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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 18, 1996
SPEEDWAY MOTORSPORTS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-13582 51-0363307
(State or other jurisdiction of Commission File (I.R.S. Employer
incorporation) Number Identification No.)
U.S. Highway 29 North, Concord, North Carolina 28026
(Address of principal executive offices) (Zip Code)
(704) 455-3239
(Registrant's telephone number, including area code)
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(Former name of former address, if changed since last report)
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This report is an amendment to the Registrant's report on Form 8-K dated
November 18, 1996 that was filed with the Securities and Exchange Commission on
December 3, 1996 (the "Initial Form 8-K Report"). This amending report contains
the required audited financial statements and unaudited pro forma financial
information referenced previously in the Initial Form 8-K Report.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired. Attached as an exhibit to this
amending report on Form 8-K/A are the following:
BRENDA RACEWAY CORPORATION:
Independent Auditors' Report
Financial Statements:
Balance Sheet at October 31, 1996;
Statement of Income and Deficit for the Year Ended October 31, 1996;
Statement of Cash Flows for the Year Ended October 31, 1996;
Notes to Financial Statements
(b) Pro Forma Financial Information. Attached as an exhibit to this amending
report on Form 8-K/A are the following:
UNAUDITED PRO FORMA FINANCIAL STATEMENTS REFLECTING THE BUSINESS COMBINATION
OF SPEEDWAY MOTORSPORTS, INC. AND SEARS POINT RACEWAY (FORMERLY OPERATED AS
BRENDA RACEWAY CORPORATION)
Description of Unaudited Pro Forma Financial Statements;
Pro Forma Balance Sheet at December 31, 1995 (Unaudited) and Notes thereto;
and Pro Forma Statement of Income for the Year Ended December 31, 1995
(Unaudited) and Notes thereto.
Pro Forma Balance Sheet at September 30, 1996 (Unaudited) and Notes
thereto; and Pro Forma Statement of Income for the Nine Months Ended
September 30, 1996 (Unaudited) and Notes thereto.
(c) Exhibits
Exhibit No. Description
99.1(*) Asset Purchase Agreement dated October 24, 1996 between
Speedway Motorsports, Inc., as buyer, and Brenda Raceway
Corporation.
99.2(*) Master Ground Lease dated November 18, 1996 by and between
Brenda Raceway Corporation and Speedway Motorsports, Inc.
99.3(*) Deed of Trust, Security Agreement and Fixture Filing with
Assignment of Rents and Agreements dated as of November
18, 1996 by Brenda Raceway Corporation to First American
Title Insurance Company for the benefit of Sonoma Funding
Corporation.
99.4(*) Promissory Note secured by Deed of Trust dated November
18, 1996 by Brenda Raceway Corporation in favor of Sonoma
Funding Corporation.
99.5(*) Press Release dated November 13, 1996.
99.6(*) Press Release dated November 20, 1996.
99.7 Financial Statements of Brenda Raceway Corporation for the
year ended October 31, 1996, including Independent
Auditors' Report.
2
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99.8 Unaudited Pro Forma Financial Statements Reflecting the
Business Combination of Speedway Motorsports, Inc. and
Sears Point Raceway for the year ended December 31, 1995.
99.9 Unaudited Pro Forma Financial Statements Reflecting the
Business Combination of Speedway Motorsports, Inc. and
Sears Point Raceway for the nine months ended September
30, 1996.
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* Previously filed.
3
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPEEDWAY MOTORSPORTS, INC.
(Registrant)
Date: _________________ By: /s/ William R. Brooks
William R. Brooks
Vice President, Chief Financial
Officer, Treasurer and Director
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EXHIBIT LIST
Exhibit No. Description
99.1(*) Asset Purchase Agreement dated October 24, 1996 between
Speedway Motorsports, Inc., as buyer, and Brenda Raceway
Corporation.
99.2(*) Master Ground Lease dated November 18, 1996 by and between
Brenda Raceway Corporation and Speedway Motorsports, Inc.
99.3(*) Deed of Trust, Security Agreement and Fixture Filing with
Assignment of Rents and Agreements dated as of November
18, 1996 by Brenda Raceway Corporation to First American
Title Insurance Company for the benefit of Sonoma Funding
Corporation.
99.4(*) Promissory Note secured by Deed of Trust dated November
18, 1996 by Brenda Raceway Corporation in favor of Sonoma
Funding Corporation.
99.5(*) Press Release dated November 13, 1996.
99.6(*) Press Release dated November 20, 1996.
99.7 Financial Statements of Brenda Raceway Corporation for the
year ended October 31, 1996, including Independent
Auditors' Report.
99.8 Unaudited Pro Forma Financial Statements Reflecting the
Business Combination of Speedway Motorsports, Inc. and
Sears Point Raceway for the year ended December 31, 1995.
99.9 Unaudited Pro Forma Financial Statements Reflecting the
Business Combination of Speedway Motorsports, Inc. and
Sears Point Raceway for the nine months ended September
30, 1996.
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* Previously filed.
5
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BRENDA RACEWAY CORPORATION
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 7
FINANCIAL STATEMENTS FOR THE YEAR ENDED OCTOBER 31, 1996:
Balance Sheet 8
Statement of Income and Deficit 9
Statement of Cash Flows 10
Notes to Financial Statements 11-14
6
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INDEPENDENT AUDITORS' REPORT
BRENDA RACEWAY CORPORATION
We have audited the balance sheet of Brenda Raceway Corporation (the Company)
as of October 31, 1996, and the related statements of income and deficit and
of cash flows for the year then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at October 31, 1996, and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Charlotte, North Carolina
January 31, 1997
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BRENDA RACEWAY CORPORATION
BALANCE SHEET
October 31, 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 2)................ $174,600
Trade accounts receivable, less allowance for
doubtful accounts of $45,000 ................... 258,600
Other receivables (Note 6)........................ 213,100
Prepaid expenses ................................. 49,200
Total current assets ........................... 695,500
PROPERTY AND EQUIPMENT, NET (Note 3)............... 9,412,900
DUE FROM AFFILIATES (Note 6)....................... 5,316,500
DEFERRED FINANCING COSTS, NET (Note 2) ............ 429,600
TOTAL ......................................... $15,854,500
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 4)..... $ 349,900
Bank line of credit (Note 4)...................... 225,000
Accounts payable ................................. 432,500
Deferred event income, net (Note 2)............... 119,300
Accrued expenses and other liabilities ........... 238,600
Deposits ......................................... 168,200
Payable to stockholder (Note 6) .................. 5,797,800
Total current liabilities ..................... 7,331,300
LONG-TERM DEBT (Note 4) ........................... 12,369,800
Total liabilities ............................. 19,701,100
CONTINGENCIES (Note 7)
STOCKHOLDER'S DEFICIENCY:
Common stock, no par value, 10,000 shares
authorized, 1,030 shares issued and outstanding . 15,000
Additional paid-in capital ....................... 17,900
Deficit .......................................... (3,879,500)
Total stockholder's deficiency ............. (3,846,600)
TOTAL ......................................... $15,854,500
See notes to financial statements.
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BRENDA RACEWAY CORPORATION
STATEMENT OF INCOME AND DEFICIT
YEAR ENDED OCTOBER 31, 1996
REVENUES (Note 2):
Admissions ...................................... $ 3,867,900
Event related revenue ........................... 4,427,800
Other operating revenue ......................... 1,396,200
Total revenues ........................... 9,691,900
OPERATING EXPENSES:
Direct expense of events ........................ 4,718,300
General and administrative ...................... 3,147,300
Depreciation and amortization ................... 644,300
Total operating expenses ................. 8,509,900
OPERATING INCOME ................................. 1,182,000
INTEREST EXPENSE (Note 6) ........................ (1,653,000)
INTEREST INCOME (Note 6) ......................... 560,100
NET INCOME (Note 2) .............................. 89,100
DEFICIT, BEGINNING OF YEAR ....................... (3,968,600)
DEFICIT, END OF YEAR ............................. $(3,879,500)
See notes to financial statements.
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BRENDA RACEWAY CORPORATION
STATEMENT OF CASH FLOWS
YEAR ENDED OCTOBER 31, 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ....................................... $ 89,100
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization.................... 644,300
Changes in operating assets and liabilities:
Accounts receivable............................ 109,600
Prepaid expenses .............................. 49,100
Accounts payable .............................. 119,600
Deferred event income.......................... (160,900)
Accrued expenses and other liabilities ........ (43,800)
Tenant and other deposits ..................... 44,300
Accrued interest receivable from affiliates ... (547,800)
Accrued interest payable to stockholder ....... 292,000
Net cash provided by operating activities. ...... 595,500
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt............... (315,600)
Payment of deferred financing costs................ 1,400
Net cash used in financing activities............ (314,200)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures, cash used in investing
activities....................................... (264,900)
NET INCREASE IN CASH AND CASH EQUIVALENTS........... 16,400
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ..... 158,200
CASH AND CASH EQUIVALENTS AT END OF YEAR ........... $174,600
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest ............................ $1,364,000
See notes to financial statements.
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BRENDA RACEWAY CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED OCTOBER 31, 1996
1. DESCRIPTION OF BUSINESS AND CHANGE IN OWNERSHIP
Brenda Raceway Corporation ("the Company") owns and operates the Sears
Point Raceway ("SPR"). SPR located on approximately 800 acres in Sonoma,
California, owns and operates a 2.52 mile, twelve-turn road course, a
one-quarter mile dragstrip, and an 157,000 square foot industrial park. SPR
currently sponsors two major NASCAR-sanctioned racing events annually,
including a Winston Cup race and Craftsman Truck Series event. Additional
major events held annually include the NHRA Winston Drag Racing Series, AMA
California Superbike Challenge, Wine Country Classic, IMSA California Grand
Prix and NHRA Autolite Nationals. The racetrack is also rented through-out
the year by various organizations, including the Sports Car Club of
America, major automobile manufacturers, and other car clubs.
On November 18,1996, Speedway Motorsports, Inc. ("SMI"), a publicly-held
company, acquired certain tangible and intangible assets and the operations
of SPR for $1,908,000 in cash. In addition, SMI executed a long-term lease,
including a $38.1 million purchase option, for the race track facilities
and real property (see Note 8). SMI will operate the facilities as Sears
Point Raceway ("SPR").
2. SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION -- Admissions revenue consists of ticket sales; event
related revenues consist of amounts received from sponsorships, television,
concessions, commissions and souvenir sales; and other operating revenue
consists of automotive industrial park rental revenues.
In fiscal 1996, SPR held major racing events in May and October. SPR
recognizes admissions and other related revenues when the events are held.
Advance revenues and certain related direct expenses pertaining to a
specific event are deferred until such time as the event is held. Deferred
expenses primarily include race purses and sanctioning fees remitted to
NASCAR. Deferred event income, net, as of October 31, 1996 relates
primarily to television broadcast rights and advance ticket sales for
events to be held in fiscal 1997. If circumstances prevent a race from
being held at any time during the racing season, all advance revenue must
be refunded and all direct event expenses deferred would be immediately
recognized except for race purses which would be refundable from NASCAR.
CASH AND CASH EQUIVALENTS -- The Company classifies as cash equivalents all
highly liquid investments with original maturities at date of purchase of
three months or less.
PROPERTY AND EQUIPMENT -- Property and equipment is recorded at cost less
accumulated depreciation. Depreciation is computed using the straight-line
method for buildings and improvements, and declining balance methods for
other property and equipment, over the estimated useful lives of the
assets. Expenditures for repairs and maintenance are charged to expense
when incurred.
DEFERRED FINANCING COSTS -- Deferred financing costs are being amortized
over the term of the related debt using the straight-line method.
Accumulated amortization as of October 31, 1996 amounted to $107,800. As
discussed in Note 8, the related debt arrangement was repaid subsequent to
October 31, 1996. In connection with this repayment, unamortized deferred
financing costs will be written-off as an extraordinary item in the fiscal
1997 statement of income.
ADVERTISING EXPENSES -- Advertising costs are expensed as incurred.
Advertising expenses amounted to $374,700 in 1996.
INCOME TAXES -- No provision for income taxes was required for the year
ended October 31, 1996 because utilization of Federal and state net
operating loss
11
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carryforwards resulted in no income taxes currently payable.
Deferred income taxes represent the tax effect of temporary differences
between financial and income tax bases of assets and liabilities and of net
operating loss carryforwards. These differences include accrued related
party interest expense and income which is not deductible or includable for
income tax purposes until paid, provisions for bad debts for financial
reporting, and the utilization of accelerated depreciation methods and net
operating losses for income tax purposes. The Company has available net
operating loss carryforwards aggregating approximately $470,000 at October
31, 1996, and which begin to expire in 2000.
At October 31, 1996, the approximate tax effects of these temporary tax
differences and net operating loss carryforwards result in deferred income
tax assets of approximately $1,650,000. The Company has recorded a 100%
valuation allowance against these deferred tax assets because of
uncertainties as to whether such assets will be realized.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual future results could differ from those
estimates.
3. PROPERTY AND EQUIPMENT
Property and equipment as of October 31, 1996 is summarized as follows:
Land and land improvements $5,088,000
Buildings 7,413,900
Machinery and equipment 564,000
Furniture and fixtures 129,400
Autos, trucks and trailers 201,000
Total 13,396,300
Less accumulated depreciation (3,983,400)
Net $9,412,900
4. FINANCING ARRANGEMENTS
Long-term debt as of October 31, 1996 consists of the following:
Note payable to bank, payable in monthly installments of $136,100,
including interest at 10.4% based on 30 year loan amortization, to May
2002, with final payment of $10,367,100, including interest, due June 1,
2002. Additional principal payments based on net cash flow as defined due
quarterly commencing
November 1, 1995. $12,633,500
Other equipment notes payable 86,200
12,719,700
Less current maturities (349,900)
$12,369,800
Annual maturities of long-term debt as of October 31, 1996 are as follows:
Year ending October 31:
1997 $ 349,900
1998 391,400
1999 431,900
2000 476,900
2001 515,300
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Thereafter 10,554,300
Total $12,719,700
Substantially all of the Company's assets were pledged as collateral under
the bank note payable. The note payable has been repaid in full subsequent
to year end (see Note 8). The Company may borrow up to $500,000 under a
bank line of credit agreement. The agreement expires November 17, 1996,
bears interest based on 2% over the bank's base rate (8 1/2% as of October
31, 1996), and is unsecured. At October 31, 1996, the Company had
outstanding borrowings of $225,000 under the agreement. The borrowings were
subsequently repaid by the Company upon expiration of the agreement.
5. LEASE INCOME
The Company leases its industrial park under triple net operating leases
primarily to businesses and individuals involved in racing and related
industries.
Annual future minimum lease payments to be received under non-cancelable
operating leases with remaining terms in excess of one year as of October
31, 1996 are as follows (excludes required tenant reimbursements of certain
operating expenses):
Year ending October 31:
1997 $ 967,400
1998 676,500
1999 379,800
2000 208,300
2001 90,300
Thereafter 226,300
Total $2,548,600
6. RELATED PARTY TRANSACTIONS
DUE FROM AFFILIATES -- At October 31, 1996, the amount is due principally
from two affiliated entities which are wholly-owned and
majority-owned,respectively, by the Company's stockholder. The amounts due
are unsecured, bear non-compounded interest at 12%, are due on demand and
include accrued interest of $776,100. Interest income on these related
party balances amounted to $547,800 in the year ended October 31, 1996. No
interest or principal payments were received in 1996.
PAYABLE TO STOCKHOLDER -- At October 31, 1996, payable to stockholder
represents notes payable to the Company's stockholder, including accrued
interest of $3,364,700. The notes are unsecured, bear non-compounded
interest at 12% and are due on demand. Interest expense on these related
party notes amounted to $292,000 in the year ended October 31, 1996. No
interest or principal payments were made in 1996.
Under the terms of the November 18, 1996 acquisition (see Note 1), the
amounts due from affiliates and payable to stockholder were not acquired by
SMI. These amounts involve the same SPR stockholder; as such, the manner of
future settlement is subject to the stockholder's discretion. However, the
Company does not intend to demand repayment of these amounts through
October 31, 1997. Therefore, the amounts due from affiliates have been
classified as non-current assets in the accompanying balance sheet.
OTHER RECEIVABLES - At October 31, 1996, other receivables includes
approximately $143,000 due from the Company's stockholder.
7. CONTINGENCIES
The Company is engaged in several disputes and legal actions in the normal
course of business. In management's opinion, the resolution of these
matters should not have a material adverse impact on the Company's
financial condition or future results of operations.
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3
8. SUBSEQUENT EVENT - REAL ESTATE LEASE AND PURCHASE OPTION
In connection with the asset acquisition by SMI on November 18, 1996 (see
Note 1), the Company executed a 14 year capital lease with SMI for all of
the real property of the SPR complex. SMI has the option to purchase the
real property for $38.1 million during a six-month option period commencing
November 1, 1999, subject to acceleration at the election of the seller
after March 31, 1997 and through December 31, 1999 ("the Purchase Option").
The Purchase Option was acquired for a payment of $3.5 million, and upon
its exercise, is to be credited against the purchase price of the real
property. The Purchase Option payment is non-refundable. Under the lease
agreement terms, SMI paid a security deposit of $3.0 million, with such
amount also to be credited against the purchase price of the real property
upon exercise of the Purchase Option. SMI is responsible for maintenance,
insurance, taxes and other operating costs of the leased property.
In connection with the acquisition, SMI loaned the Company approximately
$13.45 million under a promissory note receivable to repay the Company's
outstanding obligations on the real property. The note bears interest of 4%
and is due in equal monthly installments of interest through November 1999
and, thereafter, of principal and interest through November 2026. The note
is collateralized by a thirty year deed of trust on the real property in
favor of SMI. Also, amounts due under the note are to be credited against
amounts due from SMI upon exercise of the Purchase Option.
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DESCRIPTION OF UNAUDITED PRO FORMA FINANCIAL
STATEMENTS REFLECTING THE BUSINESS COMBINATION OF SPEEDWAY MOTORSPORTS, INC.
AND SEARS POINT RACEWAY
The following unaudited pro forma financial statements have been prepared
giving effect to the acquisition by Speedway Motorsports, Inc. (SMI) of
Sears Point Raceway ("SPR") from Brenda Raceway Corporation (BRC) as if the
transaction had taken place as of December 31, 1995 and September 30, 1996
for the pro forma balance sheets, and as of January 1, 1995 for the
statements of income for the year ended December 31, 1995 and the nine
months ended September 30, 1996. The following pro forma December 31, 1995
financial statements include the historical financial position and results
of operations of SPR for the year ended October 31, 1995, and the pro forma
financial position and results of operations of SMI for the year ended
December 31, 1995 as previously reported, giving effect to acquisition of
Bristol Motor Speedway, Inc. by SMI on January 22, 1996.
The acquisition has been accounted for using the purchase method in
accordance with Accounting Principles Board Opinion ("APB") No. 16. The
purchase price has been allocated to the assets and liabilities acquired at
their estimated fair market values at acquisition date. The Company has
obtained an independent appraisal of SPR's property and equipment, the fair
values of which have been used in the accompanying pro forma financial
statements. In the near future, the Company plans to obtain an independent
appraisal of the fair value of other net assets acquired, including
identifiable intangibles, if any. Based on current information, the
Company's management does not expect the final allocation of the purchase
price to be materially different from that used in the following pro forma
balance sheets and statements of income.
THE UNAUDITED PRO FORMA FINANCIAL INFORMATION IS NOT NECESSARILY INDICATIVE
OF THE RESULTS OF OPERATIONS OR THE FINANCIAL POSITION WHICH WOULD HAVE
BEEN ATTAINED HAD THE ACQUISITION BEEN CONSUMMATED AT EITHER OF THE
FOREGOING DATES OR WHICH MAY BE ATTAINED IN THE FUTURE. THE PRO FORMA
FINANCIAL INFORMATION SHOULD BE READ IN CONJUNCTION WITH THE HISTORICAL
FINANCIAL STATEMENTS OF SMI AND SPR.
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PRO FORMA BALANCE SHEET
SPEEDWAY MOTORSPORTS, INC. AND SEARS POINT RACEWAY
DECEMBER 31, 1995
(UNAUDITED)
(In Thousands)
<TABLE>
<CAPTION>
Proforma(1) Historical(2) Pro Forma
SMI SPR Pro Forma Adjustments Pro Forma
12/31/95 10/31/95 Adjustments Notes 12/31/95
ASSETS
CURRENT ASSETS
<S> <C> <C> <C> <C>
Cash and cash equivalents $13,725 $158 ($11,883) I $2,000
Restricted cash 86 -- -- 86
Trade accounts receivable 6,929 581 (85) F 7,425
Refundable income taxes 727 -- -- 727
Inventories 5,372 -- -- 5,372
Speedway condominiums under construction 3,142 -- -- 3,142
Prepaid expenses 185 99 -- 284
Total current assets 30,166 838 (11,968) 19,036
PROPERTY AND EQUIPMENT, NET 107,622 9,716 19,309 A 136,647
GOODWILL AND OTHER INTANGIBLE ASSETS 32,281 -- 11,422 B 43,703
OTHER ASSETS
Marketable equity securities 1,855 -- -- 1,855
Notes receivable 934 4,769 8,684 C 14,387
Other assets 1,909 507 (545) D 1,871
Total other assets 4,698 5,276 8,139 18,113
TOTAL $174,767 $15,830 $26,902 $217,499
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $26,848 $547 ($547) G $26,848
Accounts payable 7,783 313 -- 8,096
Deferred race event income, net 20,581 280 -- 20,861
Accrued expenses and other liabilities 6,221 407 -- 6,628
Due to former stockholders 1,660 5,506 (5,506) G 1,660
Total current liabilities 63,093 7,053 (6,053) 64,093
LONG-TERM DEBT
Notes payable 1,458 12,713 (2,427) G 11,744
Capital lease obligation -- -- 31,446 E 31,446
PAYABLE TO AFFILIATED COMPANIES 2,603 -- -- 2,603
DEFERRED MEMBERSHIP INCOME, NET 1,563 -- -- 1,563
DEFERRED INCOME TAXES 9,916 -- -- 9,916
OTHER LIABILITIES 754 -- -- 754
Total liabilities 79,387 19,766 22,966 122,119
STOCKHOLDERS' EQUITY
Common stock 380 15 (15) H 380
Additional paid-in capital 72,148 18 (18) H 72,148
Retained earnings 22,944 (3,969) 3,969 H 22,944
Unrealized loss on marketable equity securities (92) -- (92)
Total stockholders' equity 95,380 (3,936) 3,936 95,380
TOTAL $174,767 $15,830 $26,902 $217,499
</TABLE>
(1) Represents SMI pro forma financial statements as previously reported
giving effect to the Bristol Motor Speedway acquisition on January
22, 1996.
(2) SPR's year end is October 31. The historical fiscal year ended
October 31, 1995 balances have been used for 1995 pro forma
financial statement purposes.
See notes to pro forma financial statements.
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NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
AT DECEMBER 31, 1995
(In Thousands)
<TABLE>
<CAPTION>
<S> <C>
A. Increase in property and equipment:
- To adjust SPR depreciable property and equipment to fair
value at date of acquisition based on independent appraisal .. $16,323
- To adjust SPR land to fair value at date of acquisition
based on independent appraisal ............................... 2,986
19,309
B. Increase in excess of cost over fair values assigned to net
assets acquired (goodwill)(amortized on straight-line basis
over 40 years)................................................... 11,422
C. Increase in notes receivable:
- To record SMI loan to BRC stockholder under note receivable ... 13,453
- To eliminate BRC amounts due from affiliates not acquired ..... (4,769)
8,684
D. Decrease in other assets:
- To eliminate deferred loan costs not acquired in purchase ..... (545)
E. To record capital lease obligation on BRC real property, net of
cash deposits paid at closing of $6,500 ...................... 31,446
F. To eliminate other receivables not acquired in SPR purchase ..... (85)
G. Decrease in long-term debt:
- To eliminate BRC long-term debt, including current portion, not
assumed in purchase .......................................... (13,260)
- Increase in SMI long-term debt for pro forma purposes (see Note
J below) ..................................................... 10,286
(2,974)
- Current for Tier of Long-Term Debt.............................. (547)
(2,427)
- To eliminate BRC notes payable to stockholder not assumed in
purchase ..................................................... (5,506)
H. To eliminate historical equity of BRC:
- Common stock .................................................. (15)
- Additional paid-in capital .................................... (18)
- Deficit ....................................................... 3,969
I. Decrease in cash:
- Direct costs of acquisition ................................... (150)
- Paid at closing for net assets acquired ....................... (1,908)
- SPR lease security deposit and purchase option ................ (6,500)
- Cash retained by BRC .......................................... (175)
- Loan to BRC stockholder at closing ............................ (13,453)
- Increase in cash from pro forma borrowings (see Note J below).. (22,169)
10,286
(11,883)
Purchase price summary, including execution of real property capital lease:
Cash paid at closing ............................................ 1,908
Capital lease obligation executed at closing .................... 37,946
Direct costs of acquisition ..................................... 150
Total purchase price ............................................ 40,004
Allocation of purchase price:
Book value of net assets acquired ............................... 9,273
Step-up in fair value of property and equipment ................. 19,309
Excess of cost over fair values assigned (goodwill) ............. 11,422
Total purchase price ............................................ $40,004
17
<PAGE>
J. Increase in long-term debt for pro forma purposes:
In the November 18, 1996 acquisition, as discussed in Note I above, SMI
disbursed amounts aggregating $22,169 from available SMI cash balances. The
cash disbursed exceeded December 31, 1995 and September 30, 1996 cash
balances. As such, for pro forma presentation purposes, a portion of the
cash disbursed was assumed to be funded with borrowings of long-term debt.
The additional pro forma interest, which would not be retroactively
capitalized for construction in progress, has been reflected in the pro
forma statements of income.
</TABLE>
18
<PAGE>
PRO FORMA STATEMENT OF INCOME
SPEEDWAY MOTORSPORTS, INC. AND SEARS POINT RACEWAY
YEAR ENDED DECEMBER 31, 1995
(Unaudited)
(In Thousands except per share amounts)
<TABLE>
<CAPTION>
Pro Forma
Proforma(1) Historical(2) Pro Forma Adjustments Pro Forma
SMI SPR Adjustments Notes 12/31/95
<S> <C> <C> <C> <C> <C>
REVENUES: 12/31/95 10/31/95
Admissions $45,648 $3,648 -- $49,296
Event related revenue 30,391 4,263 -- 34,654
Other operating revenue 11,221 1,260 -- 12,481
-------- ------------ ------ --------
Total revenues 87,260 9,171 -- 96,431
-------- ------------ ------ --------
OPERATING EXPENSES:
Direct expenses of events 23,913 4,103 -- 28,016
Other direct operating expenses 7,611 -- -- 7,611
General and administrative 17,398 3,274 (245) A 20,427
Depreciation and amortization 6,249 551 772 B 7,572
-------- ------------ ------ --------
Total operating expenses 55,171 7,928 527 63,626
-------- ------------ ------ --------
OPERATING INCOME 32,089 1,243 (527) 32,805
INTEREST INCOME (EXPENSE), NET (2,074) (717) 148 C (3,577)
OTHER INCOME (EXPENSE) 3,410 (934) -- E 3,410
EQUITY IN EARNINGS OF NORTH
WILKESBORO SPEEDWAY 233 -- 233
-------- ------------ ------ --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES 33,658 (408) (379) 32,871
INCOME TAX PROVISION (BENEFIT) 14,034 -- (326) (D) 13,708
-------- ------------ ------ --------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 19,624 (408) (53) 19,163
EXTRAORDINARY ITEM, NET (133) -- -- (133)
-------- ------------ ------ --------
NET INCOME (LOSS) $19,491 ($408) ($53) $19,030
======== ============ ====== ========
INCOME PER SHARE FROM
CONTINUING OPERATIONS $0.53 $0.51
======== =========
WEIGHTED AVERAGE SHARES
OUTSTANDING 37,375 37,375
======== =========
</TABLE>
(1) Represents SMI pro forma financial statements as
previously reported giving effect to the Bristol Motor
Speedway acquisition on January 22, 1996.
(2) SPR's year end is October 31. The historical fiscal year
ended October 31, 1995 balances have been used for 1995
pro forma financial statement purposes.
See notes to pro forma financial statements.
19
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(In Thousands)
<TABLE>
<CAPTION>
<S> <C>
A. Decrease in general and administrative expense, consulting fees
paid to affiliate of BRC stockholder ........................ $ (245)
B: Increase in depreciation and amortization:
Depreciation of step-up in fair value of property and equipment
using straight-line basis .................................. 599
Amortization of goodwill (amortized on straight-line basis
over 40 years) ............................................. 286
Decrease in amortization of other assets .................... (113)
772
C. Change in interest income (expense), net:
Interest income on SMI loan to BRC stockholder at purchase... 538
Interest expense on SPR capital lease obligation ............ (2,044)
Interest expense on increase in long-term debt for pro forma purposes
(see Note J of December 31, 1995 pro forma balance
sheet) ..................................................... (101)
Elimination of interest income on BRC amounts due from
affiliates not acquired in purchase ........................ (228)
Elimination of interest expense on notes payable not assumed
in SPR purchase ............................................ 1,049
(786)
D. Decrease in income tax provision:
Income tax benefit of pro forma adjustments on consolidated income tax
provision using SMI effective income tax rate of
approximately 40% .......................................... $ (137)
E. Elimination of BRC other expense,
Litigation settlement related to a prior year................ $ 934
</TABLE>
20
<PAGE>
PRO FORMA BALANCE SHEET
SPEEDWAY MOTORSPORTS, INC. AND SEARS POINT RACEWAY
SEPTEMBER 30, 1996
(UNAUDITED)
(In Thousands)
<TABLE>
<CAPTION>
Pro Forma
Historical Pro Forma Adjustments
---------------------------
SMI SPR Adjustments Notes Pro Forma
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $15,630 $110 ($11,883) I $3,857
Restricted cash 4,644 -- -- 4,644
Trade accounts receivable 6,487 677 (126) F 7,038
Prepaid income taxes 3,469 -- -- 3,469
Inventories 6,303 -- -- 6,303
Speedway condominiums under construction 3,799 -- -- 3,799
Prepaid expenses 908 92 -- 1,000
----------- -------- ------------ -----------
Total current assets 41,240 879 (12,009) 30,110
----------- -------- ------------ -----------
PROPERTY AND EQUIPMENT, NET 215,698 9,451 19,309 A 244,458
----------- -------- ------------ -----------
GOODWILL AND OTHER INTANGIBLE ASSETS 36,364 -- 11,422 B 47,786
----------- -------- ------------ -----------
OTHER ASSETS
Marketable equity securities 2,387 -- -- 2,387
Notes receivable 684 5,185 8,268 C 14,137
Other assets 4,201 451 (442) D 4,210
----------- -------- ------------ -----------
Total other assets 7,272 5,636 7,826 20,734
----------- -------- ------------ -----------
TOTAL $300,574 $15,966 $26,548 $343,088
=========== ======== ============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $279 $577 ($577) G $279
Accounts payable 12,845 446 -- 13,291
Deferred race event income, net 27,559 -- -- 27,559
Accrued expenses and other liabilities 6,160 336 -- 6,496
Due to former stockholders 640 5,725 (5,725) G 640
----------- -------- ------------ -----------
Total current liabilities 47,483 7,084 (6,302) 48,265
LONG-TERM DEBT 0
Notes payable 41,204 12,395 (2,109) G 52,146
Capital lease obligation -- -- 31,446 E 31,446
PAYABLE TO AFFILIATED COMPANIES 2,603 -- -- 2,603
DEFERRED MEMBERSHIP INCOME, NET 1,357 -- -- 1,357
DEFERRED INCOME TAXES 9,899 -- -- 9,899
OTHER LIABILITIES 5,147 -- -- 5,147
---------- ----------- ------------ -------------
Total liabilities 107,693 19,479 23,035 150,207
---------- ----------- ------------ -------------
STOCKHOLDERS' EQUITY
Common stock 413 15 (15) H 413
Additional paid-in capital 155,276 18 (18) H 155,276
Retained earnings 37,308 (3,546) 3,546 H 37,308
Unrealized loss on marketable equity
securities (116) -- -- (116)
---------- ---------- ------------ ------------
Total stockholders' equity 192,881 (3,513) 3,513 192,881
---------- ---------- ------------ ------------
TOTAL $300,574 $15,966 $26,548 $343,088
=========== ========== ============= ============
</TABLE>
See notes to pro forma financial statements.
21
<PAGE>
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
AT SEPTEMBER 30, 1996
(In Thousands)
<TABLE>
<CAPTION>
<S> <C>
A. Increase in property and equipment:
- To adjust SPR depreciable property and equipment to fair
value at date of acquisition based on independent appraisal .. $16,323
- To adjust SPR land to fair value at date of acquisition
based on independent appraisal ............................... 2,986
19,309
B. Increase in excess of cost over fair values assigned to net
assets acquired (goodwill)(amortized on straight-line basis
over 40 years)................................................... 11,422
C. Increase in notes receivable:
- To record SMI loan to BRC stockholder under note receivable ... 13,453
- To eliminate BRC amounts due from affiliates not acquired ..... (5,185)
8,268
D. Increase in other assets:
- To eliminate deferred loan costs not acquired in purchase ..... (442)
E. To record capital lease obligation on BRC real property, net of
cash deposits paid at closing of $6,500 ...................... 31,446
F. To eliminate other receivables not acquired in SPR purchase ..... (126)
G. Decrease in long-term debt:
- To eliminate BRC long-term debt, including current portion, not
assumed in purchase .......................................... (12,972)
- Increase in long-term debt for pro forma purposes (see Note J
of December 31, 1995 pro forma balance sheet)................. 10,286
(2,686)
- Current for Tier of Long-Term Debt............................. (577)
(2,109)
- To eliminate BRC notes payable to stockholder not assumed in
purchase ..................................................... (5,725)
H. To eliminate historical equity of BRC:
- Common stock .................................................. (15)
- Additional paid-in capital .................................... (18)
- Deficit ....................................................... 3,546
I. Decrease in cash:
- Direct costs of acquisition ................................... (150)
- Paid at closing for net assets acquired ....................... (1,908)
- SPR lease security deposit and purchase option ................ (6,500)
- Cash retained by BRC .......................................... (175)
- Loan to BRC stockholder at closing ............................ (13,453)
(22,169)
- Increase in cash from pro forma borrowings (see Note J of
December 31, 1995 pro forma balance sheet) ................... 10,286
$(11,883)
</TABLE>
22
<PAGE>
PRO FORMA STATEMENT OF INCOME
SPEEDWAY MOTORSPORTS, INC. AND SEARS POINT RACEWAY
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL PRO FORMA ADJUSTMENTS
------------------------
SMI SPR ADJUSTMENTS NOTES PRO FORMA
<S> <C> <C> <C> <C> <C>
REVENUES:
Admissions $33,602 $3,649 -- $37,251
Event related revenue 23,551 3,657 -- 27,208
Other operating revenue 9,498 1,052 -- 10,550
--------- ------- ------- -----------
Total revenues 66,651 8,358 -- 75,009
--------- ------- ------- -----------
OPERATING EXPENSES:
Direct expenses of events 20,116 3,844 -- 23,960
Other direct operating expenses 5,724 168 -- 5,892
General and administrative 13,208 2,368 -- 15,576
Depreciation and amortization 5,904 466 526 A 6,896
--------- ------- ------- ------------
Total operating expenses 44,952 6,846 526 52,324
--------- ------- ------- ------------
OPERATING INCOME 21,699 1,512 (526) 22,685
INTEREST INCOME (EXPENSE), NET 818 (815) (451) B (448)
OTHER INCOME 1,282 -- -- 1,282
EQUITY IN EARNINGS OF NORTH
WILKESBORO SPEEDWAY 85 -- -- 85
--------- ------- ------- ------------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES 23,884 697 (977) 23,604
INCOME TAX PROVISION (BENEFIT) 9,520 -- (112) C 9,408
--------- ------- ------- -----------
NET INCOME $14,364 $697 ($865) $14,196
========= ======= ======= ============
INCOME PER SHARE FROM
CONTINUING OPERATIONS $0.35 $0.35
========= ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 41,046 41,046
========= ============
</TABLE>
See notes to pro forma financial statements.
23
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(In Thousands)
<TABLE>
<CAPTION>
<S> <C>
A: Increase in depreciation and amortization:
Depreciation of step-up in fair value of property and equipment
using straight-line basis .................................. $ 381
Amortization of goodwill (amortized on straight-line basis
over 40 years) ............................................. 215
Decrease in amortization of other assets ..................... (70)
526
B. Change in interest income (expense), net:
Interest income on SMI loan to BRC stockholder at purchase.... 404
Interest expense on SPR capital lease obligation ............. (1,533)
Interest expense on increase in long-term debt for pro forma purposes
(see Note J of December 31, 1995 pro forma balance
balance sheet) .............................................. (147)
Elimination of interest income on BRC amounts due from
affiliates not acquired in purchase ......................... (411)
Elimination of interest expense on notes payable not assumed in
purchase ................................................... 1,236
(451)
C. Decrease in income tax provision:
Income tax benefit of pro forma adjustments on consolidated income tax
provision using SMI effective income tax rate of
approximately 40%............................................ $ (112)
</TABLE>
24
<PAGE>
