RULE 424(b)(3)
REGISTRATION NO.333-94085
PROSPECTUS
$225,000,000
[ISC LOGO]
INTERNATIONAL SPEEDWAY CORPORATION
OFFER TO EXCHANGE
ALL OUTSTANDING 7.875% SENIOR NOTES DUE 2004
FOR
REGISTERED 7.875% SENIOR NOTES DUE 2004
THE REGISTERED NOTES
The terms of the registered notes that we are offering in exchange for the
outstanding notes are substantially identical to the terms of the outstanding
notes, except that certain transfer restrictions and registration rights
relating to the outstanding notes will not apply to the registered notes.
MATERIAL TERMS OF THE EXCHANGE OFFER
/bullet/ The exchange offer will expire at 5:00 p.m., New York City time,
on February 28, 2000, unless extended.
/bullet/ The exchange offer is subject to customary conditions, including
the conditions that the exchange offer not violate applicable law
or any applicable interpretation of the staff of the Securities
and Exchange Commission.
/bullet/ You may withdraw tenders of outstanding notes at any time before
the exchange offer expires.
/bullet/ We will exchange all outstanding notes that are validly tendered
and not withdrawn before the exchange offer expires.
/bullet/ We will issue the registered notes promptly after the exchange
offer expires.
/bullet/ We believe that the exchange of outstanding notes will not be a
taxable event for federal income tax purposes, but you should read
"Certain United States Federal Income Tax Consequences" on page 69
for more information.
/bullet/ We will not receive any proceeds from the exchange offer.
/bullet/ All broker-dealers must comply with the registration and
prospectus delivery requirements of the Securities Act of 1933.
Each broker-dealer that receives registered notes for its own
account pursuant to the exchange offer must acknowledge that it
will deliver a prospectus in connection with any resale of the
registered notes. The letter of transmittal accompanying this
prospectus states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This
prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of
registered notes received in exchange for outstanding notes where
such outstanding notes were acquired by the broker-dealer as a
result of market-making activities or other trading activities. We
have agreed that, starting on the expiration date of the exchange
offer and ending on the close of business six months after that
date, we will make this prospectus available to any broker-dealer
for use in connection with any such resale.
/bullet/ No public market currently exists for the registered notes. We do
not intend to apply for listing of the registered notes on any
securities exchange or to arrange for them to be quoted on any
quotation system.
BEFORE PARTICIPATING IN THE EXCHANGE OFFER, PLEASE REFER TO THE SECTION IN
THIS PROSPECTUS ENTITLED "RISK FACTORS" BEGINNING ON PAGE 14.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE REGISTERED NOTES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS JANUARY 24, 2000
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THE FOLLOWING TRADEMARKS AND SERVICE MARKS ARE OWNED BY US AND ARE
REGISTERED WITH THE U.S. PATENT AND TRADEMARK OFFICE: "DAYTONA USA/registered
trademark/", "DAYTONA INTERNATIONAL SPEEDWAY/registered trademark/", "TALLADEGA
SUPERSPEEDWAY/registered trademark/", "DARLINGTON/registered trademark/",
"PHOENIX INTERNATIONAL RACEWAY/registered trademark/", "WATKINS GLEN
INTERNATIONAL/registered trademark/", "WORLD CENTER OF RACING/registered
trademark/", "MICHIGAN SPEEDWAY/registered trademark/", "NAZARETH
SPEEDWAY/registered trademark/", "NORTH CAROLINA SPEEDWAY/REGISTERED MARK/" AND
"CALIFORNIA SPEEDWAY/registered trademark/". "CART/registered trademark/" IS A
REGISTERED TRADEMARK AND SERVICEMARK OF CHAMPIONSHIP AUTO RACING TEAMS, INC.
("CART"). "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").
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference in this
prospectus contain certain "forward-looking statements" within the meaning of
federal securities laws about our financial condition, results of operations
and business.
You can find many of these statements by looking for words such as
"believes," "expects," "anticipates," "estimates," or similar expressions used
in this prospectus and in the documents incorporated by reference in this
prospectus.
These forward-looking statements are subject to numerous assumptions,
risks and uncertainties that may cause our actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by us in those statements. The risks and
uncertainties include those risks and uncertainties identified, among other
places, under the heading "Risk Factors" in this prospectus. These factors
include, but are not limited to, the following:
/bullet/ operating and financial risks relating to integrating Penske
Motorsports, Inc.'s businesses;
/bullet/ revenues or income following our recent acquisition of Penske
Motorsports, Inc. being lower than expected;
/bullet/ risks relating to our ability to maintain good working
relationships with NASCAR and CART;
/bullet/ uncertain prospects of acquiring or developing new motorsports
facilities;
/bullet/ changes in general economic conditions;
/bullet/ governmental laws and regulations affecting our business,
including, in particular, limitations on advertising by the
tobacco and alcoholic beverage industries and laws relating to
environmental, land-use planning and zoning matters; and
/bullet/ significant litigation adverse to our business.
Because forward-looking statements are subject to risks and uncertainties,
actual results may differ materially from those expressed or implied by such
statements. You are cautioned not to place undue reliance on such statements,
which speak only as of the date of this prospectus.
The cautionary statements contained or referred to in this section should
be considered in connection with any subsequent written or oral forward-looking
statements that we or persons acting on our behalf may issue. We undertake no
obligation to review or confirm analysts' expectations or estimates or to
release publicly any revisions to any forward-looking statements to reflect
events or circumstances after the date of this prospectus or to reflect the
occurrence of unanticipated events.
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PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROSPECTUS AND MAY
NOT CONTAIN ALL INFORMATION THAT MAY BE IMPORTANT TO YOU. THIS PROSPECTUS AND
THE DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS INCLUDE SPECIFIC
TERMS OF THE EXCHANGE OFFER, AS WELL AS INFORMATION REGARDING OUR BUSINESS AND
DETAILED FINANCIAL DATA. WE ENCOURAGE YOU TO READ THE DETAILED INFORMATION AND
FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS.
UNLESS OTHERWISE INDICATED OR THE CONTEXT OTHERWISE REQUIRES: (I) ALL
INFORMATION CONTAINED IN THIS PROSPECTUS GIVES EFFECT TO OUR ACQUISITION OF
PENSKE MOTORSPORTS, INC. ("PENSKE MOTORSPORTS"), CONSUMMATED ON JULY 26, 1999
(THE "PENSKE ACQUISITION"); AND (II) ALL REFERENCES TO THE "COMPANY",
"INTERNATIONAL SPEEDWAY", "WE", "US" AND "OUR" MEAN INTERNATIONAL SPEEDWAY
CORPORATION AND OUR CONSOLIDATED SUBSIDIARIES AFTER GIVING EFFECT TO THE PENSKE
ACQUISITION.
WHO WE ARE
International Speedway, a leading promoter of motorsports activities in
the United States, owns and/or operates ten of the nation's premier motorsports
facilities:
/bullet/ Daytona International Speedway in Florida;
/bullet/ Michigan Speedway in Michigan;
/bullet/ Talladega Superspeedway in Alabama;
/bullet/ California Speedway in California;
/bullet/ Phoenix International Raceway in Arizona;
/bullet/ North Carolina Speedway in North Carolina;
/bullet/ Darlington Raceway in South Carolina;
/bullet/ Homestead-Miami Speedway in Florida;
/bullet/ Nazareth Speedway in Pennsylvania; and
/bullet/ Watkins Glen International road course facility in New York.
We currently promote over 100 stock car, sports car, truck, motorcycle and
other racing events annually, including:
/bullet/ 16 NASCAR Winston Cup Series events;
/bullet/ 12 NASCAR Busch Series, Grand National Division ("Busch Grand
National Series") events;
/bullet/ 6 NASCAR Craftsman Truck Series events;
/bullet/ 4 CART FedEx Championship Series events;
/bullet/ the premier sports car endurance event in the United States (the
Rolex 24 at Daytona/registered trademark/); and
/bullet/ a number of prestigious motorcycle races.
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Our operations consist principally of racing events at our ten premier
motorsports facilities, which generate revenue primarily through sales of
admissions to our racing events, television broadcast rights fees, sponsorship
fees, hospitality rentals (including luxury suites, chalets and the hospitality
portion of club seating) and royalties from licenses of our trademarks. We also
provide catering, souvenir and food concession services at certain of our
facilities, distribute and sell Goodyear brand racing tires, own and operate
MRN Radio and the DAYTONA USA entertainment complex and produce and market
collectibles and other motorsports merchandise.
We have experienced significant growth in recent years, with our revenues
and EBITDA increasing from approximately $68.9 million and approximately $25.9
million, respectively, in the year ended August 31, 1994 to approximately
$189.0 million and approximately $74.1 million, respectively, in the year ended
November 30, 1998. Our EBITDA margin increased from 37.5% in fiscal 1994 to
39.2% in fiscal 1998. Combined television rights revenues of International
Speedway and Penske Motorsports (exclusive of Homestead-Miami Speedway) have
increased from approximately $7.5 million in fiscal 1995 to approximately $34.7
million in fiscal 1998 on a pro forma basis. On a pro forma basis giving effect
to our Penske Acquisition, during the year ended November 30, 1998 we had
revenues and EBITDA of approximately $320.2 million and $118.0 million,
respectively.
MOTORSPORTS INDUSTRY
Motorsports is among the most popular and fastest growing spectator sports
in the United States, with total 1998 attendance at all U.S. motorsports events
exceeding 17 million people. We derived approximately 72% of our pro forma 1998
revenues from NASCAR-sanctioned racing events at our facilities. NASCAR Winston
Cup events have experienced the greatest increase in spectator attendance,
growing at a compound annual rate of 8.3% from 1990 to 1998. Moreover,
according to Nielsen Media Research, more than 258 million people tuned to
NASCAR's televised events in 1998. We believe 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. According
to industry reports, corporate sponsors spent approximately $1.1 billion in
U.S. motorsports marketing programs in 1998, of which approximately $476
million was attributable to NASCAR-sanctioned races. Sales of apparel,
souvenirs and collectibles licensed by NASCAR, by track operators and by
drivers have climbed from approximately $80 million in 1990 to approximately
$950 million in 1998.
STRATEGY
Our objective is to be the recognized leader in motorsports entertainment
by continuing to emphasize the following key elements of our strategy:
/bullet/ PROMOTE PREMIER MOTORSPORTS EVENTS. We plan our racing events and
operate our facilities to create an environment which maximizes
the spectators' entertainment experience. The most important
component of our fan satisfaction efforts is our emphasis on
hosting some of the nation's most prestigious auto races, which in
1999 included 16 NASCAR Winston Cup Series races, 12 NASCAR Busch
Grand National Series races, six NASCAR Craftsman Truck Series
races and four CART FedEx Championship Series races.
/bullet/ INCREASE ADMISSIONS REVENUE. We believe that the spectator demand
for our largest events continues to exceed existing seating
capacity. Accordingly, we continue to add grandstand seating at
each of our superspeedways. During 1998, we increased our
grandstand seating
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capacity at Daytona, Talladega, Phoenix, Darlington and Watkins
Glen by a total of approximately 41,800 seats, or approximately
11% overall. Similarly, in 1998, Penske Motorsports increased its
grandstand seating capacity at Michigan, California and North
Carolina by a total of approximately 30,800 seats, or
approximately 11% overall.
/bullet/ MAXIMIZE MEDIA INCOME. Televised motorsports events are continuing
to experience significant growth in viewership. NASCAR Winston Cup
Series television rights revenues have grown at a compound annual
rate of 40% from $4.7 million in 1990 to $69.5 million in 1998. We
have participated in this significant increase in media rights
revenues based on our promotion of 16 NASCAR Winston Cup Series
events, including the Daytona 500. We expect media rights revenues
to continue to increase as NASCAR begins handling negotiations for
the entire schedule of major NASCAR sanctioned events. In early
fall of 1999, NASCAR announced that it had reached an agreement
with all of the television broadcasters of its Winston Cup Series
and Busch Grand National Series events to release their
contractual rights for all such NASCAR events beginning with the
2001 racing season. In November 1999, NASCAR announced that it had
reached an agreement on a six-year television contract with NBC
Sports and Turner Sports, with the two media companies combining
to develop a joint venture. In addition, NASCAR announced that it
had reached an agreement on an eight-year television contract with
FOX and its FX cable network. Both agreements relate solely to the
domestic broadcast television rights to NASCAR's Winston Cup
Series and Busch Grand National Series events, and are effective
beginning with the 2001 racing season.
/bullet/ EMPHASIZE INTEGRATED MARKETING PARTNERSHIPS. We have developed and
will continue to develop long-term marketing partnerships with
corporate sponsors in which sponsors support us in several ways.
First, sponsors pay fees to us for the value received in being
associated with our facilities and/or events. 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. Sponsors
also lease suites and hospitality tents, purchase additional
tickets for their promotions and buy on-site advertising. Second,
the promotional and advertising expenditures of major sponsors
provide us with access to the significant market capabilities of
these leading consumer products and manufacturing companies
without the need to invest heavily in our own marketing
infrastructure or programs. Third, our sponsors frequently
advertise on the television broadcasts of our races, thereby
contributing to the increased rights fees we receive from networks
and cable companies.
/bullet/ DEVELOP AND ACQUIRE ADDITIONAL MOTORSPORTS FACILITIES. Our senior
management personnel regularly review acquisition and development
prospects that would augment or complement our existing operations
or otherwise offer significant growth opportunities. We believe
that the Penske Acquisition evidences our commitment to increasing
our motorsports presence through selected purchases of proven
motorsports businesses. Other current examples of our expansion
efforts include our pending development of a speedway near Kansas
City, Kansas, our development of a superspeedway contiguous to the
existing Route 66 Raceway near Chicago, Illinois, and our
continued exploratory efforts with respect to possible facilities
in Denver and the New York metropolitan area.
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THE PENSKE ACQUISITION
On July 26, 1999, we consummated the Penske Acquisition, in which we
acquired the approximately 88% of Penske Motorsports we did not already own for
approximately $129.8 million in cash and approximately 10.0 million shares of
our Class A common stock. Penske Motorsports, a leading promoter and marketer
of professional motorsports in the United States, owned and operated Michigan
Speedway, California Speedway, North Carolina Speedway and Nazareth Speedway.
Other motorsports interests included a 45% interest in the Homestead-Miami
Speedway near Miami, Florida. Through its subsidiaries, Penske Motorsports also
produced and marketed motorsports-related merchandise, including apparel,
souvenirs and collectibles, and distributed and sold Goodyear brand racing
tires in the midwestern and southern regions of the United States. For the year
ended December 31, 1998, Penske Motorsports and Homestead-Miami Speedway
reported combined revenues and EBITDA of approximately $131.2 million and
approximately $44.0 million, respectively. In connection with the Penske
Acquisition, we obtained a new $300 million senior credit facility to finance a
portion of the Penske Acquisition and refinance Penske Motorsports' debt. For
additional information regarding the Penske Acquisition, please see "Pro Forma
Financial Data" on page 24. We used approximately $176 million of the net
proceeds from the sale of the outstanding notes to repay outstanding borrowings
under this senior credit facility. As a result of our receipt of the net
proceeds from the sale of the outstanding notes on October 6, 1999, the maximum
availability under the senior credit facility automatically decreased to $200
million from $300 million. We recently increased the maximum availability under
the senior credit facility to $250 million from $200 million. For a more
detailed description of our senior credit facility, please see "Description of
the Senior Credit Facility" on page 35.
We believe that the Penske Acquisition represented a strategic opportunity
for us to combine similar business operations with the addition of Penske
Motorsports' high quality motorsports facilities to the list of our existing
premier motorsports facilities. The Penske Acquisition broadens our geographic
reach into new key television markets, including Los Angeles, Detroit and
Miami. We believe that our expanded geographic reach, larger base of operations
and presence in these additional key markets will permit us to pursue national
sponsorships and develop cross-marketing opportunities with a wider array of
partners. Further, we believe that with the addition of Penske Motorsports'
experienced management team we will be able to achieve greater operational
efficiencies and pursue expansion opportunities more rapidly.
RECENT DEVELOPMENTS
On December 1, 1999, we acquired Richmond International Raceway ("RIR"), a
3/4-mile intermediate speedway located approximately 10 miles from downtown
Richmond, Virginia, for approximately $215 million in cash. RIR seats over
94,000 grandstand spectators and offers luxury accommodations in its 34 suites.
RIR hosts several major NASCAR events annually, including two NASCAR Winston
Cup Series events, two NASCAR Busch Grand National Series events and one NASCAR
Craftsman Truck Series event. We financed the acquisition through approximately
$160 million in borrowings under our senior credit facility. For a description
of our senior credit facility, please see "Description of the Senior Credit
Facility" on page 35. We utilized our cash resources for the remaining $55
million.
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We were incorporated in 1953 under the laws of the State of Florida under
the name "Bill France Racing, Inc." and changed our name to "International
Speedway Corporation" in 1968. Our principal executive offices are located at
1801 West International Speedway Boulevard, Daytona Beach, Florida 32114, and
our telephone number is (904) 254-2700.
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THE EXCHANGE OFFER
The following is a summary of the principal terms of the exchange offer. A
more detailed description is contained in this prospectus under the section
entitled "The Exchange Offer." The term "registered notes" refers to the
Registered 7.875% Senior Notes due 2004 being offered in the exchange offer.
The term "outstanding notes" refers to our currently outstanding 7.875% Senior
Notes due 2004 that are exchangeable for the registered notes. The term
"indenture" refers to the indenture that applies to both the outstanding notes
and the registered notes.
The Exchange Offer......... We are offering to exchange $100,000 principal
amount of registered notes and integral multiples
of $1,000 in excess thereof which have been
registered under the Securities Act for each
$100,000 principal amount of outstanding notes and
integral multiples of $1,000 in excess thereof. We
issued the outstanding notes on October 6, 1999 in
a private offering. In order to be exchanged, an
outstanding note must be properly tendered and
accepted before expiration of the exchange offer.
All outstanding notes that are validly tendered
and not validly withdrawn will be exchanged. We
will issue the registered notes promptly after the
expiration of the exchange offer.
As of the date of this prospectus, there is
outstanding $225 million principal amount of
outstanding notes. Outstanding notes may be
tendered for exchange in whole or in part for
minimum denominations of $100,000 principal
amount and integral multiples of $1,000 in excess
thereof.
Registration Rights
Agreement.................. Simultaneously with the sale of the outstanding
notes on October 6, 1999, we entered into a
registration rights agreement under which we
committed to conduct the exchange offer. You are
entitled under the registration rights agreement
to exchange your outstanding notes for registered
notes with substantially identical terms. The
exchange offer is intended to satisfy these
rights. After the exchange offer is complete,
except as set forth in the next paragraph, you
will no longer be entitled to any exchange or
registration rights with respect to your
outstanding notes.
The registration rights agreement requires us to
file a registration statement for a continuous
offering in accordance with Rule 415 under the
Securities Act for your benefit if:
/bullet/ the exchange offer is not consummated
within 180 days of the issuance of the
initial notes;
/bullet/ you would not receive freely tradeable
registered notes in the exchange
offer; or
/bullet/ you are ineligible to participate in
the exchange offer and indicate that
you wish to have your outstanding notes
registered under the Securities Act.
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Resales of the
Registered Notes........... We believe that registered notes to be issued in
the exchange offer in exchange for the outstanding
notes may be offered for resale, resold and
otherwise transferred by you without compliance
with the registration and prospectus delivery
provisions of the Securities Act if you meet the
following conditions:
(1) the registered notes are acquired by you in
the ordinary course of your business;
(2) you are not engaging in and do not intend
to engage in a distribution of the
registered notes;
(3) you do not have an arrangement or
understanding with any person to participate
in the distribution of the registered notes;
and
(4) you are not an affiliate of ours, as that
term is defined in Rule 405 under the
Securities Act.
However, the SEC has not considered this exchange
offer in the context of a no-action letter and
we cannot be sure that the staff of the SEC
would make the same determination with respect
to the exchange offer as in other circumstances.
Furthermore, if you do not meet the above
conditions, you may incur liability under the
Securities Act if you transfer any registered
note without delivering a prospectus meeting the
requirements of the Securities Act. We do not
assume, or indemnify you against, that
liability.
Each broker-dealer that receives registered notes
for its own account in the exchange offer in
exchange for outstanding notes which that
broker-dealer acquired as a result of market-
making activities or other trading activities
must acknowledge that it will comply with the
prospectus delivery requirements of the
Securities Act in connection with any resale of
the registered notes. Broker-dealers who acquired
outstanding notes directly from us and not as a
result of market-making activities or other
trading activities may not participate in the
exchange offer and must comply with the
prospectus delivery requirements of the
Securities Act in order to resell the outstanding
notes.
Expiration Date............ The exchange offer will expire at 5:00 p.m., New
York City time, on February 28, 2000, unless we
decide to extend the exchange offer.
Withdrawal................. You may withdraw the tender of your outstanding
notes at any time prior to 5:00 p.m., New York
City time, on the expiration date.
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Conditions to the
Exchange Offer............. The only conditions to completing the exchange
offer are that the exchange offer not violate
applicable law or any applicable interpretation of
the staff of the SEC and no injunction, order or
decree has been issued, or any action or
proceeding has been instituted or threatened that
would reasonably be expected to prohibit, prevent
or materially impair our ability to proceed with
the exchange offer.
If any of these conditions exist prior to the
expiration date, we may take the following
actions:
/bullet/ refuse to accept any outstanding notes
and return all previously tendered
outstanding notes;
/bullet/ extend the duration of the exchange
offer; or
/bullet/ waive such conditions to the extent
permissible under applicable law.
Procedures for Tendering
Outstanding Notes......... We issued the outstanding notes as global
securities in fully registered form without
coupons. Beneficial interests in the outstanding
notes which are held by direct or indirect
participants in The Depository Trust Company
through certificateless depositary interests are
shown on, and transfers of the outstanding notes
can be made only through, records maintained in
book-entry form by DTC with respect to its
participants.
If you are a holder of an outstanding note held
in the form of a book-entry interest and you wish
to tender your outstanding notes for exchange
pursuant to the exchange offer, you must transmit
to First Union National Bank, as exchange agent,
on or prior to the expiration of the exchange
offer either:
/bullet/ a written or facsimile copy of a
properly completed and executed letter
of transmittal and all other required
documents to the address set forth on
the cover page of the letter of
transmittal; or
/bullet/ a computer-generated message
transmitted by means of DTC's Automated
Tender Offer Program system and forming
a part of a confirmation of book-entry
transfer in which you acknowledge and
agree to be bound by the terms of the
letter of transmittal.
The exchange agent must also receive on or prior
to the expiration of the exchange offer either:
/bullet/ a timely confirmation of book-entry
transfer of your outstanding notes into
the exchange agent's account at DTC, in
accordance with the procedure for
book-entry
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transfers described in this prospectus
under the heading "The Exchange
Offer--Book-Entry Transfer," or
/bullet/ the documents necessary for compliance
with the guaranteed delivery procedures
described below.
A letter of transmittal accompanies this
prospectus. By executing the letter of
transmittal or delivering a computer-generated
message through DTC's Automated Tender Offer
Program system, you will represent to us that,
among other things:
(1) the registered notes to be acquired by you
in the exchange offer are being acquired in
the ordinary course of your business;
(2) you do not have an arrangement or
understanding with any person to participate
in the distribution of the registered notes;
and
(3) you do not have an arrangement or
understanding with any person to participate
in the distribution of the registered notes;
and
(4) you are not an affiliate of ours.
Procedures for Tendering Certificated
Outstanding Notes......... If you are a holder of book-entry interests in
the outstanding notes, you are entitled to
receive, in limited circumstances, in exchange for
your book-entry interests, certificated notes
which are in equal principal amounts to your
book-entry interests. See "The Exchange
Offer--Procedures for Tendering--Book-Entry
Interests." No certificated notes are issued and
outstanding as of the date of this prospectus. If
you acquire certificated outstanding notes prior
to the expiration of the exchange offer, you must
tender your certificated outstanding notes in
accordance with the procedures described in this
prospectus under the heading "The Exchange
Offer-- Procedures for Tendering--Certificated
Outstanding Notes."
Special Procedures for
Beneficial Owners......... If you are the beneficial owner of outstanding
notes and they are registered in the name of a
broker, dealer, commercial bank, trust company or
other nominee, and you wish to tender your
outstanding notes, you should promptly contact the
person in whose name your initial notes are
registered and instruct that person to tender on
your behalf. If you wish to tender on your own
behalf, you must, prior to completing and
executing the letter of transmittal and delivering
your outstanding notes, either make appropriate
arrangements to register ownership of the
outstanding notes in your name or obtain a
properly completed bond power from the person in
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whose name your outstanding notes are registered.
The transfer of registered ownership may take
considerable time and it may not be possible to
complete prior to the expiration date.
Guaranteed Delivery
Procedures................. If you wish to tender your outstanding notes and
your outstanding notes are not immediately
available or you cannot deliver your outstanding
notes, the letter of transmittal or any other
documents required by the letter of transmittal to
the exchange agent, or you cannot complete the
procedure for book-entry transfer, then prior to
the expiration date you must tender your
outstanding notes according to the guaranteed
delivery procedures set forth in "The Exchange
Offer--
Procedures for Tendering--Guaranteed Delivery
Procedures."
Acceptance of Outstanding Notes
and Delivery of
Registered Notes.......... Except under the circumstances described above
under "Conditions to the Exchange Offer," we will
accept for exchange any and all outstanding notes
which are properly tendered in the exchange offer
before 5:00 p.m., New York City time, on the
expiration date. We will deliver the registered
notes promptly following the expiration date. If
we do not accept any of your outstanding notes for
exchange we will return them to you as promptly as
practicable after the expiration or termination of
the exchange offer without any expense to you.
Interest on the Registered Notes
and the
Outstanding Notes......... Interest on your registered notes will accrue from
the date of the original issuance of the
outstanding notes or from the date of the last
periodic payment of interest on the outstanding
notes, whichever is later. Interest will not be
paid on outstanding notes that are tendered and
accepted for exchange.
Exchange Agent............. First Union National Bank is serving as the
exchange agent in connection with the exchange
offer.
Use of Proceeds............ We will not receive any cash proceeds from the
issuance of the registered notes in the exchange
offer.
Consequences of Failure
to Exchange............... Outstanding notes that are not tendered or that
are tendered but not accepted will continue to be
subject to the existing restrictions on transfer
provided in the outstanding notes and in the
indenture.
Federal Income
Tax Consequences........... The exchange of the outstanding notes generally
will not be a taxable exchange for federal income
tax purposes.
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TERMS OF THE REGISTERED NOTES
Issuer..................... International Speedway Corporation.
Registered Notes Offered... $225,000,000 aggregate principal amount of
Registered 7.875% Senior Notes due 2004. The
registered notes will evidence the same debt as
the outstanding notes and will be issued under,
and entitled to the benefits of, the same
indenture. The terms of the registered notes are
the same as the terms of the outstanding notes in
all material respects except that the registered
notes:
/bullet/ have been registered under the
Securities Act;
/bullet/ do not include rights to registration
under the Securities Act; and
/bullet/ do not contain transfer restrictions
applicable to the outstanding notes.
Maturity Date.............. October 15, 2004.
Interest................... Interest on the registered notes will accrue at
a fixed annual rate of 7.875%, and will be payable
on April 15 and October 15 of each year,
commencing April 15, 2000.
Guarantees................. The registered notes will be guaranteed on an
unsecured basis by all of our subsidiaries that
are guarantors in respect of our senior revolving
credit facility as of the date of the indenture.
In addition, if any subsidiary of ours which is
not already a guarantor becomes a guarantor in
respect of our senior revolving credit facility,
we will cause such subsidiary to enter into a
supplemental indenture to the indenture pursuant
to which that subsidiary shall agree to guarantee
our obligations under the registered notes.
Ranking.................... The registered notes will be senior unsecured
obligations and will rank equally with all of our
other senior unsecured and unsubordinated
indebtedness, including borrowings under our
senior credit facility.
Optional Redemption........ The registered notes will be redeemable in whole
or in part, at our option, at any time. We will
pay a redemption price which is described under
the heading "Description of the Registered
Notes--Optional Redemption." We will also pay
accrued and unpaid interest to the redemption
date.
Certain Covenants.......... The indenture for the registered notes limits
our ability and the ability of our restricted
subsidiaries to:
/bullet/ incur liens;
10
<PAGE>
/bullet/ enter into sale and leaseback
transactions; or
/bullet/ consolidate with or merge into, or
convey, transfer or lease all or
substantially all of our and our
subsidiaries' assets to any person.
All of these limitations are subject to a number
of important qualifications described under the
headings "Description of the Registered
Notes--Restrictive Covenants and--Consolidation,
Merger and Sale of Assets."
Registration Rights........ Holders of registered notes are not entitled to
any registration rights with respect to the
registered notes.
RISK FACTORS
We urge you to read carefully the risk factors beginning on page 14 for a
discussion of factors you should consider before exchanging your outstanding
notes for registered notes.
11
<PAGE>
SUMMARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA NINE MONTHS
YEAR ENDED YEAR ENDED NINE MONTHS ENDED
NOVEMBER 30, NOVEMBER 30, ENDED AUGUST 31, AUGUST 31,
--------------------------- -------------- ----------------------- ------------
1997 1998 1998(1) 1998 1999 1999(1)
------------- ------------- -------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions, net ............................. $ 69,487 $ 86,946 $ 142,555 $ 54,432 $ 90,136 $ 124,460
Motorsports related income(2) ............... 46,650 71,793 117,857 50,104 72,805 101,878
Food, beverage and merchandise income ....... 23,408 28,597 58,168 18,666 29,913 50,601
Other income ................................ 1,829 1,632 1,632 1,095 1,243 1,243
---------- ---------- ---------- -------- -------- ---------
Total revenues ............................. 141,374 188,968 320,212 124,297 194,097 278,182
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR
sanction fees .............................. 20,567 28,767 44,287 19,727 28,252 39,535
Motorsports related expenses ................ 23,075 33,283 61,405 22,119 32,458 48,658
Food, beverage and merchandise expenses ..... 13,435 15,025 35,942 10,396 15,995 30,367
General and administrative expenses ......... 29,486 37,842 60,542 26,365 36,814 57,312
Depreciation and amortization ............... 9,910 13,137 38,671 9,593 13,936 31,778
---------- ---------- ---------- -------- -------- ---------
Total expenses ............................. 96,473 128,054 240,847 88,200 127,455 207,650
---------- ---------- ---------- -------- -------- ---------
Operating income ............................. 44,901 60,914 79,365 36,097 66,642 70,532
Interest income .............................. 3,196 4,414 2,260 2,531 6,783 5,311
Interest expense ............................. (509) (582) (13,261) (518) (2,511) (10,821)
Equity in net income (loss) from equity
investments ................................. 366 (905) (124) (111) (1,472) (389)
Minority interest ............................ -- -- 320 -- 77 398
Gain on sale of equity investment ............ -- 1,245 2,353 1,245 -- --
---------- ---------- ---------- -------- -------- ---------
Income before income taxes ................... 47,954 65,086 70,913 39,244 69,519 65,031
Income taxes ................................. 18,158 24,894 32,779 14,993 27,101 28,253
---------- ---------- ---------- -------- -------- ---------
Net income ................................... $ 29,796 $ 40,192 $ 38,134 $ 24,251 $ 42,418 $ 36,778
========== ========== ========== ======== ======== =========
OTHER FINANCIAL DATA:
EBITDA(3) .................................... $ 54,811 $ 74,051 $ 118,036 $ 45,690 $ 80,578 $ 102,310
EBITDA margin ................................ 38.8% 39.2% 36.9% 36.8% 41.5% 36.8%
Capital expenditures ......................... $ 38,627 $ 71,858 $ 106,901 $ 37,667 $ 75,387 $ 104,798
Ratio of earnings to fixed charges(4) ........ 73.0x 86.3x 5.9x 60.9x 16.3x 5.7x
PRO FORMA RATIOS:
EBITDA to interest expense ................... -- -- 8.9x -- -- --
Total debt to EBITDA ......................... -- -- 1.7x -- -- --
SELECTED OPERATING DATA:
Total admissions ............................. 1,416,618 1,730,533 3,104,074 N/A N/A N/A
Number of major events(5) .................... 18 18 36 12 15 29
</TABLE>
<TABLE>
<CAPTION>
AUGUST 31, 1999
-----------------------------
ACTUAL AS ADJUSTED(6)
------------- ---------------
BALANCE SHEET DATA: (IN THOUSANDS)
<S> <C> <C>
Working capital (deficit). ......... $ (42,955) $ 918
Total assets ....................... 1,388,586 1,432,459
Total debt ......................... 285,725 334,725
Total shareholders' equity ......... 887,986 887,986
</TABLE>
12
<PAGE>
- ----------------
(1) Gives effect to the Penske Acquisition as if it had occurred as of the
beginning of the period presented. For additional information, see "Pro
Forma Financial Data."
(2) Primarily includes television and radio broadcast rights fees, promotion
and sponsorship fees, hospitality rentals (including luxury suites,
chalets and the hospitality portion of club seating), advertising
revenues, royalties from licenses of our trademarks, and track rentals.
(3) EBITDA means operating income before depreciation and amortization. EBITDA
is a measure commonly used by the financial community but is not prepared
in accordance with United States generally accepted accounting principles
("GAAP"). While many in the financial community consider EBITDA to be an
important measure of comparative operating performance, it should be
considered in addition to, but not as a substitute for, operating income,
net income, cash flows provided by operating activities and other measures
of financial performance prepared in accordance with generally accepted
accounting principles. Our calculation of EBITDA may not be comparable to
similarly titled measures reported by other companies since all companies
do not calculate this non-GAAP measure in the same fashion.
(4) For the purpose of computing this ratio, earnings consist of income before
income taxes and fixed charges (such fixed charges have been adjusted to
exclude capitalized interest). Fixed charges consist of interest expense,
including capitalized expense, amortization of loan expense related to
long-term debt and the estimated interest component of rent expense.
(5) Major events mean our NASCAR Winston Cup Series, NASCAR Busch Grand
National Series, NASCAR Craftsman Truck Series and CART FedEx Championship
Series events.
(6) Gives effect to the application of the net proceeds of the sale of the
outstanding notes as if it had occurred as of August 31, 1999.
13
<PAGE>
RISK FACTORS
You should carefully read this entire prospectus and the documents
incorporated by reference in this prospectus before participating in the
exchange offer. Among the factors that may adversely affect an investment in
the notes are the following:
WE HAVE A SIGNIFICANT AMOUNT OF DEBT, WHICH COULD ADVERSELY AFFECT OUR
FINANCIAL POSITION, RESULTS OF OPERATIONS AND PROSPECTS AND PREVENT US FROM
FULFILLING OUR DEBT OBLIGATIONS.
We have a significant amount of debt and leverage. On a pro forma basis as
of and for the nine months ended August 31, 1999, after giving effect to sale
of the outstanding notes, the Penske Acquisition and the acquisition of RIR:
/bullet/ our total debt outstanding was approximately $494.7 million;
/bullet/ our pro forma interest expense was approximately $25.5 million;
/bullet/ our total shareholders' equity was approximately $888.0 million;
and
/bullet/ the sufficiency of our earnings available to cover fixed charges
was approximately 2.7 to 1.
As of January 4, 2000, we had approximately $90 million of current
availability for borrowings under our senior revolving credit facility.
SUBORDINATION OF THE NOTES AND GUARANTEES MAY LIMIT PAYMENTS ON THE NOTES.
The notes are our unsecured senior obligations, ranking equally with all
of our other unsecured and unsubordinated indebtedness which may be outstanding
from time to time, including borrowings under our senior credit facility. The
indenture does not limit the amount of additional indebtedness that we or any
of our subsidiaries may incur. The subsidiary guarantees for the notes are
unsecured obligations of each subsidiary guarantor and rank equally in right of
payment with all senior indebtedness of that subsidiary guarantor and senior in
right of payment to all subordinated indebtedness of that subsidiary guarantor.
Thus, the subsidiary guarantees are effectively subordinated to secured
indebtedness of the subsidiary guarantor with respect to the assets securing
that indebtedness.
OUR INABILITY TO INTEGRATE SUCCESSFULLY THE OPERATIONS OF PENSKE MOTORSPORTS
WITH OUR BUSINESS COULD NEGATIVELY IMPACT US.
There can be no assurance that we will integrate successfully the
operations of Penske Motorsports with our business. The full benefits of our
business combination with Penske Motorsports will require the integration of
administrative, finance, sales and marketing organizations, and the
implementation of appropriate operational, financial, and management systems
and controls. The integration of different businesses is a detailed and
time-consuming process and we have no experience in integrating an acquisition
on the scale of the Penske Acquisition. Our inability to achieve expected cost
savings and synergies or to otherwise integrate successfully the operations of
Penske Motorsports could have a material adverse effect on us. The Penske
Acquisition involves other special risks, including:
/bullet/ diversion of management attention;
/bullet/ the incurrence of significant non-recurring expenses related to
the transaction;
/bullet/ difficulties in improving the operations, technologies and
services of Penske Motorsports; and
/bullet/ the risk of entering into markets or services where we have
limited direct prior experience.
14
<PAGE>
OUR SUCCESS DEPENDS ON OUR RELATIONSHIPS WITH NASCAR AND CART.
Our success has been and will remain dependent on maintaining a good
working relationship with NASCAR, the sanctioning body for NASCAR's Winston Cup
Series, Busch Grand National Series and Craftsman Truck Series, and CART, the
sanctioning body for the FedEx Championship Series. For the 1999 racing season,
we had sanctioning agreements to promote and market:
/bullet/ 16 NASCAR Winston Cup Series events;
/bullet/ 12 NASCAR Busch Grand National Series events;
/bullet/ 6 NASCAR Craftsman Truck Series events; and
/bullet/ 4 CART FedEx Championship events.
Neither NASCAR nor CART is required to continue to enter into, renew or
extend sanctioning agreements with us to promote any existing event. Moreover,
although our general growth strategy includes the possible development and/or
acquisition of additional motorsports facilities, it cannot be assured that any
sanctioning body, including NASCAR or CART, will enter into sanctioning
agreements with us to promote races at our new facilities. Failure to obtain a
sanctioning agreement for a major NASCAR or CART event could negatively affect
us. Similarly, neither NASCAR nor CART is obligated to modify their race
schedules to allow us to more efficiently schedule our races. In addition, by
sanctioning an event, neither NASCAR nor CART warrants, either expressly or by
implication, nor are they responsible for, the financial or other success of
the sanctioned event or the number or identity of vehicles or competitors
participating in the event.
CERTAIN OF OUR SENIOR EXECUTIVES MAY HAVE POTENTIAL CONFLICTS OF INTEREST.
William C. France and James C. France own NASCAR, and each of them, as
well as our General Counsel, spend part of their time on NASCAR's business.
Similarly, Gregory W. Penske, our new Senior Vice President--Western
Operations, will not devote all his time to our affairs. Each of these
individuals spends substantial time on our business and all of our other
executive officers are available to us on a substantially full-time basis. In
addition, we strive to ensure, and our management believes, that the terms of
our transactions with NASCAR are no less favorable to us than those which could
be obtained in arms-length negotiations. Nevertheless, certain potential
conflicts of interest between us and NASCAR exist with respect to, among other
things:
/bullet/ the terms of any sanctioning agreements that may be awarded to us
by NASCAR;
/bullet/ the amount of time devoted by the employees mentioned above and
certain other of our employees to NASCAR's affairs; and
/bullet/ the amounts charged or paid to NASCAR for office rental,
transportation costs, shared executives, administrative expenses
and similar items.
GOVERNMENT REGULATION MAY ADVERSELY AFFECT THE AVAILABILITY OF SPONSORSHIPS AND
ADVERTISING.
The motorsports industry generates significant recurring revenue from the
promotion, sponsorship and advertising of various companies and their products.
Actual or proposed government regulation can negatively impact the availability
to the motorsports industry 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 our events. In the past few years there have been several
unsuccessful governmental attempts to impose restrictions on the advertising
and promotion of cigarettes and smokeless tobacco, including sponsorship of
motorsports activities. If successfully implemented, these regulatory efforts
would have prohibited the present
15
<PAGE>
practice of tobacco brand name sponsorship of, or identification with,
motorsports events, entries and teams. At this point, the ultimate outcome of
these or future government regulatory and legislative efforts to regulate the
advertising and promotion of cigarettes and smokeless tobacco is uncertain and
the impact, if any, on the motorsports industry or us is unclear. Major United
States companies in the tobacco industry have entered into various agreements
with the Attorneys General of all 50 states to settle certain state-initiated
litigation against the tobacco industry. These settlement agreements will,
among other things, place limits upon the sponsorship of motorsports activities
by the tobacco industry. The actual impact of these settlement agreements upon
us has not yet been determined. We are 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 less than 2% of our pro forma
fiscal 1998 revenues. In addition, the tobacco and alcoholic beverage
industries provide financial support to the motorsports industry through, among
other things, their purchase of advertising time, their sponsorship of racing
teams and their sponsorship of racing series such as NASCAR's Winston Cup and
Busch Grand National Series.
WE ARE SUBJECT TO LEGAL PROCEEDINGS.
We and certain of our subsidiaries, including certain former Penske
Motorsports' subsidiaries, are parties to legal proceedings alleging
price-fixing activities in connection with the sale of souvenirs and
merchandise. While we dispute the allegations, neither the cost of defending
the suits nor the potential damages or other remedies for which we might be
liable is insured. Recently, the parties entered into confidential memoranda of
understanding to completely settle the legal proceedings, without any admission
of wrongdoing on our or our subsidiaries' part. Under the terms of these
memoranda of understanding (which have been filed under seal with the
applicable courts), we and our subsidiaries have agreed to pay approximately
$4.6 million in cash and to distribute souvenir merchandise discount coupons to
settle with classes which would encompass all purchasers of souvenirs and
merchandise at NASCAR Winston Cup Series events during the period from January
1, 1991 to the present. The parties are in the process of attempting to agree
on the terms of formal settlement agreements, including the terms of the coupon
program. These settlement agreements will then be subject to review and
approval by both the state and federal courts. There is no assurance that the
parties will enter into a definitive settlement agreement or the courts will
approve any such settlement agreement. In the event the parties are not able to
settle the suits, we intend to resume vigorously defending against them. Our
management is not presently able to predict the outcome of these suits, and
there can be no assurance that the defense of the suits, or a possible negative
resolution, will not require material expenditures by us.
In connection with Penske Motorsports' acquisition of North Carolina
Speedway in 1997, certain of the North Carolina Speedway stockholders
(constituting more than 5% of the North Carolina Speedway shares outstanding
prior to the acquisition) exercised their right under North Carolina law to
dissent to the price paid for the common stock of North Carolina Speedway.
These dissenting stockholders were paid $16.77 per share. These dissenters have
requested $55.00 per share and have sued Penske Motorsports, Penske
Acquisition, Inc. and North Carolina Speedway in North Carolina Superior Court,
Mecklenburg County, North Carolina. Under Penske Motorsports' agreement with
Mrs. DeWitt (the former majority stockholder of North Carolina Speedway), if a
dissenting stockholder, which represents more than five percent of the North
Carolina Speedway stock, receives more consideration in a dissenters' action
than Penske Motorsports paid in connection with the acquisition of North
Carolina Speedway, all stockholders of North Carolina Speedway at the time of
the acquisition, other than Penske Motorsports and its affiliates, would
receive a per share amount equal to the award in dissenter's court less the per
share amount paid in the acquisition ($19.61 per share to stockholders other
than dissenting stockholders). Because Penske Motorsports acquired Mrs.
DeWitt's shares prior to the completion of this acquisition, Mrs. DeWitt would
not be entitled to receive additional consideration for her shares. A negative
decision with respect to the dissenters' proceeding could materially increase
the purchase price paid for North Carolina Speedway by Penske Motorsports,
which we would have to pay. Our management is not presently able to predict the
16
<PAGE>
outcome of this suit, and there can be no assurance that the defense of this
suit, or a possible negative resolution, will not require material expenditures
by us.
BAD WEATHER COULD ADVERSELY AFFECT US.
We promote outdoor motorsports events. Weather conditions affect sales of,
among other things, tickets, food, drinks and souvenirs at these events. Poor
weather conditions could have a material negative effect on us.
WE MAY BE HELD LIABLE FOR PERSONAL INJURIES.
Motorsports can be dangerous to participants and to spectators. We
maintain insurance policies that provide coverage within limits that we believe
should generally be sufficient to protect us from a large financial loss due to
liability for personal injuries sustained by persons on our property in the
ordinary course of our business. There can be no assurance, however, that the
insurance will be adequate or available at all times and in all circumstances.
Our financial condition and results of operations could be negatively affected
to the extent claims and expenses in connection with these injuries are greater
than the amount of money that can be recovered from insurance.
WE OPERATE IN A HIGHLY COMPETITIVE ENVIRONMENT.
As an entertainment company, our racing events face competition from other
spectator-oriented sporting events and other leisure, entertainment and
recreational activities, including professional football, basketball and
baseball. As a result, our revenues will be affected by the general popularity
of motorsports, the availability of alternative forms of recreation and
changing consumer preferences. 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 ours.
WE ARE SUBJECT TO ENVIRONMENTAL AND LAND USE LAWS.
We believe that our 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
our business or by pollutants, substances, contaminants or wastes used,
generated or disposed of by us, we 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
we are self-insured could be material. State and local laws relating to the
protection of the environment can also include noise abatement laws that may be
applicable to our 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 us.
WE COULD BE ADVERSELY AFFECTED BY YEAR 2000 ISSUES.
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 our time sensitive applications and business systems and those of our
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 Year 2000 problem will impact us and our business partners.
An assessment of our Year 2000 exposure related to our information
technology systems has been made and the plans to resolve the related issues
have been implemented. All of our major information technology systems have
been updated or replaced with applications that are Year 2000 compliant in the
normal course of business.
17
<PAGE>
We have performed an evaluation of our non-information technology systems,
such as elevators, heating and air-conditioning systems, etc., with date
sensitive software and embedded microprocessors that may be affected by the
Year 2000 issue. Current estimates of the costs of correcting or replacing
critical non-information technology systems indicate that these costs will not
be material to us.
We developed and implemented a plan of communication with significant
business partners in an attempt to identify and minimize disruptions to our
operations resulting from the Year 2000 issue. Although the responses of our
significant business partners have been favorable, there can be no certainty
that the computer programs and business systems of third parties on which we
rely will not have an adverse effect on our operations. However, because of the
nature of our business, we believe at this time that a failure of our vendors,
sponsors or customers to resolve issues involving the Year 2000 problem will
not be material to us.
We have completed all of our Year 2000 preparation and, at this time
believe that we have satisfactorily resolved all significant Year 2000
problems. Total actual and estimated costs to correct the identified potential
problems related to the Year 2000 indicate that these costs will not exceed
$600,000. Estimates of Year 2000 related costs are based on numerous
assumptions, including the continued availability of certain resources, the
ability to correct all relevant information and non-information technology
systems and third party modification plans. There is no assurance that the
estimates will be achieved and actual costs could differ materially from those
anticipated. Although we have dedicated substantial resources towards attaining
Year 2000 readiness, there is no assurance that we have been successful in
identifying and resolving all Year 2000 readiness issues.
FRAUDULENT CONVEYANCE CONSIDERATIONS COULD VOID THE GUARANTEES FOR THE NOTES.
Various fraudulent conveyance laws have been enacted for the protection of
creditors. A court may use those laws to subordinate or void the guarantees of
the notes issued by any of our subsidiaries. A court could void or subordinate
the guarantees by any of our subsidiaries in favor of that subsidiary's other
debts or liabilities to the extent that the court determined either of the
following were true at the time the subsidiary issued the guarantee:
/bullet/ that the subsidiary issued the guarantee with the intent to
hinder, delay or defraud any of its present or future creditors or
the subsidiary contemplated insolvency with a design to favor one
or more creditors to the total or partial exclusion of others; or
/bullet/ that the subsidiary did not receive fair consideration or
reasonably equivalent value for issuing the guarantee and, at the
time it issued the guarantee, the subsidiary:
/bullet/ was insolvent or rendered insolvent by reason of the
issuance of the guarantee;
/bullet/ was engaged or about to engage in a business or
transaction for which the remaining assets of the
subsidiary constituted unreasonably small capital; or
/bullet/ intended to incur, or believed it would incur, debts
beyond its ability to pay its debts as they matured.
Among other things, a legal challenge of a subsidiary's guarantee of the notes
on fraudulent conveyance grounds may focus on the benefits, if any, realized by
that subsidiary as a result of our issuance of the notes. To the extent a
subsidiary's guarantee of the notes is voided as a result of fraudulent
conveyance or held unenforceable for any other reason, you would cease to have
any claim in respect of that guarantee and would be creditors solely of us and
any subsidiaries whose guarantees were not voided.
THERE IS NO ESTABLISHED TRADING MARKET FOR THE REGISTERED NOTES, AND WE CANNOT
ASSURE YOU THAT A MARKET FOR THE REGISTERED NOTES WILL DEVELOP IN THE FUTURE.
If such a market were to develop, the registered notes could trade at
prices that are higher or lower than the initial offering prices depending on
many factors, including:
18
<PAGE>
/bullet/ the number of holders of the notes;
/bullet/ the overall market for similar securities;
/bullet/ our financial performance and prospects; and
/bullet/ prospects for companies in our industry generally.
The initial purchasers of the outstanding notes have informed us that they
currently intend to make a market in the registered notes. However, the initial
purchasers have no obligation to do so and may discontinue making a market at
any time without notice. Therefore, we cannot assure you as to the liquidity of
any trading market for the registered notes. We do not intend to apply (and are
not obligated to apply) for listing of the registered notes on any securities
exchange or any automated quotation system.
SOME PERSONS WHO PARTICIPATE IN THIS EXCHANGE OFFER MUST DELIVER A PROSPECTUS
IN CONNECTION WITH RESALES OF THE REGISTERED NOTES.
Based on no-action letters issued by the staff of the SEC to third
parties, we believe that you may offer for resale, resell or otherwise transfer
the registered notes without compliance with the registration and prospectus
delivery requirements of the Securities Act. However, in some instances
described in this prospectus under "The Exchange Offer," you will remain
obligated to comply with the prospectus delivery requirements of the Securities
Act to transfer your registered notes. In these instances, if you transfer any
registered note without delivering a prospectus meeting the requirements of the
Securities Act or without an exemption from registration of your registered
notes under the Securities Act, you may incur liability under this act. We do
not and will not assume, or indemnify you against, this liability.
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. In consideration
for issuing the registered notes as contemplated in this prospectus, we will
receive in exchange the outstanding notes in like principal amount. The
outstanding notes surrendered in exchange for the registered notes will be
retired and canceled and cannot be reissued. The issuance of the registered
notes will not result in any increase in our indebtedness.
19
<PAGE>
CAPITALIZATION
The following table sets forth as of August 31, 1999:
/bullet/ our historical capitalization which gives effect to the Penske
Acquisition; and
/bullet/ our pro forma capitalization, as adjusted to give effect to the
application of the net proceeds from our issuance of the
outstanding notes.
The table should be read in conjunction with "Selected Financial Data,"
"Pro Forma Financial Data" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere and
incorporated by reference in this prospectus.
<TABLE>
<CAPTION>
AUGUST 31, 1999
-------------------------------
ACTUAL AS ADJUSTED
-------------- --------------
(IN THOUSANDS)
<S> <C> <C>
Cash, cash equivalents and short-term investments ................... $ 59,791 $ 103,664
========== ==========
Long-term debt(1):
Notes payable ..................................................... $ 5,550 $ 5,550
Credit facilities ................................................. 180,500 4,500
TIF bond debt service funding commitment
(net of discount of $1,665)...................................... 69,675 69,675
Term debt ......................................................... 30,000 30,000
Senior notes due 2004 ............................................. -- 225,000
---------- ----------
Total long-term debt ............................................ $ 285,725 $ 334,725
---------- ----------
Shareholders' equity:
Class A Common Stock, $.01 par value, 80,000,000 shares authorized;
22,774,872 shares issued and outstanding ........................ $ 228 $ 228
Class B Common Stock, $.01 par value, 40,000,000 shares authorized;
30,349,841 shares issued and outstanding ........................ 303 303
Additional paid-in capital ........................................ 687,321 687,321
Retained earnings ................................................. 202,237 202,237
Unearned compensation-restricted stock(2) ......................... (2,103) (2,103)
---------- ----------
Total shareholders' equity ...................................... 887,986 887,986
---------- ----------
Total capitalization ............................................ $1,173,711 $1,222,711
========== ==========
</TABLE>
- ----------------
(1) Includes current maturities.
(2) See Note 11 to our Consolidated Financial Statements, which are
incorporated by reference in this prospectus from our Annual Report on
Form 10-K for the fiscal year ended November 30, 1998 on file with the
SEC. See "Documents Incorporated By Reference" and "Where You Can Find
More Information" on page 74.
20
<PAGE>
SELECTED FINANCIAL DATA
The following selected financial data as of and for each of the fiscal
years ended August 31, 1994 through 1996, the three months ended November 30,
1996, and the fiscal years ended November 30, 1997 and 1998 have been derived
from our Consolidated Financial Statements, which are incorporated by reference
in this prospectus from our Annual Report on Form 10-K for the fiscal year
ended November 30, 1998 on file with the SEC. See "Documents Incorporated By
Reference" and "Where You Can Find More Information" on page 74. The selected
financial data for the twelve months ended November 30, 1996 and as of and for
the nine months ended August 31, 1998 and 1999 have been derived from our
unaudited financial statements 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 nine months ended August 31, 1999 are not necessarily
indicative of results for the full year.
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
YEAR ENDED AUGUST 31, (1) NOV. 30
--------------------------------------- -------------
1994 1995 1996 1996(1)
------------ ------------ ------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions, net .......................... $ 36,935 $ 43,274 $ 50,140 $ 4,191
Motorsports related income(2) ............ 18,764 24,033 27,433 3,972
Food, beverage and merchandise
income .................................. 12,291 14,442 17,505 1,943
Other income ............................. 943 423 964 390
--------- --------- ----------- -------
Total revenues .......................... 68,933 82,172 96,042 10,496
Expenses:
Direct expenses: .........................
Prize and point fund monies and
NASCAR sanction fees .................... 9,412 11,765 13,865 1,301
Motorsports related expenses ............. 11,470 11,604 15,336 2,814
Food, beverage and merchandise
expenses ................................ 7,867 8,107 10,278 1,536
General and administrative
expenses ................................ 14,307 18,202 20,930 5,057
Depreciation and amortization ............ 3,828 4,798 6,302 2,353
--------- --------- ----------- -------
Total expenses .......................... 46,884 54,476 66,711 13,061
--------- --------- ----------- -------
Operating income (loss) ................... 22,049 27,696 29,331 (2,565)
Interest income ........................... 972 1,436 872 330
Interest expense .......................... -- -- -- (69)
Equity in net income (loss) from
equity investments ....................... 207 285 1,441 (304)
Minority interest ......................... -- -- -- --
Gain on sale of equity investment . ....... -- -- -- --
--------- --------- ----------- -------
Income (loss) before income taxes . ....... 23,228 29,417 31,644 (2,608)
Income taxes (benefit) .................... 8,662 11,054 11,963 (741)
--------- --------- ----------- -------
Net income (loss) ......................... $ 14,566 $ 18,363 $ 19,681 $(1,867)
========= ========= =========== =======
OTHER FINANCIAL DATA:
EBITDA(3) ................................. $ 25,877 $ 32,494 $ 35,633 $ (212)
EBITDA margin ............................. 37.5% 39.5% 37.1% (2.0)%
Capital expenditures ...................... $ 19,729 $ 16,831 $ 34,784 $14,864
Ratio of earnings to fixed charges(4) ..... 325.2x 435.8x 432.5x (4)
SELECTED OPERATING DATA:
Total admissions .......................... 848,134 985,739 1,028,970 N/A
Number of major events(5) ................. 12 12 13 1
BALANCE SHEET DATA
(END OF PERIOD):
Working capital (deficit) ................. $ 11,839 $ 20,821 $ (6,751) $52,922
Total assets .............................. 96,401 119,571 152,791 234,069
Total debt ................................ -- -- -- --
Total shareholders' equity ................ 68,277 85,247 106,667 179,289
<PAGE>
<CAPTION>
TWELVE
MONTHS
ENDED YEAR ENDED NINE MONTHS ENDED
NOV. 30, NOVEMBER 30, AUGUST 31,
----------- --------------------------- -------------------------
1996(1) 1997 1998 1998 1999
----------- ------------- ------------- ----------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Admissions, net .......................... $ 50,705 $ 69,487 $ 86,946 $ 54,432 $ 90,136
Motorsports related income(2) ............ 28,376 46,650 71,793 50,104 72,805
Food, beverage and merchandise
income .................................. 17,723 23,408 28,597 18,666 29,913
Other income ............................. 1,192 1,829 1,632 1,095 1,243
-------- ---------- ----------- -------- ----------
Total revenues .......................... 97,996 141,374 188,968 124,297 194,097
Expenses:
Direct expenses: .........................
Prize and point fund monies and
NASCAR sanction fees .................... 13,724 20,567 28,767 19,727 28,252
Motorsports related expenses ............. 16,384 23,075 33,283 22,119 32,458
Food, beverage and merchandise
expenses ................................ 10,559 13,435 15,025 10,396 15,995
General and administrative
expenses ................................ 21,721 29,486 37,842 26,365 36,814
Depreciation and amortization ............ 7,368 9,910 13,137 9,593 13,936
-------- ---------- ----------- -------- ----------
Total expenses .......................... 69,756 96,473 128,054 88,200 127,455
-------- ---------- ----------- -------- ----------
Operating income (loss) ................... 28,240 44,901 60,914 36,097 66,642
Interest income ........................... 912 3,196 4,414 2,531 6,783
Interest expense .......................... (69) (509) (582) (518) (2,511)
Equity in net income (loss) from
equity investments ....................... 1,291 366 (905) (111) (1,472)
Minority interest ......................... -- -- -- -- 77
Gain on sale of equity investment . ....... -- -- 1,245 1,245 --
-------- ---------- ----------- -------- ----------
Income (loss) before income taxes . ....... 30,374 47,954 65,086 39,244 69,519
Income taxes (benefit) .................... 11,540 18,158 24,894 14,993 27,101
-------- ---------- ----------- -------- ----------
Net income (loss) ......................... $ 18,834 $ 29,796 $ 40,192 24,251 $ 42,418
======== ========== =========== ======== ==========
OTHER FINANCIAL DATA:
EBITDA(3) ................................. $ 35,608 $ 54,811 $ 74,051 $ 45,690 $ 80,578
EBITDA margin ............................. 36.3% 38.8% 39.2% 36.8% 41.5%
Capital expenditures ...................... $ 41,622 $ 38,627 $ 71,858 $ 37,667 $ 75,387
Ratio of earnings to fixed charges(4) ..... 213.3x 73.0x 86.3x 60.9x 16.3x
SELECTED OPERATING DATA:
Total admissions .......................... N/A 1,416,618 1,730,533 N/A N/A
Number of major events(5) ................. 12 18 18 12 15
BALANCE SHEET DATA
(END OF PERIOD):
Working capital (deficit) ................. $ 52,922 $ (24,976) $ 27,490 $ 93,736 $ (42,955)
Total assets .............................. 234,069 302,823 476,818 471,380 1,388,586
Total debt ................................ -- 14,302 3,373 4,431 285,725
Total shareholders' equity ................ 179,289 209,907 366,855 350,741 887,986
</TABLE>
21
<PAGE>
- ----------------
(1) We changed our 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 of the 12-month
period November 30, 1996 are presented for the purpose of comparison to
the fiscal year ended November 30, 1997.
(2) Primarily includes television and radio broadcast rights fees, promotion
and sponsorship fees, hospitality rentals (including luxury suites,
chalets and the hospitality portion of club seating), advertising
revenues, royalties from licenses of our trademarks, and track rentals.
(3) EBITDA means operating income before depreciation and amortization. EBITDA
is a measure commonly used by the financial community but is not prepared
in accordance with GAAP. While many in the financial community consider
EBITDA to be an important measure of comparative operating performance, it
should be considered in addition to, but not as a substitute for,
operating income, net income, cash flows provided by operating activities
and other measures of financial performance prepared in accordance with
United States generally accepted accounting principles. Our calculation of
EBITDA may not be comparable to similarly titled measures reported by
other companies since all companies do not calculate this non-GAAP measure
in the same fashion.
(4) For the purpose of computing this ratio, earnings consist of income before
income taxes and fixed charges (such fixed charges have been adjusted to
exclude capitalized interest). Fixed charges consist of interest expense,
including capitalized expense, amortization of loan expense related to
long-term debt and the estimated interest component of rent expense. The
deficiency of earnings available to cover fixed charges for the three
months ended November 30, 1996 was approximately $2.3 million.
(5) Major events mean our NASCAR Winston Cup Series, NASCAR Busch Grand
National Series and NASCAR Craftsman Truck Series events.
22
<PAGE>
PRO FORMA FINANCIAL DATA
The following unaudited pro forma condensed consolidated financial
statements reflect adjustments to the historical consolidated statements of
income of International Speedway and Penske Motorsports to give effect to the
Penske Acquisition, using the purchase method of accounting for a business
combination. Our unaudited pro forma condensed consolidated statements of
income for the nine months ended August 31, 1999 and for the year ended
November 30, 1998 assume the Penske Acquisition was effected as of the
beginning of each period presented.
The fiscal year-ends of International Speedway and Penske Motorsports
occur at different dates. International Speedway's fiscal year-end is November
30 and Penske Motorsports' fiscal year-end was December 31. Our unaudited pro
forma condensed consolidated statements of income have been prepared by
combining the following periods of operations of International Speedway and
Penske Motorsports:
<TABLE>
<CAPTION>
PRO FORMA PERIOD INTERNATIONAL SPEEDWAY PENSKE MOTORSPORTS
- ----------------------- ------------------------ -------------------
<S> <C> <C>
Nine months ended Nine months ended Nine months ended
August 31, 1999 August 31, 1999 August 31, 1999
Year ended Year ended Year ended
November 30, 1998 November 30, 1998 December 31, 1998
</TABLE>
Prior to consummation of the Penske Acquisition, each of International
Speedway and Penske Motorsports owned 45% of Homestead-Miami Speedway
("Homestead-Miami") and each entity recorded its respective investment using
the equity method of accounting. For purposes of pro forma presentations,
Homestead-Miami's historical statements of income for the nine months ended
August 31, 1999, and the year ended December 31, 1998, have been combined with
Penske Motorsports' historical financial information.
The following unaudited pro forma condensed consolidated financial
statements have been prepared from, and should be read in conjunction with, our
historical consolidated financial statements, which are incorporated by
reference in this prospectus from our Annual Report on Form 10-K for the fiscal
year ended November 30, 1998 on file with the SEC, as well as the historical
consolidated financial statements of Penske Motorsports, which are incorporated
by reference in this prospectus from its Annual Report on Form 10-K for the
fiscal year ended December 31, 1998 on file with the SEC. See "Documents
Incorporated by Reference" and "Where You Can Find More Information" on page
74. The following unaudited pro forma condensed consolidated statements of
income are not necessarily indicative of the results of operations that would
have occurred had the Penske Acquisition occurred at the dates indicated, nor
are they necessarily indicative of our future operating results as a combined
company.
23
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED AUGUST 31, 1999
<TABLE>
<CAPTION>
PENSKE
MOTORSPORTS AND
INTERNATIONAL HOMESTEAD- PRO FORMA PRO FORMA
SPEEDWAY MIAMI ADJUSTMENTS TOTAL
--------------- ---------------- ---------------------- --------------
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C>
REVENUES
Admissions, net ...................... $ 90,136 $ 34,324 $ 0 $ 124,460
Motorsports related income. .......... 72,805 29,073 0 101,878
Food, beverage and
merchandise income .................. 29,913 20,688 0 50,601
Other income. ........................ 1,243 0 0 1,243
----------- -------- ----------- -----------
Total revenues. .................... 194,097 84,085 0 278,182
EXPENSES
Direct expenses:
Prize and point fund monies and
NASCAR sanction fees .............. 28,252 11,283 0 39,535
Motorsports related expenses. ....... 32,458 16,200 0 48,658
Food, beverage and
merchandise expenses .............. 15,995 14,372 0 30,367
General and administrative
expenses .......................... 36,814 20,498 0 57,312
Depreciation and amortization ....... 13,936 9,997 7,845 (1)(2) 31,778
----------- -------- ----------- -----------
Total expenses. .................... 127,455 72,350 7,845 207,650
----------- -------- ----------- -----------
Operating income (loss) .............. 66,642 11,735 (7,845) 70,532
Interest income. ..................... 6,783 128 (1,600)(3) 5,311
Interest expense ..................... (2,511) (3,934) (4,376)(4) (10,821)
Equity in net (loss) income from
equity investments .................. (1,472) (1,443) 2,526 (5) (389)
Minority interest. ................... 77 0 321 (5) 398
----------- -------- ----------- -----------
Income (loss) before income taxes..... 69,519 6,486 (10,974) 65,031
Income tax expense (benefit) ......... 27,101 2,566 (1,414)(6) 28,253
----------- -------- ----------- -----------
Net income (loss) .................... $ 42,418 $ 3,920 $ (9,560) $ 36,778
=========== ======== =========== ===========
Basic earnings per share ............. $ 0.96 $ 0.70
Diluted earnings per share ........... $ 0.96 $ 0.69
Basic weighted average shares ........ 44,229,684 8,675,464 (7) 52,905,148
Diluted weighted average shares. ..... 44,355,217 8,675,464 (7) 53,030,681
</TABLE>
See accompanying notes to unaudited pro forma financial statements.
24
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED NOVEMBER 30, 1998
<TABLE>
<CAPTION>
PENSKE
MOTORSPORTS AND
INTERNATIONAL HOMESTEAD- PRO FORMA PRO FORMA
SPEEDWAY MIAMI ADJUSTMENTS TOTAL
--------------- ---------------- ----------------------- --------------
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C>
REVENUES
Admissions, net ...................... $ 86,946 $ 55,609 $ 0 $ 142,555
Motorsports related income. .......... 71,793 46,064 0 117,857
Food, beverage and
merchandise income .................. 28,597 29,571 0 58,168
Other income. ........................ 1,632 0 0 1,632
----------- -------- ------------ -----------
Total revenues ..................... 188,968 131,244 0 320,212
EXPENSES
Direct expenses:
Prize and point fund monies and
NASCAR sanction fees .............. 28,767 15,520 0 44,287
Motorsports related expenses. ....... 33,283 28,122 0 61,405
Food, beverage and
merchandise expenses .............. 15,025 20,917 0 35,942
General and administrative
expenses .......................... 37,842 22,700 0 60,542
Depreciation and amortization ....... 13,137 13,766 11,768 (1)(2) 38,671
----------- -------- ------------ -----------
Total expenses ....................... 128,054 101,025 11,768 240,847
----------- -------- ------------ -----------
Operating income (loss) .............. 60,914 30,219 (11,768) 79,365
Interest income ...................... 4,414 246 (2,400)(3) 2,260
Interest expense ..................... (582) (6,111) (6,568)(4) (13,261)
Equity in net (loss) income from
equity investments .................. (905) (1,382) 2,163(5) (124)
Minority interest .................... 0 0 320(5) 320
Gain on sale of equity investment..... 1,245 1,108 0 2,353
----------- -------- -------------- -----------
Income (loss) before income taxes..... 65,086 24,080 (18,253) 70,913
Income tax expense (benefit) ......... 24,894 10,697 (2,812)(6) 32,779
----------- -------- -------------- -----------
Net income (loss) .................... $ 40,192 $ 13,383 $ (15,441) $ 38,134
=========== ======== ============== ===========
Basic earnings per share ............. $ 1.00 $ 0.76
Diluted earnings per share ........... $ 1.00 $ 0.76
Basic weighted average shares ........ 40,025,643 10,029,861 (7) 50,055,504
Diluted weighted average shares ...... 40,188,800 10,029,861 (7) 50,218,661
</TABLE>
See accompanying notes to unaudited pro forma financial statements.
25
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
Under the terms of the Penske Acquisition, each outstanding share of
Penske Motorsports common stock, other than shares held directly or indirectly
by International Speedway, was converted into the right to receive at the
election of each Penske Motorsports stockholder, subject to the transaction's
collar provision, (a) $15.00 in cash and $35.00 worth of International
Speedway's Class A common stock (30% cash and 70% stock) or (b) $50.00 worth of
International Speedway's Class A common stock.
The volume-weighted average price for International Speedway's Class A
common stock during the 20-day trading period ending two trading days before
the closing of the Penske Acquisition was $47.98 per share, which resulted in
an exchange ratio, pursuant to the Penske Acquisition agreement, of 1.042
shares of International Speedway's Class A common stock for each of the
12,222,477 shares of Penske Motorsports common stock converted in the Penske
Acquisition (total shares outstanding of 14,208,898 less treasury shares of
377,400 less 1,609,021 shares of Penske Motorsports common stock owned directly
or indirectly by International Speedway).
Of such 12,222,477 shares of Penske Motorsports common stock:
/bullet/ 8,655,402 shares were converted into 30% cash and 70% stock; and
/bullet/ 3,567,075 shares were converted entirely into stock.
Accordingly, based on the exchange ratio, International Speedway issued
10,029,861 shares of Class A common stock and paid approximately $129.8 million
in cash consideration in the Penske Acquisition.
The actual costs of the Penske Acquisition are as follows:
<TABLE>
<S> <C>
Cash consideration ............. $129,848
Stock consideration ............ 481,272
Transaction costs .............. 6,305
--------
Total acquisition cost ......... $617,425
========
</TABLE>
Under purchase accounting, Penske Motorsports' assets and liabilities are
required to be adjusted to their estimated fair values. The estimated fair
value adjustments have been determined by International Speedway based upon a
preliminary valuation and are subject to adjustments based on a final
valuation. These estimated fair values may not be the fair values that will
ultimately be determined. The following are the pro forma adjustments made to
reflect Penske Motorsports' estimated fair values assuming the Penske
Acquisition was completed on August 31, 1999:
<TABLE>
<S> <C> <C>
Net assets acquired ...................... $162,913
ADJUSTMENT
----------
Track assets ............................. $ 26,500
Intangibles--workforce ................... 900
Deferred taxes ........................... (10,412)
----------
16,988
Goodwill ................................. 431,219
Transaction costs ........................ 6,305
--------
Total acquisition cost ................... $617,425
========
</TABLE>
26
<PAGE>
- ----------------
(1) Amortization expense of $7,412 and $11,118 for the nine months ended August
31, 1999 and year ended November 30, 1998, respectively, representing
amortization of the excess purchase price over the fair value of the net
assets acquired (including transaction costs) of $437,524, over a period of
40 years and amortization of workforce intangibles of $900 over a period of
5 years.
(2) Depreciation expense of $433 and $650 for the nine months ended August 31,
1999, and the year ended November 30, 1998, respectively, representing
additional depreciation expense that would have been recorded if the
transaction had occurred as of the beginning of each period presented
assuming current fair value adjustments and an average depreciable life of
30 years.
(3) Interest income foregone on the cash paid for the accelerated vesting of
464,000 Penske Motorsports employee stock options and the cancellation of
those options in an amount equal to the excess of the cash/stock
consideration paid in connection with the Penske Acquisition over the per
share exercise price of the Penske Motorsports stock options of $11,200 in
cash, cash paid for a portion of the cash consideration of $35,100, and
cash paid of $1,700 for deferred financing costs at an assumed rate of 5%.
(4) Interest expense recorded on the long term debt to be borrowed for a
portion of the cash consideration of $101,051, (cash consideration
$129,848, transaction costs of $6,305 and cash paid $35,100) at a
borrowing rate of 6.5%, inclusive of the amortization of deferred
financing costs. A change in the interest rate of one-eighth of one
percent (0.125%) would change interest expense by $87 for the nine months
ended August 31, 1999 and $126 for the year ended November 30, 1999.
(5) To reflect the elimination of equity losses and record minority interest
for those investments in the pro forma statements of income for the nine
months ended August 31, 1999, and the year ended November 30, 1998.
(6) Reduction in income taxes as a result of pro forma adjustments, primarily
interest expense and non-deductible amortization of intangibles.
(7) Reflects our historical basic weighted average shares outstanding and
diluted weighted average shares outstanding plus the weighted average
shares outstanding of 10,029,861 for the year ended November 30, 1998 and
8,675,464 for the nine months ended August 31, 1999 related to the Penske
Acquisition.
27
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
We derive revenues primarily from (i) admissions to racing events and
motorsports activities held at our facilities, (ii) revenue generated in
conjunction with or as a result of motorsports events conducted at our
facilities, and (iii) catering, concession and merchandise made during or as a
result of such events and activities.
"Admissions" revenue includes ticket sales from all of our events and
DAYTONA USA's Track Tours and Velocitorium. Admissions revenue for racing
events is recorded upon completion of the related motorsports event.
"Motorsports related income" primarily includes television and radio
broadcast rights fees, promotion and sponsorship fees, hospitality rentals
(including luxury suites, chalets and the hospitality portion of club seating),
advertising revenues, royalties from licenses of the Company's trademarks, and
track rentals. We currently negotiate directly with television and cable
networks for coverage of substantially all of our televised motorsports events.
NASCAR has announced it will retain these rights and negotiate television and
ancillary media rights contracts beginning with the 2001 racing season as a
result of its recent agreement with all of the television broadcasters of these
events to release their contractual rights beginning with such racing season.
In November 1999, NASCAR announced that it had reached an agreement on a
six-year television contract with NBC Sports and Turner Sports, with the two
media companies combining to develop a joint venture. In addition, NASCAR
announced that it had reached an agreement on an eight-year television contract
with FOX and its FX cable network. Both agreements relate solely to the
domestic broadcast television rights to NASCAR's Winston Cup Series and Busch
Grand National Series events, and are effective beginning with the 2001 racing
season. The percentage of television broadcast rights fees that we currently
retain from each contract will be the same under the future arrangement. Our
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 merchandise income" includes revenues from concession
stands, hospitality catering and direct sales of souvenirs, programs and other
merchandise, fees paid by third party vendors for the right to sell souvenirs
and concessions at our facilities, and the wholesale and retail sale of Good
Year brand racing tires for various types of racing events.
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 promotion of our racing events, and (iii) food, beverage
and merchandise expenses, consisting primarily of labor and costs of goods
sold.
28
<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>
NINE MONTHS ENDED
AUGUST 31,
----------------------------
1998 1999
------------- ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Revenues:
Admissions, net ............................................... 43.8% 46.4%
Motorsports related income .................................... 40.3 37.5
Food, beverage and merchandise income ......................... 15.0 15.4
Other income .................................................. 0.9 0.7
----- -----
Total revenues ............................................... 100.0% 100.0%
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR sanction fees ......... 15.9 14.6
Motorsports related expenses ................................. 17.8 16.7
Food, beverage and merchandise expenses ...................... 8.4 8.2
General and administrative expenses ........................... 21.2 19.0
Depreciation and amortization ................................. 7.7 7.2
----- -----
Total expenses ............................................... 71.0 65.7
----- -----
Operating income (loss) ........................................ 29.0 34.3
Interest income ................................................ 2.1 3.5
Interest expense ............................................... (0.4) (1.3)
Equity in net loss from equity investments ..................... (0.1) (0.8)
Gain on sale of equity investment .............................. 1.0 --
Minority interest .............................................. -- 0.1
----- -----
Income (loss) before income taxes .............................. 31.6 35.8
Income tax expense (benefit) ................................... 12.1 13.9
----- -----
Net income (loss) .............................................. 19.5% 21.9%
</TABLE>
SEASONALITY AND QUARTERLY RESULTS
Our business has been, and is expected to remain, highly seasonal based on
the timing of major events. For example, one of Darlington Raceway's NASCAR
Winston Cup Series events is traditionally held on the Sunday preceding Labor
Day. Accordingly, the revenue and expenses for that race and/or the related
supporting events may be recognized in either the fiscal quarter ending August
31 or the fiscal quarter ending November 30. Further, in July 1998 we announced
the postponement of the NASCAR Winston Cup Series Pepsi 400 at Daytona from
July 4, 1998 to October 17, 1998 as a result of the nationally publicized
forest fire emergency throughout the state of Florida. This event, historically
conducted in our third fiscal quarter, was held in July in 1999.
On July 26, 1999, we acquired the 88% interest we did not already own in
Penske Motorsports. As a result of the transaction, we acquired Michigan
Speedway in Brooklyn, Michigan; Nazareth Speedway in Nazareth, Pennsylvania;
California Speedway in San Bernardino County, California; and
29
<PAGE>
North Carolina Speedway in Rockingham, North Carolina. We also acquired Penske
Motorsports' 45% interest in Homestead-Miami Speedway, LLC, bringing our
ownership in that facility to 90%, as well as other Penske Motorsports
merchandising subsidiaries. As a result of the acquisition, we now operate 10
major motorsports facilities across the United States with more than 800,000
seats and 400 suites (See "Acquisition"). We have recognized revenues and
expenses associated with acquired operations on a consolidated basis subsequent
to July 26, 1999, including a major event weekend consisting of a NASCAR
Winston Cup Series event and NASCAR Busch Series, Grand National Division event
conducted at the Michigan Speedway in August of 1999.
As a result of the prior year postponement of the Pepsi 400 at Daytona and
the Penske Acquisition, we held three Winston Cup Series races and two Busch
Series, Grand National Division races during the third quarter of 1999 compared
to one Winston Cup Series race and one Busch Series, Grand National Division
race during the third quarter of 1998. Accordingly, our results of operations,
as well as the margins of certain expenses in relation to certain revenues, are
not necessarily comparable on a period-to- period basis.
COMPARISON OF THE RESULTS FOR THE NINE MONTHS ENDED AUGUST 31, 1999 TO THE
RESULTS FOR THE NINE MONTHS ENDED AUGUST 31, 1998
Admissions revenue increased approximately $35.7 million, or 65.6%, for
the nine months ended August 31, 1999, as compared to the nine months ended
August 31, 1998. This increase was primarily attributable to the Pepsi 400 at
Daytona and the NASCAR events held at the newly acquired Michigan facility, as
well as the increase in the weighted average price of tickets sold and
increased seating capacity and attendance at the Speedweeks events held at
Daytona International Speedway, and, to a lesser extent, events conducted at
Talladega Superspeedway.
Motorsports related income increased approximately $22.7 million, or
45.3%, for the nine months ended August 31, 1999 as compared to the nine months
ended August 31, 1998. Over one-half of this increase was attributable to the
timing of the Pepsi 400 at Daytona and NASCAR events in Michigan, with the
remaining increase primarily attributable to growth in television broadcast
rights fees, expanded luxury suite and hospitality facilities and increased
sponsorship revenues for the Speedweeks events at Daytona and, to a lesser
extent, events at our other facilities.
Food, beverage and merchandise income increased approximately $11.2
million, or 60.3%, for the nine months ended August 31, 1999 as compared to the
nine months ended August 31, 1998. The majority of the increase was
attributable to the timing of the Pepsi 400 at Daytona, the merchandising
activities of certain subsidiaries acquired from Penske Motorsports, which
included sales of Goodyear brand racing tires, and fees paid by third party
vendors related to souvenir, concessions and catering operations for the
Michigan NASCAR events. The remaining increase was primarily attributable to
increased catering revenues from expanded luxury suite and hospitality
facilities at Daytona's Speedweeks events, and, to a lesser extent, increased
attendance and seating capacity for NASCAR events conducted at our other
facilities.
Prize and point fund monies and NASCAR sanction fees increased by
approximately $8.5 million, or 43.2%, for the nine months ended August 31,
1999, as compared to the same period of the prior year, primarily as a result
of the timing of the Pepsi 400 at Daytona and the Michigan NASCAR events. Over
three-quarters of the increase for the nine months ended August 31,1999 was due
to increased prize and point fund monies paid by NASCAR to participants in
NASCAR events. Growth in television broadcast rights fees contributed
significantly to these increases as standard NASCAR sanctioning agreements
require that a specified percentage of broadcast rights fees be paid as part of
prize money.
Motorsports related expenses increased approximately $10.3 million, or
46.7%, for the nine months ended August 31, 1999, as compared to the same
period of the prior year. The increase was primarily related to the timing of
operating expenses for the Pepsi 400 at Daytona and the Michigan
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NASCAR events. The remaining increase was primarily attributable to personnel
costs, hospitality services and supplies and a variety of other fan amenities
and operating expenses for Daytona's Speedweeks events and, to a lesser extent,
events conducted at our other facilities.
Food, beverage and merchandise expenses increased approximately $5.6
million, or 53.9%, for the nine months ended August 31, 1999, as compared to
the same period of the prior year primarily due to increased product and
personnel costs associated with increased revenues. The increases are primarily
attributable to costs associated with the sale of Goodyear brand racing tires
and the timing of costs associated with the Pepsi 400 at Daytona.
General and administrative expenses increased approximately $10.4 million,
or 39.6%, for the nine months ended August 31, 1999 as compared to the same
period of the prior year. During the three months ended August 31,1999, we
recorded a charge of approximately $2.8 million related to the cash portion of
a proposed settlement in the Americrown souvenir litigation. Over one-half of
the increase was related to the proposed settlement and general and
administrative expenses associated with the operations acquired from Penske
Motorsports and the consolidation of Homestead-Miami. The remaining increase in
expenses was primarily attributable to personnel costs and a variety of other
expenses, as well as a bad debt reserve primarily related to a single customer
incurred during the first quarter of fiscal 1999.
Depreciation and amortization expense increased approximately $4.3
million, or 45.3%, for the nine months ended August 31, 1999, as compared to
the same period of the prior year. The depreciation of assets acquired and
amortization of goodwill recorded as a result of the Penske Acquisition
accounted for approximately one-half of the increase. The remaining increase
was a result of the ongoing expansion of our facilities.
Interest income for the nine months ended August 31, 1999 increased by
approximately $4.3 million, as compared to the same period of the prior year.
This increase was primarily due to the investment of the remaining proceeds of
our July 1998 Class A Common Stock Offering, including our investments
restricted to the funding of the speedway in Kansas, and investment of the
proceeds from the sale of taxable special obligation revenue ("TIF") bonds
issued in January 1999 by the Unified Government of Wyandotte County/Kansas
City, Kansas, to partially fund the Kansas project (See "Future Liquidity").
Interest expense for the nine months ended August 31, 1999 increased by
approximately $2.0 million, as compared to the same period of the prior year.
Interest expense in fiscal 1999 consists primarily of the interest on $176
million borrowed under our senior credit facility (See "Acquisition" and
"Future Liquidity"), incurred during the three months ended August 31, 1999,
and interest expense on the TIF bond debt service funding commitment, net of
capitalized interest. Interest expense in fiscal 1998 was primarily related to
the note payable associated with the acquisition of our Phoenix facility.
Equity in net income (loss) from equity investments represents our pro
rata share of the current income and losses from our equity investments and the
amortization of our investment in excess of its share of the investee's
underlying net assets. During the nine months ended August 31, 1999, this
included our approximately 12% indirect investment in Penske Motorsports, our
45% investment in Homestead-Miami Speedway through July 26, 1999, and our 50%
investment in Motorsports Alliance, LLC, which is pursuing development of a
major motorsports facility in the Chicago area (See "Future Liquidity"). For
the nine months ended August 31, 1998, this included our approximately 11%
indirect investment in Penske Motorsports, our 40% investment in
Homestead-Miami, which increased to 45% in March of 1998, and our 7% investment
in Grand Prix Association of Long Beach, which was sold in March of 1998.
In March of 1998 we recorded an approximately $1.2 million gain on the
sale of our equity investment in Long Beach. We sold our investment in
conjunction with Dover Downs Entertainment, Inc.'s announced plans to merge
with Long Beach. The after tax impact of this transaction was approximately
$850,000.
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Income taxes increased $12.1 million for the nine months ended August 31,
1999. Our effective tax rate has, and is expected to continue to, increase
compared to its historical levels primarily due to the amortization of
non-deductible goodwill created in the Penske Acquisition.
As a result of the foregoing, our net income increased approximately $18.2
million, or 74.9%, for the nine months ended August 31, 1999 as compared to the
same period in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
We have historically generated sufficient cash flow from operations to
fund our working capital needs and capital expenditures at existing facilities,
as well as to pay an annual cash dividend. In addition, we have used the
proceeds from offerings of our Class A Common Stock and, most recently,
borrowings available under our Credit Facility to fund development projects and
acquisitions. We had borrowings of $176 million on our new $300 million credit
facility and a working capital deficit of $43.0 million at August 31, 1999,
compared to working capital of $27.5 million at November 30, 1998, primarily
due to the Penske Acquisition. See "Acquisition" and "Future Liquidity".
CASH FLOWS
Net cash provided by operating activities was approximately $68.6 million
for the nine months ended August 31, 1999, compared to $56.3 million for the
nine months ended August 31, 1998. The difference between our net income of
$42.4 million and the $68.6 million of operating cash flow was primarily
attributable to depreciation and amortization of $13.9 million, an increase in
deferred revenue of $12.4 million, and an increase in deferred income taxes of
$5.1 million, partially offset by an increase in accounts receivable of $6.0
million.
Net cash used in investing activities was $209.8 million for the nine
months ended August 31, 1999, compared to $17.1 million for the nine months
ended August 31, 1998. Our use of cash for investing activities reflects $134.3
million for the cash portion of the purchase price of Penske Motorsports, $75.4
million in capital expenditures, the $42.7 million net increase in restricted
investments for the project in Kansas and $11.0 million for our investment year
to date in the Chicago project, partially offset by the net proceeds from the
sale of short-term investments of $53.9 million. See "Capital Expenditures".
Net cash provided by financing activities of $161.6 million for the nine
months ended August 31, 1999, compared to $102.1 million for the nine months
ended August 31, 1998, is related primarily to net proceeds from borrowings
under our new $300 million five-year revolving credit facility (See
"Acquisition") and the issuance of the TIF bonds, partially offset by the
payment of a portion of the long-term debt acquired in the Penske Acquisition.
CAPITAL EXPENDITURES
Capital expenditures totaled approximately $75.4 million for the nine
months ended August 31, 1999 as compared to $37.7 million for the nine months
ended August 31, 1998. Almost two-thirds of these expenditures were related to
expenditures at our existing facilities, including increased seating capacity
at Daytona, Talladega, Phoenix, Darlington, Michigan and Miami, land purchased
for expansion of parking capacity and a variety of other improvements to our
facilities. The remaining capital expenditures were primarily related to the
construction of the speedway in Kansas.
We expect to make approximately $66 million of additional capital
expenditures for approved projects at existing facilities within the next 24
months to increase grandstand seating capacity, acquire land for expansion of
parking capacity, construct luxury suites and for a variety of additional
improvements to our motorsports facilities. We also expect to spend an
additional $10.1 million for 36
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additional luxury suites at the Kansas speedway, which is currently under
construction. The balance of our capital expenditures related to the
construction of the Kansas facility will be funded from restricted investments,
as discussed below.
ACQUISITION
On July 26, 1999, we consummated the Penske Acquisition, pursuant to which
we acquired the approximately 88%, or 12.2 million outstanding common shares,
of Penske Motorsports stock that we did not already own for approximately
$129.8 million and 10,029,861 shares of our Class A Common Stock. Transaction
costs, net of cash acquired in the transaction, totaled approximately $4.5
million. The total cash and stock consideration issued in the transaction was
approximately $611.1 million.
The acquisition has been accounted for under the purchase method of
accounting and, accordingly, the results of operations of the former Penske
Motorsports, as well as Homestead-Miami, have been included in our consolidated
statements of income since the date of acquisition.
The transaction purchase price has been allocated to the assets and
liabilities of Penske Motorsports and Homestead-Miami based upon preliminary
estimates of their fair market value. We do not believe the final valuation
will differ materially from the preliminary valuation. The excess of the
purchase price over the fair value of the net assets acquired of approximately
$105.9, has been allocated, based upon the preliminary valuation, as goodwill
of approximately $508.8 million and assembled workforce of approximately
$900,000 amortized on a straight line basis over 40 years and five years,
respectively. The amount amortized during the three months and six months ended
August 31, 1999 was approximately $1.1 million.
We financed a portion of the Penske Acquisition and refinanced Penske
Motorsports' outstanding indebtedness through our senior credit facility
syndicated to a select group of lenders. This credit facility replaced our
existing $100 million facility. Borrowings under the new credit facility bear
interest at the applicable LIBOR rate plus 50-100 basis points depending on
certain financial criteria. At August 31, 1999, our outstanding borrowings on
this credit facility were $176 million. In addition, at August 31, 1999, we had
a $20 million credit facility, with outstanding borrowings of $4.5 million, and
a $30 million term loan outstanding which are both collateralized by the assets
of our Miami subsidiary.
RECENT DEVELOPMENTS
On December 1, 1999, we acquired RIR, a 3/4-mile intermediate speedway
located approximately 10 miles from downtown Richmond, Virginia, for
approximately $215 million in cash. RIR seats over 94,000 grandstand spectators
and offers luxury accommodations in its 34 suites. RIR hosts several major
NASCAR events annually, including two NASCAR Winston Cup Series events, two
NASCAR Busch Grand National Series events and one NASCAR Craftsman Truck Series
event. We financed the acquisition through approximately $160 million in
borrowings under our senior credit facility. We utilized our cash resources for
the remaining $55 million.
FUTURE LIQUIDITY
On October 6, 1999, we sold $225 million principal amount of the notes in
a private placement. We used approximately $176 million of the net proceeds
from the transaction to repay the outstanding borrowings under senior credit
facility. We used a portion of the remaining net proceeds of approximately $47
million to partially fund our recent acquisition of RIR and we intend to use
the balance to partially fund the completion of certain additions and
improvements to our motorsports facilities and for working capital and other
general corporate purposes. Pending such uses, we intend to invest the
remaining proceeds in money market funds or other interest-bearing obligations.
Pursuant to the senior credit facility agreement, the size of the new credit
facility automatically reduced from $300 million to $200 million upon our
receipt of the proceeds from the sale of the notes. We recently increased the
maximum availability under our senior credit facility to $250 million from $200
million.
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<PAGE>
During the first quarter of 1999, the financing for the first phase of the
development of the Kansas facility, which is currently estimated to cost in
excess of $224 million, was substantially completed. In January 1999, the
Unified Government of Wyandotte County/Kansas City, Kansas issued approximately
$71.3 million in TIF bonds and approximately $24.3 million in sales tax special
obligation revenue ("STAR") bonds. The STAR bonds are retired with state and
local taxes generated within the project's boundaries, and are not an
obligation of ours. The TIF bonds will be serviced through payments by the
Unified Government escalating from an annual rate of approximately $4.8 million
to $7.7 million, including interest at 6.15% to 6.75%, which are funded by
payments made by us to the Unified Government in lieu of property taxes. In
addition, we have committed equity of approximately $77.9 million of which
$24.4 was funded during fiscal 1998, with the remaining $53.5 million funded in
the first quarter of fiscal 1999. The net TIF and STAR bond proceeds and our
equity contribution were deposited into trustee administered accounts for the
benefit of the construction of the Kansas facility which will be owned and
operated by us. At August 31, 1999, our $96.2 million of restricted investments
includes the funds remaining from our equity contribution and the TIF bond
proceeds.
On May 5, 1999, the Motorsports Alliance, LLC (owned 50% by us and 50% by
Indianapolis Motor Speedway) and the owners of Route 66 Raceway, LLC, formed a
new company, Raceway Associates, LLC, which is owned 75% by the Motorsports
Alliance and 25% by the former owners of the Route 66 Raceway. As a result of
this transaction, Raceway Associates owns the 240 acre Route 66 Raceway
motorsports complex located in Joliet, Illinois, approximately 35 miles from
downtown Chicago. Raceway Associates has also purchased 930 acres adjacent to
the existing Route 66 complex for the proposed construction of a 1.5 mile oval
motor speedway, which will initially accommodate approximately 75,000
spectators. The current estimate for the proposed new superspeedway development
is $125 to $130 million, $100 million of which will be financed through equity
of approximately $50 million from the Motorsports Alliance and a borrowing of
approximately $50 million by Raceway Associates. The members of the Motorsports
Alliance will guarantee up to $50 million in borrowings of Raceway Associates
on a pro rata basis until such time as the operations of Raceway Associates
meet certain financial criteria. Raceway Associates, working with local
government authorities, recently negotiated a funding mechanism to partially
fund anticipated project costs in excess of $100 million. In addition, we the
Company (through the Motorsports Alliance) may commit additional equity to fund
a portion of these additional project costs. During the nine months ended
August 31, 1999, we contributed approximately $11 million to the Motorsports
Alliance, approximately $9 million of which has been applied towards the
Company's portion of the capital commitment for the acquisition of land and
development of the new facility.
We believe that cash flow from operations, along with existing cash and
short-term investment balances and available borrowings under our credit
facilities, will be sufficient to fund i) operations and approved capital
projects at existing facilities for the foreseeable future, ii) payments
required in connection with the funding of the Unified Government's debt
service requirements related to the TIF bonds described above prior to
commencement of racing at the Speedway in Kansas, iii) payments related to
other currently existing debt service requirements, and iv) our expected equity
funding requirements for the Chicago project. We intend to pursue further
developments and/or acquisition opportunities (including the possible
development of new motorsports facilities in Denver and the New York
metropolitan area) the timing, size and success as well as associated potential
capital commitments of which are unpredictable. Accordingly, a material
acceleration in our growth strategy could require us to obtain additional
capital through debt and/or equity financings. Although there can be no
assurance, we believe that adequate debt or equity financing will be available
on satisfactory terms.
INFLATION
We do not believe that inflation has had a material impact on our
operating costs and earnings.
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DESCRIPTION OF THE SENIOR CREDIT FACILITY
Our senior credit facility provides for borrowings of up to $250.0
million, which may be used for our working capital and general corporate
purposes. We currently have borrowings outstanding under the senior credit
facility of approximately $160.0 million principal amount, all of which we
incurred in connection with our acquisition of RIR. The senior credit facility
matures on March 31, 2004, and accrues interest monthly at LIBOR plus 50 to 100
basis points. Each of our subsidiaries that is a guarantor of our obligations
under the notes is currently a guarantor of our obligations under the senior
credit facility. Should any subsidiary guarantor of the senior credit facility
be unconditionally released from its guarantee in respect thereof then that
subsidiary will be released from its guarantee of the notes upon written
request by us to the trustee. Furthermore, should any subsidiary of ours which
is not already a guarantor becomes a guarantor of our obligations under the
senior credit facility, we will cause that subsidiary to enter into a
supplemental indenture to the indenture pursuant to which that subsidiary shall
become a guarantor of our obligations under the notes. The senior credit
facility requires that we meet certain financial tests which include a maximum
leverage ratio and an interest coverage ratio. The senior credit facility also
contains covenants which, among other things, restrict our ability, subject to
certain exceptions, to do the following:
/bullet/ incur additional indebtedness;
/bullet/ incur liens;
/bullet/ make loans and investments;
/bullet/ engage in mergers, acquisitions, consolidations and asset
dispositions;
/bullet/ acquire assets, stock or debt securities of any person; and
/bullet/ engage in transactions with affiliates.
The senior credit facility also requires that we satisfy certain customary
affirmative covenants and make certain customary indemnifications to our
lenders and the administrative agent.
The senior credit facility contains customary events of default, including
without limitation, payment defaults, breaches of representations and
warranties, covenant defaults, certain events of bankruptcy and insolvency,
judgment defaults, cross-defaults to certain other indebtedness and a change of
control.
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MOTORSPORTS INDUSTRY OVERVIEW
The motorsports industry consists of several distinct categories of auto
racing, each with its own organizing body and sanctioned racing events. The
Federation Internationale de l'Automobile, or FIA, based in Paris, France, is
the worldwide governing body for auto racing, with "national sporting
authority" members in more than 100 countries. The FIA's U.S. national sporting
authority is the Automobile Competition Committee of the United States, which
in turn is made up of the following seven member sanctioning organizations:
<TABLE>
<S> <C>
NASCAR ......... National Association for Stock Car Auto Racing
CART ........... Championship Auto Racing Teams
USAC ........... United States Auto Club
NHRA ........... National Hot Rod Association
SCCA ........... Sports Car Club of America
IRL ............ Indy Racing League
PSCR ........... Professional Sports Car Racing
</TABLE>
The Winston Cup, Busch Grand National and Craftsman Truck series events
sanctioned by NASCAR and open-wheel events sanctioned by CART and IRL are
generally the most well-attended motorsports events in the United States. We
derived approximately 72% of our pro forma 1998 revenues from NASCAR-sanctioned
racing events at our facilities, and approximately 10% from CART-sanctioned
events.
ECONOMICS OF AUTO RACING
Motorsports events generally are heavily promoted, with a number of
supporting events surrounding each main race event. Examples of supporting
events include secondary races, qualifying time trials, driver autograph
sessions, automobile and product expositions, catered parties and other related
events which are all designed to maximize the spectators' entertainment
experience and enhance the value to sponsors. The primary participants in the
business of auto racing are the sanctioning bodies, spectators, sponsors, track
operators, drivers, team owners and vendors of officially licensed merchandise.
/bullet/ SANCTIONING BODIES. Sanctioning bodies such as NASCAR and CART
sanction events at various race venues in exchange for fees from track
operators. Sanctioning bodies are responsible for all aspects of race
management necessary to conduct the race event. They are responsible for
regulating racing cars, drivers and teams and providing race officials to
ensure fair competition, as well as administering the race and series' purses
and other prize payments.
/bullet/ SPECTATORS. After soccer, motorsports is the most watched sport
worldwide. Motorsports is among the fastest growing spectator sports in the
United States. Total attendance at all motorsports events in the United States
in 1998 exceeded 17.0 million people. We believe that the demographic profile
of the growing base of spectators has considerable appeal to track operators,
sponsors and advertisers.
/bullet/ SPONSORS. Drawn to the sport by its attractive demographics,
sponsors are active in all phases of auto 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 "Kmart 400." 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.
/bullet/ TRACK OPERATORS. Track operators such as International Speedway
market and promote events at their facilities. Their principal revenue sources
generally include admissions, television and radio
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broadcast rights fees, sponsorship fees, the sale of merchandise, food and
beverage concessions, hospitality fees paid for catering receptions and private
parties, luxury suite and hospitality village rentals, parking, and 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 and championship
point money.
/bullet/ DRIVERS. Although a majority of drivers contract independently
with team owners, some 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 and souvenir
licensing fees. 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 vendors of officially licensed merchandise
such as International Speedway. The efforts of each driver are supported by a
number of other team members, all of whom are supervised by a crew chief.
/bullet/ TEAM OWNERS. In most instances, team owners bear the financial
risk of placing their teams in competition. They contract with drivers, acquire
racing vehicles and support equipment, hire pit crews and mechanics, and
arrange sponsorship of their teams. Team owners generally receive income
principally from sponsorships and prize money won.
/bullet/ MERCHANDISE VENDORS. The growing popularity of motorsports
events, combined with the demographics of the spectators, has resulted in
substantial revenue growth for vendors of officially licensed racing-related
merchandise and souvenirs. For example, sales of apparel, souvenirs and
collectibles licensed by NASCAR and by drivers have climbed from approximately
$80 million in 1990 to approximately $950 million in 1998.
NASCAR
The largest auto racing category in the United States, in terms of
attendance, media exposure and sponsorships, is stock car racing. Stock car
racing utilizes equipment similar in appearance to standard passenger
automobiles and races are typically conducted on oval courses or
superspeedways. The most prominent organizing body in stock car racing is
NASCAR.
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 our Chairman and President) organized NASCAR. The first
NASCAR-sanctioned race was held in 1948 in Daytona Beach, Florida. In 1959, we
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. This premier series is now
known as the Winston Cup Series and in 1999 consisted of 37 televised events,
including three non-championship point events, at 21 tracks operating in 17
states. No track currently promotes more than two Winston Cup Series
championship point events. The following table shows the 1999 Winston Cup
Series schedule (events held at facilities operated by us are noted in bold).
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1999 WINSTON CUP SERIES
<TABLE>
<CAPTION>
DATE RACE TRACK LOCATION
- -------------- -------------------------------------------- -------------------------------------
<S> <C> <C>
FEBRUARY 7 BUD SHOOTOUT AT DAYTONA* DAYTONA INTERNATIONAL SPEEDWAY
FEBRUARY 11 GATORADE 125S* DAYTONA INTERNATIONAL SPEEDWAY
FEBRUARY 14 DAYTONA 500 DAYTONA INTERNATIONAL SPEEDWAY
FEBRUARY 21 DURA-LUBE/BIG KMART 400 NORTH CAROLINA SPEEDWAY
March 7 Las Vegas 400 Las Vegas Motor Speedway
March 14 Cracker Barrel 500 Atlanta Motor Speedway
MARCH 21 TRANSOUTH FINANCIAL 400 DARLINGTON RACEWAY
March 28 PRIMESTAR 500 Texas Motor Speedway
April 11 Food City 500 Bristol Motor Speedway
April 18 Goody's Body Pain 500 Martinsville Speedway
APRIL 25 DIEHARD 500 TALLADEGA SUPERSPEEDWAY
MAY 2 CALIFORNIA 500 PRESENTED BY NAPA CALIFORNIA SPEEDWAY
May 15 Pontiac Excitement 400 Richmond International Raceway
May 22 The Winston* Charlotte Motor Speedway
May 30 Coca Cola 600 Charlotte Motor Speedway
June 6 MBNA Platinum 400 Dover Downs International Speedway
JUNE 13 KMART 400 PRESENTED BY CASTROL SUPER CLEAN MICHIGAN SPEEDWAY
June 20 Pocono 500 Pocono Raceway
June 27 Save Mart/Kragen 350 Sears Point Raceway
JULY 3 PEPSI 400 AT DAYTONA DAYTONA INTERNATIONAL SPEEDWAY
July 11 Jiffy Lube 300 New Hampshire International Speedway
July 25 Pennsylvania 500 Pocono Raceway
August 7 Brickyard 400 Indianapolis Motor Speedway
AUGUST 15 FRONTIER AT THE GLEN WATKINS GLEN INTERNATIONAL
AUGUST 22 PEPSI 400 MICHIGAN SPEEDWAY
August 28 Goody's Headache Powder 500 Bristol Motor Speedway
SEPTEMBER 5 PEPSI SOUTHERN 500 DARLINGTON RACEWAY
September 11 Exide NASCAR Select Batteries 400 Richmond International Raceway
September 19 New Hampshire 300 New Hampshire International Speedway
September 26 MBNA Gold 400 Dover Downs International Speedway
October 3 NAPA AutoCar 500 Martinsville Speedway
October 10 UAW-GM Quality 500 Charlotte Motor Speedway
OCTOBER 17 WINSTON 500 TALLADEGA SUPERSPEEDWAY
OCTOBER 24 POP SECRET MICROWAVE POPCORN 400 NORTH CAROLINA SPEEDWAY
NOVEMBER 7 CHECKER AUTO PARTS/DURA-LUBE 500 PHOENIX INTERNATIONAL RACEWAY
NOVEMBER 14 PENNZOIL 400 HOMESTEAD-MIAMI SPEEDWAY
November 21 NAPA 500 Atlanta Motor Speedway
</TABLE>
- ----------------
* Non-championship point events.
NASCAR also sanctions various other stock car racing events and series,
including the Busch Grand National Series and the Craftsman Truck Series. In
1999, 32 Busch Grand National Series events were promoted at 26 tracks in 20
states. Many track operators, including International Speedway, host a Busch
Grand National or Craftsman Truck Series event in conjunction with a Winston
Cup Series event in order to boost overall attendance for a race weekend. We
had sanctioning agreements for 12 Busch Grand National Series events in 1999,
all of which were televised on NBC, CBS, ABC, ESPN, ESPN2 or TNN. In 1999, 25
Craftsman Truck Series events were promoted at 24 tracks in 20 states. We had
sanctioning agreements for six Craftsman Truck Series races in 1999, all of
which were televised on ABC, CBS or ESPN.
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CART/IRL
Internationally, the most recognized form of auto racing is open-wheel
racing, using aerodynamically designed chassis and technologically advanced
equipment. In the United States, the most established open-wheel racing series
are the series sanctioned by CART and IRL.
CART, formed by Indy team owners in 1978, owns, operates and sanctions the
FedEx CART Championship, which in 1999 consisted of 20 races staged in five
countries. CART events are staged on four different types of
tracks--superspeedways, ovals, temporary street courses and permanent road
courses. Racing on different types of tracks requires teams and drivers to
master different courses to compete for the CART Championship. CART also owns
and sanctions two developmental series for the CART Championship--the Indy
Lights Championship and the Atlantic Championship.
In 1999, we promoted a number of CART PPG Dayton Indy Lights races, as
well as the following four CART FedEx Championship races:
/bullet/ Marlboro Grand Prix of Miami, presented by Toyota at
Homestead-Miami Speedway;
/bullet/ Bosch Spark Plug Grand Prix, presented by Toyota at Nazareth
Speedway;
/bullet/ US 500, presented by Toyota at Michigan Speedway; and
/bullet/ Marlboro 500, presented by Toyota at California Speedway.
The IRL was formed in 1995 to sanction a United States based open wheel
series on oval courses and began racing in 1996. The IRL's events include 11
races, including the Indianapolis 500, one of the world's most-prestigious
motorsports events. In fiscal 1999, we promoted the MCI Worldcom 200, an IRL
race at Phoenix International Raceway.
OTHER SANCTIONING BODIES
Although NASCAR is the most prominent sanctioning body, there are a number
of organizations that sanction stock car races, including ARCA--the Automobile
Racing Club of America. In 1999, we promoted three ARCA races. We also promoted
three of the four races in the International Race of Champions ("IROC") series,
in which a select field of drivers from different motorsports disciplines
compete in equally prepared vehicles. Other examples of motorsports events and
their sanctioning bodies include:
/bullet/ Formula One open-wheel races held on road courses in Europe, South
America, Canada, Australia, South Africa and Japan sanctioned by
the FIA;
/bullet/ sports car races held on road courses and temporary street
circuits throughout the country sanctioned in the United States by
SCCA;
/bullet/ motorcycle races sanctioned by the American Motorcyclists
Association;
/bullet/ drag strip races sanctioned in the United States by NHRA; and
/bullet/ go-kart races sanctioned by the World Karting Association.
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<PAGE>
BUSINESS
International Speedway, a leading promoter of motorsports activities in
the United States, owns and/or operates ten of the nation's premier motorsports
facilities:
/bullet/ Daytona International Speedway in Florida;
/bullet/ Michigan Speedway in Michigan;
/bullet/ Talladega Superspeedway in Alabama;
/bullet/ California Speedway in California;
/bullet/ Phoenix International Raceway in Arizona;
/bullet/ North Carolina Speedway in North Carolina;
/bullet/ Darlington Raceway in South Carolina;
/bullet/ Homestead-Miami Speedway in Florida;
/bullet/ Nazareth Speedway in Pennsylvania; and
/bullet/ Watkins Glen International road course facility in New York.
We currently promote over 100 stock car, sports car, truck, motorcycle and
other racing events annually, including:
/bullet/ 16 NASCAR Winston Cup Series events;
/bullet/ 12 NASCAR Busch Grand National Series events;
/bullet/ 6 NASCAR Craftsman Truck Series events;
/bullet/ 4 CART FedEx Championship Series events;
/bullet/ the premier sports car endurance event in the United States (the
Rolex 24 at Daytona/registered trademark/); and
/bullet/ a number of prestigious motorcycle races.
Our operations consist principally of racing events at our ten premier
motorsports facilities, which generate revenue primarily through sales of
admissions to our racing events, television broadcast rights fees, sponsorship
fees, hospitality rentals (including luxury suites, chalets and the hospitality
portion of club seating) and royalties from licenses of our trademarks. We also
provide catering, souvenir and food concession services at certain of our
facilities, distribute and sell Goodyear brand racing tires, own and operate
MRN Radio and the DAYTONA USA entertainment complex and produce and market
collectibles and other motorsports merchandise.
We have experienced significant growth in recent years, with our revenues
and EBITDA increasing from approximately $68.9 million and approximately $25.9
million, respectively, in the year ended August 31, 1994 to approximately
$189.0 million and approximately $74.1 million, respectively, in the year ended
November 30, 1998. Our EBITDA margin increased from 37.5% in fiscal 1994 to
39.2% in fiscal 1998. Combined television rights revenues of International
Speedway and Penske Motorsports (exclusive of Homestead-Miami Speedway) have
increased from approximately $7.5 million in fiscal 1995 to approximately $34.7
million in fiscal 1998 on a pro forma basis. On a pro
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forma basis giving effect to our Penske Acquisition, during the year ended
November 30, 1998 we had revenues and EBITDA of approximately $320.2 million
and $118.0 million, respectively.
RECENT DEVELOPMENTS
On December 1, 1999, we acquired RIR, a 3/4-mile intermediate speedway
located approximately 10 miles from downtown Richmond, Virginia, for
approximately $215 million in cash. RIR seats over 94,000 grandstand spectators
and offers luxury accommodations in its 34 suites. RIR hosts several major
NASCAR events annually, including two NASCAR Winston Cup Series events, two
NASCAR Busch Grand National Series events and one NASCAR Craftsman Truck Series
event. We financed the acquisition through approximately $160 million in
borrowings under our senior credit facility. We utilized our cash resources for
the remaining $55 million.
STRATEGY
Our objective is to be the recognized leader in motorsports entertainment
by continuing to emphasize the following key elements of our strategy:
/bullet/ PROMOTE PREMIER MOTORSPORTS EVENTS. We plan our racing events and
operate our facilities to create an environment which maximizes the spectators'
entertainment experience. The most important component of our fan satisfaction
efforts is our emphasis on hosting some of the nation's most prestigious auto
races, which in 1999 included 16 NASCAR Winston Cup Series races, 12 Busch
Grand National Series races, six Craftsman Truck Series races and four CART
FedEx Championship Series races. Moreover, we frequently host a supporting
motorsports event in conjunction with our premier events in order to boost
overall attendance for a race weekend. For example, we host the Winn Dixie 300,
an ARCA-sanctioned race, on the Saturday preceding the Winston 500, which is a
Winston Cup event.
As part of our emphasis on enhancing race spectators' total entertainment
experience, we also continually strive to increase the comfort, view and
amenities offered to race spectators. We have in recent years engaged in a
series of facility improvements, including new luxury suites, Jumbotron
television screens, premium seating sections, innovative corporate
entertainment facilities and a number of aesthetic and other improvements to
food and beverage concession, restroom and other customer convenience
facilities.
In addition, we seek to develop and maintain a unique brand identity for
each of our motorsports facilities, as well as a distinctive environment for
each of our premier races. We attempt to differentiate our 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.
/bullet/ INCREASE ADMISSIONS REVENUE. We believe that the spectator demand
for our largest events continues to exceed existing seating capacity.
Accordingly, we continue to add grandstand seating at each of our
superspeedways. During 1998, we increased our grandstand seating capacity at
Daytona, Talladega, Phoenix, Darlington and Watkins Glen by a total of
approximately 41,800 seats, or approximately 11% overall. Similarly, in 1998,
Penske Motorsports increased seating capacity at Michigan, California and North
Carolina by a total of approximately 30,800 seats, or approximately 11%
overall. In the long term, we intend to continue to expand our facilities based
upon customer demand and available capital. For example, in 1999 we added
approximately 26,000 grandstand seats at Homestead-Miami, approximately 14,500
seats at Daytona, approximately 13,500 grandstand seats at Michigan Speedway,
approximately 12,500 seats at Talladega, approximately 6,000 seats at Phoenix,
and approximately 4,500 seats at Darlington.
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Although spectator demand for most of our NASCAR Winston Cup Series events
continues to exceed existing capacity, there is unused capacity for certain
events which provides opportunities for increased utilization. For example,
attendance at the NASCAR Winston Cup Series event at Talladega, historically
held in the summer, was below capacity. As a result of NASCAR's schedule
expansion in 1997, we 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, our completion in fiscal 1998 of a $5.8
million lighting project at Daytona enabled us to hold the Pepsi 400 at night,
thereby increasing ticket sales for that race, providing a prime time
television audience and increasing attendance at both the qualifying events and
our DAYTONA USA facility. We believe that the significant increase in our
portfolio of premier motorsports events as a result of our recent Penske
Acquisition will permit us to take advantage of comparable opportunities to
more efficiently schedule races and thereby maximize attendance. Other elements
of our efforts to increase our admissions revenue include periodic ticket price
increases, substantial advance ticket sales and the sale of multi-event ticket
packages.
/bullet/ MAXIMIZE MEDIA INCOME. Televised motorsports events are
continuing to experience significant growth in viewership. CBS's live coverage
of the Pepsi 400 at Daytona on July 3, 1999 marked the first prime time network
television broadcast of a NASCAR Winston Cup Series event. According to
Nielsen, an estimated 5.4 million households tuned to CBS, a 57% increase over
TNN's broadcast of last year's race. NASCAR Winston Cup Series television
rights revenues have grown at a compounded annual rate of 40% from $4.7 million
in 1990 to $69.5 million in 1998 and are expected to continue to grow. 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. For example, the $12.0 million
CBS broadcast rights for the 1998 Daytona 500 represented the most lucrative
television contract in the history of stock car racing at that time. We have
also expanded our television coverage to include more races, and in 1999 all of
our NASCAR Winston Cup Series, Busch Grand National Series and Craftsman Truck
Series races were televised. Moreover, in 1999 NBC joined the six existing
networks carrying NASCAR races with its first live coverage of a NASCAR event -
the 1999 Pennzoil 400 at the Homestead-Miami Speedway. As a result of the
higher broadcast rights fees and expanded coverage, combined television rights
revenues of International Speedway and Penske Motorsports (exclusive of
Homestead-Miami Speedway) have increased, on a pro forma basis, from
approximately $7.5 million in fiscal 1995 to $34.7 million in fiscal 1998.
We currently negotiate directly with network and cable television
companies for live and rebroadcast coverage of all of our televised
NASCAR-sanctioned races except for the Craftsman Truck Series events, which are
negotiated by NASCAR. However, NASCAR has announced that it will handle
negotiation of television and ancillary media rights for all NASCAR Winston Cup
and Busch Grand National series races beginning with the 2001 racing season as
a result of its recent agreement with all of the television broadcasters of
these events to release their contractual rights beginning with such racing
season. In November 1999, NASCAR announced that it had reached an agreement on
a six-year television contract with NBC Sports and Turner Sports, with the two
media companies combining to develop a joint venture. In addition, NASCAR
announced that it had reached an agreement on an eight-year television contract
with FOX and its FX cable network. Both agreements relate solely to the
domestic broadcast television rights to NASCAR's Winston Cup Series and Busch
Grand National Series events, and are effective beginning with the 2001 racing
season. The existing NASCAR revenue-splitting formula will not change - 65% for
the track operator, 25% for the drivers/teams in the form of prize and point
fund monies and 10% for NASCAR. We believe that NASCAR's ability to negotiate
for the entire schedule of major NASCAR sanctioned events will provide a
significant opportunity to further increase broadcast rights fees.
/bullet/ EMPHASIZE INTEGRATED MARKETING PARTNERSHIPS. Corporate sponsors
support us in several ways. First, sponsors pay fees to us for the value
received in being associated with our facilities and/or events. 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
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designation to advertising and promotional rights in the sponsor's product
category. Sponsors also lease suites and hospitality tents, purchase additional
tickets for their promotions and buy on-site advertising. Second, the
promotional and advertising expenditures of major sponsors provide us with
access to the significant market capabilities of these leading consumer
products and manufacturing companies without the need to invest heavily in our
own marketing infrastructure or programs. Third, our sponsors frequently
advertise on the television broadcasts of our races, thereby contributing to
the increased rights fees we receive from networks and cable companies.
Accordingly, we pursue a fully integrated marketing strategy which combines
on-track corporate involvement, such as hospitality and signage, with off-track
promotional campaigns such as in-store displays, retailer incentives and
consumer promotions. Although the identities of sponsors and the terms of
sponsorships change from time to time, some of our principal sponsors currently
include:
<TABLE>
<S> <C> <C>
/bullet/ Pepsi /bullet/ Pontiac /bullet/ Goodyear
/bullet/ Coca-Cola /bullet/ Ford /bullet/ TranSouth Financial
/bullet/ Kmart /bullet/ Chevrolet /bullet/ First Union
/bullet/ Sears /bullet/ Toyota /bullet/ NAPA Auto Parts
/bullet/ General Mills /bullet/ Dura-Lube /bullet/ Bosch
/bullet/ Anheuser Busch /bullet/ DuPont /bullet/ Gatorade
/bullet/ Rolex /bullet/ Circuit City /bullet/ Frontier Cellular
</TABLE>
We believe that the Penske Acquisition will enhance our sponsorship
opportunities by enhancing our ability to offer access to additional key
markets, a broader geographic reach and an expanded marketing season to
sponsors seeking a broader involvement with the motorsports industry.
/bullet/ DEVELOP AND ACQUIRE ADDITIONAL MOTORSPORTS FACILITIES. Our senior
management personnel regularly review acquisition and development prospects
that would augment or complement our existing operations or otherwise offer
significant growth opportunities. We believe that the Penske Acquisition
evidences our commitment to increasing our motorsports presence through
selected purchases of proven motorsports businesses. Other current examples of
our expansion efforts include our development of a speedway near Kansas City,
Kansas, our development of a superspeedway contiguous to the existing Route 66
Raceway near Chicago, Illinois, and our continued exploratory efforts with
respect to possible facilities in Denver and the New York metropolitan area. We
also believe that our recently completed financing arrangements for Kansas
City, as well as the financing for the Homestead-Miami Speedway, reflect our
ability to successfully pursue public-private partnerships that are based on
widespread community support for our business. In addition, our new facilities
provide a number of significant additional profit opportunities, including
naming rights to the venues, "Founding Fan" arrangements similar to the
permanent seat licenses used to finance a number of NFL stadiums and NBA
arenas, and the economies of scale and increased diversification resulting from
geographic expansion.
KANSAS CITY. We are currently developing a 1.5 mile oval speedway near
Kansas City, Kansas. The aggregate cost of acquiring and developing the first
phase of the Kansas speedway land and facility (which will accommodate
approximately 75,000 spectators) is expected to be over $224 million. Financing
for the first phase of our Kansas facility was substantially completed during
the first quarter of 1999. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources." Construction is underway and expected to be completed in 2001,
providing us with a key Midwest market located more than 400 miles from the
nearest facility hosting a Winston Cup Series event. Moreover, in order to meet
initial fan demand prior to construction, we have increased the number of
luxury suites to be built at the Kansas speedway from 32 to 68.
CHICAGO. We are currently participating in the development of a
motorsports facility in the Chicago area through the Motorsports Alliance, LLC,
which is equally owned by us and Indianapolis Motor Speedway. In May 1999, the
Motorsports Alliance and the owners of the Route 66 Raceway (one of the
nation's preeminent drag strips) formed a new company, Raceway Associates, LLC,
which
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is owned 75% by the Motorsports Alliance and 25% by the former owners of the
Route 66 Raceway. As a result of this transaction, we now own a 37.5% interest
in Raceway Associates, which in turn owns the 240 acre Route 66 Raceway
motorsports complex located in Joliet, Illinois, approximately 35 miles from
downtown Chicago. Raceway Associates has also purchased 930 acres adjacent to
the existing Route 66 complex for the construction of a 1.5 mile oval motor
speedway, which is being designed to initially accommodate approximately 75,000
spectators. The drag strip and this additional land was annexed into the city
of Joliet, which we believe again demonstrates the strength of local and
governmental support for our projects. We completed our preliminary engineering
work and broke ground in the fourth quarter of fiscal 1999. NASCAR and the IRL
have conditionally committed to enter into negotiations with Raceway Associates
for events to be conducted at the Chicago facility upon its expected completion
in 2001.
There can be no assurance that suitable acquisition candidates or sites to
develop new facilities will be available or, because of competition from other
purchasers or other business reasons or the absence of cooperation of local
government officials, that we will be able to acquire additional motorsports
facilities or develop new facilities on satisfactory terms.
MOTORSPORTS FACILITIES
The following table sets forth certain information relating to each of our
principal speedway facilities as of August 31, 1999:
<TABLE>
<CAPTION>
APPROXIMATE
NUMBER OF
GRANDSTAND APPROXIMATE
TRACK NAME LOCATION SEATS ACREAGE TRACK LENGTH
- -------------------------------- ---------------------------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Daytona International Speedway Daytona Beach, Florida 157,000 440 2.5 miles
Michigan Speedway Brooklyn, Michigan 125,400 1,000 2.0 miles
Talladega Superspeedway Talladega, Alabama 124,500 1,365 2.6 miles
California Speedway Fontana, California 86,400 529 2.0 miles
Phoenix International Raceway Phoenix, Arizona 70,800 598 1.0 miles
North Carolina Speedway Rockingham, North Carolina 60,100 300 1.0 miles
Darlington Raceway Darlington, South Carolina 54,400 230 1.3 miles
Homestead-Miami Speedway Homestead, Florida 50,700 344 1.5 miles
Nazareth Speedway Nazareth, Pennsylvania 44,000 230 1.0 miles
Watkins Glen International Watkins Glen, New York 38,200 1,377 3.4 miles
</TABLE>
OPERATIONS
Our operations consist principally of racing events at our 10 major
speedways. We also provide catering, souvenir and food concession services at
certain of our facilities, distribute and sell Goodyear brand racing tires, own
and operate MRN Radio and the DAYTONA USA entertainment complex and produce and
market collectibles and other motorsports merchandise.
AMERICROWN SERVICE CORPORATION. Our Americrown subsidiary conducts the
food and beverage concession operations at Daytona, Talladega and Darlington.
Americrown also provides souvenir merchandising operations and catering
services to corporate customers both in suites and hospitality chalets at these
facilities and at the Homestead-Miami Speedway. Americrown was formed in 1989
to conduct souvenir merchandising and concessions operations as part of our
ongoing efforts to enhance race spectators' total entertainment experience. We
intend that Americrown will eventually conduct the souvenir merchandising,
concession and catering operations at each of our major motorsports facilities.
COMPETITION TIRE. As a result of the Penske Acquisition, we are engaged in
the wholesale and retail sale and distribution of Goodyear brand racing tires
for various types of racing events.
MRN RADIO. MRN Radio produces and syndicates NASCAR Winston Cup Series,
Busch Grand National Series, Craftsman Truck Series and other races promoted by
us and others. MRN Radio also
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produces daily and weekly NASCAR racing programs. Network radio programs are
currently carried by over 600 radio stations. We derive revenue from the sale
of advertising on the networks and rights fees paid by broadcast affiliates.
DAYTONA USA. DAYTONA USA-The Ultimate Motorsports Attraction is a
motorsports-themed entertainment complex, located adjacent to the Daytona
International Speedway. DAYTONA USA includes:
/bullet/ 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;
/bullet/ Advanced Auto Parts' Tours, a tram tour of the Daytona
International Speedway's garage area, pit road and high banked
track;
/bullet/ the Richard Petty Riding Experience at Daytona; and
/bullet/ for groups of 15 or more, the VIP Tour, which includes a tour of
the Winston Tower.
Adjoining DAYTONA USA are (i) a high tech arcade using state of the art video
technology and computerized, "virtual" racing simulators, (ii) the Pit Shop,
which sells DAYTONA USA, Daytona International Speedway, NASCAR and race team
clothing, books, collectibles and other officially licensed merchandise and
(iii) the Fourth Turn Grill concessions facility.
MOTORSPORTS MERCHANDISE. We sell a variety of motorsports-related
merchandise, including apparel, souvenirs and collectibles, directly to
spectators at our facilities, to retail customers through catalogue sales and
through direct sales to dealers. We are also exploring additional distribution
channels such as the Internet.
OTHER ACTIVITIES. From time to time we use our 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. We also rent
"show cars" for promotional events. Other motorsports interests include the
operation of Tucson Raceway Park in Arizona.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
As a condition to the sale of the outstanding notes, we and the initial
purchasers of the outstanding notes entered into the registration rights
agreement. Under the registration rights agreement, we agreed to:
/bullet/ file with the SEC a registration statement under the Securities
Act with respect to the registered notes no later than February 3,
2000;
/bullet/ use our best efforts to cause the registration statement to be
declared effective under the Securities Act no later than April 3,
2000; and
/bullet/ keep the exchange offer open for not less than 30 days and not
later than 45 days (or, in each case, longer if required by
applicable law) after the date notice of the exchange offer is
mailed to holders of the outstanding notes.
The exchange offer being made by this prospectus is intended to satisfy
our obligations under the registration rights agreement. You may be entitled to
"shelf" registration rights. In accordance with the registration rights
agreement, we are required to file a shelf registration covering your
outstanding notes for a continuous offering in accordance with Rule 415 of the
Securities Act if:
/bullet/ we are not permitted to conduct the exchange offer because of a
change in SEC rules or policy;
/bullet/ we have not completed the exchange offer by April 3, 2000; or
/bullet/ the registered notes are not freely tradeable (other than because
the holder is an affiliate of ours or is a person that must
deliver a prospectus in connection with the resale).
In the event that we are obligated to file a shelf registration statement,
we will be required to keep the shelf registration statement effective until
the earlier of two years from the date the shelf registration is declared
effective by the SEC or the time all of the outstanding notes have been sold
thereunder.
If we fail to fulfill such obligations, the holders of outstanding notes
are entitled to receive "Additional Interest" until we have fulfilled such
obligations, at the rate of 0.25% per year. All amounts of accrued Additional
Interest will be payable in cash on the same interest payment dates as the
outstanding notes. We have filed a copy of the registration rights agreement as
an exhibit to the registration statement of which this prospectus is a part.
Our discussion of the registration rights agreement is qualified in its
entirety by reference to the terms of the agreement.
EFFECT OF THE EXCHANGE OFFER
Based on no-action letters issued by the staff of the SEC to third
parties, we believe that you may offer for resale, resell and otherwise
transfer the registered notes issued to you under the exchange offer without
further compliance with the registration and prospectus delivery provisions of
the Securities Act, provided that you can represent that:
/bullet/ you are acquiring the registered notes in the ordinary course of
your business;
/bullet/ you are not engaging in and do not intend to engage in a
distribution of the registered notes;
/bullet/ you have no arrangements or understandings with any person to
participate in the exchange offer for the purpose of distributing
the registered notes; and
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<PAGE>
/bullet/ you are not an "affiliate" (as defined in Rule 405 of the
Securities Act) of ours.
If you are not able to make these representations, you are a "Restricted
Holder." As a Restricted Holder, you will not be able to participate in the
exchange offer, may not rely on the SEC staff positions set forth in the Exxon
Capital Holdings Corporation no-action letter and similar no-action letters and
may only sell your outstanding notes as part of a registration statement
containing the selling security holder information required by Item 507 of SEC
Regulation S-K, or under an exemption from the registration requirements of the
Securities Act.
In addition, each broker-dealer, other than a Restricted Holder, that
receives registered notes for its own account in exchange for outstanding notes
which were acquired by such broker-dealer as a result of market-making or other
trading activities (a "Participating Broker-Dealer") may be a statutory
underwriter and must acknowledge in the letter of transmittal that it will
deliver a prospectus meeting the requirements of the Securities Act upon any
resale of such registered notes. The letter of transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. Based upon interpretations by the SEC staff, we believe that a
Participating Broker-Dealer may offer for resale, resell and otherwise transfer
registered notes issued under the exchange offer upon compliance with the
prospectus delivery requirements, but without compliance with the registration
requirements, of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a Participating Broker-Dealer as
part of their resales. We have agreed that, for a period of six months after
the completion of the exchange offer, we will make this prospectus available to
any broker-dealer for use by the broker-dealer in any resale. For more
information, please see the section in this prospectus entitled "Plan of
Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
To the extent outstanding notes are tendered and accepted in the exchange
offer, the principal amount of outstanding notes will decrease with a resulting
decrease in the liquidity in the market for the outstanding notes. In addition,
following completion of the exchange offer, except as provided in the
registration rights agreement, you will not have any further registration
rights and your outstanding notes will continue to be subject to certain
restrictions on transfer. Accordingly, if you do not participate in the
exchange offer, your ability to sell your outstanding notes could be adversely
affected. You may suffer adverse consequences if you fail to exchange your
outstanding notes.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions contained in this prospectus
and in the letter of transmittal, we will accept for exchange any and all
outstanding notes that are validly tendered and not withdrawn prior to 5:00
p.m., New York City time, on the expiration date. We will issue $1,000
principal amount at maturity of registered notes in exchange for each $1,000
principal amount at maturity of outstanding notes accepted in the exchange
offer. You may tender some or all of your outstanding notes under the exchange
offer. However, outstanding notes may be tendered only in minimum denominations
of $100,000 principal amount and integral multiples of $1,000 in excess
thereof. As of the date of this prospectus, an aggregate of $225,000,000 in
principal amount at maturity of the outstanding notes is outstanding. This
prospectus, together with the accompanying letter of transmittal, is first
being sent on or about January 26, 2000, to the nominee of The Depository Trust
Company ("DTC" or the "Depository") and to others believed to have beneficial
ownership in the outstanding notes.
The form and terms of the registered notes will be substantially identical
to the form and terms of the outstanding notes, except that:
/bullet/ the offering of the registered notes has been registered under the
Securities Act;
/bullet/ the registered notes will not be subject to transfer restrictions;
and
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<PAGE>
/bullet/ the registered notes will be issued free of any covenants
regarding registration rights and free of any provision for
Additional Interest.
The registered notes will evidence the same debt as the outstanding notes
and will be issued under the same indenture.
You do not have any appraisal or dissenters rights under law or the
indenture in the exchange offer. We intend to conduct the exchange offer in
accordance with the applicable requirements of the Exchange Act. Outstanding
notes which are not tendered for, or are tendered but not accepted in
connection with, the exchange offer will remain outstanding.
We will be deemed to have accepted validly tendered outstanding notes
when, as and if we have given oral notice, promptly confirmed in writing, or
written notice of the acceptance to the exchange agent. The exchange agent will
act as agent for the tendering holders for the purpose of receiving the
registered notes from us.
If we do not accept for exchange any tendered outstanding notes because of
an invalid tender, the occurrence of other events described in this prospectus
or otherwise, certificates for any such unaccepted outstanding notes will be
returned to you, without expense, as promptly as practicable after the
expiration date.
If you tender outstanding notes in the exchange offer, you will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the letter of transmittal, transfer taxes relating to the exchange of
outstanding notes under the exchange offer. We will pay all charges and
expenses, other than underwriting discounts and commissions and transfer taxes,
as part of the exchange offer. See "--Fees and Expenses."
EXPIRATION DATE, EXTENSIONS, TERMINATION
The term "expiration date" means 5:00 p.m., New York City time, on
February 28, 2000, unless we, in our sole discretion, extend the exchange
offer, in which case the term "expiration date" shall mean the latest date and
time to which the exchange offer is extended.
We have the right, subject to applicable law, in our reasonable
discretion, at any time and from time to time, (1) to extend the exchange offer
or (2) to terminate the exchange offer, if any of the conditions set forth
below under "--Conditions" shall not have been satisfied by giving oral or
written notice of such extension or termination to the exchange agent. Any such
extension or termination will be followed as promptly as practicable by a
public announcement.
Any such termination or extension will be followed promptly by oral or
written notice to the exchange agent (any such oral notice to be promptly
confirmed in writing) and by making a public announcement, and such
announcement in the case of an extension will be made no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
expiration date. Without limiting the manner in which we may choose to make any
public announcement, and subject to applicable laws, we shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement, other than by issuing a timely release to an appropriate news
agency.
PROCEDURES FOR TENDERING
BOOK-ENTRY INTERESTS
The outstanding notes were issued as global securities in fully registered
form without interest coupons. Beneficial interests in the global securities,
held by direct or indirect participants in DTC, are shown on, and transfers of
these interests are effected only through, records maintained in book-entry
form by DTC with respect to its participants.
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<PAGE>
If you hold your outstanding notes in the form of book-entry interests and
you wish to tender your outstanding notes for exchange pursuant to the exchange
offer, you must transmit to the exchange agent on or prior to the expiration
date either:
(1) a written or facsimile copy of a properly completed and duly executed
letter of transmittal, including all other documents required by such
letter of transmittal, to the exchange agent at the address set forth
on the cover page of the letter of transmittal; or
(2) a computer-generated message transmitted by means of DTC's Automated
Tender Offer Program system and received by the exchange agent and
forming a part of a confirmation of book-entry transfer, in which you
acknowledge and agree to be bound by the terms of the letter of
transmittal.
In addition, in order to deliver outstanding notes held in the form of
book-entry interests:
(A) a timely confirmation of book-entry transfer of such notes into the
exchange agent's account at DTC pursuant to the procedure for
book-entry transfers described below under "--Book-Entry Transfer"
must be received by the exchange agent prior to the expiration date;
or
(B) you must comply with the guaranteed delivery procedures described
below.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES AND THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND
RISK. INSTEAD OF DELIVERY BY MAIL, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR
HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. YOU SHOULD
NOT SEND THE LETTER OF TRANSMITTAL OR OUTSTANDING NOTES TO US. YOU MAY REQUEST
YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY, OR NOMINEE TO EFFECT THE
ABOVE TRANSACTIONS FOR YOU.
CERTIFICATED OUTSTANDING NOTES
Only registered holders of certificated outstanding notes may tender those
notes in the exchange offer. If your outstanding notes are certificated notes
and you wish to tender those notes for exchange pursuant to the exchange offer,
you must transmit to the exchange agent on or prior to the expiration date, a
written or facsimile copy of a properly completed and duly executed letter of
transmittal, including all other required documents, to the address set forth
below under "-- Exchange Agent." In addition, in order to validly tender your
certificated outstanding notes:
(1) the certificates representing your outstanding notes must be received
by the exchange agent prior to the expiration date, or
(2) you must comply with the guaranteed delivery procedures described
below.
PROCEDURES APPLICABLE TO ALL HOLDERS
If you validly tender outstanding notes and you do not withdraw the tender
prior to the expiration date, you will have made an agreement with us in
accordance with the terms and subject to the conditions set forth in this
prospectus and in the letter of transmittal.
If your outstanding notes are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee and you wish to tender your
notes, you should contact the registered holder promptly and instruct the
registered holder to tender on your behalf. If you wish to tender on your own
behalf, you must, prior to completing and executing the letter of transmittal
and delivering your outstanding notes, either make appropriate arrangements to
register ownership of the outstanding notes in your name or obtain a properly
completed bond power from the registered holder. The transfer of registered
ownership may take considerable time.
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Signatures on a letter of transmittal or a notice of withdrawal must be
guaranteed by an eligible institution unless:
(A) outstanding notes tendered in the exchange offer are tendered either:
(1) "Special Delivery Instructions" on the letter of transmittal; or
(2) for the account of an eligible institution; and
(B) the box entitled "Special Registration Instructions" on the letter of
transmittal has not been completed.
If signatures on a letter of transmittal or a notice of withdrawal are
required to be guaranteed, the guarantee must be by a financial institution,
which includes most banks, savings and loan associations and brokerage houses,
that is a participant in the Securities Transfer Agents Medallion Program, the
New York Stock Exchange Medallion Program or the Stock Exchanges Medallion
Program.
If the letter of transmittal is signed by a person other than you, your
outstanding notes must be endorsed or accompanied by a properly completed bond
power and signed by you as your name appears on those outstanding notes.
If the letter of transmittal or any outstanding notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations, or others acting in a fiduciary or representative
capacity, those persons should so indicate when signing. Unless we waive this
requirement, in this instance you must submit with the letter of transmittal
proper evidence satisfactory to us of their authority to act on your behalf.
We will determine, in our sole discretion, all questions regarding the
validity, form, eligibility, including time of receipt, acceptance and
withdrawal of tendered outstanding notes. This determination will be final and
binding. We reserve the absolute right to reject any and all outstanding notes
not properly tendered or any outstanding notes our acceptance of which would,
in the opinion of our counsel, be unlawful. We also reserve the right to waive
any defects, irregularities or conditions of tender as to particular
outstanding notes. Our interpretation of the terms and conditions of the
exchange offer, including the instructions in the letter of transmittal, will
be final and binding on all parties.
You must cure any defects or irregularities in connection with tenders of
your outstanding notes within the time period we will determine unless we waive
that defect or irregularity. Although we intend to notify you of defects or
irregularities with respect to your tender of outstanding notes, neither we,
the exchange agent nor any other person will incur any liability for failure to
give this notification. Your tender will not be deemed to have been made and
your notes will be returned to you if:
(1) you improperly tender your outstanding notes;
(2) you have not cured any defects or irregularities in your tender; and
(3) we have not waived those defects, irregularities or improper tender.
The exchange agent will return your outstanding notes, unless otherwise
provided in the letter of transmittal, as soon as practicable following the
expiration of the exchange offer.
By tendering, you will represent to us that, among other things:
(1) the registered notes to be acquired by you in the exchange offer are
being acquired in the ordinary course of your business;
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(2) you are not engaging in and do not intend to engage in a distribution
of the registered notes to be acquired by you in the exchange offer;
(3) you do not have an arrangement or understanding with any person to
participate in the distribution of the registered notes to be acquired
by you in the exchange offer; and
(4) you are not an "affiliate" of ours, as defined under Rule 405 of the
Securities Act.
In all cases, issuance of registered notes for outstanding notes that are
accepted for exchange in the exchange offer will be made only after timely
receipt by the exchange agent of certificates for your outstanding notes or a
timely book-entry confirmation of your outstanding notes into the exchange
agent's account at DTC, a properly completed and duly executed letter of
transmittal, or a computer-generated message instead of the letter of
transmittal, and all other required documents. If any tendered outstanding
notes are not accepted for any reason set forth in the terms and conditions of
the exchange offer or if outstanding notes are submitted for a greater
principal amount than you desire to exchange, the unaccepted or non-exchanged
outstanding notes, or outstanding notes in substitution therefor, will be
returned without expense to you. In addition, in the case of outstanding notes
tendered by book-entry transfer into the exchange agent's account at DTC
pursuant to the book-entry transfer procedures described below, the
non-exchanged outstanding notes will be credited to your account maintained
with DTC, as promptly as practicable after the expiration or termination of the
exchange offer.
GUARANTEED DELIVERY PROCEDURES
If you desire to tender your outstanding notes and your outstanding notes
are not immediately available or one of the situations described in the
immediately preceding paragraph occurs, you may tender if:
(1) you tender through an eligible financial institution;
(2) on or prior to 5:00 p.m., New York City time, on the expiration date,
the exchange agent receives from an eligible institution, a written or
facsimile copy of a properly completed and duly executed letter of
transmittal and notice of guaranteed delivery, substantially in the
form provided by us; and
(3) the certificates for all certificated outstanding notes, in proper
form for transfer, or a book-entry confirmation, and all other
documents required by the letter of transmittal, are received by the
exchange agent within three NYSE trading days after the date of
execution of the notice of guaranteed delivery.
The notice of guaranteed delivery may be sent by facsimile transmission,
mail or hand delivery. The notice of guaranteed delivery must set forth:
(1) your name and address;
(2) the amount of outstanding notes you are tendering; and
(3) a statement that your tender is being made by the notice of guaranteed
delivery and that you guarantee that within three New York Stock
Exchange trading days after the execution of the notice of guaranteed
delivery, the eligible institution will deliver the following
documents to the exchange agent:
(A) the certificates for all certificated outstanding notes being
tendered, in proper form for transfer or a book-entry
confirmation of tender;
(B) a written or facsimile copy of the letter of transmittal, or a
book-entry confirmation instead of the letter of transmittal; and
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(C) any other documents required by the letter of transmittal.
BOOK-ENTRY TRANSFER
The exchange agent will establish an account with respect to the
book-entry interests at DTC for purposes of the exchange offer promptly after
the date of this prospectus. You must deliver your book-entry interest by
book-entry transfer to the account maintained by the exchange agent at DTC. Any
financial institution that is a participant in DTC's systems may make
book-entry delivery of book-entry interests by causing DTC to transfer the
book-entry interests into the exchange agent's account at DTC in accordance
with DTC's procedures for transfer.
If one of the following situations occur:
(1) you cannot deliver a book-entry confirmation of book-entry delivery of
your book-entry interests into the exchange agent's account at DTC; or
(2) you cannot deliver all other documents required by the letter of
transmittal to the exchange agent prior to the expiration date.
then you must tender your book-entry interests according to the guaranteed
delivery procedures discussed above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of outstanding notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the expiration
date.
To withdraw a tender of outstanding notes in the exchange offer, a written
or facsimile transmission notice of withdrawal must be received by the exchange
agent at its address listed in this prospectus prior to 5:00 p.m., New York
City time, on the expiration date. Any notice of withdrawal must:
/bullet/ specify the name of the person having deposited the outstanding
notes to be withdrawn;
/bullet/ identify the outstanding notes to be withdrawn, including the
certificate number or numbers and principal amount of such
outstanding notes;
/bullet/ be signed by the holder in the same manner as the original
signature on the letter of transmittal by which the outstanding
notes were tendered, including any required signature guarantees,
or be accompanied by documents of transfer sufficient to have the
trustee with respect to the outstanding notes register the
transfer of the outstanding notes into the name of the person
withdrawing the tender; and
/bullet/ specify the name in which any outstanding notes are to be
registered if different from that of the person that deposited the
outstanding notes to be withdrawn.
If the outstanding notes have been delivered under the book-entry
procedure set forth above under "--Procedures for Tendering," any notice of
withdrawal must specify the name and number of the participant's account at DTC
to be credited with the withdrawn outstanding notes.
We will determine, in our sole discretion, all questions as to the
validity, form and eligibility, including time of receipt, of withdrawal
notices. Our determination shall be final and binding on all parties. Any
outstanding notes withdrawn will be deemed not to have been validly tendered
for purposes of the exchange offer and registered notes will not be issued in
exchange for such withdrawn outstanding notes unless the withdrawn outstanding
notes are validly retendered. Properly withdrawn
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outstanding notes may be retendered by following one of the procedures
described above under "--Procedures for Tendering" at any time prior to the
expiration date.
Any outstanding notes that are tendered but not accepted due to
withdrawal, rejection of tender or termination of the exchange offer will be
returned as soon as practicable to the holder without cost to the holder (or,
in the case of outstanding notes tendered by book-entry transfer into the
exchange agent's account at the book-entry transfer facility under the
book-entry transfer procedures described above, these outstanding notes will be
credited to an account maintained with such book-entry transfer facility for
the outstanding notes).
CONDITIONS
Notwithstanding any other term of the exchange offer, we are not required
to accept for exchange any outstanding notes, and may terminate the exchange
offer as provided in this prospectus before the acceptance of any outstanding
notes, if:
/bullet/ the exchange offer will violate applicable law or any applicable
interpretation of the SEC staff;
/bullet/ the outstanding notes are not tendered in accordance with the
exchange offer;
/bullet/ you do not represent that you are acquiring the registered notes
in the ordinary course of your business, that you are not engaging
in and do not intend to engage in a distribution of the registered
notes, and that you have no arrangement or understanding with any
person to participate in a distribution of the registered notes;
or
/bullet/ any action or proceeding is instituted or threatened by any
governmental agency with respect to the exchange offer which would
reasonably be expected to impair our ability to proceed with the
exchange offer.
These conditions are for our sole benefit and we may assert them
regardless of the circumstances giving rise to any condition or we may waive
them in whole or in part at any time and from time to time in our reasonable
discretion. Our failure at any time to exercise any of the foregoing rights
shall not be deemed a waiver of the right and each right shall be deemed an
ongoing right which may be asserted at any time and from time to time.
If we determine in our reasonable judgment that any of the conditions are
not satisfied, we may (1) refuse to accept any outstanding notes and return all
tendered outstanding notes to the tendering holders (or, in the case of
outstanding notes delivered by book-entry transfer within DTC, credit any
outstanding notes to the account maintained within DTC by the participant in
DTC which delivered the notes), (2) extend the exchange offer and retain all
outstanding notes tendered prior to the expiration of the exchange offer,
subject, however, to the rights of holders to withdraw the tenders of
outstanding notes (see "Withdrawal of Tenders" above) or (3) waive the
unsatisfied conditions with respect to the exchange offer and accept all
properly tendered outstanding notes which have not been withdrawn. If a waiver
constitutes a material change to the exchange offer, we will promptly disclose
the waiver by means of a prospectus supplement that will be distributed to the
registered holders, and we will extend the exchange offer for a period of five
to ten business days, depending upon the significance of the waiver and the
manner of disclosure to the registered holders, if the exchange offer would
otherwise expire during such five to ten business day period.
EXCHANGE AGENT
First Union National Bank has been appointed as exchange agent for the
exchange offer. Delivery of letters of transmittal and any other required
documents, questions, requests for assistance, and requests for additional
copies of this prospectus or of the letter of transmittal should be directed to
the exchange agent as follows:
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<TABLE>
<S> <C>
BY REGISTERED OR CERTIFIED MAIL, BY FACSIMILE (ELIGIBLE INSTITUTIONS ONLY):
OVERNIGHT COURIER OR HAND DELIVERY:
704-590-7628
First Union National Bank Attention: Exchange Department
Corporate Trust Operations
1525 West W.T. Harris Blvd. Confirmed by Telephone: 1-800-665-9343
Building 3C3
Charlotte, North Carolina 28288-1153 (Originals of all documents submitted by facsimile should
Attention: Exchange Department be sent promptly by hand, overnight courier or registered
or certified mail.)
</TABLE>
Delivery to other than the above address or facsimile number will not
constitute a valid delivery of your outstanding notes.
FEES AND EXPENSES
We will pay expenses of soliciting tenders. The principal solicitation is
being made by mail; however, additional solicitation may be made by facsimile,
telephone or in person by our officers and regular employees.
We have not retained any dealer-manager as part of the exchange offer and
will not make any payments to brokers, dealers or others soliciting acceptance
of the exchange offer. We will, however, pay the exchange agent reasonable and
customary fees for services and will reimburse it for its reasonable
out-of-pocket expenses under the exchange offer. We will also pay the
reasonable fees and expenses of one firm acting as counsel for the outstanding
purchasers. Expenses include fees and expenses of the exchange agent and
trustee, accounting and legal fees and printing costs, among others.
TRANSFER TAXES
You must pay all transfer taxes, if any, applicable to the exchange of
outstanding notes under the exchange offer. If satisfactory evidence of payment
of the taxes or exemption therefrom is not submitted with the letter of
transmittal, the amount of the transfer taxes will be billed directly to you.
ACCOUNTING TREATMENT
The registered notes will be recorded at the same carrying value as the
outstanding notes on the date of the exchange. Accordingly, we will recognize
no gain or loss for accounting purposes. The expenses of the exchange offer and
the unamortized expenses relating to the issuance of the outstanding notes will
be amortized over the term of the registered notes.
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DESCRIPTION OF THE REGISTERED NOTES
We will issue the registered notes under the indenture for the outstanding
notes dated as of October 6, 1999 between us, the Guarantors and First Union
National Bank, as trustee. The following discussion summarizes selected
provisions of the indenture. Because this is only a summary, it is not complete
and does not describe every aspect of the notes and the indenture. Whenever
there is a reference to particular sections or defined terms of the indenture,
the sections or defined terms are incorporated by reference, and the statement
is qualified in its entirety by that reference. There are references to section
numbers of the indenture so that you can easily locate these provisions.
Capitalized terms are terms that are defined in the indenture. You can find the
definitions of certain of these terms in this summary under the heading
"--Certain Definitions." In this description, the words "International
Speedway," "we," "us" and "our" refer to International Speedway Corporation and
not any of its subsidiaries. We urge you to read the indenture because it, and
not this description, defines your rights as a holder of these notes. A copy of
the indenture is available upon request to International Speedway at the
address set forth under "Where You Can Find More Information."
GENERAL
The indenture provided for the initial issuance of up to $225,000,000
principal amount of notes of which $225,000,000 are currently outstanding. Any
outstanding notes that remain outstanding after the completion of the exchange
offer, together with the registered notes issued in exchange for the
outstanding notes will be treated as a single class of debt securities under
the indenture. The outstanding notes and the registered notes to be issued in
the exchange offer are collectively referred to as the "notes" in this summary
description of the notes.
The notes will mature on October 15, 2004 (referred to as the "Maturity
Date").
Interest on the notes will accrue at a rate of 7.875% per year from and
including October 6, 1999 or from and including the most recent Interest
Payment Date to which interest has been paid or provided for, payable on April
15 and October 15 of each year, beginning April 15, 2000 (each, referred to as
an "Interest Payment Date").
We will pay interest to the person in whose name the notes are registered,
referred to as the "Holder," at the close of business on the date fifteen days
prior to such Interest Payment Date, referred to as the "Regular Record Date."
Interest on the notes will be computed on the basis of a 360-day year of twelve
30-day months.
The notes will be issued only in fully registered form without coupons, in
minimum denominations of $100,000 and integral multiples of $1,000 in excess
thereof. The notes are not entitled to the benefit of any mandatory redemption
or sinking fund.
The notes will be our unsecured senior obligations, ranking equally with
all of our other unsecured and unsubordinated indebtedness which may be
outstanding from time to time. Under certain circumstances, our Subsidiaries
which are created or acquired after the date of the indenture will not be
required to guaranty the notes. The indenture does not limit the amount of
additional indebtedness that we or any of our Subsidiaries may incur. The
indenture and the form of the notes do not contain provisions designed to
afford holders of the notes protection in the event of a takeover,
recapitalization, or similar restructuring involving us that may adversely
affect holders of the notes.
The notes will not be listed on any national securities exchange or
automated quotation system.
SUBSIDIARY GUARANTEES OF NOTES
All of our Subsidiaries that were guarantors in respect of our senior
revolving credit facility as of the date of the indenture have, jointly and
severally, fully and unconditionally guaranteed our
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obligations under the notes on an equal and ratable basis subject to the
limitation described in the next to last paragraph of this description of the
subsidiary guarantees. In addition, if any Subsidiary of ours which is not
already a guarantor becomes a guarantor in respect of our senior revolving
credit facility, we will cause such Subsidiary to enter into a supplemental
indenture to the indenture pursuant to which such Subsidiary shall agree to
guarantee our obligations under the notes.
Under its subsidiary guarantee, each subsidiary guarantor will guarantee,
jointly and severally, to each holder of notes and the trustee, the full and
prompt performance of our obligations under the indenture and the notes,
including the payment of principal of (or premium, if any, on) and interest on
the notes.
The subsidiary guarantees are unsecured obligations of each subsidiary
guarantor and rank equally in right of payment with all senior indebtedness of
that subsidiary guarantor and senior in right of payment to all subordinated
indebtedness of that subsidiary guarantor. The subsidiary guarantees are
effectively subordinated to secured indebtedness of the subsidiary guarantor
with respect to the assets securing that indebtedness.
The obligations of each subsidiary guarantor are limited to the maximum
amount that will result in the obligations of that subsidiary guarantor under
its subsidiary guarantee not constituting a fraudulent conveyance or fraudulent
transfer under federal or state law, after giving effect to the following: (i)
all other contingent and fixed liabilities of that subsidiary guarantor; and
(ii) any collections from or payments made by or on behalf of any other
subsidiary guarantor for the obligations of that other subsidiary guarantor
under its subsidiary guarantee or under its contribution obligations contained
in the indenture. Each subsidiary guarantor that makes a payment or
distribution under a subsidiary guarantee will be entitled to a contribution
from each other subsidiary guarantor in a pro rata amount based on the amount
by which the fair value of the properties and assets of each subsidiary
guarantor exceeds the total amount of liabilities, including contingent
liabilities, but excluding liabilities under such guarantor's subsidiary
guarantee.
Notwithstanding the foregoing, but subject to the requirements described
below under "--Consolidation, Merger and Sale of Assets," any guarantee by a
subsidiary guarantor shall be automatically and unconditionally released and
discharged (i) upon any sale, exchange or transfer to any person other than us
or another subsidiary guarantor (whether or not affiliated with the subsidiary
guarantor) of all of the Capital Stock of such subsidiary guarantor, or all or
substantially all of the assets of such subsidiary guarantor, pursuant to a
transaction which is in compliance with the indenture or (ii) at our request,
in the event that the lenders under the revolving credit facility
unconditionally release such subsidiary guarantor from its guarantee
obligations under such facility.
OPTIONAL REDEMPTION
The notes will be redeemable, as a whole or in part, at our option, at any
time or from time to time. We will provide the holders at least 30 days but not
more than 60 days' notice of our intent to redeem. The redemption prices will
be equal to the greater of:
(1) 100% of the principal amount of the notes to be redeemed, or
(2) the sum of the present values of the Remaining Scheduled Payments (as
defined below) on those securities discounted, on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months), at a
rate equal to the sum of the applicable Treasury Rate (as defined
below) plus 30 basis points.
Accrued interest and Liquidated Damages, if any, will be paid to the date of
redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity (computed as of the
second business day immediately
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preceding that redemption date) of the Comparable Treasury Issue (as defined
below), assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price (as
defined below) for that redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining
term of the notes. "Independent Investment Banker" means one of the Reference
Treasury Dealers appointed by the trustee after consultation with us.
"Comparable Treasury Price" means, with respect to any redemption date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such redemption date, as set forth in the daily
statistical release (or any successor release) published by the Federal Reserve
Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is
not published or does not contain such prices on such business day, (A) the
average of the Reference Treasury Dealer Quotations (as defined below) for such
redemption date, after excluding the highest and lowest such Reference Treasury
Dealer Quotations, or (B) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations.
"Reference Treasury Dealers" means Salomon Smith Barney Inc., First Union
Capital Markets Corp., Banc One Capital Markets, Inc., Raymond James &
Associates, Inc. and SunTrust Equitable Securities and their successors. If any
Reference Treasury Dealer shall cease to be a primary U.S. Government
securities dealer, we will substitute another nationally recognized investment
banking firm that is a primary U.S. Government securities dealer.
"Reference Treasury Dealer Quotations" means, with respect to the
Reference Treasury Dealers and any redemption date, the average, as determined
by the trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the trustee by the Reference Treasury Dealers, at 5:00 p.m., New
York City time, on the third business day preceding that redemption date.
"Remaining Scheduled Payments" means, with respect to the notes to be
redeemed, the remaining scheduled payments of principal of and interest on
those notes that would be due after the related redemption date but for that
redemption; provided, however, that if such redemption date is not an interest
payment date with respect to the notes to be redeemed, the amount of the next
succeeding scheduled interest payment on those notes will be reduced by the
amount of interest accrued on such notes to such redemption date.
On and after the redemption date, interest will cease to accrue on the
notes or any portion of the notes called for redemption (unless we default in
the payment of the redemption price and accrued interest). On or before the
redemption date, we will deposit with a paying agent (or the trustee) money
sufficient to pay the redemption price of and accrued interest on the notes to
be redeemed on that date. If less than all of the notes of any series are to be
redeemed, the notes to be redeemed shall be selected by the trustee by a method
the trustee deems to be fair and appropriate.
BOOK-ENTRY SYSTEM, FORM AND DELIVERY
The notes will be represented by one or more Global Securities registered
in the name of Cede & Co., the nominee of The Depository Trust Company, as
Depositary, and the provisions set forth under "Description of Notes--Global
Securities" below will apply.
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal
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Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. The Depositary holds securities
that its participants (the "Participants") deposit with the Depositary. The
Depositary also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants, referred to as the "Direct Participants," include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. The Depositary is owned by a number of its Direct
Participants and by The New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the Depositary's system is also available to others such as securities
brokers and dealers, banks and trust companies that clear through, or maintain
a custodial relationship with a Direct Participant, either directly or
indirectly, referred to as the "Indirect Participants." The rules applicable to
the Depositary and its Participants are on file with the Commission.
Purchases of the notes under the Depositary's system must be made by or
through Direct Participants, who receive a credit for the notes on the
Depositary's records. The ownership interest of each actual purchaser of each
note, referred to as "Beneficial Owner," is recorded on the Direct and Indirect
Participants' respective records. Beneficial Owners will not receive written
confirmation from the Depositary of their purchase, but Beneficial Owners are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their Holdings, from the Direct or Indirect
Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interest in the notes are to be accomplished by entries
made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interest in the notes except in the event that use of the book-entry system for
the notes is discontinued.
To facilitate subsequent transfers, all notes deposited by Participants
with the Depositary will be registered in the name of Cede & Co. The deposit of
the notes with the Depositary and their registration in the name of Cede & Co.
effect no change in beneficial ownership. The Depositary has no knowledge of
the actual Beneficial Owners of the notes; the Depositary's records reflect
only the identify of the Direct Participants to whose accounts such notes are
credited, which may or may not be the Beneficial Owners. The Participants will
remain responsible for keeping account of their holdings on behalf of their
customers.
Delivery of notices and other communications by the Depositary to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with respect to
the notes. Under its usual procedures, the Depositary mails an omnibus proxy,
referred to as an "Omnibus Proxy," to us as soon as possible after the record
date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts the notes are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Principal and interest payments on the notes will be made to Cede & Co.
The Depositary's practice is to credit Direct Participants' accounts on the
relevant payment date in accordance with their respective holdings shown on the
Depositary's records unless the Depositary has reason to believe that it will
not receive payment on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities for the accounts of customers in
bearer form or registered in "street-name," and will be the responsibility of
such Participant and will not be our responsibility, nor the responsibility of
the Depositary or the Underwriters, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and
interest to Cede & Co. is our responsibility or the
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responsibility of the trustee. Disbursement of such payments to Direct
Participants is the responsibility of the Depositary, and disbursement of such
payments to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
The Depositary may discontinue providing its services as securities
depository with respect to the notes at any time by giving us reasonable
notice. Under such circumstances and in the event that a successor securities
depository is not obtained, certificates for the notes are required to be
printed and delivered. In addition, we may decide to discontinue use of the
system of book-entry transfers through the Depositary (or a successor
securities depository). In that event, certificates will be printed and
delivered.
We will not have any responsibility or obligation to Participants or the
persons for whom they act as nominees with respect to the accuracy of the
records of the Depositary, its nominee or any Direct or Indirect Participant
with respect to any ownership interest in the notes, or with respect to
payments to or providing of notice for the Direct Participants, the Indirect
Participants or the Beneficial Owners.
The Depositary's management is aware that some computer applications,
systems and the like for processing data, referred to as "Systems," that are
dependent upon calendar dates, including dates before, on, and after January 1,
2000, may encounter "Year 2000 problems." The Depositary has informed its
participants and other members of the financial community, referred to as the
"Industry," that it has developed and is implementing a program so that its
Systems, as the same relate to the timely payment of distributions (including
principal and income payments) to security holders, book-entry deliveries, and
settlement of trades with in the Depositary, referred to as "DTC Services,"
continue to function appropriately. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally, the
Depositary's plan includes a testing phase, which is expected to be completed
within appropriate time frames.
However, the Depositary's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as third party vendors from whom the Depositary licenses
software and hardware, and third party vendors on whom the Depositary relies
for information or the provision of services, including telecommunications and
electrical utility service providers, among others. The Depositary has informed
the Industry that it is contacting (and will continue to contact) third party
vendors from whom the Depositary acquires services to: (i) impress upon them
the importance of such services being Year 2000 compliant; and (ii) determine
the extent of their efforts for Year 2000 remediation (and, as appropriate,
testing) of their services. In addition, the Depositary is in the process of
developing such contingency plans as it deems appropriate.
According to the Depositary, the foregoing information with respect to the
Depositary has been provided to the Industry for informational purposes only
and is not intended to serve as a representation, warranty or contract
modification of any kind.
The information contained above under the caption "Description of
Notes-Book-Entry System, Form and Delivery" concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that we believe
to be reliable. We do not, nor does the trustee, the underwriters, dealers or
agents take responsibility for the accuracy or completeness thereof.
FORM, EXCHANGE AND TRANSFER
The notes will be issuable only in fully registered form, without coupons,
and only in minimum denominations of $100,000 and integral multiples of $1,000
in excess thereof (Section 302). We shall deliver the notes, duly executed by
us to the trustee for authentication, together with an order for the
authentication and delivery of the notes. The trustee, in accordance with such
order, shall authenticate and deliver such notes. No notes shall be entitled to
any benefit under the indenture or be valid or
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obligatory for any purpose unless there appears thereon a certificate of
authentication substantially in the form provided for in the indenture and
manually executed by the trustee or an authenticating agent duly appointed by
the trustee. Such certificate shall be conclusive evidence, and the only
evidence, that the notes have been duly authenticated and delivered under, and
are entitled to the benefits of, the indenture.
At the option of the holder, subject to the terms of the indenture and the
limitations applicable to Global Securities, the notes will be exchangeable for
other notes of the same series of any authorized denomination and of a like
tenor and aggregate principal amount (Section 305).
Subject to the terms of the indenture and the limitations applicable to
Global Securities, the notes may be presented for exchange as provided above or
for registration of transfer (duly endorsed or with the form of transfer
endorsed thereon duly executed) at the office of the Registrar or at the office
of any transfer agent designated by us for such purpose. No service charge will
be made for any registration of transfer or exchange of the notes but we may
require payment of any taxes or other governmental charges as described in the
indenture. Such transfer or exchange will be effected upon the Registrar or
such transfer agent, as the case may be, being satisfied with the documents of
title and identity of the person making the request. We have appointed the
trustee as Registrar. We may at any time designate additional transfer agents
or rescind the designation of any transfer agent. We may also approve a change
in the office through which any transfer agent acts, except that we will be
required to maintain a transfer agent in each Place of Payment for the notes
(section 1002).
In the event of a redemption in part, we will not be required to (i)
issue, register the transfer of or exchange any notes during a period beginning
at the opening of business 15 days before the day of mailing of a notice of
redemption of any such notes that may be selected for redemption and ending at
the close of business on the day of such mailing or (ii) register the transfer
of or exchange any notes, in whole or in part, called for redemption, except
the unredeemed portion of any such notes being redeemed in part (Section 305).
GLOBAL SECURITIES
The Global Securities will have an aggregate principal amount equal to
that of the notes that they represent. The Global Securities will have a legend
regarding their restrictions on exchanges and registration of transfer referred
to below and any such other matters as may be provided for pursuant to the
indenture.
No Global Security may be exchanged, in whole or in part, for notes
registered, and no transfer of a Global Security, in whole or in part, may be
registered, in the name of any Person other than the Depositary for such Global
Security or any nominee of such Depositary unless: (i) the Depositary has
notified us that it is unwilling or unable to continue as Depositary for such
Global Security or has ceased to be qualified to act as such as required by the
indenture, and we do not appoint a successor depository within 90 days of
receipt of such notice; or (ii) there shall have occurred and be continuing an
Event of Default with respect to the notes represented by such Global Security.
All securities issued in exchange for a Global Security or any portion of a
Global Security will be registered in such names as the Depositary may direct.
(Section 305).
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the notes
represented by such Global Security for all purposes under the notes and the
indenture. Except as provided above, owners of beneficial interests in a Global
Security will not be entitled to have such Global Security or any notes that it
represents registered in their names, will not receive or be entitled to
receive physical delivery of certificated notes in exchange therefor and will
not be considered to be the owners or Holders of such Global Security or any
notes represented thereby for any purpose under the notes or the indenture. All
payments of principal of, and any premium and interest on, a Global Security
will be made to the Depositary or its nominee, as
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the case may be, as the Holder of such Global Security. The laws of some
jurisdictions require that certain purchasers (for example, certain insurance
companies) of securities take physical delivery of such securities in
definitive form. These laws may impair your ability to transfer your beneficial
interests in a Global Security to these types of purchasers.
Ownership of beneficial interests in a Global Security will be limited to
institutions that have accounts with the Depositary or its nominee, referred to
as "participants," and to persons that may hold beneficial interests through
participants. In connection with the issuance of any Global Security, the
Depositary will credit, on its book-entry registration and transfer system, the
respective principal amounts of notes represented by the Global Security to the
accounts of its participants. Ownership of beneficial interests in a Global
Security will be shown only on, and the transfer of those ownership interests
will be effected only through, records maintained by the Depositary (with
respect to participants' interests) or any such participant (with respect to
interests of persons held by such participants on their behalf). Payments,
transfers, exchanges and other matters relating to beneficial interests in a
Global Security may be subject to various policies and procedures adopted by
the Depositary from time to time. None of the Company, the trustee or any agent
of the Company or the trustee will have any responsibility or liability for any
aspect of the Depositary's or any participant's records relating to, or for
payments made on account of, beneficial interests in a Global Security, or for
maintaining, supervising or reviewing any records relating to such beneficial
interests.
PAYMENT AND PAYING AGENTS
Payment of interest on a note on any Interest Payment Date will be made to
the Person in whose name such note is registered at the close of business on
the Regular Record Date for such interest (Section 307).
Principal of, and any premium and interest on, the notes will be payable
at the office of such paying agent or paying agents as we may designate for
such purpose from time to time. However, at our option, payment of any interest
may be made by check mailed to the address of the Person entitled thereto as
such address appears in the Note Register.
The corporate trust office of the trustee in Charlotte, North Carolina
will be designated as our sole paying agent for payments with respect to notes.
We may at any time designate additional paying agents or rescind the
designation of any paying agent or approve a change in the office through which
any paying agent acts, except that we will be required to maintain a paying
agent in each Place of Payment for the notes (Section 1002).
All monies paid by us to a paying agent for the payment of principal of,
premium, if any, or interest on any notes that remain unclaimed at the end of
two years after such principal, premium or interest has become due and payable
will be repaid to us. After such time, the Holder of such note will look only
to us for payment of such amounts (Section 1003).
RESTRICTIVE COVENANTS
LIMITATION ON LIENS. The indenture provides that, except as otherwise
provided in the next succeeding paragraph, neither we nor any Restricted
Subsidiary (as defined below) of ours will issue, assume or guarantee any
indebtedness for borrowed money, referred to as "Debt," secured by any
mortgage, pledge, security interest, lien or other encumbrance, referred to as
a "Lien," upon any Principal Property of ours or of any Restricted Subsidiary
or upon any shares of stock or Debt of any Restricted Subsidiary (whether such
Principal Property, shares of stock or Debt are now owned or hereafter
acquired) unless we secure or cause such Restricted Subsidiary to secure the
notes equally and ratably with, or prior to, such secured Debt, for so long as
such Debt will be so secured. The restriction will not apply to Debt secured
by:
(A) Liens on property, shares of stock or indebtedness of any corporation
existing at the time such corporation becomes a Restricted Subsidiary
or arising thereafter (i) otherwise than in
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connection with the borrowing of money arranged thereafter and (ii)
pursuant to contractual commitments entered into prior to and not in
contemplation of such corporation's becoming a Restricted Subsidiary;
(B) Liens on any property (including shares of stock or Debt) existing at
the time of acquisition thereof (including acquisition through merger
or consolidation) or securing the payment of all or any part of the
purchase price or construction cost thereof or securing any Debt
incurred prior to, at the time of or within 180 days after, the
acquisition of such property, shares of stock or Debt or the
completion of any such construction, whichever is later, for the
purpose of financing all or any part of the purchase price or
construction costs thereof (provided such Liens are limited to such
property, improvements thereon and the land upon which such property
and improvements are located and any other property not then
constituting a Principal Property);
(C) Liens on any property to secure all or any part of the cost of
development, operations, construction, alteration, repair or
improvement of all or any part of such property, or to secure Debt
incurred prior to, at the time of or within 180 days after, the
completion of such development, operation, construction, alteration,
repair or improvement, whichever is later, for the purpose of
financing all or any part of such cost (provided such Liens are
limited to such property, improvements thereon and the land upon which
such property and improvements are located and any other property not
then constituting a Principal Property);
(D) Liens which secure Debt owing by a Restricted Subsidiary to us or to
another Restricted Subsidiary or by us to a Restricted Subsidiary;
(E) Liens securing indebtedness of a corporation which becomes our
successor in accordance with the provisions described under the
heading "--Consolidation, Merger and Sale of Assets" below;
(F) Liens on our property or the property of a Restricted Subsidiary in
favor of the United States of America or any State thereof, or any
department agency or instrumentality or political subdivision of the
United States of America or any State thereof, or in favor of any
other country or any political subdivision thereof, to secure partial,
progress, advance or other payments pursuant to any contract or
statute or to secure any indebtedness incurred for the purpose of
financing all or any part of the purchase price or the cost of
construction of the property subject to such Liens, or in favor of any
trustee or mortgagee for the benefit of holders of indebtedness of any
such entity incurred for any such purpose;
(G) Liens existing as of the date of the indenture; and
(H) any extension, renewal or replacement (or successive extension,
renewals or replacements), in whole or in part, of any Lien referred
to in the foregoing clauses (A) to (G), inclusive, or of any Debt
secured thereby; provided that such extension, renewal or replacement
Lien shall be limited to all or any part of the same property that
secured the Lien extended, renewed or replaced (plus any improvements
on such property) and shall secure no larger amount of Debt than that
existing at the time of such extension, renewal or replacement.
Notwithstanding the foregoing restrictions, we and any one or more
Restricted Subsidiaries may issue, assume or guarantee Debt secured by a Lien
which would otherwise be subject to the foregoing restrictions if at the time
it does so, referred to as the "Incurrence Time," the aggregate amount of such
Debt plus all of our and our Restricted Subsidiaries' other Debt secured by a
Lien which would otherwise be subject to the foregoing restrictions (not
including Debt permitted to be secured under clauses (A) through (H) referred
to above), plus the aggregate Attributable Debt (determined as of the
Incurrence Time) of Sale and Leaseback Transactions (other than Sale and
Leaseback Transactions permitted by clause (1) under the heading "--Limitations
on Sale and Leaseback
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Transactions" below) entered into after the date of the indenture and in
existence at the Incurrence Time (less the aggregate amount of proceeds of such
Sale and Leaseback Transactions which shall have been applied in accordance
with clause (3) under "--Limitations on Sale and Leaseback Transactions"), does
not exceed 15% of Consolidated Net Tangible Assets.
LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS. The indenture provides
that neither we nor any of our Restricted Subsidiaries will enter into any Sale
and Lease-Back Transaction with respect to any Principal Property unless
either:
(1) we or such Restricted Subsidiary would (at the time of entering into
such arrangement) be entitled pursuant to the foregoing covenant
relating to "--Limitation on Liens," without equally and ratably
securing the notes, to issue, assume or guarantee indebtedness secured
by a Lien on such Principal Property; or
(2) our Attributable Debt and the Attributable Debt of our Restricted
Subsidiaries in respect of such Sale and Leaseback Transaction and all
other Sale and Leaseback Transactions entered into after the date of
the indenture (other than such Sale and Leaseback Transactions as are
permitted by clause (1) or clause (3) of this paragraph), plus the
aggregate principal amount of Debt secured by Liens on Principal
Properties then outstanding (excluding any such Debt secured by Liens
covered in subdivisions (A) through (H) under the heading
"--Limitation on Liens" above) which do not equally and ratably secure
the notes, would not exceed 15 % of Consolidated Net Tangible Assets;
or
(3) we, within 180 days after the sale or transfer: (A) apply or cause a
Restricted Subsidiary to apply an amount equal to the greater of the
net proceeds of such sale or transfer or the fair market value of the
Principal Property so sold and leased back at the time of entering
into such Sale and Leaseback Transaction (in either case as determined
by the Board of Directors) to the retirement of the notes or other of
our indebtedness (other than indebtedness subordinated to the notes)
or indebtedness of a Restricted Subsidiary, for money borrowed, having
a stated maturity more than 12 months from the date of such
application or which is extendible at the option of the obligor
thereon to a date more than 12 months from the date of such
application, provided that the amount to be so applied shall be
reduced by (i) the principal amount of notes delivered within 180 days
after such sale or transfer to the trustee for retirement and
cancellation, and (ii) the principal amount of any such indebtedness
of us or a Restricted Subsidiary other than notes voluntarily retired
by us or a Restricted Subsidiary within 180 days after such sale or
transfer; or (B) invest an equal amount, or the amount not so applied
pursuant to clause (A), in Additional Assets (including investments in
Additional Assets by a Restricted Subsidiary); provided, further, that
notwithstanding the foregoing, no retirement referred to in this
clause (3) may be affected by payment at Maturity; or
(4) the lease period for such Sale and Leaseback Transaction, including
renewals, is for not more than three years.
Notwithstanding the foregoing, where we are, or any Restricted Subsidiary
is, the lessee in any Sale and Leaseback Transaction, Attributable Debt shall
not include any Debt resulting from the guarantee by us or any other Restricted
Subsidiary of the lessee's obligation thereunder.
CERTAIN DEFINITIONS
The term "Additional Assets" means (i) any property or assets (other than
indebtedness and Capital Stock) in a Related Business, including improvements
to existing assets, used by us or a Restricted Subsidiary in a Related
Business; (ii) Capital Stock of a person that becomes a Restricted Subsidiary
as a result of the acquisition of such Capital Stock by us or another
Restricted Subsidiary; provided, however, that any such Restricted Subsidiary
is primarily engaged in a Related Business;
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(iii) Capital Stock constituting an additional equity interest in any person
that at such time is a Restricted Subsidiary that is not a wholly-owned
subsidiary; or (iv) the costs of improving or developing any property owned by
us or a Restricted Subsidiary that is used in a Related Business.
The term "Attributable Debt" means, in respect of a Sale and Leaseback
Transaction and as of any particular time, the present value (discounted at the
rate of interest implicit in the terms of the lease involved in such Sale and
Leaseback Transaction, as determined in good faith by us) of the obligation of
the lessee thereunder for net rental payments (excluding, however, any amounts
required to be paid by such lessee, whether or not designated as rent or
additional rent, on account of maintenance and repairs, services, insurance,
taxes, assessments, water rates or similar charges or any amounts required to
be paid by such lessee thereunder contingent upon monetary inflation or the
amount of sales, maintenance and repairs, insurance, taxes, assessments, water
rates or similar charges) during the remaining term of such lease (including
any period for which such lease has been extended or may, at the option of the
lessor, be extended).
The term "Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any preferred stock, but excluding any debt securities convertible
into such equity.
The term "Consolidated Net Tangible Assets" means the aggregate amount of
assets (less applicable reserves and other properly deductible items) after
deducting therefrom (a) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles, and (b) all
current liabilities, all as shown on our most recent consolidated financial
statements filed with the SEC prior to the time as of which "Consolidated Net
Tangible Assets" shall be determined.
The term "Maturity," when used with respect to any security, means the
date on which the principal of such security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.
The term "Principal Property" means any single racetrack facility or
business unit located within the United States of America (other than its
territories and possessions) and owned or operated by, or leased to, us or any
Subsidiary, the book value of the property and equipment of which (as shown,
net of depreciation, on the books of the owner or owners thereof) is not less
than 4% of the Consolidated Net Tangible Assets as shown on our most recent
consolidated financial statements filed with the SEC, except (a) any such
facility (i) owned or operated or leased jointly or in common with one or more
Persons other than by us or our Subsidiaries, in which our interest and the
interest of our Subsidiaries does not exceed 50%, or (ii) which the Board of
Directors determines by Board Resolution in good faith is not of material
importance to the total business conducted, or assets owned, by us and our
Subsidiaries as an entirety, or (b) any portion of any such facility which the
Board of Directors determines by Board Resolution in good faith not to be of
material importance to the use or operation of such facility.
The term "Related Business" means any business related, ancillary or
complementary (as determined in good faith by the Board of Directors) to our
business and the Restricted Subsidiaries on the issue date.
The term "Restricted Subsidiary" means any of our Subsidiaries
substantially all the property of which is located, or substantially all of the
business of which is carried on, within the United States of America (other
than its territories and possessions) which shall at the time, directly or
indirectly through one or more Subsidiaries or in combination with one or more
other Subsidiaries, own, operate or be a lessee of a Principal Property.
The term "Subsidiary" shall mean, as to any person, a corporation,
partnership, limited liability company or other entity of which the shares of
stock or other ownership interests having ordinary
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voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or management of which is otherwise
controlled, directly or indirectly, through one or more intermediaries, or
both, by such person. For purposes of the indenture, all Subsidiaries are also
our affiliates.
CONSOLIDATION, MERGER AND SALE OF ASSETS
The indenture provides that we may not consolidate with or merge into, or
convey, transfer or lease our and our Subsidiaries properties and assets
substantially as an entirety to, any Person, referred to as a "successor
Person," and may not permit any Person to merge into, or convey, transfer or
lease our properties and assets substantially as an entirety to, us, unless:
(i) the successor Person (if any) is a corporation, partnership, trust or
other entity organized and validly existing under the laws of any
domestic jurisdiction and assumes our obligations on the notes and
under the indenture;
(ii) immediately after giving effect to the transaction, no Event of
Default, and no event that, after notice or lapse of time or both,
would become an Event of Default, has occurred and is continuing;
(iii) if, as a result of the transaction, our property or the property of
any of our Restricted Subsidiaries becomes subject to a Lien that
would not be permitted under the provisions described under the
heading "Restrictive Covenants--Limitations on Liens" above, we take
such steps as shall be necessary to secure the notes, if any, equally
and ratably with (or prior to) the indebtedness secured by such Lien;
and
(iv) certain other conditions are met (Section 801).
EVENTS OF DEFAULT
The following are Events of Default under the indenture with respect to
the notes:
/bullet/ failure to pay principal of or premium, if any, on any notes when
due;
/bullet/ failure to pay any interest on any notes when due, continued for
30 days;
/bullet/ failure to perform any of our covenants in the indenture,
continued for 60 days after written notice has been given by the
trustee, or the holders of at least 25% in principal amount of the
outstanding notes, as provided in the indenture;
/bullet/ if any guarantee of the notes shall be deemed to be unenforceable
or invalid in any judicial proceeding or shall cease to be in full
force and effect, or any guarantor or any person acting on behalf
of any guarantor shall deny or disaffirm its obligations under its
guarantee; and
/bullet/ certain events in bankruptcy, insolvency or reorganization.
If an Event of Default (other than an Event of Default relating to
bankruptcy, insolvency or reorganization as described above) with respect to
the notes occurs and is continuing, either the trustee or the holders of at
least 25% in aggregate principal amount of the outstanding notes may declare
the principal amount of the notes to be due and payable immediately. If an
Event of Default relating to bankruptcy, insolvency or reorganization as
described above with respect to the notes occurs, the principal amount of all
the notes will automatically, and without any action by the trustee or any
holder, become immediately due and payable. After any such acceleration, but
before a judgment or decree for the payment of money based on such acceleration
has been obtained by the
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trustee, the holders of a majority in aggregate principal amount of the notes,
may under certain circumstances, rescind and annul such acceleration if all
Events of Default, other than the nonpayment of accelerated principal (or other
specified amount), have been cured or waived as provided in the indenture
(Section 502). For information as to waiver of defaults, see "Modification and
Waiver" below.
Subject to the provisions of the indenture relating to the duties of the
trustee, in case an Event of Default occurs and is continuing, the trustee will
be under no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders, unless such
holders shall have offered to the trustee reasonable indemnity (Section 603).
Subject to such provisions for the indemnification of the trustee, the holders
of a majority in aggregate principal amount of the notes will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power conferred on the
trustee with respect to the notes (Section 512).
Holders of notes do not have any right to institute any proceeding with
respect to the indenture, or for the appointment of a receiver or a trustee, or
for any other remedy thereunder, unless:
(i) such holder has previously given to the trustee written notice of a
continuing Event of Default with respect to the notes;
(ii) the holders of at least 25% in aggregate principal amount of the
notes have made written request, and such holder or holders have
offered reasonable indemnity, to the trustee to institute such
proceeding as trustee; and
(iii) the trustee has failed to institute such proceeding, and has not
received from the holders of a majority in aggregate principal amount
of the notes a direction inconsistent with such request, within 60
days after such notice, request and offer (Section 507).
However, such limitations do not apply to a suit instituted by a holder of
notes for the enforcement of payment of the principal of or any premium or
interest on such notes on or after the due date of such notes (Section 508).
We will be required to furnish to the trustee annually a statement as to
our performance of our covenants and agreements under the indenture. We must
also specify all such known defaults under the indentures (Section 1004).
MODIFICATION AND WAIVER
Modifications or amendments of the indenture may be made by us and the
trustee with the consent of the holders of a majority in aggregate principal
amount of the notes, except that no such modification or amendment may, without
the consent of the holders of all the notes to:
(a) change the Stated Maturity of the principal of, or any installment of
principal of or interest on, the notes;
(b) reduce the principal amount of, or any premium or interest on, the
notes;
(c) reduce the amount of principal payable upon acceleration of the
Maturity of the notes;
(d) change the place or currency of payment of principal of, or any
premium or interest on, the notes;
(e) impair the right to institute suit for the enforcement of any payment
on or with respect to the notes;
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(f) reduce the percentage in principal amount of notes, the consent of
whose holders is required for modification or amendment of the
indenture;
(g) reduce the percentage in principal amount of notes necessary for
waiver of compliance with certain provisions of the indenture or for
waiver of certain defaults; or
(h) modify the provisions of the indenture with respect to modification
and waiver (Section 902).
The holders of a majority in principal amount of the notes may waive our
compliance with certain restrictive provisions of the indenture (Sections 1010
and 1008). The holders of a majority in principal amount of the notes may waive
any past default under the indenture, except a default in the payment of
principal, premium or interest and certain covenants and provisions of the
indenture which cannot be amended without the consent of the holder of each
outstanding note (Section 513).
We will be entitled to set any day as a record date for the purpose of
determining the holders of outstanding notes entitled to give or take any
direction, notice, consent, waiver or other action under the indenture, in the
manner and subject to the limitations provided in the indenture, except in
limited circumstances. In certain limited circumstances, the trustee will be
entitled to set a record date for action by holders. If a record date is set
for any action to be taken by holders of notes, such action may be taken only
by persons who are holders of outstanding notes on the record date. To be
effective, such action must be taken by holders of the requisite principal
amount of such notes within a specified period following the record date. For
any particular record date, this period will be 180 days or such shorter period
as we may specify (or the trustee, if it set the record date), and may be
shortened or lengthened (but not beyond 180 days) from time to time (Section
104).
DEFEASANCE AND COVENANT DEFEASANCE
We may elect at any time to have the provisions of Section 1302, relating
to defeasance and discharge of indebtedness, or Section 1303, relating to
defeasance of certain restrictive covenants in the indenture, applied to the
notes or to any specified part of the notes.
/bullet/ DEFEASANCE AND DISCHARGE. The indenture provides that we will be
discharged from all of our obligations with respect to such notes
(except for certain obligations to exchange or register the
transfer of notes, to replace stolen, lost or mutilated notes, to
maintain paying agencies and to hold moneys for payment in trust)
upon the deposit in trust for the benefit of the holders of such
notes of money or U.S. Government Obligations, or both, that,
through the payment of principal and interest in respect thereof
in accordance with their terms, will provide money in an amount
sufficient to pay the principal of, and any premium and interest
on, the notes on the Stated Maturity in accordance with the terms
of the indenture and the notes. Such defeasance or discharge may
occur only if, among other things, we have delivered to the
trustee an Opinion of Counsel to the effect that we have received
from, or there has been published by, the United States Internal
Revenue Service a ruling, or there has been a change in tax law,
in either case to the effect that holders of the notes will not
recognize gain or loss for federal income tax purposes as a result
of such deposit, defeasance and discharge and will be subject to
federal income tax on the same amount, in the same manner and at
the same times as would have been the case if such deposit,
defeasance and discharge were not to occur (Sections 1302 and
1304).
/bullet/ DEFEASANCE OF CERTAIN COVENANTS. The indenture provides that we
may omit to comply with certain restrictive covenants, including
those described under "--Restrictive Covenants" and in the last
sentence under "--Consolidation, Merger and Sale of Assets," and
the occurrence of certain Events of Default will be deemed not to
be or result in an Event of Default, in each case with respect to
the notes. In order to do so, we will be required to deposit, in
trust for the benefit of the holders of the notes, money or U.S.
Government Obligations, or both, that, through the payment of
principal and interest in respect thereof in accordance with their
terms,
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will provide money in an amount sufficient to pay the principal
of, and any premium and interest, on the notes on the Stated
Maturity in accordance with the terms of the indenture and the
notes. We will also be required, among other things, to deliver to
the trustee an Opinion of Counsel to the effect that holders of
the notes will not recognize gain or loss for federal income tax
purposes as a result of such deposit and defeasance of certain
obligations and will be subject to federal income tax on the same
amount, in the same manner and at the same times as would have
been the case if such deposit and defeasance were not to occur. In
the event we exercise this option with respect to any notes and
such notes are declared due and payable because of the occurrence
of any Event of Default, the amount of money and U.S. Government
Obligations so deposited in trust would be sufficient to pay
amounts due on the notes at the time of their Stated Maturity but
may not be sufficient to pay amounts due on the notes upon any
acceleration resulting from such Event of Default. In such case,
we would remain liable for such payments (Sections 1303 and 1304).
NOTICES
Notices to Holders of notes will be given by mail to the addresses of such
holders as they appear in the Register of notes (Sections 101 and 106).
TITLE
We, the trustee and any of our or the trustee's agents may treat the
Person in whose name any note is registered as the absolute owner of the note
(whether or not the note may be overdue) for the purpose of making payment and
for all other purposes (Section 308).
GOVERNING LAW
The indenture is and the registered notes will be governed by, and
construed in accordance with, the law of the State of New York (Section 112).
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the material U.S. federal income
and estate tax considerations we expect to apply to a holder's acquisition,
holding and disposition of a registered note. This discussion is based on the
Internal Revenue Code of 1986, Treasury regulations promulgated hereunder,
administrative positions of the Internal Revenue Service (the "IRS") and
judicial decisions now in effect, all of which are subject to change, possibly
with retroactive effect, or to different interpretations. There can be no
assurance that the IRS will not challenge one or more of the conclusions
described herein. We have not obtained, and do not intend to obtain, a ruling
from the IRS with respect to the U.S. federal income tax consequences of
acquiring, holding or disposing of a registered note. This discussion does not
purport to deal with all aspects of U.S. federal income taxation that may be
relevant to a particular holder in light of the holder's circumstances (for
example, a person subject to the alternative minimum tax provisions of the
Code). In addition, it is not intended to be wholly applicable to all
categories of investors, some of which (like dealers in securities, banks,
insurance companies, tax-exempt organizations, persons holding a registered
note as part of a "straddle," "hedge," "conversion transaction" or other risk
reduction transaction and persons who have a "functional currency" other than
the U.S. dollar) may be subject to special rules. The discussion also does not
address any aspect of state, local or foreign law, or U.S. federal estate and
gift tax law other than U.S. federal estate tax law as applicable to a
"Non-U.S. Holder" (as defined below). In addition, this discussion is limited
to an original holder of a registered note who acquired an outstanding note
exchanged for the registered note on its original issue date and at its
original issue price within the meaning of Section 1273 of the Code and who
will hold the registered note as a "capital asset" within the meaning of
Section 1221 of the Code.
HOLDERS OF OUTSTANDING NOTES ARE ADVISED TO CONSULT THEIR TAX ADVISERS
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
ACQUISITION, OWNERSHIP AND DISPOSITION OF THE REGISTERED NOTES.
EXCHANGE OF NOTES
The exchange of an outstanding note for a registered note pursuant to the
exchange offer should not be a taxable exchange for U.S. Federal income tax
purposes. Accordingly, a registered note acquired in exchange for an
outstanding note should have the same adjusted basis, holding period, issue
price, adjusted issue price, stated redemption price at maturity, yield and
accrual periods as the outstanding note had in the hands of its beneficial
owner immediately before the exchange. The tax consequences of ownership and
disposition of a registered note should be the same as the tax consequences of
the ownership and disposition of the outstanding note surrendered in exchange
for it.
Accordingly, in the following discussion, the U.S. Federal income tax
consequences with respect to a registered note assume that the registered note
is treated, for U.S. Federal income tax purposes, as the same note as the
outstanding note for which it was issued and that the registered note has the
same adjusted basis, holding period, issue price, adjusted issue price, stated
redemption price at maturity, yield and accrual periods as the outstanding note
had in the hands of its beneficial owner immediately before the exchange, and
that any amounts that accrue or are paid or payable on an outstanding note are
treated as accruing or as paid or payable on the registered note.
U.S. HOLDERS
The following discussion is limited to a holder of a registered note that
is a "U.S. Holder." For purposes of this discussion, a "U.S. Holder" is a
beneficial owner of a registered note that for U.S. federal income tax purposes
is (i) a citizen or resident (as defined in Section 7701(b) of the Code) of the
United States, (ii) a corporation or partnership (or an entity treated as a
corporation or partnership) created or organized in the United States or under
the law of the United States, any state or the District of Columbia, (iii) an
estate the income of which is subject to U.S. federal income
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taxation regardless of source or (iv) a trust if a U.S. court is able to
exercise primary supervision over the administration of the trust and one or
more U.S. persons have the authority to control all substantial decisions of
the trust.
TAXATION OF STATED INTEREST ON THE REGISTERED NOTES. Generally, payments
of "qualified stated interest" will be includible in a U.S. Holder's gross
income and taxable as ordinary income for U.S. federal income tax purposes at
the time they are paid or accrue in accordance with the U.S. Holder's regular
method of tax accounting. Generally, "qualified stated interest" payments
include stated interest payments that are unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually at a
single fixed rate that appropriately takes into account the length of intervals
between payments.
ORIGINAL ISSUE DISCOUNT ON THE REGISTERED NOTES. The outstanding notes
were issued with a DE MINIMIS amount of original issue discount or "OID," and
each registered note therefore should have the same DE MINIMIS OID as the
outstanding note exchanged therefor. A U.S. Holder is not required to include
DE MINIMIS OID on a registered note in income in advance of the receipt of the
corresponding cash payments on the registered note. The amount of DE MINIMIS
OID with respect to each registered note will be equal to the excess of (i) the
"stated redemption price at maturity" of the registered note (100% of its
principal amount) over (ii) the "issue price" of the registered note (99.845%
of its principal amount).
A U.S. Holder may elect (the "Accrual Election") to include in gross
income, on the constant yield method specified in the Treasury regulations, all
income on a registered note (including stated interest, OID, DE MINIMIS OID,
market discount, acquisition discount, DE MINIMIS market discount and unstated
interest), as adjusted by any amortizable bond premium or acquisition premium.
In applying the constant yield method to a registered note with respect to
which the Accrual Election has been made, the issue price of the registered
note will equal the electing U.S. Holder's adjusted basis in the registered
note immediately after its acquisition, the issue date of the registered note
will be the date of its acquisition by the electing U.S. Holder, and no
payments on the registered note will be treated as payments of qualified stated
interest. An Accrual Election will generally apply only to the registered note
with respect to which it is made and may not be revoked without the consent of
the IRS. Any Accrual Election made with respect to an outstanding note or a
registered note should be treated as an Accrual Election made with respect to
the corresponding registered note or outstanding note, respectively.
ADJUSTED TAX BASIS. A U.S. Holder's tax basis in a registered note for
which an Accrual Election has been made will be increased by the amount of OID
that the U.S. Holder includes in income pursuant to the rules described in the
preceding paragraph through the day preceding the day of disposition and will
be decreased by the amount of any cash payments received on the registered
note. In other cases, a U.S. Holder's tax basis in a registered note generally
will be the U.S. Holder's purchase price for the registered note.
SALE, EXCHANGE OR RETIREMENT OF A REGISTERED NOTE. Each U.S. Holder
generally will recognize capital gain or loss upon a sale, exchange or
retirement of a registered note measured by the difference, if any, between (i)
the amount of cash and the fair market value of any property received (except
to the extent that the cash or other property received in respect of a
registered note is attributable to the payment of accrued interest on the
registered note not previously included in income, which amount will be taxable
as ordinary income) and (ii) the holder's adjusted tax basis in the instrument.
In each case, the gain or loss will be long-term capital gain or loss if the
registered note has been held for more than one year at the time of the sale,
exchange or retirement. Long-term capital gain recognized on a sale, exchange
or retirement of a registered note by certain noncorporate U.S. Holders is
subject to tax at a maximum tax rate of 20%.
Prospective acquirors of registered notes should be aware that the resale
of a registered note may be affected by the "market discount" rules of the
Code, under which a portion of any gain realized on
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the retirement or other disposition of a registered note by a subsequent holder
that acquires the registered note at a market discount generally would be
treated as ordinary income to the extent of the market discount that accrues
while that holder holds the registered note.
INFORMATION REPORTING AND BACKUP WITHHOLDING. A U.S. Holder of a
registered note may be subject, under certain circumstances, to information
reporting and "backup withholding" at a rate of 31% with respect to certain
"reportable payments," including interest on or principal (and premium, if any)
of a note and the gross proceeds from a disposition of a registered note. The
backup withholding rules apply if the holder, among other things, (i) fails to
furnish a social security number or other taxpayer identification number
("TIN") certified under penalties of perjury within a reasonable time after the
request therefor, (ii) furnishes an incorrect TIN, (iii) fails to properly
report the receipt of interest or dividends or (iv) under certain
circumstances, fails to provide a certified statement, signed under penalties
of perjury, that the TIN furnished is the correct number and that the holder is
not subject to backup withholding. A U.S. Holder who does not provide us with
its correct TIN also may be subject to penalties imposed by the IRS. Backup
withholding will not apply with respect to payments made to certain holders,
including corporations and tax-exempt organizations, provided their exemptions
from backup withholding are properly established. We will report annually to
the IRS and to each U.S. Holder of a registered note the amount of any
"reportable payments" and the amount of tax withheld, if any, with respect to
those payments.
Any amounts withheld under the backup withholding rules from a payment to
a U.S. Holder will be allowed as a refund or as a credit against that U.S.
Holder's U.S. federal income tax liability, provided the requisite procedures
are followed.
NON-U.S. HOLDERS
The following discussion is limited to U.S. federal income and estate tax
consequences relevant to a Non-U.S. Holder. As used herein, a "Non-U.S. Holder"
is a beneficial owner of a registered note, that, for U.S. federal income tax
purposes, is (a) a nonresident alien individual, (b) a corporation or
partnership (or an entity treated as a corporation or partnership) created or
organized in or under the law of a country (or a political subdivision thereof)
other than the United States or (c) a foreign estate or trust, which generally
is an estate or trust that is not a U.S. Holder. For purposes of the
withholding tax discussed below (other than backup withholding), a Non-U.S.
Holder includes a nonresident fiduciary of an estate or trust. This discussion
does not address tax consequences relevant to an expatriate or former long-term
resident of the United States or to a person who holds a registered note
through a partnership. A person who holds a registered note through a hybrid
entity (that is, an entity that is fiscally transparent for U.S. federal income
tax purposes but not for foreign tax purposes) may not be entitled to the
benefits of a tax treaty. For example, a person who is a partner in a foreign
partnership or beneficiary of a foreign trust or estate and who is subject to
U.S. federal income tax because of his own status, for example, as a U.S.
resident or a foreign person engaged in trade or business in the United States,
may be subject to U.S. federal income tax even though the foreign partnership,
trust or estate is not itself subject to U.S. federal income tax. For purposes
of the following discussion, "U.S. trade or business income" of a Non-U.S.
Holder generally means interest or gain on a sale, exchange or retirement of a
registered note if that interest or gain is (i) effectively connected with
trade or business conducted by the Non-U.S. Holder within the United States or
(ii) in most cases of a resident of a country with which the United States has
an income tax treaty, attributable to a permanent establishment (or fixed base)
of the Non-U.S. Holder in the United States.
STATED INTEREST AND OID ON THE REGISTERED NOTES. In general, interest (and
premium, if any) paid to (and, if an Accrual Election has been made, OID paid
to or accrued by) a Non-U.S. Holder of a registered note will not be subject to
U.S. withholding tax if it qualifies for the portfolio interest exemption, and
it will not otherwise be subject to U.S. federal income tax if it is not U.S.
trade or business income of the Non-U.S. Holder. Interest (and such OID) on a
registered note qualifies for the portfolio interest exemption if (i) the
Non-U.S. Holder of the registered note (a) does not own,
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actually and constructively, 10% or more of the total combined voting power of
all classes of our stock entitled to vote, (b) is not a controlled foreign
corporation related, directly or indirectly, to us through stock ownership and
(c) is not a bank receiving interest on an extension of credit made pursuant to
a loan agreement made in the ordinary course of its trade or business and (ii)
either (a) the Non-U.S. Holder certifies, under penalties of perjury, to us or
the paying agent, as the case may be, that it is a Non-U.S. Holder and provides
its name and address or (b) a securities clearing organization, bank or other
financial institution that holds customers' securities in the ordinary course
of its trade or business (a "Financial Institution") and holds the registered
note on behalf of the Non-U.S. Holder certifies, under penalties of perjury,
that it or a Financial Institution between it and the Non-U.S. Holder has
received such a certificate and furnishes the payor with a copy thereof.
Recently adopted Treasury regulations that generally will be effective for
payments made on or after January 1, 2001 provide alternative methods for
satisfying the certification requirement described in (ii) above. The new
regulations generally will require, in the case of a registered note held by a
foreign partnership, that the certificate described in (ii) above must be
provided by the partners rather than by the foreign partnership and that the
partnership must provide certain information, including a U.S. TIN.
Interest and premium, if any (and, if an Accrual Election has been made,
OID) paid to or accrued by a Non-U.S. Holder that constitutes U.S. trade or
business income will be subject to U.S. federal income tax on a net income
basis at graduated rates in the same manner that a U.S. taxpayer is subject to
tax and will be exempt from the withholding tax described above. In the case of
a Non-U.S. Holder that is a corporation, U.S. trade or business income under
certain circumstances also will be subject to an additional branch profits tax
at a 30% rate (or, if applicable, a lower treaty rate). The gross amount of
interest (and premium, if any, and, if an Accrual Election has been made, OID)
paid to a Non-U.S. Holder that does not qualify for the portfolio interest
exemption and that is not U.S. trade or business income will be subject to
withholding of U.S. federal income tax at the rate of 30%, unless a U.S. income
tax treaty reduces or eliminates withholding. To claim the benefit of a tax
treaty or to claim an exemption from withholding because income is U.S. trade
or business income, a Non-U.S. Holder must provide a properly executed Form
1001 or 4224 (or a successor form), as applicable, prior to the payment of the
income. These forms generally must be updated periodically. Under the new
regulations, a Non-U.S. Holder claiming either of those exemptions will be
required to provide an IRS Form W-8. In addition, under the new regulations, a
Non-U.S. Holder who is claiming the benefits of a tax treaty may be required to
obtain a U.S. TIN and to provide certain documentary evidence issued by a
foreign governmental authority to prove residence in the foreign country.
Special procedures are provided in the new regulations for payments through
qualified intermediaries. A holder of an outstanding note should consult its
own tax adviser regarding the effect, if any, of the new regulations on it.
SALE, EXCHANGE OR RETIREMENT OF A REGISTERED NOTE. Subject to the
discussion below of backup withholding, gain recognized by a Non-U.S. Holder on
a sale, exchange or retirement of a registered note generally will not be
subject to U.S. federal income tax unless (i) the gain is U.S. trade or
business income of the Non-U.S. Holder or (ii) subject to certain exceptions,
the Non-U.S. Holder is an individual who holds the registered note as a capital
asset and is present in the United States for 183 days or more in the taxable
year of the disposition.
Prospective acquirors of registered notes should be aware that the resale
of a registered note to a U.S. Holder may be affected by the "market discount"
rules of the Code, under which a portion of any gain realized on retirement or
other disposition of a registered note by a subsequent holder that is a U.S.
Holder that acquires the registered note at a market discount generally would
be treated as ordinary income to the extent of the market discount that accrued
while the U.S. Holder holds the registered note.
FEDERAL ESTATE TAX. A registered note that is owned, or treated as owned,
by an individual who is not a citizen of the United States and who is not
domiciled in the United States at the time of death will not be subject to U.S.
federal estate tax, provided the individual did not own, actually and
constructively, 10% or more of the total combined voting power of all classes
of our stock entitled to
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vote and provided the income on the registered note was not U.S. trade or
business income. A registered note that is owned, or is treated as owned, by an
individual who is domiciled in the United States at the time of death will be
subject to U.S. federal estate tax regardless of whether such holder is neither
a citizen nor a resident of the United States.
INFORMATION REPORTING AND BACKUP WITHHOLDING. We must report annually to
the IRS and to each Non-U.S. Holder any interest (or OID) that is subject to
U.S. withholding tax or that is exempt from withholding pursuant to a tax
treaty or the portfolio interest exception. Copies of these information returns
also may be made available under the provisions of a specific treaty or
agreement to the tax authorities of the country in which the Non-U.S. Holder
resides. Information reporting and backup withholding (at a rate of 31%) do not
apply to interest (or OID) paid to a Non-U.S. Holder if the holder makes the
requisite certification or otherwise establishes an exemption provided that
neither we nor our paying agent has actual knowledge that the holder is not a
Non-U.S. Holder or that the conditions of any other exemption are not, in fact,
satisfied.
Backup withholding and information reporting do not apply to our payments
of principal of a registered note to a Non-U.S. Holder if the holder certifies
under penalties of perjury that it is not a U.S. Holder or otherwise
establishes an exemption provided that neither we nor our paying agent has
actual knowledge that the holder is not a Non-U.S. Holder or that the
conditions of any other exemption are not, in fact, satisfied.
The payment of the proceeds from the disposition of a registered note to
or through the U.S. office of any broker, U.S. or foreign, is subject to
information reporting and possible backup withholding unless the owner
certifies under penalties of perjury that it is not a U.S. Holder or otherwise
establishes an exemption provided that the broker does not have actual
knowledge that the holder is not a Non-U.S. Holder or that the conditions of
any other exemption are not, in fact, satisfied.
The proceeds of a disposition of a registered note by a Non-U.S. Holder to
or through a foreign office of a broker will not be subject to backup
withholding. However, information reporting will apply in the case of a "U.S.
related broker" unless the broker has documentary evidence in its files of the
Non-U.S. Holder's foreign status and has no actual knowledge to the contrary or
unless the Non-U.S. Holder otherwise establishes an exemption. A broker is a
"U.S. related broker" if the broker is a United States person, a controlled
foreign corporation for U.S. federal income tax purposes, a foreign person 50%
or more of whose income from all sources for a designated period is from or,
with respect to payments made on or after January 1, 2001, a foreign
partnership that, at any time during its taxable year, is owned 50% or more (by
income or capital interest) by United States persons or is engaged in the
conduct of trade or business in the United States. The new regulations provide
certain presumptions under which a Non-U.S. Holder will be subject to backup
withholding and information reporting unless the Non-U.S. Holder provides a
certification as to its status as a Non-U.S. Holder.
Any amounts withheld under the backup withholding rules from a payment to
a Non-U.S. Holder will be allowed as a refund or as a credit against the
Non-U.S. Holder's U.S. federal income tax liability, provided the requisite
procedures are followed.
PLAN OF DISTRIBUTION
Each broker-dealer that receives registered notes in exchange for
outstanding notes for its own account pursuant to the exchange offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such registered notes. This prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in connection with resales of
registered notes received in exchange for outstanding notes where such
outstanding notes were acquired as a result of market-making activities or
other trading activities. We have agreed that we will make this prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale for a period of six months after consummation of the
exchange offer.
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We will not receive any proceeds from any sale of registered notes by
broker-dealers. Registered notes received by broker-dealers for their own
account pursuant to the exchange offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the registered notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such registered notes. Any
broker-dealer that effects any resale of registered notes that were received by
it for its own account pursuant to the exchange offer and any broker or dealer
that participates in a distribution of such registered notes may be deemed to
be an "underwriter" within the meaning of the Securities Act and any profit on
any such resale of registered notes and any commissions or concessions received
by any such persons may be deemed to be underwriting compensation under the
Securities Act. The Letter of Transmittal states that by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of six months after consummation of the exchange offer, we
will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests such documents
in the letter of transmittal. We have agreed to pay all expenses incident to
the exchange offer (including the expenses of one counsel for the holders of
the outstanding notes) other than commissions or concessions of any brokers or
dealers and will indemnify the holders of the outstanding notes (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, information statements and
other information with the SEC. Prior to the Penske Acquisition, Penske
Motorsports also filed annual, quarterly and special reports, information
statements and other information with the SEC. You may read and copy any
reports, statements and other information we file or that Penske Motorsports
filed prior to the Penske Acquisition at the SEC's public reference rooms in
Washington, D.C., New York, New York, and Chicago, Illinois. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms.
Ours as well as Penske Motorsports' SEC filings are also available to the
public from commercial document retrieval services and at the web site
maintained by the SEC at "http://www.sec.gov." We have filed a registration
statement on Form S-4 with the SEC to register under the Securities Act the
registered notes. This prospectus is part of that registration statement. As
allowed by the SEC's rules, this prospectus does not contain all of the
information you can find in the registration statement or the exhibits to the
registration statement.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" information in this
prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The
information incorporated by reference is considered to be part of this
prospectus, except for any information that is superseded by information that
is included directly in this prospectus or in any other subsequently filed
document which we also incorporated by reference. We incorporate by reference
the documents listed below and any future filings we will make with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of
this prospectus and prior to the termination of the exchange offer:
/bullet/ Our Annual Report on Form 10-K for the fiscal year ended November
30, 1998;
/bullet/ Our Quarterly Reports on Form 10-Q for the fiscal quarters ended
February 28, 1999, May 31, 1999 and August 31, 1999;
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/bullet/ Our Current Reports on Form 8-K filed May 6, 1999, May 12, 1999,
June 3, 1999, July 1, 1999, July 6, 1999, July 28, 1999, September
27, 1999, October 6, 1999, October 8, 1999, January 4, 2000 and
January 13, 2000; and
/bullet/ Penske Motorsports' Annual Report on Form 10-K for the fiscal year
ended December 31, 1998.
You can obtain copies of any of the documents incorporated by reference in
this document without charge, excluding any exhibits to those documents unless
the exhibit is specifically incorporated by reference as an exhibit to this
prospectus, by requesting them in writing or by telephone to:
International Speedway Corporation
1801 West International Speedway Boulevard
Daytona Beach, Florida 32114
Attention: Wes Harris, Director of Investor Relations
(904) 254-2700
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. We may not
make an offer of the registered notes in any state where the offer is not
permitted. The delivery of this prospectus does not, under any circumstances,
mean that there has not been a change in our affairs since the date of this
prospectus. It also does not mean that the information in this prospectus or in
the documents we incorporate in this prospectus by reference is correct after
this date.
LEGAL MATTERS
The validity of the registered notes offered hereby will be passed upon by
Greenberg Traurig, P.A., Miami, Florida
EXPERTS
The consolidated financial statements (including the schedule incorporated
by reference) of International Speedway as of November 30, 1997 and 1998, and
for the year ended August 31, 1996, the three-month period ended November 30,
1996, and the fiscal years ended November 30, 1997 and 1998, incorporated by
reference in this prospectus and the registration statement have been audited
by Ernst & Young LLP, independent certified public accountants, as set forth in
their report thereon incorporated by reference elsewhere herein, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of Penske Motorsports as of December
31, 1997 and 1998, and for each of the three years in the period ended December
31, 1998, incorporated by reference in this prospectus and the registration
statement have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports thereon incorporated by reference elsewhere herein, and
have been so included in reliance upon the reports of such firm given upon
their authority as experts in accounting and auditing.
75
<PAGE>
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WE HAVE NOT AUTHORIZED ANY DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS
PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL. THIS PROSPECTUS AND THE
ACCOMPANYING LETTER OF TRANSMITTAL DO NOT OFFER TO SELL OR BUY ANY SECURITIES IN
ANY JURISDICTION WHERE IT IS UNLAWFUL.
--------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Cautionary Statement Regarding
Forward-Looking Statements ..................... i
Prospectus Summary ................................ 1
Risk Factors ...................................... 14
Use of Proceeds ................................... 19
Capitalization .................................... 20
Selected Financial Data ........................... 21
Pro Forma Financial Data .......................... 23
Management's Discussion and
Analysis of Financial Condition
and Results of Operations ...................... 28
Description of the Senior Credit Facility ......... 35
Motorsports Industry Overview ..................... 36
Business .......................................... 40
The Exchange Offer ................................ 46
Description of the Registered Notes ............... 55
Certain United States Federal Income
Tax Consequences ............................... 69
Plan of Distribution .............................. 73
Where You Can Find More Information ............... 74
Documents Incorporated By Reference ............... 74
Legal Matters ..................................... 75
Experts ........................................... 75
</TABLE>
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[ISC LOGO]
INTERNATIONAL SPEEDWAY
CORPORATION
OFFER TO EXCHANGE
$225,000,000
ALL OUTSTANDING
7.875% SENIOR NOTES
DUE 2004
FOR
REGISTERED
7.875% SENIOR NOTES
DUE 2004
-----------------------------------
PROSPECTUS
-----------------------------------
JANUARY 24, 2000
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