, 1996, and the related consolidated statements of
income, shareholders' equity and cash flows for the year then ended (not
presented separately herein) and in our report dated 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, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of August 31, 1996, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
/s/ Ernst & Young LLP
Jacksonville, Florida
January 9, 1997
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On October 21, 1996, the Company's subsidiary, Americrown Service Corporation
("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 has removed the suit from the state court to the
Federal District Court for the Northern District of Alabama - Eastern
Division.
The plaintiffs oppose the removal to Federal District Court and have filed a
motion with the Federal District Court seeking to have the suit remanded to
the
Circuit Court of Talladega County, Alabama. The Federal District Court has
not
yet ruled on the motion for remand. Americrown disputes the allegations and
intends to defend the action fully and vigorously.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its annual meeting of shareholders on January 8, 1997 after
the close of the quarter being reported. The following persons were
re-elected
to serve as directors for a three year term to hold office until the annual
meeting of shareholders in 2000:
Lesa D. Kennedy
J. Hyatt Brown
Thomas W. Staed.
The following persons were elected to serve as directors for a three year term
to hold office until the annual meeting of shareholders in 2000:
Robert R. Dyson
Edward H. Rensi.
The following persons' term of office as directors continued after the
meeting:
H. Lee Combs
John R. Cooper
James H. Foster
Brian Z. France
James C. France
William C. France
Christy F. Harris
Raymond K. Mason, Jr.
Lloyd E. Reuss
Chapman J. Root, II.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
I. (27) - Article 5 Fin. Data Schedule for Transition period 10-Q
B. Reports on Form 8-K
A report on Form 8-K dated September 5, 1996 was filed with the SEC on
September
20, 1996 reporting the Company determined to change its fiscal year-end to
November 30 effective December 1, 1996. The report noted this will result in
a
three-month transition period commencing September 1, 1996, and thereafter a
new
fiscal year beginning December 1, 1996 and ending November 30, 1997.
A report on Form 8-K dated October 21, 1996 was filed with the SEC on October
29, 1996 reporting the service of the Class Action Complaint referenced in the
description of Legal Proceedings above.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERNATIONAL SPEEDWAY CORPORATION
(Registrant)
Date January 9, 1997 /s/ James C. France
_____________________________________
James C. France, President
Date January 9, 1997 /s/ Susan G. Schandel
_____________________________________
Susan G. Schandel,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE ACCOMPANYING CONDENSED CONSOLIDATED BALANCE SHEET OF INTERNATIONAL
SPEEDWAY CORPORATION AS OF NOVEMBER 30, 1996, AND THE RELATED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS, SHAREHOLDERS' EQUITY AND CASH FLOWS FOR
THE THREE-MONTH PERIODS ENDED NOVEMBER 30, 1996 AND 1995 AND IS QUALIFIED IN
ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> Nov-30-1997
<PERIOD-START> Sep-01-1996
<PERIOD-END> Nov-30-1996
<PERIOD-TYPE> OTHER
<CASH> 8,057
<SECURITIES> 75,557
<RECEIVABLES> 4,895
<ALLOWANCES> 35
<INVENTORY> 1,253
<CURRENT-ASSETS> 92,633
<PP&E> 150,611
<DEPRECIATION> 39,258
<TOTAL-ASSETS> 234,069
<CURRENT-LIABILITIES> 39,711
<BONDS> 0
0
0
<COMMON> 384
<OTHER-SE> 178,905
<TOTAL-LIABILITY-AND-EQUITY> 234,069
<SALES> 8,163
<TOTAL-REVENUES> 10,496
<CGS> 5,651
<TOTAL-COSTS> 5,651
<OTHER-EXPENSES> 7,410
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69
<INCOME-PRETAX> (2,608)
<INCOME-TAX> (741)
<INCOME-CONTINUING> (1,867)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> (1,867)
<EPS-PRIMARY> (.05)
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