AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 8, 1998
REGISTRATION NO. 333-55709
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
INTERNATIONAL SPEEDWAY CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
FLORIDA 59-0709342
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
----------------
<TABLE>
<S> <C>
GLENN R. PADGETT
INTERNATIONAL SPEEDWAY CORPORATION
1801 WEST INTERNATIONAL 1801 WEST INTERNATIONAL SPEEDWAY BOULEVARD
SPEEDWAY BOULEVARD DAYTONA BEACH, FLORIDA 32114
DAYTONA BEACH, FLORIDA 32114 (904) 947-6446
(904) 254-2700 FAX: (904) 947-6884
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE) INCLUDING AREA CODE, OF AGENT FOR SERVICE)
</TABLE>
----------------
COPIES OF COMMUNICATIONS TO:
<TABLE>
<S> <C>
BRUCE E. MACDONOUGH
GREENBERG TRAURIG HOFFMAN DONN A. BELOFF
LIPOFF ROSEN & QUENTEL, P.A. HOLLAND & KNIGHT LLP
1221 BRICKELL AVENUE ONE EAST BROWARD BOULEVARD
MIAMI, FLORIDA 33131 FT. LAUDERDALE, FLORIDA 33302
PHONE: (305) 579-0500 PHONE: (954) 525-1000
FAX: (305) 579-0717 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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<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE(2) OFFERING PRICE(1)(2) REGISTRATION FEE
<S> <C> <C> <C> <C>
Class A Common Stock,
$.01 par value per share....... 4,600,000 shares $ 30.00 $138,000,000 $40,710
</TABLE>
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(1) Includes shares of 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(c) under the Securities Act of 1933 and based on
the average of the high and low sales prices for the Registrant's Class A
Common Stock on May 27, 1998 as reported by the Nasdaq National Market.
----------------
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 JUNE 8, 1998
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 (the "Offering")
are being sold by International Speedway Corporation (the "Company").
The Company's Class A Common Stock is traded on the Nasdaq National Market
under the symbol "ISCA." On June 4, 1998, the closing price of the Class A
Common Stock on the Nasdaq National Market was $31.25. See "Price Range of
Common Stock."
The Company's authorized capital stock includes Class A Common Stock and
Class B Common Stock. The economic rights of the Class A Common Stock and the
Class B Common Stock (collectively the "Common Stock") are identical, except
that each share of Class A Common Stock entitles 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 entitles the holder
thereof to one (1) vote on such matters. Immediately after this Offering, the
outstanding Class A Common Stock will represent approximately 5.6% of the
combined voting power of both classes of Common Stock. Immediately after this
Offering, 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 approximately
49.8% of the Company's outstanding Common Stock and approximately 60.9% of the
combined voting power of both classes of Common Stock. Each share of Class B
Common Stock is 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 7 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN 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.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
<S> <C> <C> <C>
Per Share $ $ $
Total(3) $ $ $
</TABLE>
- --------------------------------------------------------------------------------
(1) For information regarding indemnification of the Underwriters, see
"Underwriting."
(2) Before deducting expenses of the Offering, estimated at $575,000.
(3) The Company has 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 and
Proceeds to Company will be $ , $ and $ , respectively.
----------------
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 and 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 , 1998, at the offices of Smith Barney Inc., 333
West 34th Street, New York, New York 10001.
----------------
Salomon Smith Barney
CIBC Oppenheimer
Raymond James & Associates, Inc.
, 1998
<PAGE>
Inside Flap
Description of photographs:
Left top photograph: Stock cars at start line of race.
Right top photograph: Driver holding a trophy.
Bottom photograph: Pit crew servicing a stock car.
Inside Front Cover
Description of photographs:
Center: Map of United States indicating geographic
locations of ISC owned and/or operated
facilities, strategic affiliates and
expansion targets.
Left and Right of Center: ISC's logo and track logos
with photographs of each facility
designated on the map.
Background: Aerial view of a motorsports facility.
<PAGE>
[PHOTOS]
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK, INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE COVERING
TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMPANY'S
CLASS A COMMON STOCK ON NASDAQ IN ACCORDANCE WITH RULE 103 OF REGULATION M. 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, THE INFORMATION IN THIS PROSPECTUS
ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. UNLESS THE
CONTEXT OTHERWISE REQUIRES, REFERENCES HEREIN TO THE "COMPANY" MEAN
INTERNATIONAL SPEEDWAY CORPORATION AND ITS WHOLLY OWNED SUBSIDIARIES CONSIDERED
AS ONE ENTERPRISE.
THE COMPANY
International Speedway Corporation, a leading promoter of motorsports
activities in the United States, owns and/or operates five of the nation's
premier motorsports facilities--Daytona International Speedway in Florida;
Talladega Superspeedway in Alabama; Phoenix International Raceway in Arizona;
Darlington Raceway in South Carolina; and Watkins Glen International road
course facility in upstate New York. Other motorsports interests include the
operation of Tucson Raceway Park in Arizona, a 45% indirect interest in the
operations of the Metro--Dade Homestead Motorsports Complex near Miami, Florida
and an approximately 11% indirect interest in Penske Motorsports, Inc. The
Company currently promotes over 80 stock car, sports car, truck, motorcycle and
other racing events annually, including eight NASCAR Winston Cup Series
championship point races, two Winston Cup Series non-championship point events,
five NASCAR Busch Series, Grand National Division ("Busch Grand National
Series") races, the premier sports car endurance event in the United States
(the Rolex 24 at Daytona) and a number of prestigious motorcycle races. The
Company also owns and operates MRN Radio, the nation's largest independent
sports radio network, and DAYTONA USA--The Ultimate Motorsports Attraction, a
motorsports-themed entertainment complex that includes interactive media,
theaters, historical memorabilia, exhibits and tours of Daytona International
Speedway. In the year ended November 30, 1997 ("fiscal 1997"),
NASCAR-sanctioned races at the Company's facilities accounted for approximately
78% of the Company's total revenues.
According to THE WALL STREET JOURNAL, stock car racing is the most-watched
professional sport on U.S. television behind the National Football League.
According to Nielsen Media Research ("Nielsen"), more than 175 million people
tuned to NASCAR's televised events in 1997. Moreover, based on statistics
developed by The Goodyear Tire and Rubber Co. ("Goodyear"), attendance at
NASCAR's three major professional circuits, the Winston Cup Series, the Busch
Grand National Series and the Craftsman Truck Series, grew 9.0%, 16.6% and
13.5%, respectively, from 1996 to 1997. The Company believes that the
demographic profile of this growing base of spectators and viewers has
considerable appeal to sponsors and advertisers, including leading consumer
product and manufacturing companies which have expanded their participation in
the motorsports industry. Published reports indicate that corporate sponsors
will spend an estimated $1.1 billion on motorsports marketing programs in 1998.
The Company's major sponsors include Pepsi, Coca-Cola, Kmart, Sears, Anheuser
Busch, Rolex, Pontiac, Ford, Chevrolet, Dura-Lube, DuPont, Circuit City,
Goodyear, TranSouth Financial, First Union, NAPA Auto Parts and Gatorade.
The Company attributes its historical increases in revenues and profits to
the increasing popularity of the Winston Cup Series, the Busch Grand National
Series and other motorsports events in the United States, as well as an
operating strategy that emphasizes (i) senior management's long-term
association with the motorsports industry, (ii) capital improvements and other
efforts designed to maximize race spectators' total entertainment experience,
(iii) integrated marketing programs targeting both corporate and individual
customers, (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.
3
<PAGE>
RECENT DEVELOPMENTS
Following its initial public offering of Class A Common Stock in November
1996, the Company completed several significant projects:
/bullet/ During fiscal 1997, the Company increased combined grandstand
seating capacity at Daytona, Talladega, Darlington and Watkins
Glen by approximately 13%, and increased the total number of
luxury suites at these facilities by approximately 40%.
/bullet/ In April 1997, the Company acquired the 50% interest it did
not own in Watkins Glen International, strengthening the
Company's presence in an important northeast market.
/bullet/ In July 1997, the Company acquired Phoenix International
Raceway, providing a key western presence in one of the
nation's largest markets.
/bullet/ In July 1997, the Company also acquired a 40% indirect
interest in the operations of the Metro-Dade Homestead
Motorsports Complex located south of Miami, Florida, and
increased this interest to 45% in March 1998.
FUTURE GROWTH STRATEGY
The Company has experienced significant growth in recent years with
revenues and net income increasing from approximately $59.2 million and $12.8
million for the fiscal year ended August 31, 1993 to $141.4 million and $29.8
million for the year ended November 30, 1997, respectively. 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 existing spectator demand, (ii) developing a unique
brand identity for each of the Company's motorsports facilities, (iii)
increasing television, sponsorship and other motorsports related income, (iv)
maximizing the profitability of existing facilities and events, and (v)
acquiring and/or developing additional motorsports facilities.
The Company expects to make approximately $56.0 million of capital
expenditures for projects at existing facilities during the 24-month period
ending February 29, 2000 to increase grandstand seating capacity, to construct
luxury suites, and for a number of other improvements, of which approximately
$7.8 million had been spent as of the date hereof. These planned capital
expenditures include a track lighting project at Daytona, which will allow CBS
Sports to broadcast the Pepsi 400 at Daytona on the evening of July 4, 1998,
the first live network broadcast of an automobile race in prime time.
In December 1997, the Company entered into a development agreement for the
construction of the Kansas International Speedway, a 1.5 mile oval motor
speedway near Kansas City, Kansas. The aggregate cost of acquiring and
developing the first phase of the Kansas International Speedway land and
facility (which will accommodate approximately 75,000 spectators) is expected
to be over $200 million, of which the Company's estimated investment of
approximately $58.8 million will be funded with a portion of the proceeds of
this Offering. Ground breaking is scheduled for 1998, with racing expected to
begin in 2000. In addition, the Company and Indianapolis Motor Speedway
Corporation are equal partners in a venture exploring the possible development
of a new motorsports facility near Chicago, Illinois. The Company's ability to
develop the Kansas International Speedway is subject to the resolution of
certain litigation and to a number of other significant conditions, including
the Company's ability to acquire the land and secure guaranteed maximum price
construction contracts within the prescribed budget.
4
<PAGE>
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.
"DAYTONA USA/registered trademark/", the "Daytona 500/registered
trademark/", "Daytona International Speedway/registered trademark/", "Talladega
Superspeedway/registered trademark/", "Darlington/registered trademark/",
"Phoenix International Raceway/registered trademark/", "Watkins Glen
International/registered trademark/" and "World Center of Racing/registered
trademark/" are registered trademarks and service marks of the Company.
"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").
THE OFFERING
<TABLE>
<S> <C>
Class A Common Stock offered .......... 4,000,000 shares
Common Stock to be outstanding
after the Offering ................... 9,702,135 shares of Class A Common Stock
32,800,498 shares of Class B Common Stock
42,502,633 total shares of Common Stock
Use of proceeds ....................... The Company intends to use approximately $58.8
million of the net proceeds from this Offering to
fund its estimated investment in the Kansas
International Speedway, approximately $48.2
million to fund additions and improvements to
track facilities and the balance for working capital
and other general corporate purposes, including
possible acquisitions. See "Use of Proceeds."
Nasdaq National Market symbol ......... ISCA
</TABLE>
5
<PAGE>
SUMMARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,(1)
----------------------------------------------------------
1993 1994 1995 1996
---------------- ------------- ------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE, SELECTED OPERATING AND
INDUSTRY ATTENDANCE DATA)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions, net ............................. $ 32,078 $ 36,935 $ 43,274 $ 50,140
Motorsports related income .................. 16,557 18,764 24,033 27,433
Food, beverage and souvenir
income ..................................... 9,515 12,291 14,442 17,505
Other income ................................ 1,003 943 423 964
--------- ----------- ----------- -----------
Total revenues ............................. 59,153 68,933 82,172 96,042
Expenses:
Direct expenses:
Prize and point fund monies and
NASCAR sanction fees ...................... 8,251 9,412 11,765 13,865
Motorsports related expenses ............... 10,470 11,470 11,604 15,336
Food, beverage and souvenir
expenses .................................. 4,775 7,867 8,107 10,278
General and administrative
expenses ................................... 13,046 14,307 18,202 20,930
Depreciation and amortization ............... 3,006 3,828 4,798 6,302
--------- ----------- ----------- -----------
Total expenses ............................. 39,548 46,884 54,476 66,711
--------- ----------- ----------- -----------
Operating income (loss) ...................... 19,605 22,049 27,696 29,331
Net income (loss) ............................ $ 12,763(2) $ 14,566 $ 18,363 $ 19,681
=========== =========== =========== ===========
Diluted earnings (loss) per share(3) ......... $ 0.37(2) $ 0.43 $ 0.54 $ 0.57
SELECTED OPERATING DATA:
Total admissions ............................. 767,717 848,134 985,739 1,028,970
Number of seats(4):
Daytona ..................................... 99,204 103,600 109,779 113,149
Talladega ................................... 67,435 74,793 82,671 95,256
Phoenix(5) .................................. N/A N/A N/A N/A
Darlington .................................. 32,455 37,281 39,917 42,553
Watkins Glen ................................ 26,061 26,061 28,095 33,221
INDUSTRY ATTENDANCE DATA(6):
Winston Cup Series events .................... 4,020,000 4,896,000 5,327,000 5,588,000
Busch Grand National Series events ........... 1,165,000 1,302,000 1,604,000 1,666,000
<CAPTION>
THREE TWELVE THREE MONTHS
MONTHS MONTHS YEAR ENDED
ENDED ENDED ENDED FEBRUARY 28,
NOV. 30, NOV. 30, NOV. 30, -------------------------
1996 1996 1997 1997 1998
------------ ------------- ------------- ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE, SELECTED OPERATING AND INDUSTRY
ATTENDANCE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions, net ............................. $ 4,191 $ 50,705 $ 69,487 $26,360 $31,889
Motorsports related income .................. 3,972 28,376 46,650 17,209 27,165
Food, beverage and souvenir
income ..................................... 1,943 17,723 23,408 8,078 8,966
Other income ................................ 390 1,192 1,829 219 264
------- ----------- ----------- ------- -------
Total revenues ............................. 10,496 97,996 141,374 51,866 68,284
Expenses:
Direct expenses:
Prize and point fund monies and
NASCAR sanction fees ...................... 1,301 13,724 20,567 6,984 11,092
Motorsports related expenses ............... 2,814 16,384 23,075 5,150 8,154
Food, beverage and souvenir
expenses .................................. 1,536 10,559 13,435 4,510 4,469
General and administrative
expenses ................................... 5,057 21,721 29,486 6,174 8,528
Depreciation and amortization ............... 2,353 7,368 9,910 1,945 3,041
------- ----------- ----------- ------- -------
Total expenses ............................. 13,061 69,756 96,473 24,763 35,284
------- ----------- ----------- ------- -------
Operating income (loss) ...................... (2,565) 28,240 44,901 27,103 33,000
Net income (loss) ............................ $(1,867) $ 18,834 $ 29,796 $17,475 $20,149
======= =========== =========== ======= =======
Diluted earnings (loss) per share(3) ......... $ (0.05) $ 0.54 $ 0.78 $ 0.46 $ 0.53
SELECTED OPERATING DATA:
Total admissions ............................. N/A N/A 1,416,618 N/A N/A
Number of seats(4):
Daytona ..................................... 113,149 113,149 126,067 126,067 146,628
Talladega ................................... 95,256 95,256 110,133 95,256 110,133
Phoenix(5) .................................. N/A N/A 68,817 N/A 68,817
Darlington .................................. 42,553 42,553 50,805 42,553 50,805
Watkins Glen ................................ 33,221 33,221 35,884 33,221 35,884
INDUSTRY ATTENDANCE DATA(6):
Winston Cup Series events .................... N/A 5,588,000 6,091,000 N/A N/A
Busch Grand National Series events ........... N/A 1,666,000 1,943,000 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
FEBRUARY 28, 1998
----------------------------
ACTUAL AS ADJUSTED(7)
------------ ---------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital (deficit) .......... $ (9,129) $ 60,856
Total assets ....................... 337,366 455,551
Long-term debt ..................... -- --
Total shareholders' equity ......... 230,675 348,860
</TABLE>
- ----------------
(1) The Company changed its fiscal year-end to November 30 effective December 1,
1996. This resulted in a three-month transition period commencing September
1, 1996 and ending November 30, 1996.
(2) Reflects income of $288,000 ($0.01 per share) attributable to the cumulative
effect of a change in accounting principle.
(3) Earnings per share amounts prior to 1998 have been restated as required to
comply with Statement of Financial Accounting Standards No. 128. See Note 1
of Notes to the Company's audited financial statements.
(4) Consists of seating in grandstands and luxury suites as of the end of
period. Excludes infield admission.
(5) Phoenix International Raceway was acquired July 14, 1997.
(6) This information relates to the year which ended December 31 following the
end of the specified fiscal year and was obtained from public information
provided by Goodyear.
(7) Adjusted to give effect to the sale by the Company of 4,000,000 shares of
Class A Common Stock at an assumed public offering price of $31.25 per
share and the application of the estimated net proceeds therefrom as set
forth in "Use of Proceeds."
6
<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.
STATEMENTS IN THIS PROSPECTUS TO THE EFFECT OF THE COMPANY'S OR
MANAGEMENT'S ANTICIPATIONS, BELIEFS, EXPECTATIONS, INTENTIONS, STRATEGIES,
SCHEDULES AND/OR WORDS OF SIMILAR IMPORT 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 21E OF THE
SECURITIES EXCHANGE ACT OF 1934. SUCH STATEMENTS RELATE TO, AMONG OTHER ITEMS,
(I) THE COMPANY'S GROWTH STRATEGIES, INCLUDING ITS POTENTIAL ACQUISITION AND/OR
DEVELOPMENT OF NEW MOTORSPORTS FACILITIES, (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 A NUMBER OF FACTORS, INCLUDING THOSE DESCRIBED BELOW.
IN LIGHT OF THESE RISKS AND UNCERTAINTIES, THERE CAN BE NO ASSURANCE THAT THE
EVENTS THAT ARE SUBJECT TO THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS
PROSPECTUS WILL IN FACT TRANSPIRE.
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 NASCAR's
Winston Cup Series, the Busch Grand National Series and certain other races
promoted by the Company. The Company has sanctioning agreements to promote and
market eight Winston Cup Series championship point races, two Winston Cup
Series non-championship point races, five Busch Grand National Series races and
a number of other NASCAR races for the 1998 racing season. Each NASCAR event
sanctioning agreement is awarded on an annual basis. In fiscal 1997,
NASCAR-sanctioned races at the Company's facilities accounted for approximately
78% 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."
UNCERTAIN PROSPECTS OF NEW MOTORSPORTS FACILITIES
The Company's growth strategy includes the potential acquisition and/or
development of new motorsports facilities, including the proposed Kansas
International Speedway and the possible development of a motorsports facility
near Chicago, Illinois. The Company's ability to implement successfully this
element of its growth strategy will depend on a number of factors, including
(i) the
7
<PAGE>
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, (v) the Company's ability to hire and retain qualified
personnel and (vi) with respect to the proposed Kansas International Speedway,
the resolution of certain pending litigation. The Company's inability to
implement its expansion plans for any reason could 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. 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. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations--Liquidity and Capital
Resources," "Business--Growth Strategy" and "Business--Legal Proceedings."
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 would 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 are expected to delay and could change the scheduled
implementation of these regulations. In June 1997, the major United States
companies engaged in the manufacture of cigarettes and smokeless tobacco
(collectively the "tobacco industry") entered into a memorandum of
understanding with, among others, the Attorneys General of six states to
support the adoption of federal legislation and ancillary undertakings that
would resolve many of the regulatory and litigation issues affecting the United
States tobacco industry, and which would have had an effect similar to the
pending FDA regulations and thereby settle potential challenges. This proposed
settlement required federal legislative approval and enabling legislation which
was not ultimately obtained in a form satisfactory to the tobacco industry.
Accordingly, the tobacco industry has recently announced that it is withdrawing
from the proposed settlement. At this point, the final outcome of the
challenges to the FDA 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. The
combined advertising and sponsorship revenue from the tobacco and alcoholic
beverage industries accounted for approximately 1.5% of the Company's total
revenues in both the fiscal year ended August 31, 1996 ("fiscal 1996") and
fiscal 1997. 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 Series and Busch
Grand National Series.
8
<PAGE>
LEGAL PROCEEDINGS
The Company is a party to certain legal proceedings alleging price-fixing
activities in connection with the sale of racing souvenirs and merchandise.
While the Company disputes the allegations and intends to defend the actions
fully and vigorously, neither the cost of defending the suits nor the potential
damages or other remedies for which the Company could be liable is insured. In
addition, management is presently unable to predict or quantify the outcome of
these matters. Accordingly, there can be no assurance the defense of the suits,
or a possible adverse resolution, will not require material expenditures by the
Company. See "Business--Legal Proceedings."
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 (collectively the "Shared Employees") devote portions of
their time to NASCAR's affairs. Each of the Shared Employees 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 Shared Employees and certain other Company
employees to NASCAR's affairs, and (iii) the amounts charged or paid to NASCAR
for office rental, transportation costs, shared executives, administrative
expenses and similar items. See "NASCAR," "Management" and "Certain
Transactions."
COMPETITION
The Company's racing events face competition from other spectator-oriented
sporting events and other leisure and recreational activities, including
professional football, basketball and baseball. 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"), Indy Racing League ("IRL"), the United States Auto Club
("USAC"), the National Hot Rod Association ("NHRA"), the Sports Car Club of
America ("SCCA"), the United States Road Racing Championship ("USRRC"), 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.
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
9
<PAGE>
in advance of its most popular events, poor weather conditions could have a
material adverse effect on the Company's results of operations, particularly
any interruption of the Company's February "Speedweeks" events.
LIABILITY FOR PERSONAL INJURIES
Motorsports can be dangerous to participants and to spectators. The
Company maintains insurance policies that provide coverage within limits that
management believes should generally be sufficient to protect the Company from
material financial loss due to liability for personal injuries sustained by
persons on the Company's premises in the ordinary course of Company business.
Nevertheless, there can be no assurance that such insurance will be adequate or
available at all times and in all circumstances. The Company's financial
condition and results of operations would be adversely affected to the extent
claims and associated expenses exceed insurance recoveries.
OTHER REGULATORY 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. For example, one of Darlington's Winston
Cup Series events is traditionally held on the Sunday preceding Labor Day.
Accordingly, the 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 in the fiscal quarter ending November 30. 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. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Seasonality and Quarterly Results."
IMPACT OF THE YEAR 2000
The Year 2000 issue is the result of computer programs and other business
systems being written using two digits rather than four to represent the year.
Many of the time sensitive applications and business systems of the Company and
its business partners may recognize a date using "00" as the year 1900 rather
than the year 2000, which could result in system failure or disruption of
operations. The
10
<PAGE>
Year 2000 problem will impact the Company and its business partners. An
assessment of the Year 2000 exposure has been made by the Company and the plans
to resolve the related issues are being implemented. Most major systems have
already been updated or replaced with applications that are Year 2000 compliant
in the normal course of business. The Company believes it will be able to
achieve Year 2000 compliance by the end of fiscal 1998. The Company has also
developed a plan of communication with significant business partners to ensure
that the Company's operations are not disrupted through these relationships and
that the Year 2000 issues are resolved in a timely manner. The Company believes
that it will satisfactorily resolve all significant Year 2000 problems and that
the related costs will not be material. Estimates of Year 2000 related costs
are based on numerous assumptions, including the continued availability of
certain resources, the ability to correct all relevant applications and third
party modification plans. There is no guarantee that the estimates will be
achieved and actual costs could differ materially from those anticipated.
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 will represent
approximately 5.6% of the combined voting power of both classes of the
Company's Common Stock. Immediately after this Offering, the France Family
Group will in the aggregate beneficially own approximately 49.8% of the
Company's outstanding capital stock and approximately 60.9% of the combined
voting power of both classes of Common Stock. Accordingly, if 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 holders of Class A Common Stock
might receive a premium for their shares over prevailing market prices. See
"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
11
<PAGE>
at a special meeting, and (iii) establish certain advance notice procedures for
nomination of candidates for election as directors and for shareholder
proposals to be considered at annual shareholders' meetings. In addition, the
Company is 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 16.7 million additional shares of Class A Common Stock currently
outstanding or issuable upon conversion of currently outstanding shares of
Class B Common Stock are also eligible for public sale without restriction. The
holders of the approximately 21.8 million remaining outstanding shares of
Common Stock have agreed not to sell or otherwise dispose of such shares,
without the consent of Smith Barney Inc. until 90 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."
POSSIBLE VOLATILITY OF STOCK PRICE
The Company's Class A Common Stock is 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. See "Price
Range of Common Stock."
12
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 4,000,000 shares of
Class A Common Stock offered hereby are estimated to be approximately $118.2
million, after deduction of underwriting discounts and commissions and
estimated expenses of the Offering and assuming a per share public offering
price of $31.25 ($136.0 million if the Underwriters' over-allotment option is
exercised in full). The Company intends to use approximately $58.8 million of
such net proceeds to fund the Company's estimated investment in the proposed
Kansas International Speedway. The Company intends to use approximately $48.2
million of the net proceeds to fund the completion of certain additions and
improvements to the Company's motorsports facilities, including additional
suites and/or grandstand seating at its Daytona, Talladega and Phoenix
facilities. 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 $11.2 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. In the event that the proposed Kansas International Speedway is not
developed, the Company intends to use the approximately $70.0 million remaining
net proceeds for working capital and other general corporate purposes. See
"Risk Factors-Uncertain Prospects of New Motorsports Facilities." Except for
its proposed development of the Kansas International Speedway and an additional
motorsports facility near Chicago, the Company does not currently have any
agreement regarding any potential acquisition or development project. Pending
such uses, the Company intends to invest the net proceeds of this Offering in
money market funds or other interest-bearing obligations.
PRICE RANGE OF COMMON STOCK
The Class A Common Stock commenced trading on the Nasdaq National Market
under the symbol "ISCA" on November 4, 1996. The Class B Common Stock is traded
on the OTC Bulletin Board under the symbol "ISCB" and, at the option of the
holder, is convertible to Class A Common Stock at any time.
The reported high and low sales prices or high and low bid information as
applicable (as adjusted for the Company's November 1996 15-for-1 stock split)
for each quarter indicated are as follows:
<TABLE>
<CAPTION>
ISCA ISCB(1)
------------------------- -------------------------
QUARTER ENDING: HIGH LOW HIGH LOW
- ----------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
February 1996 ......... N/A N/A $ 19.33 $ 12.33
May 1996 .............. N/A N/A 23.33 16.67
August 1996 ........... N/A N/A 19.33 16.67
November 1996 ......... $ 22.25 $ 18.50 25.00 17.33
February 1997 ......... 24.75 19.38 24.00 16.50
May 1997 .............. 22.50 17.25 21.75 17.00
August 1997 ........... 22.00 18.63 21.88 18.75
November 1997 ......... 22.50 17.00 22.63 19.75
February 1998 ......... 29.75 21.25 29.13 21.50
May 1998 .............. 36.50 29.00 35.88 29.38
</TABLE>
- ----------------
(1) ISCB quotations were obtained from the OTC Bulletin Board and represent
prices between dealers and do not include mark-up, mark-down or
commission. Such quotations do not necessarily represent actual
transactions.
On May 29, 1998, the closing price of the Class A Common Stock on the
Nasdaq National Market was $30.50. As of April 30, 1998 there were a total of
2,636 record holders of both classes of Common Stock.
13
<PAGE>
DIVIDEND POLICY
The Company has historically paid annual cash dividends on its Common
Stock. See "Selected Financial Data." In addition, in April 1998, the Company
declared an annual dividend of $0.06 per share of Common Stock that will be
paid on or about June 30, 1998 to shareholders of record as of May 29, 1998.
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 future dividends will be declared.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
February 28, 1998, 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 at an assumed per
share public offering price of $31.25 and the application of the estimated net
proceeds therefrom as described under "Use of Proceeds."
<TABLE>
<CAPTION>
FEBRUARY 28, 1998
---------------------------
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, 5,502,762 shares issued and outstanding,
9,502,762 shares as adjusted ................................. 55 95
Class B Common Stock, $.01 par value, 40,000,000 shares
authorized, 32,977,635 shares issued and outstanding ......... 330 330
Additional paid-in capital ..................................... 86,877 205,022
Retained earnings .............................................. 145,468 145,468
Unearned compensation--restricted stock(1) ..................... (2,055) (2,055)
-------- --------
Total shareholders' equity .................................... 230,675 348,860
-------- --------
Total capitalization ......................................... $230,675 $348,860
======== ========
</TABLE>
- ----------------
(1) See Note 11 of Notes to the Company's audited Consolidated Financial
Statements.
14
<PAGE>
SELECTED FINANCIAL DATA
The following selected historical financial data as of and for each of the
fiscal years ended August 31, 1993 through 1996, the three months ended
November 30, 1996, and the fiscal year ended November 30, 1997 have been
derived from the Company's Consolidated Financial Statements which have been
audited by Ernst & Young LLP, independent certified public accountants. The
selected financial data for the twelve months ended November 30, 1996 and as of
and for the three months ended February 28, 1997 and 1998 have been derived
from the unaudited financial statements of the Company which, in the opinion of
management, include all adjustments (consisting of only normal recurring
adjustments) necessary for a fair presentation of the information set forth
therein. The results of operations for the three months ended February 28, 1998
are not necessarily indicative of results for the full year. For comparability,
certain prior period results have been reclassified to conform to the
presentation adopted in fiscal 1997. 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)
-------------------------------------------------------
1993 1994 1995 1996
---------------- ------------ ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions, net ............................ $ 32,078 $ 36,935 $ 43,274 $ 50,140
Motorsports related income ................. 16,557 18,764 24,033 27,433
Food, beverage and souvenir income ......... 9,515 12,291 14,442 17,505
Other income ............................... 1,003 943 423 964
--------- -------- --------- --------
Total revenues ............................ 59,153 68,933 82,172 96,042
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR
sanction fees ............................ 8,251 9,412 11,765 13,865
Motorsports related expenses .............. 10,470 11,470 11,604 15,336
Food, beverage and souvenir expenses ...... 4,775 7,867 8,107 10,278
General and administrative expenses ........ 13,046 14,307 18,202 20,930
Depreciation and amortization .............. 3,006 3,828 4,798 6,302
--------- -------- --------- --------
Total expenses ............................ 39,548 46,884 54,476 66,711
--------- -------- --------- --------
Operating income (loss) ..................... 19,605 22,049 27,696 29,331
Interest income, net ........................ 724 972 1,436 872
Equity in net income (loss) from equity
investments ................................ (27) 207 285 1,441
--------- -------- --------- --------
Income (loss) before income taxes ........... 20,302 23,228 29,417 31,644
Income taxes (benefit) ...................... 7,827 8,662 11,054 11,963
--------- -------- --------- --------
Net income (loss) ........................... $ 12,763(2) $ 14,566 $ 18,363 $ 19,681
=========== ======== ========= ========
Basic earnings (loss) per share(3) .......... $ 0.37(2) $ 0.43 $ 0.54 $ 0.58
Diluted earnings (loss)
per share(3) ............................... $ 0.37(2) $ 0.43 $ 0.54 $ 0.57
Dividends per share ......................... $ 0.03 $ 0.04 $ 0.05 $ 0.05
BALANCE SHEET DATA (END OF PERIOD):
Working capital (deficit) ................... $ 16,356 $ 11,839 $ 20,821 $ (6,751)
Total assets ................................ 78,847 96,401 119,571 152,791
Long-term debt .............................. -- -- -- --
Total shareholders' equity .................. 55,236 68,277 85,247 106,667
<CAPTION>
THREE TWELVE THREE MONTHS
MONTHS MONTHS YEAR ENDED
ENDED ENDED ENDED FEBRUARY 28,
NOV. 30, NOV. 30, NOV. 30, -----------------------
1996 1996 1997 1997 1998
------------ ------------ ------------ ---------- ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions, net ............................ $ 4,191 $ 50,705 $ 69,487 $ 26,360 $ 31,889
Motorsports related income ................. 3,972 28,376 46,650 17,209 27,165
Food, beverage and souvenir income ......... 1,943 17,723 23,408 8,078 8,966
Other income ............................... 390 1,192 1,829 219 264
-------- --------- --------- -------- --------
Total revenues ............................ 10,496 97,996 141,374 51,866 68,284
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR
sanction fees ............................ 1,301 13,724 20,567 6,984 11,092
Motorsports related expenses .............. 2,814 16,384 23,075 5,150 8,154
Food, beverage and souvenir expenses ...... 1,536 10,559 13,435 4,510 4,469
General and administrative expenses ........ 5,057 21,721 29,486 6,174 8,528
Depreciation and amortization .............. 2,353 7,368 9,910 1,945 3,041
-------- --------- --------- -------- --------
Total expenses ............................ 13,061 69,756 96,473 24,763 35,284
-------- --------- --------- -------- --------
Operating income (loss) ..................... (2,565) 28,240 44,901 27,103 33,000
Interest income, net ........................ 261 843 2,687 992 128
Equity in net income (loss) from equity
investments ................................ (304) 1,291 366 (441) (421)
-------- --------- --------- -------- --------
Income (loss) before income taxes ........... (2,608) 30,374 47,954 27,654 32,707
Income taxes (benefit) ...................... (741) 11,540 18,158 10,179 12,558
-------- --------- --------- -------- --------
Net income (loss) ........................... $ (1,867) $ 18,834 $ 29,796 $ 17,475 $ 20,149
======== ========= ========= ======== ========
Basic earnings (loss) per share(3) .......... $ (0.05) $ 0.55 $ 0.78 $ 0.46 $ 0.53
Diluted earnings (loss)
per share(3) ............................... $ (0.05) $ 0.54 $ 0.78 $ 0.46 $ 0.53
Dividends per share ......................... $ -- $ 0.05 $ 0.06 $ -- $ --
BALANCE SHEET DATA (END OF PERIOD):
Working capital (deficit) ................... $ 52,922 $ 52,922 $ (24,976) $ 62,670 $ (9,129)
Total assets ................................ 234,069 234,069 302,823 259,902 337,366
Long-term debt .............................. -- -- 1,007 -- --
Total shareholders' equity .................. 179,289 179,289 209,907 197,228 230,675
</TABLE>
- ---------------
(1) The Company changed its fiscal year-end to November 30 effective December
1, 1996. This resulted in a three-month transition period commencing
September 1, 1996 and ending November 30, 1996. The unaudited results for
the 12-month period ended November 30, 1996 are presented for the purpose
of comparison to the fiscal year ended November 30, 1997.
(2) Reflects income of $288,000 ($0.01 per share) attributable to a cumulative
effect of change in accounting principle.
(3) Earnings per share amounts prior to 1998 have been restated as required to
comply with Statement of Financial Accounting Standards No. 128. See Note
1 of Notes to the Company's audited financial statements.
15
<PAGE>
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 or as a result of such events.
"Admissions" revenue includes ticket sales from all of the Company's
events, track tours and the DAYTONA USA Velocitorium. Admissions revenue for
racing events is recorded upon completion of the related motorsports event.
"Motorsports related income" includes television and radio broadcast
rights fees, promotion and sponsorship fees, hospitality rentals (including
luxury suites and chalets), advertising revenues, royalties from licenses of
the Company's trademarks and track rentals. 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.
During fiscal 1997, the Company acquired Phoenix International Raceway
("Phoenix") and the 50% interest it did not own in Watkins Glen International
("Watkins Glen"). The consolidation of Watkins Glen, effective April 1, 1997,
and the July 14, 1997 purchase of Phoenix resulted in the addition of numerous
events to the Company's fiscal 1997 event schedule, including two Winston Cup
Series championship point events, a Busch Grand National Series event and two
Craftsman Truck Series events. These acquisitions resulted in increases in both
revenues and expenses in fiscal 1997 and the three months ended February 28,
1998 as compared to the twelve months ended November 30, 1996 and the three
months ended February 28, 1997, respectively. Accordingly, the Company's
results of operations are not necessarily comparable on a period-to-period
basis.
16
<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>
TWELVE MONTHS FISCAL YEAR THREE MONTHS ENDED
ENDED ENDED ------------------------------
NOVEMBER 30, NOVEMBER 30, FEBRUARY 28, FEBRUARY 28,
1996(1) 1997 1997 1998
--------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Admissions, net ............................... 51.7% 49.1% 50.8% 46.7%
Motorsports related income .................... 29.0 33.0 33.2 39.8
Food, beverage and souvenir income ............ 18.1 16.6 15.6 13.1
Other income .................................. 1.2 1.3 0.4 0.4
----- ----- ----- -----
Total revenues ............................... 100.0 100.0 100.0 100.0
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR
sanction fees .............................. 14.0 14.5 13.5 16.2
Motorsports related expenses ................. 16.7 16.3 9.9 11.9
Food, beverage and souvenir expenses ......... 10.8 9.5 8.7 6.6
General and administrative expenses ........... 22.2 20.9 11.9 12.5
Depreciation and amortization ................. 7.5 7.0 3.8 4.5
----- ----- ----- -----
Total expenses ............................... 71.2 68.2 47.8 51.7
----- ----- ----- -----
Operating income ............................... 28.8 31.8 52.2 48.3
Interest income, net ........................... 0.9 1.9 1.9 0.2
Equity in net income (loss) from equity
investments ................................... 1.3 0.2 ( 0.8) ( 0.6)
----- ----- ----- -----
Income before income taxes ..................... 31.0 33.9 53.3 47.9
Income taxes ................................... 11.8 12.8 19.6 18.4
----- ----- ----- -----
Net income ..................................... 19.2% 21.1% 33.7% 29.5%
===== ===== ===== =====
</TABLE>
- ----------------
(1) The Company changed its fiscal year end to November 30 effective December
1, 1996. Management believes that a comparison of the year ended November
30, 1997 to the twelve months ended November 30, 1996 is more meaningful
than a comparison of the year ended November 30, 1997 to the year ended
August 31, 1996. Therefore, the discussion and analysis of results of
operations for fiscal 1997 is compared to the unaudited twelve months
ended November 30, 1996.
COMPARISON OF THREE MONTHS ENDED FEBRUARY 28, 1998 TO THREE MONTHS ENDED
FEBRUARY 28, 1997
Admissions revenue increased approximately $5.5 million, or 21%, for the
three months ended February 28, 1998 as compared to the three months ended
February 28, 1997. Most of this increase was related to the Speedweeks events
held at Daytona International Speedway ("Daytona"). Approximately two thirds of
the Speedweeks-related increase was attributable to increased seating capacity
and attendance, with the remaining portion of this increase resulting from an
increase in the weighted average price of tickets sold. The remaining increase
was primarily attributable to events conducted at Phoenix.
Motorsports related income increased approximately $10.0 million, or
57.9%, during the three months ended February 28, 1998 as compared to the three
months ended February 28, 1997. Approximately two-thirds of this increase was a
result of increased television broadcast rights fees for the Speedweeks events
at Daytona. Increases in sponsorship fees, luxury suite and hospitality rentals
and advertising revenues for Speedweeks and, to a lesser extent, Phoenix,
accounted for the remainder of this increase.
Food, beverage and souvenir income increased approximately $900,000, or
11%, during the three months ended February 28, 1998 as compared to the three
months ended February 28, 1997. Increased attendance and, to a lesser extent,
increases in certain prices at Daytona's Speedweeks events accounted
17
<PAGE>
for approximately three-quarters of the increase. The remaining increase was
primarily attributable to increased sales of souvenirs at the gift shop
adjacent to DAYTONA USA and the events conducted at Phoenix.
Prize and point fund monies and NASCAR sanction fees increased by
approximately $4.1 million, or 58.8%, during the three months ended February
28, 1998 as compared to the three months ended February 28, 1997. Approximately
80% of this increase was due to increases in the prize and point fund monies
paid by the Company and distributed by NASCAR to participants in the Speedweeks
events. This increase was primarily attributable to the increases in the
Company's television broadcast rights fees because standard NASCAR sanctioning
agreements require that a specified percentage of television broadcast rights
fees be paid as part of prize money.
Motorsports related expenses increased approximately $3.0 million, or
58.3%, during the three months ended February 28, 1998 as compared to the three
months ended February 28, 1997. More than one-half of this increase related to
an increase in salaries, advertising and other increased operating costs for
the Speedweeks events held at Daytona. The operating costs of Phoenix and, to a
lesser extent, Watkins Glen, accounted for the remaining increase. Motorsports
related expenses as a percentage of combined admissions and motorsports related
revenue increased to 13.8% in the three months ended February 28, 1998 from
11.8% in the three months ended February 28, 1997. This decreased margin was
primarily attributable to the lower margin on events conducted at Phoenix
during the three months ended February 28, 1998.
Food, beverage and souvenir expenses decreased approximately $50,000, or
1%, during the three months ended February 28, 1998 as compared to the three
months ended February 28, 1997. However, food, beverage and souvenir expenses
as a percentage of food, beverage and souvenir revenue decreased to
approximately 49.8% in the three months ended February 28, 1998 from 55.8% in
the three months ended February 28, 1997. This improvement was attributable to
the discontinuation of certain lower margin activities at facilities not
operated by the Company, an increase in margins on souvenir merchandise sales,
and fees from third party vendors at Phoenix for which there are no associated
costs.
General and administrative expenses increased approximately $2.4 million,
or 38.1%, during the three months ended February 28, 1998 as compared to the
three months ended February 28, 1997. General and administrative expenses at
Phoenix and Watkins Glen accounted for approximately one-half of this increase.
Excluding the effects of Watkins Glen and Phoenix, general and administrative
expenses remained relatively constant as a percentage of total revenues for the
three months ended February 28, 1998 as compared to the same period of the
prior year.
Depreciation and amortization expense increased approximately $1.1
million, or 56.3%, during the three months ended February 28, 1998 as compared
to the three months ended February 28, 1997. More than one-half of this
increase was attributable to Phoenix and Watkins Glen, including the
amortization of goodwill related to the Phoenix acquisition. The remaining
increase was attributable to the ongoing improvements to the Company's
facilities.
The approximately $850,000 decrease in net interest income resulted from
lower average investment balances and interest expense related to the note
payable associated with the Phoenix acquisition.
Equity in net loss from equity investments for the three months ended
February 28, 1998 represents the Company's pro rata share of losses and the
amortization of the Company's investment in excess of its share of the
investee's underlying net assets from its approximately 11% indirect investment
in Penske Motorsports, Inc. ("PMI"), its then 40% investment in the operations
of Homestead-Miami Speedway, LLC ("Homestead") and its then approximately 7%
investment in Grand Prix Association of Long Beach ("Long Beach"). The
comparable period of the prior year included the Company's equity in net losses
from PMI and the Company's 50% interest in Watkins Glen. In March 1998, the
Company purchased an additional 5% interest in Homestead for $2.8 million,
which was substantially financed through a 7.5% interest bearing note, payable
in December 2001, and sold its entire interest in Long Beach for $5.3 million.
18
<PAGE>
As a result of the foregoing, the Company's net income increased
approximately $2.7 million, or 15.3%, for the three months ended February 28,
1998 as compared to the comparable period of the prior year.
COMPARISON OF FISCAL 1997 TO THE TWELVE MONTHS ENDED NOVEMBER 30, 1996
Admissions revenue increased approximately $18.8 million, or 37%, during
fiscal 1997 as compared to the twelve months ended November 30, 1996.
Approximately one-third of this increase is a result of increased seating
capacity and attendance at Daytona, Talladega Superspeedway ("Talladega") and
Darlington Raceway ("Darlington"). Approximately one-quarter of the increase is
attributable to an increase in the weighted average price of tickets sold at
Daytona, Talladega and Darlington. The remainder of the increase is primarily
attributable to the impact of admissions revenue for events conducted at
Watkins Glen and Phoenix.
Motorsports related income increased approximately $18.3 million, or
64.4%, during fiscal 1997 as compared to the same period of the prior year.
Approximately one-half of this increase is a result of an increase in broadcast
rights fees, the rentals of hospitality facilities, and promotion and
sponsorship fees related to events conducted at Daytona, Talladega and
Darlington. The remaining increase is attributable to the events conducted at
Watkins Glen and Phoenix, advertising revenue, other promotion and sponsorship
fees and royalties.
Food, beverage and souvenir income increased approximately $5.7 million,
or 32.1%, for fiscal 1997 as compared to the same period of the prior year.
Increased attendance at events conducted at Daytona, Talladega and Darlington,
and, to a lesser extent, increases in certain prices accounted for almost
one-half of the increase. The remaining increase is a result of events
conducted at Watkins Glen and Phoenix and direct sales of souvenirs at the gift
shop adjacent to DAYTONA USA.
Prize and point fund monies and NASCAR sanction fees increased by
approximately $6.8 million, or 49.9%, during fiscal 1997 as compared to the
same period of the prior year. Over one-half of this increase is due to events
conducted at Watkins Glen and Phoenix. The remaining increase is primarily the
result of increases in the prize and point fund monies paid by the Company and
distributed by NASCAR to participants in the Company's events. This increase is
primarily attributable to increases in the Company's television broadcast
rights because standard NASCAR sanction agreements require that a specified
percentage of television broadcast rights be paid as part of the prize money.
Motorsports related expenses increased approximately $6.7 million, or
40.8%, for fiscal 1997 as compared to the same period of the prior year. This
increase is primarily attributable to operating costs related to the events
held at Watkins Glen and Phoenix, increases in direct race expenses related to
events conducted at Daytona, Talladega and Darlington, including increases in
operating costs related to the rain out and rescheduling of Talladega's second
quarter NASCAR Winston Cup Series event and, to a lesser extent, the operation
of DAYTONA USA. Motorsports related expenses remained relatively constant as a
percentage of combined admissions and motorsports related income during both
periods.
Food, beverage and souvenir expenses increased approximately $2.9 million,
or 27.2%, in fiscal 1997 as compared to the same period of the prior year,
primarily due to increases in personnel and product costs. Food, beverage and
souvenir expenses as a percentage of food, beverage and souvenir income
decreased from approximately 59.6% for the twelve months ended November 30,
1996 to 57.4% in fiscal 1997 primarily due to the use of third party vendors at
the Company's Phoenix facility.
General and administrative expenses increased approximately $7.8 million,
or 35.7%, during fiscal 1997 as compared to the same period of the prior year.
The increases are due to the acquisition of Phoenix, the consolidation of
Watkins Glen, and expenses related to the ongoing expansion of the Company's
business. General and administrative expenses as a percentage of total revenue
decreased from approximately 22.2% for the twelve months ended November 30,
1996 to 20.9% in fiscal 1997.
The Company's depreciation and amortization expense increased
approximately $2.5 million, or 34.5%, during fiscal 1997 as compared to the
same period of the prior year, primarily as a result of
19
<PAGE>
DAYTONA USA, the ongoing expansion of the Company's motorsports facilities and
amortization of goodwill related to the acquisition of Phoenix. This increase
was partially mitigated by an approximately $1 million decrease in depreciation
associated with the lengthening of the estimated service lives of grandstands
and other significant assets as a result of management's review of actual
service lives of these types of assets conducted at the beginning of fiscal
1997.
The approximately $1.8 million increase in the Company's net interest
income during fiscal 1997 as compared to the same period of the prior year is
attributable primarily to the investment of proceeds, pending their use, from
the Company's initial public offering of Class A Common Stock in November 1996.
Equity in net income from equity investments represents the Company's pro
rata share of the current income and losses from its equity investments and the
amortization of the Company's investment in excess of its share of the
investee's underlying net assets, accounted for using the equity method of
accounting. In fiscal 1997 this included the Company's approximately 11%
indirect interest in PMI, its 40% investment in Homestead from July 1997, its
approximately 7% investment in Long Beach from August 1997, and its 50%
investment in Watkins Glen through March 31, 1997. The approximately $900,000,
or 71.6% decrease in equity in net income from equity investments during fiscal
1997, as compared to the same period of the prior year, is due to the changes
in the Company's equity investments and the timing of those changes.
As a result of the foregoing, the Company's net income increased
approximately $11.0 million, or 58.2%, during fiscal 1997 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 working capital needs and capital expenditures at
existing facilities, as well as to pay an annual cash dividend. At February 28,
1998, the Company had a working capital deficit of $9.1 million, compared to a
working capital deficit of $25.0 million at November 30, 1997. There were no
borrowings under the Company's credit facility at February 28, 1998.
CASH FLOWS
Net cash provided by operating activities was approximately $29.5 million
for the three months ended February 28, 1998, as compared to $20.6 million for
the three months ended February 28, 1997. The difference between the Company's
net income of $20.1 million and the $29.5 million of operating cash flow was
primarily attributable to a $7.9 million increase in income taxes payable, a
$4.9 million increase in accounts payable and other current liabilities, a $4.0
million increase in deferred income taxes and depreciation and amortization of
$3.0 million, partially offset by an increase in accounts receivable of $7.3
million, a decrease in deferred revenue of $2.7 million and an increase in
prepaids, inventory and other current assets of $1.2 million.
Net cash used in investing activities was $23.1 million for the three
months ended February 28, 1998, compared to $13.7 million for the three months
ended February 28, 1997. The Company's use of cash for investing activities for
the three months ended February 28, 1998, reflects $10.6 million in capital
expenditures and the net acquisition of $12.1 million of short-term
investments.
CAPITAL EXPENDITURES
Capital expenditures totaled $10.6 million for the three months ended
February 28, 1998, compared to $10.3 million for the three months ended
February 28, 1997. Capital expenditures during the three months ended February
28, 1998 related primarily to increased seating capacity at Daytona, Darlington
and Talladega and construction in progress related to additional luxury suites
and track lighting at Daytona.
20
<PAGE>
The Company expects to make approximately $56.0 million of capital
expenditures for approved projects at existing facilities during the 24-month
period ending February 29, 2000 to increase grandstand seating capacity, to
construct luxury suites, and for a number of other improvements, of which
approximately $7.8 million had been spent as of the date hereof. See
"Business--Motorsports Facilities" and "Use of Proceeds."
FUTURE LIQUIDITY
In May 1998, the Company entered into a five-year, unsecured, $100 million
revolving line of credit facility with First Union National Bank, N.A. (the
"Credit Facility"). Borrowings under the Credit Facility will bear interest at
the applicable LIBOR rate plus 40-80 basis points depending on certain
financial criteria. The Credit Facility includes customary representations and
warranties, covenants, defaults and conditions. The Credit Facility is intended
to be used for short-term working capital and to finance the development and/or
acquisition of additional motorsports facilities.
The Company is currently pursuing the development of facilities in several
major markets. In December 1997, the Company entered into an agreement with the
Unified Government of Wyandotte County/Kansas City, Kansas for the construction
of a 1.5-mile oval motor speedway near Kansas City, Kansas. The aggregate cost
of acquiring and developing the first phase of the Kansas International
Speedway land and facility (which will accommodate approximately 75,000
spectators) is expected to be over $200 million, which is expected to be
financed with (i) approximately $58.8 million invested by the Company and
funded with a portion of the proceeds from this Offering, (ii) approximately
$75.0 million of proceeds from the sale of 30-year, taxable special obligation
"TIF" bonds that will be serviced through payments by the Company escalating
from an annual rate of approximately $4.8 million to $7.7 million, (iii)
approximately $25.0 million of proceeds from the sale of tax-exempt special
obligation "STAR" bonds that will be retired with state and local taxes
generated within the project's boundaries, and (iv) a variety of other
mechanisms and governmental incentives. However, there currently are no firm
commitments from any person to purchase any of the contemplated bond
instruments, and there can be no assurance that the contemplated bond
financings will be consummated or that the expected terms of the bonds will not
be materially changed. Moreover, completion of the Kansas International
Speedway is subject to resolution of certain litigation and a number of other
significant conditions, including the Company's ability to acquire the land and
secure guaranteed maximum price construction contracts within the prescribed
budget. See "Risk Factors--Uncertain Prospects of New Motorsports Facilities"
and "Business--Legal Proceedings."
The Company believes that cash flow from operations will be sufficient to
fund the Company's operations for the foreseeable future. In addition, the
Company intends to pursue further development and/or acquisition opportunities,
the timing, size, success or associated potential capital commitments of which
are unpredictable. Accordingly, a material acceleration of the Company's growth
strategy could require the Company to obtain additional capital through debt
and/or equity financings. Although there can be no assurance, management
believes that adequate debt or equity financing would be available on
satisfactory terms.
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, one of Darlington's Winston
Cup Series events 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. 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. This resulted in a three-month transition period commencing
September 1, 1996 and ending November 30, 1996.
21
<PAGE>
Historically, the Company had incurred net losses in the fiscal quarter
ending November 30, and achieved its highest net income in the fiscal quarter
ending February 28. However, in fiscal 1997 the Company had net income for the
quarter ended November 30, primarily due to (i) the acquisition of Phoenix,
which resulted in the addition of a NASCAR Winston Cup Series event in the
quarter ended November 30, and (ii) the date change for Talladega's second
Winston Cup Series race, which moved the event from the quarter ended August 31
to the quarter ended November 30.
The following table presents certain unaudited financial data for each of
the Company's prior nine fiscal quarters (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED
------------------------------------------------------------
FEBRUARY 29, MAY 31, AUGUST 31, NOVEMBER 30,
1996 1996 1996 1996
-------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Total revenues ............................ $ 40,277 $ 24,176 $ 23,047 $ 10,496
Operating income (loss) ................... 20,338 6,230 4,237 (2,565)
Net income (loss) ......................... 12,089 3,817 4,795 (1,867)
Basic earnings (loss) per share ........... 0.35 0.11 0.14 (0.05)
Diluted earnings (loss) per share ......... 0.35 0.11 0.14 (0.05)
</TABLE>
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED
------------------------------------------------------------
FEBRUARY 28, MAY 31, AUGUST 31, NOVEMBER 30,
1997 1997 1997 1997
-------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Total revenues ..................... $ 51,866 $ 29,630 $ 33,106 $ 26,772
Operating income ................... 27,103 7,075 8,762 1,961
Net income ......................... 17,475 4,486 5,985 1,850
Basic earnings per share ........... 0.46 0.12 0.16 0.05
Diluted earnings per share ......... 0.46 0.12 0.16 0.05
</TABLE>
<TABLE>
<CAPTION>
FISCAL
QUARTER
ENDED
FEBRUARY 28,
1998
-------------
<S> <C>
Total revenues ..................... $ 68,284
Operating income ................... 33,000
Net income ......................... 20,149
Basic earnings per share ........... 0.53
Diluted earnings per share ......... 0.53
</TABLE>
INCOME TAXES
Due to the seasonal fluctuation of the Company's business, federal
estimated tax deposits historically have not been required until the second
quarter of the fiscal year. As a result, income taxes payable at February 28,
1998 have increased since November 30, 1997. The deferred income tax liability
increased from November 30, 1997 primarily as a result of differences between
financial and tax accounting treatments relating to depreciation expense and
different bases in the equity investments for tax and financial reporting
purposes.
INFLATION
Management does not believe that inflation has had a material impact on
operating costs and earnings of the Company.
IMPACT OF THE YEAR 2000
The Company believes that it will satisfactorily resolve all significant
Year 2000 problems by the end of fiscal 1998 and that the related costs will
not be material. Estimates of Year 2000 related costs are based on numerous
assumptions, including the continued availability of certain resources, the
ability to correct all relevant applications and third party modification
plans. There is no guarantee that the estimates will be achieved and actual
costs could differ materially from those anticipated. See "Risk Factors--Impact
of the Year 2000."
22
<PAGE>
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
"Certain Transactions." NASCAR sanctions all races that constitute the Winston
Cup Series and Busch Grand National Series, as well as the Craftsman Truck
Series and a number of other racing series and events. The Company derived
approximately 78% of its total revenues from NASCAR-sanctioned racing events at
the Company's facilities in fiscal 1997.
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 both the Company's Chairman and its 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 constituting its premier series,
now known as the Winston Cup Series, from approximately 50 to 30 races.
NASCAR-sanctioned events, particularly Winston Cup races, enjoy a large
and growing base of spectator support. Based on statistics developed by
Goodyear, attendance at NASCAR's Winston Cup Series, Busch Grand National
Series and Craftsman Truck Series grew 9.0%, 16.6% and 13.5%, respectively,
from 1996 to 1997. Moreover, according to Nielsen, more than 175 million people
tuned in to NASCAR's televised events in 1997. Winston Cup, Busch Grand
National and other major NASCAR-sanctioned races also receive extensive
national radio coverage, including 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 operators 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 operators), the composition of race cars and the sanctioning
of races. It sanctions events by means of one-year agreements with track
operators, 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. NASCAR
also administers, monitors and promotes the championship point systems for its
Winston Cup Series, Busch Grand National Series and Craftsman Truck Series
events. Such point systems were designed to establish the championship drivers
in each relevant series.
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,
23
<PAGE>
nor anything in the course of dealing between NASCAR and the Company, should be
construed to require NASCAR to enter into a sanction agreement or to issue a
sanction for any other event in the future.
ECONOMICS OF STOCK CAR RACING
The primary participants in the business of stock car racing are
spectators, sponsors, track operators, drivers and team members and team
owners.
SPECTATORS. According to Goodyear, approximately 9.0 million spectators
attended the 1997 Winston Cup Series, Busch Grand National Series and Craftsman
Truck Series events. Moreover, according to Nielsen, approximately 123 million
viewers tuned to televised Winston Cup Series events in 1997. The Company
believes that the demographic profile of the growing base of spectators has
considerable appeal to track operators, 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 operators by paying fees associated with
specific name events such as the "Pepsi 400 at Daytona", the "DieHard 500" or
the "Bud Shootout at Daytona." In addition, premier racing events such as the
Daytona 500 frequently have multiple "official corporate sponsors." In return,
sponsors receive advertising exposure through television and radio coverage,
newspapers, race programs, brochures and advertising at the track on race day.
TRACK OPERATORS. Track operators such as the Company market and promote
events at their facilities. Their principal revenue sources generally include
(i) admissions, (ii) television and radio broadcast rights fees, (iii)
sponsorship fees, (iv) the sale of merchandise such as souvenirs, collectibles
and apparel, (v) food and beverage concessions, (vi) hospitality fees paid for
catering receptions and private parties, (vii) luxury suite and hospitality
village rentals, (viii) parking, 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 operators negotiate directly with television and
radio networks for coverage of NASCAR-sanctioned events.
DRIVERS AND TEAM MEMBERS. 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. The efforts of each driver are supported by a
number of other team members, all of whom are supervised by a crew chief.
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.
THE WINSTON CUP SERIES
The most prominent and well-attended NASCAR-sanctioned events are the
Winston Cup Series events. According to statistics compiled by Goodyear, total
attendance at Winston Cup Series events increased from approximately 3.3
million in 1990 to approximately 6.0 million in 1997.
24
<PAGE>
The Winston Cup Series begins in February with Speedweeks (consisting of
the annual "Bud Shootout at Daytona" all star event, the "Gatorade 125's"
qualifying races and a number of other premier racing events culminating with
the Daytona 500) and concludes with the "NAPA 500" in November. In 1998, NASCAR
will sanction 37 events, including four non-championship point events, at 21
tracks operating in 17 states and Japan. The following table shows the 1998
Winston Cup Series schedule (events held at facilities operated by the Company
are noted in bold).
1998 WINSTON CUP SERIES SCHEDULE
<TABLE>
<CAPTION>
DATE RACE TRACK LOCATION
- -------------- ----------------------------------- -------------------------------------
<S> <C> <C>
FEBRUARY 8 BUD SHOOTOUT AT DAYTONA* DAYTONA INTERNATIONAL SPEEDWAY
FEBRUARY 12 GATORADE 125S* DAYTONA INTERNATIONAL SPEEDWAY
FEBRUARY 15 DAYTONA 500 DAYTONA INTERNATIONAL SPEEDWAY
February 22 GM Goodwrench Service North Carolina Speedway
March 1 Las Vegas 400 Las Vegas Motor Speedway
March 8 PRIMESTAR 500 Atlanta Motor Speedway
MARCH 22 TRANSOUTH FINANCIAL 400 DARLINGTON RACEWAY
March 29 Food City 500 Bristol Motor Speedway
April 5 Texas 500 Texas Motor Speedway
April 19 Goody's 500 Martinsville Speedway
APRIL 26 DIEHARD 500 TALLADEGA SUPERSPEEDWAY
May 3 California 500 presented by NAPA California Speedway
May 16 The Winston* Charlotte Motor Speedway
May 24 Coca-Cola 600 Charlotte Motor Speedway
May 31 MBNA Platinum 400 Dover Downs International Speedway
June 6 Pontiac Excitement 400 Richmond International Raceway
June 14 Miller-Lite 400 Michigan Speedway
June 21 Pocono 500 Pocono Raceway
June 28 Save Mart/Kragen 350 Sears Point Raceway
JULY 4 PEPSI 400 AT DAYTONA DAYTONA INTERNATIONAL SPEEDWAY
July 12 Jiffy Lube 300 New Hampshire International Speedway
July 26 Pennsylvania 500 Pocono Raceway
August 1 Brickyard 400 Indianapolis Motor Speedway
AUGUST 9 THE BUD AT THE GLEN WATKINS GLEN INTERNATIONAL
August 16 Pepsi 400 presented by DeVilbiss Michigan Speedway
August 22 Goody's 500 Bristol Motor Speedway
August 30 New Hampshire 300 New Hampshire International Speedway
SEPTEMBER 6 PEPSI SOUTHERN 500 DARLINGTON RACEWAY
September 12 Exide NASCAR Select Batteries 400 Richmond International Raceway
September 20 MBNA Gold 400 Dover Downs International Speedway
September 27 NAPA AutoCar 500 Martinsville Speedway
October 4 UAW-GM Quality 500 Charlotte Motor Speedway
OCTOBER 11 WINSTON 500 TALLADEGA SUPERSPEEDWAY
OCTOBER 25 DURA-LUBE 500 PRESENTED BY KMART PHOENIX INTERNATIONAL RACEWAY
November 1 ACDelco 400 North Carolina Speedway
November 8 NAPA 500 Atlanta Motor Speedway
November 22 Twin Ring Motegi, Japan* Motegi, Japan
</TABLE>
- ----------------
* Non-championship point events.
No track currently promotes more than two Winston Cup Series championship
point events. The Company has sanctioning agreements for a total of eight such
point events, as well as sanctioning agreements for the non-point "Bud Shootout
at Daytona" all star race and "Gatorade 125s" (qualifying races for the Daytona
500) at Daytona International Speedway.
THE BUSCH GRAND NATIONAL SERIES AND OTHER NASCAR EVENTS
Among series sanctioned by NASCAR, the Busch Grand National Series is
generally perceived as second in prominence to the Winston Cup Series. In 1998,
31 Busch Grand National Series events will be promoted at 25 tracks in 19
states. Many track operators, including the Company, host a Busch
25
<PAGE>
Grand National Series event in conjunction with a Winston Cup Series event in
order to boost overall attendance for a race weekend. The Company has
sanctioning agreements for five Busch Grand National Series races in 1998: the
NAPA Auto Parts 300, the Lysol 200, the Touchstone Energy 500K, the Diamond
Hill Plywood 200, and the Dura-Lube 200, all of which are scheduled to be
televised.
In addition to Winston Cup Series and Busch Grand National Series events,
NASCAR sanctions various other stock car racing events and series, including
the Craftsman Truck Series, Winston Racing Series, Goody's Dash Series and
Winston West Series.
OTHER MOTORSPORTS
Other motorsports include stock car racing not sanctioned by NASCAR, a
variety of open-wheel racing formats such as "Champ Car," "Indy car" and
"Formula One," as well as sports car, motorcycle and go-kart racing.
STOCK CAR RACING. Sanctioning bodies for stock car racing include NASCAR,
the Automobile Racing Club of America ("ARCA"), the American Motor Racing
Association ("AMRA"), the International Super Modified Association ("ISMA"),
the National Championship Racing Association ("CRA") and the United States
Racers Association ("USRA"). In 1998, the Company is scheduled to promote two
ARCA races--First Plus Financial 200 at Daytona, the annual season-opener for
the ARCA Bondo/Mar-Hyde Supercar series, and the Winn Dixie 300 at Talladega.
The Company also promotes one 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.
OPEN WHEEL RACING. The most established open-wheel racing series are the
CART FedEx Championship Series, the Indy Racing League (the "IRL"), a United
States-based oval-racing series that includes the Indianapolis 500, and Formula
One.
CHAMP CAR RACING. In 1997, CART Champ Car racing was conducted at 17
events in four countries on four different types of tracks--superspeedways,
ovals, temporary street courses and permanent road courses.
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 the
IRL. In fiscal 1998, the Company will promote an IRL race at Phoenix
International Raceway.
FORMULA ONE. 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. Sports car racing is sanctioned in the United States by
the Sports Car Club of America ("SCCA"), the United States Road Racing
Championship ("USRRC") and Professional Sports Car Racing ("PSR"), which
sanction races held on road courses throughout the country. The Company
promotes a number of sports car racing events sanctioned by SCCA and USRRC,
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 Supercross by Honda, each
of which is conducted in connection with the Company's Daytona 200 Motorcycle
Week held each Spring in Daytona Beach.
26
<PAGE>
BUSINESS
The Company, a leading promoter of motorsports activities in the United
States, owns and/or operates five of the nation's premier motorsports
facilities--Daytona International Speedway in Florida; Talladega Superspeedway
in Alabama; Phoenix International Raceway in Arizona; Darlington Raceway in
South Carolina; and the Watkins Glen International road course facility in
upstate New York. Other motorsports interests include the operation of Tucson
Raceway Park in Arizona, a 45% indirect interest in the operations of the
Metro-Dade Homestead Motorsports Complex near Miami, Florida and an
approximately 11% indirect interest in Penske Motorsports, Inc. The Company
currently promotes over 80 stock car, sports car, truck, motorcycle and other
racing events annually, including eight NASCAR Winston Cup Series championship
point races, two Winston Cup Series non-championship point events, five Busch
Grand National Series races, the premier sports car endurance event in the
United States (the Rolex 24 at Daytona) and a number of prestigious motorcycle
races. The Company also owns and operates MRN Radio, the nation's largest
independent sports radio network, and DAYTONA USA--The Ultimate Motorsports
Attraction, a motorsports-themed entertainment complex that includes
interactive media, theaters, historical memorabilia, exhibits and tours of
Daytona International Speedway. In fiscal 1997, NASCAR-sanctioned races at the
Company's facilities accounted for approximately 78% of the Company's total
revenues.
According to THE WALL STREET JOURNAL, stock car racing is the most-watched
professional sport on U.S. television behind the National Football League.
According to Nielsen, more than 175 million people tuned to NASCAR's televised
events in 1997. Moreover, based on statistics developed by Goodyear, attendance
at NASCAR's three major professional circuits, the Winston Cup Series, the
Busch Grand National Series and the Craftsman Truck Series, grew 9.0%, 16.6%
and 13.5%, respectively, from 1996 to 1997. The Company believes that the
demographic profile of this growing base of spectators and viewers has
considerable appeal to sponsors and advertisers, including leading consumer
product and manufacturing companies which have expanded their participation in
the motorsports industry. Published reports indicate that corporate sponsors
will spend an estimated $1.1 billion on motorsports marketing programs in 1998.
The Company's major sponsors include Pepsi, Coca-Cola, Kmart, Sears, Anheuser
Busch, Rolex, Pontiac, Ford, Chevrolet, Dura-Lube, DuPont, Circuit City,
Goodyear, TranSouth Financial, First Union, NAPA Auto Parts and Gatorade.
OPERATING STRATEGY
Key elements of the Company's general operating strategy emphasize (i)
senior management's long-term association with the motorsports industry, (ii)
capital improvements and other efforts designed to maximize race spectators'
total entertainment experience, (iii) integrated marketing programs targeting
both corporate and individual customers, (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 ASSOCIATION WITH MOTORSPORTS INDUSTRY. Members of the France
family have been involved in senior management positions with the Company since
its formation in 1953. 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 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 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. In addition, the France family has been instrumental in the
development of the nation's motorsports industry through their organization and
continued management of NASCAR. See "NASCAR."
27
<PAGE>
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 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
aesthetic and other improvements to food and beverage concession, restroom and
other customer convenience facilities. The Company's fiscal 1997 capital
expenditures attributable to such improvement projects totalled approximately
$27.2 million. Recent efforts to improve customer satisfaction have included
the use of Jumbotron television screens to enhance viewing, the creation of
premium seating sections such as the "Daytona Club" and the provision of a tram
system to transport spectators to and within Daytona International Speedway.
EMPHASIS ON MARKETING. Management believes that it is important to market
the Company's racing events, facilities and trademarks to both corporate and
individual customers. The Company recently expanded its corporate marketing
staff to 12 persons. This staff, supervised by the Company's Vice
President--Marketing, works with marketing personnel at each of the Company's
facilities to develop and execute integrated marketing programs that provide
enhanced value to the Company's marketing partners. The Company pursues a fully
integrated marketing strategy including sponsorships, advertising, promotion,
licensing and public relations. For example, the DAYTONA USA entertainment
complex and the Company's licenses for computer and video games, apparel and
other merchandise are intended in part to increase the awareness and popularity
of motorsports with younger spectators and thereby ensure a foundation for
future growth. The Company's superspeedways also host three of the five events
included in NASCAR's "Winston No Bull 5", a special promotion introduced in
1998, which offers the top five finishers of each of five designated NASCAR
Winston Cup events the opportunity to win a bonus of $1 million by winning the
next of the five designated events.
DEVELOPMENT OF STRATEGIC ALLIANCES WITH CORPORATE SPONSORS. Corporate
sponsors support the Company and the motorsports industry in several ways.
First, sponsors pay fees to track operators. Second, the promotional and
advertising expenditures of major sponsors provide the Company with indirect
marketing benefits. Third, sponsors support racing teams through the funding of
certain operational costs. 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, Coca-Cola, Kmart, Sears, Anheuser Busch, Rolex, Pontiac, Ford,
Chevrolet, Dura-Lube, DuPont, Circuit City, Goodyear, TranSouth Financial,
First Union, NAPA Auto Parts and Gatorade. 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 or official corporate sponsor
designation to advertising and promotional rights in the sponsor's product
category.
UTILIZATION OF MEDIA TO MAXIMIZE EXPOSURE. The Company's comprehensive
and integrated media campaign includes television, radio, newspapers and trade
and consumer publications. The Company negotiates directly with network and
cable television companies for live and rebroadcast coverage of all of its
televised races except for Craftsman Truck Series events, which are negotiated
by NASCAR. All of the Company's Winston Cup Series and Busch Grand National
Series races are televised on CBS, ESPN or TNN, and management intends to seek
similar arrangements for other racing events when opportunities arise. In
addition, certain of the Company's events, including the Daytona 500 and the
Rolex 24 at Daytona, are televised world-wide. The Company also produces and
syndicates its Winston Cup Series, Busch Grand National Series and Craftsman
Truck Series races, as well as other races promoted by the Company or third
parties, on MRN Radio, its proprietary motor racing network. MRN Radio programs
are currently carried by more than 500 radio stations. Management also seeks to
increase the visibility of its racing events and facilities through local and
regional media exposure and the use of public relations professionals to obtain
favorable press coverage.
28
<PAGE>
GROWTH STRATEGY
The Company intends to increase its revenues and profitability by
capitalizing on both its existing strengths and the growth and popularity of
motorsports generally. Key components of this growth strategy are as follows:
EXPAND EXISTING FACILITIES. Management believes that the spectator demand
for its largest events continues to exceed existing seating capacity.
Accordingly, the Company plans to continue its expansion by adding permanent
grandstand seating and luxury suites at each of its superspeedways. During
fiscal 1997, the Company increased its combined grandstand seating capacity at
Daytona, Talladega, Darlington and Watkins Glen by approximately 37,000 seats,
or 13%. This expansion included the addition of approximately 12,500 seats
along the "superstretch" in Daytona to increase capacity for the Daytona 500
and the acceleration of construction of approximately 7,900 seats in Talladega
to meet the additional demand resulting from the date change of a Winston Cup
Series event from July 1996 to October 1997, thereby allowing the Company to
capitalize on the cooler Fall date. In addition, during fiscal 1997 the Company
added a total of 30 luxury suites, representing a 40% increase over the prior
year, to expand the Company's sponsorship opportunities and to compete with
other major sports facilities. Management continually evaluates the demand for
its most popular racing events in order to ensure that additional seating
continues to provide an acceptable rate of return on invested capital. Subject
to such analyses, the Company currently expects to add approximately 46,000
seats in fiscal 1998 through the construction of additional suites and
grandstands at its Daytona, Talladega, Darlington, Phoenix and Watkins Glen
facilities. In the long term, the Company intends to continue to expand its
facilities based upon customer demand and available capital.
DEVELOP BRAND IDENTITY FOR EACH COMPANY SPEEDWAY. The Company intends to
continue its efforts to develop a unique brand identity for each of its
motorsports facilities. The Company attempts to differentiate its tracks
through unique racing configurations, distinct logos, aesthetic environments
and marketing themes that seek to capture the particular diverse
characteristics of the facility or locale, extensive marketing materials and
promotional campaigns that emphasize the history and attributes of that
speedway, as well as integrated advertising and promotional activities that
focus on both the facility and the featured racing event. Examples of the
Company's efforts to develop unique brand imaging and positioning statements
for its facilities include (i) Daytona International Speedway, the "World
Center of Racing," (ii) Talladega Superspeedway, the "Most Competitive Track in
America," and (iii) Darlington Raceway, "A NASCAR Tradition," while brand
imaging for its events includes (a) The Daytona 500, "The Great American Race,"
(b) The Pepsi 400 at Daytona, "Daytona at the Speed of Light," and (c) The Bud
Shootout, "The Fastest Guns in NASCAR." Management believes that these
track-specific branding activities, combined with the Company's general
business strategy of ongoing capital improvements to enhance spectators' total
entertainment experience, will position the Company for continued growth in
attendance, merchandising sales, sponsorships and cross-marketing
opportunities.
Management believes that the best example of the Company's branding
strategy is Daytona International Speedway, which 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 the 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
Daytona 200 Motorcycle Week, (ii) sports car races hosted by the Company,
including the Rolex 24 at Daytona, and (iii) the season opener for the IROC
series. The Company has initiated a number of projects to capitalize on
Daytona's prestige and brand name recognition, including the opening in July
1996 of DAYTONA USA--The Ultimate Motorsports Attraction, an agreement with
General Motors to produce and market a limited edition "Daytona 500" Grand Prix
pace car, an upcoming television commercial that features the Daytona 500 and
Sega's popular DAYTONA USA video arcade and CD ROM computer race games.
29
<PAGE>
INCREASE MOTORSPORTS RELATED INCOME. Motorsports related income, which
includes television and radio broadcast rights fees, promotion and sponsorship
fees, hospitality rentals (including luxury suites and chalets), advertising
revenues and royalties from licenses of the Company's trademarks, increased
from 28.6% of the Company's total revenues in fiscal 1996 to 33.0% in fiscal
1997, reflecting the growing importance of this component of the Company's
revenue stream. Televised motorsports events are continuing to experience
significant growth in viewership. According to Nielsen, ratings for the Winston
Cup Series races televised by ABC, CBS, ESPN, TBS and TNN increased 54%, 24%,
54%, 61% and 43%, respectively, from 1991 to 1997. Moreover, according to THE
WALL STREET JOURNAL, for the last four years, the Daytona 500 has drawn
racing's largest television audience. This significant growth in viewership,
together with unique market conditions that favor prestigious "content"
providers, has resulted in higher broadcast rights fees from television
networks in recent periods. In March 1997, the Company entered into an
agreement with CBS to broadcast the Daytona 500, the NAPA Auto Parts 300, the
Pepsi 400 at Daytona, the Bud Shootout and the Gatorade 125s from 1998 through
2001. The Company also has an agreement with ESPN to broadcast five Winston Cup
Series races, four Busch Grand National Series races and one ARCA race to be
promoted by the Company in each year from 1998 to 2001. The Company's agreement
with TNN terminates with the 1998 Dura-Lube 500 presented by Kmart, and a
renewal agreement is currently being negotiated. Management believes that
certain Busch Grand National Series, Craftsman Truck Series and other racing
events promoted by the Company may also provide increased television broadcast
fees.
The Company believes that the rapidly growing popularity of motorsports
will provide opportunities to increase sponsorship fees and royalties from the
licensing of its trademarks. The Company intends to aggressively explore a
number of race related marketing partnerships, including additional official
status programs and promotional programs for corporate sponsors. In addition,
the Company will emphasize increasing revenues from motorsports collectibles,
home entertainment products, video licensing and automotive related products.
The Company will also seek to expand its radio broadcast rights fees through
methods such as the recent expansion of MRN Radio to include the NASCAR Truck
Network. In addition, the Company recently expanded its corporate marketing
staff to better pursue sponsorship opportunities on an ongoing basis. Published
reports indicate that corporate sponsors will spend an estimated $1.1 billion
on motorsports marketing programs in 1998.
MAXIMIZE PROFITABILITY OF EXISTING FACILITIES AND EVENTS. Although
spectator demand for its largest events continues to exceed existing capacity,
there is often unused capacity for other events. For example, attendance at the
Winston Cup Series event at Talladega, historically held in the summer, was
below capacity. As a result of NASCAR's schedule expansion in 1997, the Company
capitalized on the opportunity to move this event to a cooler Fall date. The
sell-out crowd for this rescheduled event represented more than a 50% increase
in attendance over the prior year and the largest crowd in Talladega history.
Similarly, the lighting of Daytona International Speedway, one of the world's
largest outdoor lighting projects, will permit the July 4th 1998 Pepsi 400 at
Daytona to be held at night, thereby increasing ticket sales and providing a
prime time network television audience. Other elements of the Company's efforts
to increase attendance at non-sold-out events and maximize the profitability of
existing facilities include (i) the sale of multi-event ticket packages, (ii)
the strategic bundling of other products and services, including sponsorship
promotions and hospitality suites, (iii) continued improvements to the quality
and diversity of food and beverage concessions, and (iv) other enhancements and
upgrades to the design, presentation and quality of the Company's promoted
events, facilities and spectator amenities.
ACQUIRE AND DEVELOP ADDITIONAL MOTORSPORTS FACILITIES. Senior management
personnel regularly review acquisition and development prospects that would
augment or complement the Company's existing operations or otherwise offer
significant growth opportunities. Current examples of these efforts include the
Company's proposed development of new motorsports facilities near Kansas City,
Kansas and Chicago, Illinois. The aggregate cost of acquiring and developing
the first phase of the Kansas International Speedway land and facility (which
will accommodate approximately 75,000 spectators) is expected to be over $200
million, of which the Company's estimated investment of approximately $58.8
million will be funded with a portion of the proceeds of this Offering. Ground
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<PAGE>
breaking is scheduled for 1998, with racing expected to begin in 2000. However,
the Company's ability to develop the Kansas City facility is subject to the
resolution of certain pending litigation and a number of other significant
conditions, including its ability to acquire the requisite land and secure
guaranteed maximum price construction contracts within the prescribed budget.
See "--Legal Proceedings." Similarly, there can be no assurance that suitable
acquisition candidates will be available or, because of competition from other
purchasers or other business reasons, that the Company will be able to
consummate the acquisition of additional motorsports facilities on satisfactory
terms. Management believes that the Company's recent acquisitions of Phoenix
International Raceway, the 50% interest in Watkins Glen not previously owned
and a 45% indirect interest in the operations of South Florida's Metro-Dade
Homestead Motorsports Complex exemplify the Company's commitment to increasing
its motorsports presence.
MOTORSPORTS FACILITIES
The following table sets forth certain information relating to each of the
Company's speedway facilities.
<TABLE>
<CAPTION>
NUMBER OF APPROXIMATE
TRACK NAME LOCATION SEATS* ACREAGE TRACK LENGTH
- -------------------------------- ---------------------------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Daytona International Speedway Daytona Beach, Florida 146,628 440 2.5 miles
Talladega Superspeedway Talladega, Alabama 110,133 1,365 2.6 miles
Phoenix International Raceway Phoenix, Arizona 68,817 320 1.0 miles
Darlington Raceway Darlington, South Carolina 50,805 230 1.3 miles
Watkins Glen International Watkins Glen, New York 35,884 1,377 3.4 miles
Tucson Raceway Park Tucson, Arizona 5,372 58 .4 miles
</TABLE>
- ----------------
* At February 28, 1998 and consisting of seating in grandstands and luxury
suites (excludes infield admission).
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 to the
infield 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. Daytona International Speedway is 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 Company is currently completing a $5.8
million track lighting project that will permit night racing events, including
the Pepsi 400 at Daytona in July 1998, which will be the first live prime time
telecast of a race by a television network.
At February 28, 1998, Daytona International Speedway had 142,268
grandstand seats, 38 suites (including air conditioned luxury sky boxes and
Winston Tower suites that include access to hospitality areas) that include a
total of 2,360 additional seats, and 40 "Paddock Club" suites that provide
seating for 2,000 along "Pit Road" in Daytona's infield. During major events,
the Company also uses chalet villages and other pre-race hospitality facilities
that service approximately 15,000. Pending capital improvement projects include
(i) premium grandstand seating for approximately 6,000 additional spectators on
the Speedway's frontstretch, (ii) 28 additional "superstretch" suites, seating
approximately 1,200 spectators, and (iii) a variety of other hospitality and
aesthetic improvements.
TALLADEGA SUPERSPEEDWAY. Talladega Superspeedway, which holds the record
for the fastest lap speed attained in stock car racing, is a high banked,
tri-oval track with an infield road course. The facility is located about 90
minutes 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,
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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 February 28, 1998, the facility included
108,129 grandstand seats, 22 luxury suites containing an additional 1,760
seats, a Paddock Club Suite for up to 244 spectators, and pre-race hospitality
chalets providing service for approximately 10,000. The facility also includes
a 400-acre campground facility, the International Motorsports Hall of Fame
owned by the State of Alabama and hospitality and souvenir villages. Pending
capital improvement projects include (i) additional grandstand seating for
approximately 21,000 spectators, (ii) eight new luxury suites providing seating
for approximately 240 spectators, (iii) an extensive renovation of the
facility's hospitality village, and (iv) the purchase of an additional 630
acres of land.
PHOENIX INTERNATIONAL RACEWAY. The Phoenix International Raceway
motorsports complex is located near Phoenix, Arizona on 320 acres owned by the
Company. The complex, which was acquired by the Company in July 1997, has a
1-mile oval racing surface and a 1.5 mile road course. There are 67,477
grandstand seats and 25 suites that provide seating for an additional 1,340
spectators. Pending capital improvement projects include (i) additional
grandstand seating for approximately 5,000 spectators, (ii) six new luxury
suites providing seating for approximately 400 spectators, (iii) additional
track wall cable barrier systems, and (iv) the purchase of additional land
previously being leased for parking.
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, "egg
shaped" oval track commonly known as "too tough to tame", grandstands that seat
49,883 spectators, nine luxury suites containing an additional 922 seats and
pre-race hospitality chalets providing service for approximately 4,700. Capital
improvement projects completed subsequent to February 28, 1998 include
additional grandstand seating for approximately 4,500 spectators.
WATKINS GLEN INTERNATIONAL. Watkins Glen International includes 3.4 mile
and 2.4 mile road course tracks located on approximately 1,377 acres owned by
the Company. The Watkins Glen International facility includes grandstands that
seat 35,244 spectators, five suites containing an additional 640 seats and
pre-race hospitality chalets providing service for approximately 8,900.
Additional temporary seating for approximately 3,000 spectators will be added
for the NASCAR Winston Cup Series event scheduled for August 1998.
TUCSON RACEWAY PARK. Tucson Raceway Park includes a progressively banked,
3/8 mile paved oval track, grandstands providing seating for 5,372 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.
OTHER FACILITIES. The Company's 67,000 square foot corporate
headquarters, acquired and renovated in fiscal 1997, is located on
approximately nine acres across International Speedway Boulevard from Daytona
International Speedway. The Company also owns 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 corporate headquarters, as well as concession
facilities in Daytona Beach and in Talladega. In addition, the Company leases
real estate and office space in Talladega, and 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
2002, including renewals. The Company's lease for the Talladega Municipal
Airport expires in 2022, including renewals.
OPERATIONS
The Company's operations consist principally of racing events at its six
tracks. The Company also owns a 45% indirect interest in the operations of the
Metro-Dade Homestead Motorsports Complex
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south of Miami, Florida and an approximately 11% indirect interest in Penske
Motorsports, Inc. In addition, the Company owns and operates the DAYTONA USA
entertainment complex, provides catering, merchandising and concession services
at certain of its facilities and operates two radio networks--MRN Radio and the
NASCAR Truck Network (collectively "MRN Radio").
Approximately $110 million, or 78%, of the Company's fiscal 1997 revenues
were attributable to NASCAR-sanctioned races at the Company's facilities,
including applicable admissions, luxury suite rentals, sponsorship, television
and MRN Radio broadcast rights fees, food and beverage concession and catering,
souvenir, advertising and other revenues.
The Company's fiscal 1997 revenues that were not attributable to
NASCAR-sanctioned races at the Company's facilities were derived from a number
of 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, merchandising and concession revenues for the Company's
non-NASCAR racing events, (v) admissions and sponsorship fees attributable to
DAYTONA USA, (vi) merchandising, food and beverage revenues from the gift shop
and snackbar adjacent to DAYTONA USA, and (vii) other revenues unrelated to
racing events such as hangar rentals and gas sales at the Talladega Municipal
Airport. None of the foregoing non-NASCAR revenue sources accounted for over 5%
of the Company's fiscal 1997 revenues.
RACING EVENTS
The 1998 race schedule for the Company includes eight Winston Cup Series
races (not including the Bud Shootout at Daytona all star event or the Gatorade
125s qualifying races for the Daytona 500), five Busch Grand National Series
races and over 50 other NASCAR races and events. In addition, in fiscal 1998
the Company is scheduled to promote over 20 other stock car, sports car,
motorcycle and go-kart racing events, including events sanctioned by USRRC,
ARCA, IRL, USAC, SCCA, AMA, WKA, the Championship Cup Series, the American
Historic Racing Motorcycle Association, Historic Sportscar Racing, and the
Sportscar Vintage Racing Association.
OTHER OPERATIONS
HOMESTEAD MOTORSPORTS COMPLEX. In July 1997, the Company acquired a 40%
indirect interest in the operations of the Metro-Dade Homestead Motorsports
Complex located south of Miami, Florida. The Company increased its stake to 45%
in March 1998. The Homestead facility has a 1.5 mile oval racing track on 320
acres of leased property. The state-of-the-art facility has grandstands that
seat approximately 36,000 spectators, 50 suites containing an additional 2,260
seats, and temporary seating for approximately 5,700 additional persons. The
Homestead facility will be the site of a number of significant racing events in
1998, including the Grand Prix of Miami (a CART event) and the Jiffy Lube 300
(a Busch Grand National Series event).
PENSKE MOTORSPORTS. The Company beneficially owns an approximately 11%
indirect interest in Penske Motorsports, Inc., a publicly traded promoter and
marketer of motorsports events. PMI owns and operates The California Speedway
near Los Angeles, California, Michigan International Speedway in Brooklyn,
Michigan, North Carolina Motor Speedway in Rockingham, North Carolina and
Nazareth Speedway in Nazareth, Pennsylvania. Major racing events scheduled to
be promoted by Penske Motorsports in 1998 include five Winston Cup Series
races, five Busch Grand National Series races, three Champ Car races sanctioned
by CART, two Craftsman Truck Series races, two IROC races and one ARCA race.
Two of the Company's directors serve on the Board of Directors of Penske
Motorsports. See "Management."
DAYTONA USA. The Company's DAYTONA USA--The Ultimate Motorsports
Attraction motorsports-themed entertainment complex is located adjacent to the
Daytona International Speedway.
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DAYTONA USA includes (i) the Velocitorium, which covers approximately 50,000
square feet, stands nearly four stories high and contains numerous highly
interactive motorsports exhibits, many of which are sponsored by leading
consumer brands; (ii) Western Auto's Speedway Tours, a tram tour of the Daytona
International Speedway's garage area, pit road and high banked track; (iii) the
Richard Petty Riding Experience at Daytona; and (iv) for groups of fifteen or
more, the VIP Tour, which includes a tour of the Winston Tower. Adjoining
DAYTONA USA are (a) the Daytona Beach Area Convention and Visitors Official
Welcome Center; (b) the Daytona ticket office; (c) the Sega Speedway, a high
tech arcade using state of the art video technology and computerized, "virtual"
racing simulators; (d) the Pit Shop, which sells DAYTONA USA, Daytona
International Speedway, NASCAR and race team clothing, books, collectibles and
other officially licensed merchandise; and (e) the Fourth Turn Grill
concessions facility. Management believes that DAYTONA USA and these adjoining
facilities appeal to individual tourists, tour groups, conventions and the
Company's corporate sponsors, thereby (i) increasing the use of the Company's
Daytona facility, (ii) expanding the Company's concessions 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.
MRN RADIO. MRN Radio, which includes the NASCAR Truck Network, produces
and syndicates Winston Cup Series, Busch Grand National Series, Craftsman Truck
Series and other races promoted by the Company and others. These networks also
produce daily and weekly NASCAR racing programs. Network radio programs are
currently carried by over 500 radio stations. The Company derives revenue from
the sale of advertising on the networks and rights fees paid by broadcast
affiliates. In addition, management believes that MRN Radio and the NASCAR
Truck Network enhance the Company through increased media exposure to an
expanding radio audience.
AMERICROWN. The Company's Americrown subsidiary conducts the food,
beverage and souvenir concession operations at Daytona, Talladega and
Darlington. Americrown also provides catering services to corporate customers
both in suites and entertainment chalets at these facilities and at Homestead.
Americrown was formed in 1989 to conduct concessions operations as part of the
Company's ongoing efforts to enhance race spectators' total entertainment
experience.
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.
The Company also operates Talladega Municipal Airport, which is located
adjacent to the Talladega Superspeedway.
COMPETITION
Racing events compete with other sports such as professional football,
basketball and baseball, as well as other recreational events. The Company's
events also compete with other racing events sanctioned by various racing
bodies such as NASCAR, CART, IRL, USAC, SCCA, USRRC, ARCA and others, many of
which are often held on the same dates at separate tracks. Management believes
that the type and caliber of promoted racing events, facility location, sight
lines, pricing and level of customer conveniences are the principal factors
that distinguish competing motorsports facilities. See "Risk
Factors--Competition."
EMPLOYEES
As of February 28, 1998, the Company had approximately 400 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 2,500 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.
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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.
In October 1996, Americrown was served with a class action complaint filed
in the Circuit Court of Talladega County, Alabama. The complaint 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, the sole defendant in this case,
disputes the allegations and intends to defend the action fully and vigorously.
In March 1997, two purported class action companion lawsuits were filed in
the United States District Court, Northern District of Georgia, against the
Company, Americrown and a number of other persons alleging, in substance, that
the defendants unlawfully conspired to fix prices of souvenirs and merchandise
sold to consumers in violation of federal antitrust laws. One suit was filed by
Florida residents and the other suit was filed by Georgia residents. Both suits
seek damages and injunctive relief on behalf of all persons who purchased
souvenirs or merchandise from certain vendors at any NASCAR Winston Cup Series
race or supporting event in the United States during the period from 1991 to
present. The two suits have been consolidated and the court has established a
timetable to consider class certification. Discovery is proceeding. The Company
and Americrown dispute the allegations and intend to defend the actions fully
and vigorously.
In April 1998, Kansas International Speedway Corporation, a wholly owned
subsidiary of the Company, was named as a defendant in a lawsuit filed in the
District Court of Wyandotte County, Kansas, by certain county property owners
against the Unified Government of Wyandotte County/ Kansas City, Kansas (the
"Unified Government") seeking to temporarily and permanently enjoin the
development of the Kansas International Speedway on constitutional grounds.
Also in April 1998, the District Attorney of Wyandotte County initiated a
proceeding against the Unified Government challenging the constitutionality of
the Kansas statute authorizing, among other things, the Unified Government's
issuance of special obligation bonds and its exercise of eminent domain and
zoning decisions regarding the development of Kansas International Speedway.
The District Attorney requested an expedited review by the Supreme Court of the
State of Kansas, which was granted. The Supreme Court is expected to rule on
these issues in the summer of 1998. An adverse disposition by the Supreme Court
would most likely impede or preclude development of the Kansas International
Speedway. Further, the ultimate disposition of the District Court proceeding
may adversely impact the development of the Kansas International Speedway.
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,
including "DAYTONA USA," the "Daytona 500," "Daytona International Speedway,"
"Talladega Superspeedway,"
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"Darlington," "World Center of Racing," "Watkins Glen International," "Phoenix
International Raceway" 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.
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MANAGEMENT
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 .............. 64 Chairman of the Board and Chief Executive Officer
James C. France ................ 53 President, Chief Operating Officer and Director
Lesa D. Kennedy ................ 36 Executive Vice President and Director
H. Lee Combs ................... 44 Senior Vice President--Operations and Director
Robert E. Smith ................ 65 Vice President--Administration
Susan G. Schandel .............. 34 Treasurer and Chief Financial Officer
Gregory J. Sullivan ............ 43 Vice President--Marketing
John E. Graham, Jr. ............ 49 Vice President
W. Grant Lynch, Jr. ............ 44 Vice President
James H. Hunter ................ 58 Vice President
John R. Saunders ............... 41 Vice President--Corporate Administrative Services
W. Garrett Crotty .............. 34 Secretary and General Counsel
J. Hyatt Brown ................. 60 Director
John R. Cooper ................. 65 Director
Robert R. Dyson ................ 51 Director
James H. Foster ................ 70 Director
Brian Z. France ................ 35 Director
Christy F. Harris .............. 52 Director
Raymond K. Mason, Jr. .......... 42 Director
Edward H. Rensi ................ 53 Director
Lloyd E. Reuss ................. 61 Director
Chapman Root, II ............... 48 Director
Thomas W. Staed ................ 67 Director
</TABLE>
The Company's Articles provide that the Board of Directors be divided into
three classes, with regular three year staggered terms. 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, Ms. Kennedy and Messrs.
Brown, Dyson, Rensi and Staed will hold office until the annual meeting of
shareholders to be held in 2000, and Messrs. William C. France, Combs, Foster,
Harris and Root will hold office until the annual meeting of shareholders to be
held in 2001.
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.
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. Robert E. Smith has served as Vice President--Administration of the
Company for more than five years.
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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. John R. Saunders has served as a Vice President since May 1997 and was
President of Watkins Glen International from 1983 until 1997.
Mr. W. Garrett Crotty has served as Secretary and General Counsel since
1996. Prior to that time he had been in the private practice of law 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 R. Dyson, a director since January 1997, has served as Chairman
and Chief Executive Officer of the Dyson-Kissner-Moran Corporation (DKM), a
private company involved in a variety of businesses, since November 1992.
Mr. James H. Foster, a director since 1968, served as the Company's Senior
Vice President--Special Projects from January 1994 until his retirement in
1997. Mr. Foster served as President of Daytona International Speedway from
1988 until 1994.
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.
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.
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Mr. Edward H. Rensi, a director since January 1997, is an executive
consultant with McDonald's Corporation. He served as President and Chief
Executive Officer of McDonald's USA from 1991 until 1997. Mr. Rensi also serves
as a director of McDonald's Corporation and Snap-On Incorporated.
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.
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.
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" and
"Management." Standard NASCAR sanctioned 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 Company paid $20.6
million in NASCAR sanction fees and prize and point fund monies in fiscal 1997.
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 certain
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 $720,000 during fiscal 1997.
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 $166,000 during fiscal 1997.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock includes 80 million shares of Class
A Common Stock, 40 million shares of Class B Common Stock, and one million
shares of Preferred Stock. As of February 28, 1998, there were 5,502,762 shares
of Class A Common Stock and 32,977,635 shares of Class B Common Stock
outstanding. No shares of Preferred Stock are outstanding as of the date of
this Prospectus.
The following descriptions of the Company's capital stock set forth 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.
CONVERSION. 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.
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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.
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 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 of Directors, 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.
41
<PAGE>
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.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have approximately 42.5
million outstanding shares of Common Stock. Of these shares, the 4,000,000
shares of Class A Common Stock sold in this 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 38.5 million currently outstanding shares of Common Stock are eligible
for resale in the public market, subject in the case of approximately 21.8
million shares to the Rule 144 limitations applicable to affiliates and to the
lock-up agreements described below.
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 90 calendar days after the date of this
Prospectus without the prior consent of Smith Barney Inc. See "Underwriting."
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. See "Risk Factors--Shares
Eligible for Future Sale" and "Risk Factors--Possible Volatility of Stock
Price."
42
<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.
UNDERWRITER NUMBER OF
- ----------- SHARES
Smith Barney Inc. ........................
CIBC Oppenheimer Corp. ...................
Raymond James & Associates, Inc. .........
Total ................................ 4,000,000
=========
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Class A Common
Stock offered hereby are subject to approval of certain legal matters by
counsel and to certain other conditions. The Underwriters are obligated to take
and pay for all shares of Class A Common Stock offered hereby (other than those
covered by the over-allotment option described below) if any such shares of
Class A Common Stock are taken.
The Underwriters, for whom Smith Barney Inc., CIBC Oppenheimer Corp. 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 Offering, the price to the public, concession, allowance and reallowance
may be changed by the Representatives.
The Company has 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. The Underwriters may exercise such option solely for the purpose
of covering over-allotments, if any, in connection with the Offering. 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 Underwriters may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation
M under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Over-allotment involves syndicate sales in excess of the offering size, which
creates a syndicate short position. Stabilizing transactions permit bids for
and
43
<PAGE>
purchases of the Class A Common Stock so long as the stabilizing bids do not
exceed a specified maximum. Syndicate covering transactions involve purchases
of the Class A Common Stock in the open market in order to cover syndicate
short positions. Penalty bids permit the Underwriters to reclaim a selling
concession from a syndicate member when the Class A Common Stock originally
sold by such syndicate member is purchased in a stabilizing transaction or
syndicate covering transaction to cover syndicate short positions. Such
stabilizing transactions, syndicate covering transactions and penalty bids may
cause the price of the Class A Common Stock to be higher than it would
otherwise be in the absence of such transactions. These transactions may be
effected on The Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
The Underwriters and dealers may engage in passive market making
transactions in the Class A Common Stock in accordance with Rule 103 of
Regulation M under the Exchange Act. In general, a passive market maker may not
bid for, or purchase, the Class A Common Stock at a price that exceeds the
highest independent bid. In addition, the net daily purchases made by any
passive market maker may not bid for, or purchase, the Class A Common Stock at
a price that exceeds the highest independent bid. In addition, the net daily
purchases made by any passive market maker generally may not exceed 30% of its
average daily trading volume in the Class A Common Stock during a specified two
month prior period, or 200 shares, whichever is greater. A passive market maker
must identify passive market making bids as such on the Nasdaq electronic
inter-dealer reporting system. Passive market making may stabilize or maintain
the market price of the Class A Common Stock above independent market levels.
Underwriters and dealers are not required to engage in passive market making
and may end passive market making activities at any time.
The Company and each of the Company's executive officers and directors,
who beneficially hold an aggregate of approximately 21.8 million shares of
Common Stock, have agreed that, for a period of 90 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.
From time to time in the ordinary course of its business, an affiliate of
one of the Representatives has provided, and one or more of the Representatives
or their affiliates may in the future provide, investment banking or other
services 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 LLP, Ft. Lauderdale, Florida.
EXPERTS
The consolidated financial statements (including the schedule incorporated
by reference) of International Speedway Corporation as of November 30, 1996 and
1997, and for each of the years ended August 31, 1995 and 1996, the three-month
period ended November 30, 1996 and the fiscal year ended November 30, 1997,
appearing in this Prospectus and the 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.
44
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, information statements and
other information with the Commission. Such reports, information 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 Commission also maintains a World Wide Web site on
the Internet at http://www.sec.gov that provides access to reports, proxy and
information statements and other information regarding registrants, such as the
Company, that file electronically with the Commission. Information concerning
the Company is also available for inspection at the offices of the Nasdaq
National Market, 1735 K Street, N.W., Washington, D.C. 20006.
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, may be obtained through the Commission's
World Wide Web site, or may be examined, without charge, at the public
reference facilities maintained by 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 November 30, 1997; (2) the Company's Quarterly Report
on Form 10-Q for the quarter ended February 28, 1998; and (3) 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
as part hereof from the date of filing such documents. Any statements contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that the statement contained herein or in any other subsequently
filed document which also is, or is deemed to be, incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus. The Company will provide without charge
to each person to whom this Prospectus is delivered, upon a written or oral
request of such person, a copy of any or all of the foregoing documents
incorporated by reference into this Prospectus (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
such documents). Request for such copies should be delivered to Glenn R.
Padgett, 1801 West International Speedway Boulevard, Daytona Beach, Florida
32114, telephone (904) 947-6446; telecopy (904) 947-6884.
45
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
PAGE
----
UNAUDITED INTERIM FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets
as of November 30, 1997 and February 28, 1998 .......................... F-2
Condensed Consolidated Statements of Income
for the Three Months ended February 28, 1997 and 1998 .................. F-3
Condensed Consolidated Statements of Shareholders' Equity
for the Three Months ended February 28, 1997, the Nine Months ended
November 30, 1997 and the Three Months ended February 28, 1998 ......... F-4
Condensed Consolidated Statements of Cash Flows
for the Three Months ended February 28, 1997 and 1998 .................. F-5
Notes to Condensed Consolidated Financial Statements .................... F-6
AUDITED FINANCIAL STATEMENTS:
Report of Independent Certified Public Accountants ...................... F-9
Consolidated Balance Sheets
as of November 30, 1996 and 1997 ....................................... F-10
Consolidated Statements of Income
for the Years ended August 31, 1995 and 1996, the Three Months ended
November 30, 1996 and the Year ended November 30, 1997 ................. F-11
Consolidated Statements of Shareholders' Equity
for the Years ended August 31, 1995 and 1996, the Three Months ended
November 30, 1996 and the Year ended November 30, 1997 ................. F-12
Consolidated Statements of Cash Flows
for the Years ended August 31, 1995 and 1996, the Three Months ended
November 30, 1996 and the Year ended November 30, 1997 ................. F-13
Notes to Consolidated Financial Statements .............................. F-14
</TABLE>
F-1
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
NOVEMBER 30, FEBRUARY 28,
1997 1998
-------------- -------------
(UNAUDITED)
ASSETS (IN THOUSANDS)
<S> <C> <C>
Current Assets:
Cash and cash equivalents ............................................... $ 9,974 $ 16,193
Short-term investments .................................................. 23,601 35,674
Receivables, less allowances of $100..................................... 7,425 14,703
Inventories ............................................................. 866 1,410
Prepaid expenses and other current assets ............................... 4,077 4,781
-------- --------
Total Current Assets ..................................................... 45,943 72,761
Property and Equipment--at cost--less accumulated depreciation of
$53,917 and $56,644 at November 30 and February 28, respectively......... 166,078 173,814
Other Assets:
Cash surrender value of life insurance (Note 3) ......................... 3,590 3,640
Equity investments ...................................................... 45,844 45,945
Goodwill, less accumulated amortization of $382 and $638 at
November 30 and February 28, respectively ............................. 40,400 40,144
Long-term investments ................................................... 500 500
Other ................................................................... 468 562
-------- --------
90,802 90,791
-------- --------
Total Assets ............................................................. $302,823 $337,366
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable ........................................................ $ 6,898 $ 8,818
Income taxes payable .................................................... 7 7,726
Deferred income ......................................................... 49,338 46,665
Current portion of note payable ......................................... 13,295 14,613
Other current liabilities ............................................... 1,381 4,068
-------- --------
Total Current Liabilities ................................................ 70,919 81,890
Notes payable ............................................................ 1,007 --
Deferred income taxes .................................................... 20,990 24,801
Commitments and Contingencies (Note 5)
Shareholders' Equity (Note 1)
Class A Common Stock, $.01 par value, 80,000,000 shares
authorized; 5,342,042 and 5,502,762 issued at
November 30 and February 28, respectively ............................. 53 55
Class B Common Stock, $.01 par value, 40,000,000 shares
authorized; 33,154,920 and 32,977,635 issued at
November 30 and February 28, respectively ............................. 332 330
Additional paid-in capital .............................................. 86,437 86,877
Retained earnings ....................................................... 125,457 145,468
-------- --------
212,279 232,730
Less unearned compensation--restricted stock ............................ 2,372 2,055
-------- --------
Total Shareholders' Equity ............................................... 209,907 230,675
-------- --------
Total Liabilities and Shareholders' Equity ............................... $302,823 $337,366
======== ========
</TABLE>
See accompanying notes.
F-2
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------
FEBRUARY 28, FEBRUARY 28,
1997 1998
-------------- -------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C>
Revenues:
Admissions, net ............................................... $26,360 $31,889
Motorsports related income .................................... 17,209 27,165
Food, beverage and souvenir income ............................ 8,078 8,966
Other income .................................................. 219 264
------- -------
51,866 68,284
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR sanction fees ......... 6,984 11,092
Motorsports related expenses ................................. 5,150 8,154
Food, beverage and souvenir expenses. ........................ 4,510 4,469
General and administrative expenses ........................... 6,174 8,528
Depreciation and amortization ................................. 1,945 3,041
------- -------
24,763 35,284
------- -------
Operating Income ............................................... 27,103 33,000
Interest income, net ........................................... 992 128
Equity in net loss from equity investments ..................... (441) (421)
------- -------
Income before income taxes ..................................... 27,654 32,707
Income taxes ................................................... 10,179 12,558
------- -------
Net Income ..................................................... $17,475 $20,149
======= =======
Basic net income per share (Note 2) ............................ $ 0.46 $ 0.53
======= =======
Diluted net income per share (Note 2) .......................... $ 0.46 $ 0.53
======= =======
Dividends per share ............................................ $ -- $ --
======= =======
</TABLE>
See accompanying notes.
F-3
<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 NOVEMBER 30, 1996 .............. $40 $344 $82,236 $ 98,119 $ (1,450) $179,289
Activity 12/1/96 - 2/28/97--unaudited:
Net income ............................... -- -- -- 17,475 -- 17,475
Additional expense of Class A
Common Stock Offering .................. -- -- (29) -- -- (29)
Increase in equity investment ............ -- -- 400 -- -- 400
Restricted stock granted ................. -- 1 1,984 -- (1,985) --
Reacquisition of previously issued
common stock ........................... -- -- -- (147) -- (147)
Conversion of Class B Common Stock
to Class A Common Stock ................ 4 (4) -- -- -- --
Amortization of unearned
compensation ........................... -- -- -- -- 240 240
--- ----- ------- -------- -------- --------
BALANCE AT FEBRUARY 28, 1997--
unaudited ................................ 44 341 84,591 115,447 (3,195) 197,228
Activity 3/1/97 - 11/30/97--unaudited:
Net income ............................... -- -- -- 12,321 -- 12,321
Cash dividends (6.0\c per share) ......... -- -- -- (2,310) -- (2,310)
Additional expense of Class A
Common Stock Offering .................. -- -- (17) -- -- (17)
Increase in equity investment ............ -- -- 1,863 -- -- 1,863
Reacquisition of previously issued
common stock ........................... -- -- -- (1) -- (1)
Conversion of Class B Common Stock
to Class A Common Stock ................ 9 (9) -- -- -- --
Amortization of unearned
compensation ........................... -- -- -- -- 823 823
--- ----- ------- --------- -------- ---------
BALANCE AT NOVEMBER 30, 1997 .............. 53 332 86,437 125,457 (2,372) 209,907
Activity 12/1/97-2/28/98--unaudited:
Net income ............................... -- -- -- 20,149 -- 20,149
Increase in equity investment ............ -- -- 115 -- -- 115
Reacquisition of previously issued
common stock ........................... -- -- (57) (138) -- (195)
Conversion of Class B Common Stock
to Class A Common Stock ................ 2 (2) -- -- -- --
Forfeiture of restricted shares .......... -- -- (110) -- 110 --
Income tax benefit related to restricted
stock plan ............................. -- -- 492 -- -- 492
Amortization of unearned
compensation ........................... -- -- -- -- 207 207
--- ----- ------- --------- -------- ---------
BALANCE AT FEBRUARY 28, 1998--
unaudited ................................ $55 $330 $86,877 $145,468 $ (2,055) $230,675
=== ===== ======= ========= ======== =========
</TABLE>
See accompanying notes.
F-4
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------
FEBRUARY 28, FEBRUARY 28,
1997 1998
-------------- -------------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net income .................................................. $ 17,475 $ 20,149
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization .............................. 1,945 3,041
Amortization of unearned compensation ...................... 240 207
Deferred income taxes ...................................... 1,447 4,035
Undistributed loss from equity investments ................. 441 421
Loss on disposition of property and equipment .............. -- 98
Changes in Operating Assets and Liabilities:
Receivables ............................................... (7,031) (7,278)
Inventories ............................................... (343) (544)
Prepaid expenses and other current assets ................. (798) (704)
Other assets .............................................. (3) (100)
Accounts payable .......................................... 4,330 1,919
Income taxes payable ...................................... 8,008 7,915
Deferred income ........................................... (7,174) (2,673)
Other current liabilities ................................. 2,066 2,998
---------- ---------
Net Cash Provided by Operating Activities. ................... 20,603 29,484
INVESTING ACTIVITIES
Acquisition of investments .................................. (12,025) (64,983)
Proceeds from maturities of investments ..................... 8,646 52,910
Capital expenditures ........................................ (10,328) (10,612)
Cash surrender value of life insurance ...................... (34) (50)
Equity investments .......................................... -- (335)
---------- ---------
Net Cash Used in Investing Activities ........................ (13,741) (23,070)
FINANCING ACTIVITIES
Reacquisition of previously issued common stock ............. (147) (195)
Additional expense of Class A Common Stock Offering ......... (29) --
---------- ---------
Net Cash Used in Financing Activities ........................ (176) (195)
---------- ---------
Net Increase in Cash and Cash Equivalents .................... 6,686 6,219
Cash and Cash Equivalents at Beginning of Period ............. 8,057 9,974
---------- ---------
Cash and Cash Equivalents at End of Period ................... $ 14,743 $ 16,193
========== =========
</TABLE>
See accompanying notes.
F-5
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 1998 (UNAUDITED)
NOTE 1--BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared in compliance with Rule 10-01 of Regulation S-X and generally accepted
accounting principles but do not include all of the information and disclosures
required for complete financial statements. The statements should be read in
conjunction with the consolidated financial statements and notes thereto that
follow. In management's opinion, the statements include all adjustments which
are necessary for a fair presentation of the results for the interim periods.
All such adjustments are of a normal recurring nature. Certain
reclassifications have been made to conform to the financial presentation at
February 28, 1998.
Because of the seasonal concentration of racing events, the results of
operations for the three-month periods ended February 28, 1997 and February 28,
1998 are not indicative of the results to be expected for the year.
NOTE 2--EARNINGS PER SHARE
The Company has adopted Statement of Financial Accounting Standards No.
128, "Earnings Per Share", during the three months ended February 28, 1998.
This statement requires the Company to present "Basic" and "Diluted" earnings
per share on the face of the income statement for current periods and to
restate earnings per share for prior periods. For the three months ended
February 28, 1997 and February 28, 1998 earnings per share were $.46 and $.53,
respectively, for both basic and diluted earnings per share. Basic weighted
average shares outstanding for the three-month periods ended February 28, 1997
and February 28, 1998 were 38,172,705 and 38,204,357, respectively. Diluted
weighted average shares outstanding for the three-month periods ending February
28, 1997 and February 28, 1998 were 38,299,227 and 38,361,625, respectively.
The difference between basic weighted average shares and diluted weighted
average shares is related to shares issued under the Company's Long-term
Incentive Restricted Stock Plan, using the treasury stock method as prescribed
by the standard.
NOTE 3--RELATED PARTY DISCLOSURES AND TRANSACTIONS
All of the racing events that take place during the Company's fiscal year
are sanctioned by various racing organizations, such as the American Historic
Racing Motorcycle Association ("AHRMA"), the American Motorcyclist Association
("AMA"), the Automobile Racing Club of America ("ARCA"), the Championship Cup
Series ("CCS"), the Federation Internationale de l'Automobile ("FIA"), the
Federation Internationale Motocycliste ("FIM"), the International Race of
Champions ("IROC"), the Indy Racing League ("IRL"), the Sports Car Club of
America ("SCCA"), the Sportscar Vintage Racing Association ("SVRA"), the United
States Auto Club ("USAC"), the United States Road Racing Championship
("USRRC"), the World Karting Association ("WKA"), 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 55% of the outstanding stock of the Company and some
members of which serve as directors and officers. Standard NASCAR sanction
agreements require racetrack operators to pay sanction fees and prize and point
fund monies for each sanctioned event conducted. The prize and point fund
monies are distributed by NASCAR to participants in the events. Prize and point
fund monies paid by the Company to NASCAR for disbursement to competitors
totaled approximately $5.6 million and $8.9 million for the three-month periods
ended February 28, 1997 and February 28, 1998, respectively.
F-6
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FEBRUARY 28, 1998 (UNAUDITED)
NOTE 3--RELATED PARTY DISCLOSURES AND TRANSACTIONS--(CONTINUED)
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 records a net insurance
expense representing the excess of the premiums paid over the increase in cash
surrender value of the policies associated with these agreements. During the
three-month periods ended February 28, 1997 and February 28, 1998, premiums
paid were approximately equal to the increase in cash surrender value of the
policies.
NOTE 4--SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for income taxes and interest for the three months ended
February 28, 1997 and February 28, 1998 is as follows:
<TABLE>
<CAPTION>
1997 1998
------ -------
(IN THOUSANDS)
<S> <C> <C>
Income taxes paid ......... $619 $547
Interest paid ............. $ -- $ --
</TABLE>
NOTE 5--LEGAL PROCEEDINGS
On October 21, 1996, the Company's indirect corporate 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 alleged, 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 putative 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. Although
Americrown attempted to remove the suit to Federal District Court, it was
remanded to the Circuit Court of Talladega County, Alabama, where discovery and
the class certification process are proceeding. Americrown disputes the
allegations and intends to defend the action fully and vigorously.
In March 1997, two purported class action companion lawsuits were filed in
the United States District Court, Northern District of Georgia, against the
Company, its indirect corporate subsidiary, Americrown Service Corporation, and
a number of other persons alleging, in substance, that the defendants
unlawfully conspired to fix prices of souvenirs and merchandise sold to
consumers in violation of federal antitrust laws. One suit was filed by Florida
residents and the other suit was filed by Georgia residents. Both suits seek
damages and injunctive relief on behalf of all persons who purchased souvenirs
or merchandise from certain vendors at any NASCAR Winston Cup Series stock car
race or supporting event in the United States during the period 1991 to
present. The two suits have been consolidated and the court has established a
timetable to consider class certification. Discovery is proceeding. The Company
and Americrown dispute the allegations and intend to defend the actions fully
and vigorously.
Management is presently unable to predict or quantify the outcome of these
matters.
F-7
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
FEBRUARY 28, 1998 (UNAUDITED)
NOTE 6--ACQUISITION
On July 14, 1997, Phoenix Speedway Corporation, a newly formed
wholly-owned subsidiary of the Company, acquired substantially all of the
assets comprising the business and motorsports complex known as "Phoenix
International Raceway" from Phoenix International Raceway, Inc., Phoenix
International Raceway, L.L.C. and Phoenix International Raceway Limited
Partnership. The acquisition has been accounted for under the purchase method
of accounting, and accordingly, the results of operations have been included in
the Company's consolidated statements of operations since the date of
acquisition.
The following unaudited pro forma financial information presents a summary
of consolidated results of operations as if the acquisition had occurred as of
December 1, 1996 after giving effect to certain adjustments, including
depreciation, amortization of goodwill, interest income, interest expense on
acquisition debt and related income tax effects. The pro forma results have
been prepared for comparative purposes only and do not purport to be indicative
of what would have occurred had the acquisition been made on that date, nor are
they necessarily indicative of results which may occur in the future.
<TABLE>
<CAPTION>
PRO FORMA--UNAUDITED
FOR THE THREE MONTHS
ENDED FEBRUARY 28, 1997
-----------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C>
Total revenues ....................... $54,047
Net income ........................... 16,769
Basic net income per share ........... .44
Diluted net income per share ......... .44
</TABLE>
NOTE 7--SUBSEQUENT EVENTS
In March, 1998, the Company sold its entire equity interest in Grand Prix
Association of Long Beach, Inc. for $5.3 million. The Company acquired its
position in Grand Prix through a series of transactions during 1997 for a total
of $4.3 million, including acquisition costs.
In March of 1998, the Company acquired an additional 5% ownership interest
in the Homestead-Miami Speedway, LLC for $2.8 million, which was substantially
financed by a 7.5% interest bearing note, payable on December 31, 2001.
In April 1998, Kansas International Speedway Corporation, a wholly owned
subsidiary of the Company, was named as a defendant in a lawsuit filed in the
District Court of Wyandotte County, Kansas, by certain county property owners
against the Unified Government of Wyandotte County/ Kansas City, Kansas (the
"Unified Government") seeking to temporarily and permanently enjoin the
development of the Kansas International Speedway on constitutional grounds.
Also in April 1998, the District Attorney of Wyandotte County initiated a
proceeding against the Unified Government challenging the constitutionality of
the Kansas statute authorizing, among other things, the Unified Government's
issuance of special obligation bonds and its exercise of eminent domain and
zoning decisions regarding the development of Kansas International Speedway.
The District Attorney requested an expedited review by the Supreme Court of the
State of Kansas, which was granted. The Supreme Court is expected to rule on
these issues in the summer of 1998. An adverse disposition by the Supreme Court
would most likely impede or preclude development of the Kansas International
Speedway. Further, the ultimate disposition of the District Court proceeding
may adversely impact the development of the Kansas International Speedway.
F-8
<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 November 30, 1996 and
1997, and the related consolidated statements of income, shareholders' equity
and cash flows for the years ended August 31, 1995 and 1996, the three month
period ended November 30, 1996, and the year ended November 30, 1997. 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 November 30, 1996 and
1997, and the consolidated results of their operations and their cash flows for
the years ended August 31, 1995 and 1996, the three month period ended November
30, 1996 and the year ended November 30, 1997, in conformity with generally
accepted accounting principles.
Ernst & Young LLP
Jacksonville, Florida
January 22, 1998, except as to Note 1,
Earnings Per Share, as to which the date
is April 14, 1998.
F-9
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
NOVEMBER 30,
-------------------------
1996 1997
----------- -----------
ASSETS (IN THOUSANDS)
<S> <C> <C>
Current Assets:
Cash and cash equivalents ......................................... $ 8,057 $ 9,974
Short-term investments (Note 4) ................................... 75,557 23,601
Receivables, less allowances of $35 and $100, respectively......... 4,860 7,425
Inventories ....................................................... 1,253 866
Prepaid expenses and other current assets ......................... 2,906 4,077
-------- --------
Total Current Assets ............................................... 92,633 45,943
Property and Equipment:
Land and leasehold improvements ................................... 3,668 15,177
Buildings, grandstands and tracks ................................. 104,152 153,044
Furniture and equipment ........................................... 27,173 33,168
Construction in progress .......................................... 15,618 18,606
-------- --------
150,611 219,995
Less: accumulated depreciation .................................... 39,258 53,917
-------- --------
111,353 166,078
Other Assets:
Cash surrender value of life insurance ............................ 2,337 3,590
Equity investments (Note 2) ....................................... 26,952 45,844
Goodwill, less accumulated amortization of $382 (Note 3)........... -- 40,400
Long-term investments (Note 4) .................................... 500 500
Other ............................................................. 294 468
-------- --------
30,083 90,802
-------- --------
Total Assets ....................................................... $234,069 $302,823
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable .................................................. $ 3,306 $ 6,898
Income taxes payable (Note 5) ..................................... 87 7
Deferred income ................................................... 35,760 49,338
Current portion of note payable ................................... -- 13,295
Other current liabilities ......................................... 558 1,381
-------- --------
Total Current Liabilities .......................................... 39,711 70,919
Notes Payable ...................................................... -- 1,007
Deferred Income Taxes (Note 5) ..................................... 15,069 20,990
Commitments and Contingencies (Note 8)
Shareholders' Equity (Notes 1 and 7):
Class A Common Stock, $.01 par value, 80,000,000 shares
authorized; 4,000,000 and 5,342,042 issued and outstanding
in 1996 and 1997, respectively .................................. 40 53
Class B Common Stock, $.01 par value, 40,000,000 shares
authorized; 34,406,325 and 33,154,920 issued and outstanding
in 1996 and 1997, respectively .................................. 344 332
Additional paid-in capital ........................................ 82,236 86,437
Retained earnings ................................................. 98,119 125,457
-------- --------
180,739 212,279
Less unearned compensation--restricted stock (Note 11) ............ 1,450 2,372
-------- --------
Total Shareholders' Equity ......................................... 179,289 209,907
-------- --------
Total Liabilities and Shareholders' Equity ......................... $234,069 $302,823
======== ========
</TABLE>
See accompanying notes.
F-10
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED YEAR ENDED
AUGUST 31, NOVEMBER 30, NOVEMBER 30,
--------------------------- -------------- -------------
1995 1996 1996 1997
------------ ------------ -------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Revenues:
Admissions, net ................................... $ 43,274 $ 50,140 $ 4,191 $ 69,487
Motorsports related income ........................ 24,033 27,433 3,972 46,650
Food, beverage and souvenir income ................ 14,442 17,505 1,943 23,408
Other income ...................................... 423 964 390 1,829
-------- -------- -------- ---------
82,172 96,042 10,496 141,374
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR
sanction fees .................................. 11,765 13,865 1,301 20,567
Motorsports related expenses ..................... 11,604 15,336 2,814 23,075
Food, beverage and souvenir expenses ............. 8,107 10,278 1,536 13,435
General and administrative expenses ............... 18,202 20,930 5,057 29,486
Depreciation and amortization ..................... 4,798 6,302 2,353 9,910
-------- -------- -------- ---------
54,476 66,711 13,061 96,473
-------- -------- -------- ---------
Operating income (loss) ............................ 27,696 29,331 (2,565) 44,901
Interest income, net ............................... 1,436 872 261 2,687
Equity in net income (loss) from
equity investments ............................... 285 1,441 (304) 366
-------- -------- -------- ---------
Income (loss) before income taxes .................. 29,417 31,644 (2,608) 47,954
Income taxes (benefit) (Note 5) .................... 11,054 11,963 (741) 18,158
-------- -------- -------- ---------
Net income (loss) .................................. $ 18,363 $ 19,681 $ (1,867) $ 29,796
======== ======== ======== =========
Basic earnings (loss) per share (Note 1) ........... $ 0.54 $ 0.58 $ (0.05) $ 0.78
======== ======== ======== =========
Diluted earnings (loss) per share (Note 1) ......... $ 0.54 $ 0.57 $ (0.05) $ 0.78
======== ======== ======== =========
Dividends per share (Note 1) ....................... 4.7\c 5.3\c -- 6.0\c
======== ======== ======== =========
</TABLE>
See accompanying notes.
F-11
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
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, 1994 .................. $-- $344 $1,364 $ 67,194 $ (625) $ 68,277
Net income ................................. -- -- -- 18,363 -- 18,363
Cash dividends (4.7\c per share) ........... -- -- -- (1,605) -- (1,605)
Reacquisition of previously issued
common stock ............................. -- -- -- (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\c per share) ........... -- -- -- (1,836) -- (1,836)
Reacquisition of previously issued
common stock ............................. -- (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 ...... -- -- 4,677 -- -- 4,677
--- ------ -------- -------- -------- --------
BALANCE AT AUGUST 31, 1996 .................. -- 344 8,127 99,986 (1,790) 106,667
Net loss ................................... -- -- -- (1,867) -- (1,867)
Public offering--Class A Common
Stock (Note 7) ........................... 40 -- 74,327 -- -- 74,367
Forfeiture of restricted shares ............ -- -- (218) -- 218 --
Amortization of unearned
compensation (Note 11) ................... -- -- -- -- 122 122
--- ------ -------- -------- -------- --------
BALANCE AT NOVEMBER 30, 1996 ................ 40 344 82,236 98,119 (1,450) 179,289
Net income ................................. -- -- -- 29,796 -- 29,796
Cash dividends (6.0\c per share) ........... -- -- -- (2,310) -- (2,310)
Increase in equity investments (Note 2)..... -- -- 2,263 -- -- 2,263
Additional expense of Class A
Common Stock Offering .................... -- -- (46) -- -- (46)
Restricted stock granted (Note 11) ......... -- 1 1,984 -- (1,985) --
Reacquisition of previously issued
common stock ............................. -- -- -- (148) -- (148)
Conversion of Class B Common Stock
to Class A Common Stock .................. 13 (13) -- -- -- --
Amortization of unearned
compensation (Note 11) ................... -- -- -- -- 1,063 1,063
--- ------ -------- -------- -------- --------
BALANCE AT NOVEMBER 30, 1997 ................ $53 $332 $86,437 $125,457 $ (2,372) $209,907
=== ====== ======== ======== ======== ========
</TABLE>
See accompanying notes.
F-12
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED YEAR ENDED
AUGUST 31, NOVEMBER 30, NOVEMBER 30,
-------------------------- -------------- -------------
1995 1996 1996 1997
------------- ------------ -------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss) ..................................... $ 18,363 $ 19,681 $ (1,867) $ 29,796
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization ........................ 4,798 6,302 2,353 9,910
Amortization of unearned compensation ................ 318 606 122 1,063
Deferred income taxes ................................ 1,650 1,500 (766) 4,425
Undistributed (income) loss from
equity investments. ................................ (285) (1,441) 304 (366)
(Gain) loss on disposition of property
and equipment ...................................... 251 (13) -- --
Changes in Operating Assets and Liabilities:
Receivables ......................................... (447) (1,661) (1,405) (667)
Inventories ......................................... (89) (251) 156 485
Prepaid expenses and other current assets ........... (1,322) 712 651 (689)
Other assets ........................................ (61) (127) -- (204)
Accounts payable .................................... 1,167 1,201 (514) 3,280
Deferred income ..................................... 2,702 6,111 9,797 6,791
Income taxes payable ................................ 272 (267) 30 (80)
Other current liabilities ........................... 409 317 (1,038) 1,190
---------- --------- --------- ----------
Net Cash Provided by Operating Activities .............. 27,726 32,670 7,823 54,934
INVESTING ACTIVITIES
Acquisition of investments ............................ (125,982) (83,502) (70,959) (145,391)
Proceeds from maturities of investments ............... 119,392 106,330 3,771 197,347
Capital expenditures .................................. (16,831) (34,792) (14,864) (38,627)
Equity investments .................................... -- (15,287) -- (17,725)
Cash surrender value of life insurance ................ (30) (725) (1,123) (1,253)
Proceeds from sale of assets .......................... 80 21 -- --
Acquisition of Watkins Glen International interest,
net of cash acquired ................................ -- -- -- (996)
Acquisition of Phoenix International Raceway,
net of cash acquired ................................ -- -- -- (43,868)
---------- --------- --------- ----------
Net Cash Used in Investing Activities .................. (23,371) (27,955) (83,175) (50,513)
FINANCING ACTIVITIES
Reacquisition of previously issued common stock ....... (106) (1,708) -- (148)
Additional expense of Class A
Common Stock Offering . ............................. -- -- -- (46)
Cash dividends paid ................................... (1,605) (1,836) -- (2,310)
Issuance of Class A Common Stock ...................... -- -- 74,367 --
Short-term borrowings ................................. -- -- 7,800 --
Repayment of short-term borrowings .................... -- -- (7,800) --
---------- --------- --------- ----------
Net Cash Provided by (Used in) Financing Activities..... (1,711) (3,544) 74,367 (2,504)
---------- --------- --------- ----------
Net Increase (Decrease) in Cash
and Cash Equivalents .................................. 2,644 1,171 (985) 1,917
Cash and Cash Equivalents at Beginning of Period ....... 5,227 7,871 9,042 8,057
---------- --------- --------- ----------
Cash and Cash Equivalents at End of Period ............. $ 7,871 $ 9,042 $ 8,057 $ 9,974
========== ========= ========= ==========
</TABLE>
See accompanying notes.
F-13
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1997
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 five premier
motorsports facilities--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; Phoenix International Raceway
("Phoenix"), a one mile oval track located outside of Phoenix, Arizona (See
Note 3); Darlington Raceway, a 1.3 mile track located in Darlington, South
Carolina; and Watkins Glen International ("Watkins Glen"), a 3.4 mile road
course located in Watkins Glen, New York (See Note 3). The Company also
operates Tucson Raceway Park in Pima County Arizona.
At these facilities the Company currently promotes over 80 stock car,
sports car, truck, motorcycle and other racing events annually, including eight
NASCAR Winston Cup Series championship point races, two NASCAR Winston Cup
Series non-championship point races, five NASCAR Busch Series--Grand National
Division races, three NASCAR Craftsman Truck Series races, and a number of
prestigious sports car and motorcycle races.
The Company also has investments in other motorsports entertainment
companies. The Company holds an 11% indirect interest in Penske Motorsports,
Inc. ("PMI"), which owns and operates Michigan International Speedway,
Pennsylvania's Nazareth Speedway, the California Speedway, and the North
Carolina Motor Speedway. The Company also holds a 40% interest in
Homestead--Miami Speedway, LLC ("Homestead"), the operator of the Metro-Dade
Homestead Motorsports Complex, and an approximately 7% interest in Grand Prix
Association of Long Beach ("Long Beach"), the operator of Grand Prix of Long
Beach, California, Gateway International Raceway in Madison, Illinois and
Memphis Motorsports Park in Millington, Tennessee.
The Company owns and operates DAYTONA USA--The Ultimate Motorsports
Attraction, a motorsports theme-entertainment complex that includes interactive
media, theaters, historical memorabilia and exhibits.
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 and at unaffiliated
sporting events.
The Company's proprietary MRN radio network and NASCAR Truck Network
produces and syndicates NASCAR Winston Cup Series, NASCAR Busch Series--Grand
National Division, NASCAR Craftsman Truck Series 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 which became effective
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
F-14
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997
NOTE 1--DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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.
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, repurchase
agreements and money market accounts at investment firms. Cash and cash
equivalents exclude certificates of deposit, obligations of U.S. Government
Agencies, U.S. Treasury Notes and U.S. Treasury Bills, regardless of original
maturity.
INVESTMENTS (NOTE 4): 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.
F-15
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997
NOTE 1--DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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:
<TABLE>
<S> <C>
Buildings, grandstands and tracks ......... 5-34 years
Furniture and equipment ................... 3-20 years
</TABLE>
EQUITY INVESTMENTS (NOTE 2): Equity investments at November 30, 1996,
represent a 50% ownership interest in Watkins Glen and a 20% ownership interest
in PSH Corp (resulting in an approximately 11% indirect interest in PMI). At
November 30, 1997, equity investments represent a 40% interest in Homestead, an
approximately 7% interest in Long Beach 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 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 pro rata
share of the underlying assets reduce the investment. The Company's investment
in excess of its pro rata share of the underlying assets is amortized by the
straight-line method over 20 years. The Company recognizes the effects of
transactions involving the sale or distribution by an equity investee of its
common stock as capital transactions.
GOODWILL: Goodwill resulting from acquisitions is being amortized by the
straight-line method over 40 years. Recoverability of intangibles is assessed
using estimated undiscounted cash flows of related operations.
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 November 30, 1997.
INCOME TAXES (NOTE 5): 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.
ADVERTISING EXPENSE: Advertising costs are expensed as incurred or, as in
the case of race-related advertising, upon the completion of the event.
Advertising expense was approximately $1.3 million, $1.7 million, $290,000 and
$2.4 million for the years ended August 31, 1995 and 1996, the three months
ended November 30, 1996 and the year ended November 30, 1997, respectively.
EARNINGS PER SHARE: The Company adopted Statement of Financial Accounting
Standards No. 128, "Earnings Per Share", during its first quarter ended
February 28, 1998. This statement requires the Company to present "Basic" and
"Diluted" earnings per share on the face of the income statement
F-16
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997
NOTE 1--DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
for current periods and to restate earnings per share for prior periods. All
earnings per share amounts presented have been restated to conform to Statement
128 requirements. Weighted shares outstanding for the restated periods
presented are:
<TABLE>
<CAPTION>
BASIC DILUTED
------------ -----------
<S> <C> <C>
Year ended August 31, 1995 .................... 34,215,479 34,294,530
Year ended August 31, 1996 .................... 34,191,106 34,317,430
Three months ended November 30, 1996 .......... 35,327,263 35,470,048
Year ended November 30, 1997 .................. 38,185,473 38,339,978
</TABLE>
The difference between basic weighted average shares and diluted weighted
average shares is related to shares issued under the Company's long-term
incentive restricted stock plan, using the treasury stock method as prescribed
by the standard.
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.
NEW ACCOUNTING PROUNCEMENTS: In 1997, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of." SFAS 121
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. The adoption of SFAS No. 121 had no 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 1995, SFAS No. 123,
"Accounting for Stock Based Compensation" was issued. SFAS No. 123 provides an
alternative to APB 25 and is effective for the Company in fiscal year 1997. The
Company has elected to continue to account for its long-term incentive plan in
accordance with the provisions of APB 25. See Note 11.
In February 1997, SFAS No. 128, "Earnings Per Share," was issued and is
effective for financial statements issued for periods ending after December 15,
1997. This statement requires companies to present earnings per share on the
face of the income statement in two categories called "Basic" and "Diluted" and
requires restatement of all periods presented. The Company will adopt SFAS No.
128 during the first quarter of 1998. Management believes the impact on
earnings per share will not be material.
In June 1997, SFAS No. 130, "Reporting Comprehensive Income," was issued.
SFAS No. 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements and is effective for fiscal years beginning after December
15, 1997. The Company will adopt SFAS No. 130 in fiscal 1999. SFAS No. 130
expands or modifies disclosures and, accordingly, will have no impact on the
Company's reported financial position, results of operations or cash flows.
F-17
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997
NOTE 1--DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," was issued. SFAS No. 131 establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements and reporting selected information
about operating segments in interim financial reports and is effective for
fiscal years beginning after December 15, 1997. The Company has not yet
determined the effect of SFAS No. 131 on its financial statement disclosures.
COMPARABILITY: For comparability, certain 1995 and 1996 amounts have been
reclassified where appropriate to conform with the presentation adopted in
1997.
NOTE 2--EQUITY INVESTMENTS
Equity investments includes the following:
<TABLE>
<CAPTION>
% %
1996 OWNERSHIP 1997 OWNERSHIP
---------------- ----------- --------------- ----------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
PSH Corp. ............................. $23,774 20 $30,628 20
Watkins Glen International, Inc.
(Note 3) ............................. 3,178 50 -- --
Grand Prix Association of Long
Beach, Inc. .......................... -- -- 3,816 7
Homestead-Miami Speedway, LLC ......... -- -- 11,400 40
------- -------
$26,952 $45,844
======= =======
</TABLE>
On December 13, 1996, PMI acquired property adjacent to the California
Speedway for $13.4 million, which was paid with cash of $5 million and the
issuance of 254,298 shares of its common stock. As a result of the increase in
PMI's equity, the Company recorded an increase in its equity investment in PSH
Corp. of approximately $650,000 and recorded a corresponding increase in
deferred income taxes and additional paid-in capital of approximately $250,000
and $400,000, respectively.
On May 19, 1997, PMI increased its ownership interest in North Carolina
Motor Speedway ("NCMS") to approximately 70% through the issuance of 906,542
shares of its common stock valued at $30 per share. As a result of PMI's
increased investment in NCMS, the Company recorded an increase in its equity
investment in PSH Corp. of approximately $3 million and recorded a
corresponding increase in deferred income taxes and additional paid-in capital
of approximately $1.2 million and $1.8 million, respectively.
In July 1997, the Company invested $11.8 million, plus related acquisition
costs, for its 40% interest in Homestead.
On August 8, 1997, the Company invested $3.9 million, plus related
acquisition costs, for an approximately 7% interest in Long Beach. The
Company's investment exceeded its share of the underlying net assets by
approximately $1.9 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.
F-18
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997
NOTE 2--EQUITY INVESTMENTS--(CONTINUED)
The Company's investment in excess of its share of underlying net assets
in equity investments net of amortization amounted to $7.3 million and $8.8
million in 1996 and 1997, respectively. Amortization of the excess over the
Company's share of the underlying net assets for the year ended August 31,
1996, the three month period ended November 30, 1996 and the year ended
November 30, 1997 was approximately $288,000, $96,000 and $416,000,
respectively.
The Company's share of undistributed equity in the earnings from equity
investments included in retained earnings at November 30, 1996 and 1997 was
approximately $3,002,000 and $3,784,000, respectively.
Summarized financial information for the Company's affiliated companies
accounted for by the equity method (PSH Corp. and Watkins Glen as of August 31
and November 30, 1996, PSH Corp., Homestead and Long Beach as of November 30,
1997) is as follows (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED YEAR ENDED
AUGUST 31, NOVEMBER 30, NOVEMBER 30,
1996 1996 1997
------------ -------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Current assets ................. $79,900 $ 62,500 $ 22,400
Noncurrent assets .............. 97,100 115,700 379,900
Current liabilities ............ 26,000 19,300 44,100
Noncurrent liabilities ......... 12,500 14,000 116,200
Minority interests ............. 52,900 55,500 84,900
Net revenues ................... 58,900 24,800 126,800
Operating income ............... 20,500 9,200 29,200
Net income ..................... 7,500 3,800 8,900
</TABLE>
NOTE 3--ACQUISITIONS
On April 1, 1997, the Company exercised its contractual option to acquire
the 50% interest it did not already own in Watkins Glen from Corning, Inc. for
approximately $3.1 million. The transaction price represented the stock's book
value at December 31, 1996. The Company's option to purchase Corning's interest
for its book value was part of a shareholder agreement between the two
companies in place since 1988.
The Company's equity in Watkins Glen's net loss through March 31, 1997 is
included in equity in net income from equity investments at November 30, 1997.
The acquisition of the additional 50% interest was accounted for under the
purchase method. Subsequent to the acquisition on April 1, 1997, Watkins Glen
International is accounted for on a consolidated basis.
On July 14, 1997, Phoenix Speedway Corporation, a newly formed
wholly-owned subsidiary of the Company, acquired substantially all of the
assets comprising the business and motorsports complex known as "Phoenix
International Raceway" from Phoenix International Raceway, Inc., Phoenix
International Raceway, L.L.C. and Phoenix International Raceway Limited
Partnership for consideration consisting of $46.4 million in cash, notes
payable of $13.8 million, and related acquisition costs. Interest is being
accrued on the note payable to the former principal and shareholder at an
annual rate of 9%.
F-19
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997
NOTE 3--ACQUISITIONS--(CONTINUED)
The Phoenix acquisition has been accounted for under the purchase method
of accounting, and accordingly, the results of operations have been included in
the Company's consolidated statements of operations since the date of
acquisition. The purchase price was allocated to the assets and liabilities
acquired based on estimated fair values at the acquisition date. The excess of
the purchase price over the fair value of the net assets acquired was
approximately $40.8 million and has been recorded as goodwill, which is being
amortized on a straight-line basis over 40 years. The amount amortized for the
year ended November 30, 1997 was approximately $382,000.
The following unaudited pro forma financial information presents a summary
of consolidated results of operations as if the Phoenix transaction had
occurred as of September 1, 1995 after giving effect to certain adjustments,
including depreciation, amortization of goodwill, interest income, interest
expense on acquisition debt and related income tax effects. The pro forma
results have been prepared for comparative purposes only and do not purport to
be indicative of what would have occurred had the acquisition been made on that
date, nor are they necessarily indicative of results which may occur in the
future.
<TABLE>
<CAPTION>
PRO FORMA
---------------------------------------------------
YEAR ENDED THREE MONTHS ENDED YEAR ENDED
AUGUST 31, NOVEMBER 30, NOVEMBER 30,
1996 1996 1997
------------ -------------------- -------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Total revenues ................... $ 107,343 $17,449 $ 146,135
Net income ....................... 19,752 119 28,953
Basic income per share ........... 0.58 -- 0.76
Diluted income per share ......... 0.58 -- 0.76
</TABLE>
NOTE 4--INVESTMENTS
The following is a summary of short-term and long-term investments:
<TABLE>
<CAPTION>
NOVEMBER 30, 1996
-----------------------------------------------------
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ------------ ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Held-to-maturity securities
Municipal securities ........... $74,642 $-- $ 3 $74,639
Certificates of deposit ......... 1,415 -- -- 1,415
------- --- --- -------
$76,057 $-- $ 3 $76,054
======= === === =======
</TABLE>
F-20
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997
NOTE 4--INVESTMENTS--(CONTINUED)
<TABLE>
<CAPTION>
NOVEMBER 30, 1997
-----------------------------------------------------
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ------------ ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Held-to-maturity securities
Obligations of U.S. Government agencies ......... $11,936 $36 $-- $11,972
Municipal securities ............................ 957 -- 2 955
------- --- --- -------
12,893 36 2 12,927
Certificates of deposit .......................... 11,208 -- -- 11,208
------- --- --- -------
$24,101 $36 $ 2 $24,135
======= === === =======
</TABLE>
The cost and market values of held-to-maturity securities include accrued
investment income of approximately $81,000 and $12,000 at November 30, 1996 and
1997, respectively.
The cost and estimated market value of the held-to-maturity securities at
November 30, 1997, 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.
<TABLE>
<CAPTION>
NOVEMBER 30, 1997
--------------------------
ESTIMATED
COST MARKET VALUE
---------- -------------
(IN THOUSANDS)
<S> <C> <C>
Held-to-maturity securities
Due in one year or less ........................ $12,393 $12,429
Due after one year through three years ......... 500 498
------- -------
$12,893 $12,927
======= =======
</TABLE>
NOTE 5--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.
F-21
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997
NOTE 5--FEDERAL AND STATE INCOME TAXES--(CONTINUED)
Significant components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS
AUGUST 31, ENDED YEAR ENDED
--------------------- NOVEMBER 30, NOVEMBER 30,
1995 1996 1996 1997
--------- --------- -------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Current tax expense (benefit):
Federal ........................... $ 8,274 $ 9,117 $(1,140) $12,973
State ............................. 1,150 1,310 (3) 2,042
Deferred tax expense:
Federal ........................... 1,369 1,341 352 2,181
State ............................. 261 195 50 962
------- ------- --------- -------
Provision for income taxes ......... $11,054 $11,963 $ (741) $18,158
======= ======= ========= =======
</TABLE>
The reconciliation of income tax computed at the federal statutory tax
rates to income tax expense is as follows:
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS
-------------------------------------------- ENDED YEAR ENDED
AUGUST 31, 1995 AUGUST 31, 1996 NOVEMBER 30, 1996 NOVEMBER 30, 1997
----------------------- -------------------- --------------------- ----------------------
% OF % OF % OF % OF
PRE-TAX PRE-TAX PRE-TAX PRE-TAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
------------- --------- ---------- --------- ---------- ------------ ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Income tax computed at
federal statutory rates .... $10,296 35.0% $11,075 35.0% $ (913) (35.0%) $16,784 35.0%
State income taxes, net of
federal tax benefit ........ 884 3.0 977 3.1 26 1.0 2,053 4.3
Non-taxable share of
(income) loss from
unconsolidated affiliates... (100) (0.3) (504) (1.6) 73 2.8 (238) (0.5)
Officers' life insurance
expense .................... (2) -- 162 0.5 17 0.7 23 --
Other, net .................. (24) (0.1) 253 0.8 56 2.1 (464) (0.9)
-------- ---- ------- ---- ------ ------ ------- ----
$11,054 37.6% $11,963 37.8% $ (741) (28.4%) $18,158 37.9%
======== ==== ======= ==== ====== ====== ======= ====
</TABLE>
NOTE 6--LINES OF CREDIT
The Company has a $10 million line of credit with a financial institution
which expires in March 1999. There were no borrowings under the Company's
credit facility at November 30, 1997.
F-22
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997
NOTE 7--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 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 of 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, 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.
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 "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 $74.3
million, after deduction of underwriting discounts and commissions and expenses
of the Offering. Approximately $7.8 million of the net proceeds of this
Offering was used to repay borrowings incurred under one of the Company's lines
of credit in September 1996. The Company used approximately $3.1 million of the
net proceeds to acquire the 50% interest it did not already own in Watkins Glen
International, Inc., $43.9 million to acquire Phoenix International Raceway and
$16.2 million for equity investments in Homestead-Miami Speedway, LLC and Grand
Prix Association of Long Beach, Inc. The remaining net proceeds were used for
working capital and other general corporate purposes, including continued
improvements to and expansion of the Company's facilities and operations.
Pending such uses, the Company had invested the net proceeds of the Offering in
short-term interest-bearing obligations.
No shares of Preferred Stock are outstanding. See also Note 1--Basis of
Presentation.
F-23
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997
NOTE 8--COMMITMENTS AND CONTINGENCIES
A. In 1985, International Speedway Corporation ("ISC") established a
salary incentive plan designed to qualify under Section 401(k) of the Internal
Revenue Code. Employees of ISC and certain participating subsidiaries who have
completed 1,000 hours and 12 months continuous service are eligible to
participate in the plan. Matching contributions are made to a savings trust
(subject to certain limits) concurrent with employees' contributions. The level
of the matching contribution depends upon the amount of the employee
contribution. Employees become 100% vested upon entrance to the plan.
The contribution expense for the plan was approximately $228,000,
$307,000, $85,000 and $376,000 for the years ended August 31, 1995 and 1996,
for the three month period ended November 30, 1996 and the year ended November
30, 1997, respectively.
B. The estimated cost to complete construction in progress at November 30,
1997 is approximately $55.3 million.
C. 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 alleged, 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 putative 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. Although
Americrown attempted to remove the suit to Federal District Court, it was
remanded to the Circuit Court of Talladega County, Alabama, where discovery and
the class certification process are proceeding. Americrown disputes the
allegations and intends to defend the action fully and vigorously.
In March 1997, two purported class action companion lawsuits were filed in
the United States District Court, Northern District of Georgia, against the
Company, Americrown, and a number of other persons alleging, in substance, that
the defendants unlawfully conspired to fix prices of souvenirs and merchandise
sold to consumers in violation of federal antitrust laws. One suit was filed by
Florida residents and the other suit was filed by Georgia residents. Both suits
seek damages and injunctive relief on behalf of all persons who purchased
souvenirs or merchandise from certain vendors at any NASCAR Winston Cup Series
stock car race or supporting event in the United States during the period 1991
to present. The two suits have been consolidated and the court has established
a timetable to consider class certification. Discovery is proceeding. The
Company and Americrown dispute the allegations and intend to defend the actions
fully and vigorously.
Management is presently unable to predict or quantify the outcome of these
matters.
F-24
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997
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 American Historic
Racing Motorcycle Association ("AHRMA"), the American Motorcyclist Association
("AMA"), the Automobile Racing Club of America ("ARCA"), the Championship Cup
Series ("CCS"), the Federation Internationale de l'Automobile ("FIA"), the
Federation Internationale Motocycliste ("FIM"), the International Race of
Champions ("IROC"), the Indy Racing League ("IRL"), the National Association
for Stock Car Auto Racing, Inc. ("NASCAR"), the Sports Car Club of America
("SCCA"), the Sportscar Vintage Racing Association ("SVRA"), the United States
Auto Club ("USAC"), the United States Road Racing Championship ("USRRC"), and
the World Karting Association ("WKA"). NASCAR, which sanctions some of the
Company's principal racing events, is a member of the France Family Group which
controls in excess of 55% of the outstanding stock of the Company and some
members of which serve as directors and officers. Standard NASCAR sanction
agreements require racetrack operators to pay sanction fees and prize and point
fund monies for each sanctioned event conducted. The prize and point fund
monies are distributed by NASCAR to participants in the events. Prize and point
fund monies paid by the Company to NASCAR for disbursement to competitors
totaled approximately $10.1, $11.6 and $17.0 million for the years ended August
31, 1995, 1996 and November 30, 1997, respectively. For the three month period
ended November 30, 1996, monies paid by the Company to NASCAR for disbursements
to competitors totaled approximately $1.1 million.
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 and $38,000, 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, and the
three months ended November 30, 1996, respectively. During the year ended
November 30, 1997, premiums paid were approximately equal to the increase in
the cash surrender value of the policies.
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.
F-25
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997
NOTE 10--SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for income taxes and interest for respective periods is
summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED THREE MONTHS
AUGUST 31, ENDED YEAR ENDED
---------------------- NOVEMBER 30, NOVEMBER 30,
1995 1996 1996 1997
--------- ---------- -------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Income taxes paid ......... $9,806 $10,763 $185 $13,652
====== ======= ==== =======
Interest paid ............. $ -- $ -- $ 69 $ 31
====== ======= ==== =======
</TABLE>
See Note 2 for discussion of non-cash equity investment transactions.
NOTE 11--LONG-TERM INCENTIVE RESTRICTED STOCK PLAN
In November 1993, the Company's Board of Directors and a majority of the
Company's shareholders approved a Long-term Incentive Restricted Stock Plan
(the "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 fifth anniversary of the award
date. Shares awarded under the Plan generally are subject to forfeiture in the
event of termination of employment prior to the vesting dates. The Plan
participants own the shares and may vote and receive dividends, but are subject
to restrictions under the Plan. Restrictions include the prohibition of the
sale or transfer of the shares during the period prior to vesting of the
shares. The Company also has a right of first refusal to purchase any shares of
stock issued under the Plan which are offered for sale.
On January 1, 1995, 1996 and 1997, a total of 70,410, 102,075 and 98,010
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, 1995, 1996 and 1997 amounted to approximately $489,000, $1,600,000, and
$1,985,000, 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 periods of the
shares. The total expense charged against operations during the years ended
August 31, 1995, and 1996, for the three month period ended November 30, 1996
and the year ended November 30, 1997 was approximately $318,000, $606,000,
$122,000 and $1,063,000, respectively. In accordance with APB 25, the Company
will recognize a compensation charge over the vesting periods equal to the fair
market value of these shares on the date awarded. The SFAS No. 123 expense is
equal to the APB 25 expense.
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.
F-26
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997
NOTE 12--CHANGE IN FISCAL YEAR END
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. Consequently, the
consolidated audited financial statements contain information as of and for the
three months ended November 30, 1996. The following supplemental unaudited
consolidated statement of operations and unaudited consolidated statement of
cash flows for the three months ended November 30, 1995 are presented for
comparative purposes only and were presented in the Transition Form 10-Q filed
for the period ended November 30, 1996.
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30, 1995
----------------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT
SHARE AND
PER SHARE AMOUNTS)
<S> <C>
Revenues .............................................................. $ 8,542
Expenses .............................................................. 10,016
-----------
Operating loss ........................................................ (1,474)
Interest income, net .................................................. 290
Equity in net loss from equity investments ............................ (154)
-----------
Loss before income taxes .............................................. (1,338)
Income tax benefit .................................................... (318)
-----------
Net loss .............................................................. $ (1,020)
===========
Basic loss per share .................................................. $ (0.03)
===========
Diluted loss per share ................................................ $ (0.03)
===========
Weighted average number of common shares outstanding--Basic ........... 34,214,610
Weighted average number of common shares outstanding--Diluted ......... 34,315,301
</TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30, 1995
-------------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C>
Net cash provided by operating activities ................ $ 3,673
Investing Activities
Proceeds from maturities of investments, net ............ 21,053
Capital expenditures .................................... (8,229)
Investment in PSH Corp. ................................. (14,975)
Other investing activities .............................. (732)
---------
Net cash used in investing activities .................... (2,883)
Net cash provided by financing activities ................ --
---------
Net increase in cash and cash equivalents ................ 790
Cash and cash equivalents at beginning of period ......... 7,871
---------
Cash and cash equivalents at end of period ............... $ 8,661
=========
</TABLE>
F-27
<PAGE>
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOVEMBER 30, 1997
NOTE 13--QUARTERLY DATA (UNAUDITED)
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 Darlington Southern 500 is
traditionally held on the Sunday preceding Labor Day. Accordingly, the 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. 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. This
resulted in a three-month transition period commencing September 1, 1996 and
ending November 30, 1996.
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. In fiscal 1997, the Company had net income for the quarter
ended November 30. This was primarily due to the acquisition of Phoenix, which
resulted in the addition of a NASCAR Winston Cup Series event in the quarter
ending November 30, and the date change for the Company's DieHard 500 race,
which moved the event from the quarter ended August 31 to the quarter ended
November 30.
The following table presents certain unaudited financial data for each
fiscal quarter of fiscal 1996 and fiscal 1997 and for the transition quarter
ended November 30, 1996 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
TRANSITION
FISCAL QUARTER ENDED QUARTER
------------------------------------------------------- -------------
NOVEMBER 30, FEBRUARY 29, MAY 31, AUGUST 31, NOVEMBER 30,
1995 1996 1996 1996 1996
-------------- -------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Total revenues ........................ $ 8,542 $ 40,277 $ 24,176 $ 23,047 $ 10,496
Operating income (loss) ............... (1,474) 20,338 6,230 4,237 (2,565)
Net income (loss) ..................... (1,020) 12,089 3,817 4,795 (1,867)
Basic earnings (loss) per share ....... (0.03) 0.35 0.11 0.14 (0.05)
Diluted earnings (loss) per share ..... (0.03) 0.35 0.11 0.14 (0.05)
</TABLE>
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED
------------------------------------------------------------
FEBRUARY 28, MAY 31, AUGUST 31, NOVEMBER 30,
1997 1997 1997 1997
-------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Total Revenues ................. $ 51,866 $ 29,630 $ 33,106 $ 26,772
Operating Income ............... 27,103 7,075 8,762 1,961
Net Income ..................... 17,475 4,486 5,985 1,850
Basic earnings per share ....... 0.46 0.12 0.16 0.05
Diluted earnings per share ..... 0.46 0.12 0.16 0.05
</TABLE>
F-28
<PAGE>
Inside Back Cover
Description of photographs:
Collage consisting of various motorsports races in progress,
a victorious driver celebrating and a child spectator eating
a hot dog.
<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
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Prospectus Summary ....................... 3
Risk Factors ............................. 7
Use of Proceeds .......................... 13
Price Range of Common Stock .............. 13
Dividend Policy .......................... 14
Capitalization ........................... 14
Selected Financial Data .................. 15
Management's Discussion and
Analysis of Financial Condition
and Results of Operations ............. 16
NASCAR ................................... 23
Business ................................. 27
Management ............................... 37
Certain Transactions ..................... 39
Description of Capital Stock ............. 40
Shares Eligible for Future Sale .......... 42
Underwriting ............................. 43
Legal Matters ............................ 44
Experts .................................. 44
Available Information .................... 45
Incorporation of Certain Documents
by Reference .......................... 45
Index to Financial Statements ............ F-1
</TABLE>
4,000,000 Shares
[ISC LOGO]
INTERNATIONAL
SPEEDWAY
CORPORATION
Class A Common Stock
-----------------
P R O S P E C T U S
, 1998
-----------------
Salomon Smith Barney
CIBC Oppenheimer
Raymond James & Associates, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE 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:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee .................................... $ 40,710
NASD filing fee ........................................................................ 14,300
Nasdaq National Market listing fee ..................................................... 17,500
Printing expenses ...................................................................... 125,000
Accounting fees and expenses ........................................................... 90,000
Legal fees and expenses ................................................................ 110,000
Fees and expenses (including legal fees) for qualifications under state securities laws 500
Registrar and Transfer Agent's fees and expenses ....................................... 1,500
Miscellaneous .......................................................................... 175,490
--------
Total ................................................................................ $575,000
========
</TABLE>
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 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.
The Company also maintains a policy of directors' and officers' liability
insurance that insures, subject to certain exclusions, the Company's directors
and officers against the cost of defense, settlement of, payment of a judgment
in connection with a proceeding, whether actual or threatened, to which any
person may be made a party by reason of the fact that such person is or was a
director or officer of the Company.
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
II-1
<PAGE>
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.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement*
3.1 Amended and Restated Articles of Incorporation(3)(i)**
3.2 Amended and Restated Bylaws(3)(ii)**
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.***
10.1 Daytona Property Lease(3)**
10.2 1994 Long-Term Incentive Plan(4)**
10.3 1996 Long-Term Incentive Plan(5)**
10.4 Split-Dollar Agreement(6)**
10.5 Split-Dollar Agreement(7)**
10.6 Registrant's Credit Agreement with First Union Bank*
23.1 Consent of Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A. (to be included in its
opinion to be filed as Exhibit 5.1)***
23.2 Consent of Ernst & Young LLP***
24.1 Reference is made to the Signatures section of this Registration Statement as initially filed for
the Power of Attorney contained therein.
24.2 Secretary's Certificate as to resolutions of Board of Directors.***
</TABLE>
- ----------------
* Previously filed.
** Incorporated by reference to the exhibit shown in parentheses and filed
with the registrant's Annual Report on Form 10-K for the year ended
November 30, 1997.
*** Filed herewith.
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.
II-2
<PAGE>
(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-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Daytona, State of Florida, on June 5, 1998.
INTERNATIONAL SPEEDWAY CORPORATION
BY: /s/ JAMES C. FRANCE*
-------------------------------------------
JAMES C. FRANCE
President and Chief Operating Officer
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>
NAME AND SIGNATURE TITLE DATE
- ------------------------------- --------------------------------------- -------------
<S> <C> <C>
/s/ WILLIAM C. FRANCE* Chairman of the Board and June 5, 1998
- ----------------------------- Chief Executive Officer
William C. France (Principal Executive Officer)
/s/ SUSAN G. SCHANDEL* Treasurer and Chief Financial Officer June 5, 1998
- ----------------------------- (Principal Financial Officer)
Susan G. Schandel
/s/ DANIEL W. HOUSER* Controller June 5, 1998
- ----------------------------- (Principal Accounting Officer)
Daniel W. Houser
/s/ JAMES C. FRANCE* President, Chief Operating Officer June 5, 1998
- ----------------------------- and Director
James C. France
/s/ LESA D. KENNEDY* Executive Vice President June 5, 1998
- ----------------------------- and Director
Lesa D. Kennedy
/s/ H. LEE COMBS* Senior Vice President--Operations June 5, 1998
- ----------------------------- and Director
H. Lee Combs
/s/ J. HYATT BROWN* Director June 5, 1998
- -----------------------------
J. Hyatt Brown
/s/ JOHN R. COOPER* Director June 5, 1998
- -----------------------------
John R. Cooper
/s/ ROBERT R. DYSON* Director June 5, 1998
- -----------------------------
Robert R. Dyson
/s/ JAMES H. FOSTER* Director June 5, 1998
- -----------------------------
James H. Foster
</TABLE>
II-4
<PAGE>
NAME AND SIGNATURE TITLE DATE
- ---------------------------------- ---------- -------------
/s/ BRIAN Z. FRANCE* Director June 5, 1998
- -----------------------------
Brian Z. France
/s/ CHRISTY F. HARRIS* Director June 5, 1998
- -----------------------------
Christy F. Harris
/s/ RAYMOND K. MASON, JR.* Director June 5, 1998
- -----------------------------
Raymond K. Mason, Jr.
/s/ EDWARD H. RENSI* Director June 5, 1998
- -----------------------------
Edward H. Rensi
/s/ LLOYD E. REUSS* Director June 5, 1998
- -----------------------------
Lloyd E. Reuss
/s/ CHAPMAN ROOT, II* Director June 5, 1998
- -----------------------------
Chapman Root, II
/s/ THOMAS W. STAED* Director June 5, 1998
- -----------------------------
Thomas W. Staed
- -----------------
* By: /s/ GLENN R. PADGETT
- -----------------------------
Glenn R. Padgett
Attorney-in-fact
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT DESCRIPTION PAGE
- --------- ---------------------------------------------------------------------------- -------------
<S> <C> <C>
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.
23.2 Consent of Ernst & Young LLP
24.2 Secretary's Certificate as to resolutions of Board of Directors.
</TABLE>
Exhibit 5.1
[GREENBERG TRAURIG LETTERHEAD]
June 5, 1998
International Speedway Corporation
1801 West International Speedway Boulevard
Daytona Beach, Florida 32114
RE: PUBLIC OFFERING
Ladies and Gentleman:
On June 1, 1998, International Speedway Corporation, a Florida
corporation (the "Company"), filed with the Securities and Exchange Commission a
Registration Statement on Form S-3 (No. 33-55709) (the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"). The
Registration Statement relates to the sale by the Company of up to 4,000,000
shares (the "Public Shares") of the Company's Class A Common Stock, par value
$.01 per share (the "Class A Common Stock") and the sale of up to 600,00 shares
of Class A Common Stock which may be purchased by the Underwriters pursuant to
an over-allotment option (the "Over-Allotment Shares" and together with the
Public Shares, the "Offering Shares"). We have acted as counsel to the Company
in connection with the preparation and filing of the Registration Statement.
In connection therewith, we have examined and relied upon copies of (i)
the Company's Amended and Restated Articles of Incorporation and Amended and
Restated Bylaws; (ii) resolutions of the Company's Board of Directors
authorizing the offering and the issuance of the Offering Shares; (iii) the
Registration Statement and exhibits thereto; (iv) such other documents and
instruments as we have deemed necessary for the expression of opinions herein
contained. In making the foregoing examinations, we have assumed the genuineness
of all signatures and the authenticity of all documents submitted to us as
originals, and the conformity to original documents of all documents submitted
to us as certified or photostatic copies. As to various questions of fact
material to this option, we have relied, to the extent we deemed reasonably
appropriate, upon representations or certificates of officers or directors of
the Company and upon documents, records and instruments furnished to us by the
Company, without independently verifying the accuracy of such documents, records
and instruments.
Based upon the foregoing examination, we are of the opinion that the
Offering Shares have been duly and validly authorized and, when issued and
delivered in accordance with the terms of the Underwriting Agreement filed as
Exhibit 1.1 to the Registration Statement, will be validly issued, fully paid
and nonassessable.
<PAGE>
International Speedway Corporation
June 5, 1998
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the caption "Legal
Matters" in the prospectus comprising a part of the Registration Statement. In
giving such consent, we do not hereby admit that we are included within the
category of persons whose consent is required under Section 7 of the Securities
Act, or the rules and regulations promulgated thereunder.
Sincerely,
GREENBERG TRAURIG HOFFMAN
LIPOFF ROSEN & QUENTEL, P.A.
By: /s/ BRUCE E. MACDONOUGH
--------------------------
Bruce E. Macdonough
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 January 22, 1998
(except Note 1, EARNINGS PER SHARE, as to which the date is April 14, 1998) in
Amendment No. 1 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
January 22, 1998 with respect to the financial statement schedule of
International Speedway Corporation for the years ended August 31, 1995 and 1996,
for the three months ended November 30, 1996 and for the year ended November 30,
1997 included in the Annual Report (Form 10-K) for 1997 filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
- ---------------------
Jacksonville, Florida
June 5, 1998
ASSITANT SECRETARY'S CERTIFICATE
The undersigned, Glenn R. Padgett, Assistant Secretary of International
Speedway Corporation, a Florida Corporation (the "Company"), does hereby certify
on behalf of the Company, and in connection with the filing by the Company of a
Registration Statement with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, that the following resolution was duly
adopted by the Board of Directors of the Company on May 20, 1998, and that said
resolution has not been altered, amended, modified or rescinded and remains in
full force and effect on the date hereof:
FURTHER RESOLVED, that the execution and delivery by the
officers and directors of the Company of a power-of-attorney severally
appointing W. Garrett Crotty and Glenn R. Padgett and each of them to
be Attorney-in-Fact and agent with full power of substitution for each
of such directors and officers and in their name, place and stead, in
any and all capacities to sign any filing under Rule 462(b) of the
Securities Act or any amendment(s) to the Registration Statement,
including post-effective amendment(s), to file the same with the SEC
and to perform all other acts necessary in connection with any matter
relating to the Registration Statement and any filing under Rule 462(b)
of the Securities Act or any amendment(s) or post-effective
amendment(s) thereto, be, and it hereby is, ratified, confirmed and
approved in al respects.
IN WITNESS WHEREOF, the undersigned has executed this Certificate the
5th day of June, 1997.
INTERNATIONAL SPEEDWAY CORPORATION
By: /S/ GLENN R. PADGETT
-----------------------------------------
Glenn R. Padgett, Assistant Secretary
