UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 1-13582
SPEEDWAY MOTORSPORTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0363307
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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)
----------------------------------
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
As of November 10, 1998, there were 41,490,669 shares of $0.01 par value common
stock outstanding.
<PAGE>
INDEX TO FORM 10-Q
PAGE
----
PART I - FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements - Unaudited 3
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 15
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 23
SIGNATURES 24
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements.
SPEEDWAY MOTORSPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ......................... $ 28,148 $ 23,580
Restricted cash ................................... 2,775 1,267
Accounts and notes receivable ..................... 24,452 19,759
Prepaid income taxes .............................. 4,649 --
Inventories (Note 3) .............................. 8,900 10,636
Speedway condominiums held for sale (Note 2)....... 22,908 8,308
Prepaid expenses .................................. 768 2,120
-------- --------
Total current assets ............................ 92,600 65,670
-------- --------
PROPERTY AND EQUIPMENT, NET (Note 4)................ 436,547 498,118
GOODWILL AND OTHER INTANGIBLE ASSETS, NET........... 51,300 49,008
OTHER ASSETS:
Marketable equity securities ...................... 1,609 929
Notes receivable (Note 7).......................... 5,498 10,927
Other assets ...................................... 9,614 9,020
-------- --------
Total other assets .............................. 16,721 20,876
-------- --------
TOTAL ........................................... $597,168 $633,672
======== ========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
SPEEDWAY MOTORSPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 5)..... $ 375 $ 481
Accounts payable ................................. 21,927 11,465
Deferred race event income, net .................. 58,433 51,076
Accrued income taxes ............................. -- 6,433
Accrued expenses and other liabilities............ 13,853 12,662
-------- --------
Total current liabilities ..................... 94,588 82,117
LONG-TERM DEBT (Note 5)............................ 219,135 234,312
PAYABLE TO AFFILIATED COMPANY (Note 7) ............ 2,603 2,603
DEFERRED INCOME, NET (Note 2)...................... 13,900 15,579
DEFERRED INCOME TAXES ............................. 18,795 18,695
OTHER LIABILITIES ................................. 4,033 2,279
-------- --------
Total liabilities ............................. 353,054 355,585
-------- --------
COMMITMENTS (Notes 2 and 4)........................
STOCKHOLDERS' EQUITY:
Preferred stock, $.10 par value, shares
authorized - 3,000,000, no shares issued ........ -- --
Common stock, $.01 par value, shares authorized -
200,000,000, issued and outstanding - 41,433,000
in 1997 and 41,488,000 in 1998 .................. 414 415
Additional paid-in capital ....................... 156,477 157,001
Retained earnings ................................ 87,526 121,112
Accumulated other comprehensive loss - unrealized
loss on marketable equity securities (Note 2).... (303) (441)
-------- --------
Total stockholders' equity .................... 244,114 278,087
-------- --------
TOTAL ......................................... $597,168 $633,672
======== ========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
SPEEDWAY MOTORSPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------
September 30
1997 1998
----------- -----------
<S> <C> <C>
REVENUES:
Admissions ................................... $ 13,935 $ 20,761
Event related revenue ........................ 9,093 16,891
Other operating revenue ...................... 3,356 4,096
-------- --------
Total revenues ............................ 26,384 41,748
-------- --------
OPERATING EXPENSES:
Direct expense of events ..................... 11,077 19,369
Other direct operating expense ............... 2,053 2,878
General and administrative ................... 7,893 8,541
Depreciation and amortization ................ 4,593 5,108
-------- --------
Total operating expenses .................. 25,616 35,896
-------- --------
OPERATING INCOME .............................. 768 5,852
Interest expense, net (Note 5)................. (2,588) (2,871)
Other income, net ............................. 255 189
-------- --------
INCOME (LOSS) BEFORE INCOME TAXES ............. (1,565) 3,170
Income tax provision (benefit)................. (584) 1,275
-------- --------
NET INCOME (LOSS).............................. $ (981) $ 1,895
======== ========
PER SHARE DATA (Note 6):
Basic earnings (loss) per share ............. $ (0.02) $ 0.05
======== ========
Weighted average shares outstanding ........ 41,329 41,488
Diluted earnings (loss) per share ........... $ (0.02) $ 0.05
======== ========
Weighted average shares outstanding ........ 44,470 44,527
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
SPEEDWAY MOTORSPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------
September 30
1997 1998
----------- -----------
<S> <C> <C>
REVENUES:
Admissions ................................... $ 70,390 $ 82,157
Event related revenue ........................ 64,210 82,674
Other operating revenue ...................... 11,378 12,616
-------- --------
Total revenues ............................ 145,978 177,447
-------- --------
OPERATING EXPENSES:
Direct expense of events ..................... 50,970 66,132
Other direct operating expense ............... 6,903 8,138
General and administrative ................... 23,685 25,486
Depreciation and amortization ................ 11,712 14,847
Preoperating expense of new facility (Note 2). 1,850 --
-------- --------
Total operating expenses .................. 95,120 114,603
-------- --------
OPERATING INCOME .............................. 50,858 62,844
Interest expense, net (Note 5)................. (2,970) (8,483)
Other income, net ............................. 277 1,626
-------- --------
INCOME BEFORE INCOME TAXES .................... 48,165 55,987
Income tax provision .......................... 19,892 22,401
-------- --------
NET INCOME .................................... $ 28,273 $ 33,586
======== ========
PER SHARE DATA (Note 6):
Basic earnings per share .................... $ 0.68 $ 0.81
======== ========
Weighted average shares outstanding ........ 41,313 41,479
Diluted earnings per share .................. $ 0.65 $ 0.79
======== ========
Weighted average shares outstanding ........ 44,471 44,599
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
SPEEDWAY MOTORSPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Accumulated Total
Common Stock Additional Other Stock-
------------- Paid-In Retained Comprehensive holders'
Shares Amount Capital Earnings Loss Equity
------ ------ ---------- -------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE - DECEMBER 31, 1997 ............ 41,433 $414 $156,477 $ 87,526 $(303) $244,114
Net income.............................. -- -- -- 33,586 -- 33,586
Issuances of stock under employee
stock purchase plan ................... 6 -- 136 -- -- 136
Exercise of stock options .............. 49 1 388 -- -- 389
Net unrealized loss on marketable
equity securities (Note 2)............. -- -- -- -- (138) (138)
------ ------ -------- -------- ----- --------
BALANCE - SEPTEMBER 30, 1998............ 41,488 $415 $157,001 $121,112 $(441) $278,087
====== ====== ======== ======== ===== ========
</TABLE>
See notes to consolidated financial statements.
7
<PAGE>
SPEEDWAY MOTORSPORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------
September 30
1997 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................................................ $ 28,273 $ 33,586
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization ............................................. 11,712 14,847
Gain on sale of marketable equity securities and
investments ............................................................. (186) (150)
Amortization of deferred income ........................................... (471) (693)
Changes in operating assets and liabilities:
Restricted cash ..................................................... 10,409 1,508
Accounts receivable ................................................. (1,433) 1,496
Prepaid and accrued income taxes .................................... 3,318 11,082
Inventories ......................................................... (2,107) (1,736)
Speedway condominiums held for sale.................................. (14,227) 14,600
Accounts payable .................................................... (4,018) (10,462)
Deferred race event income .......................................... 7,234 (7,357)
Accrued expenses and other liabilities .............................. 1,249 (1,191)
Deferred income ..................................................... 4,777 2,372
Other assets and liabilities ........................................ (492) (4,505)
--------- ---------
Net cash provided by operating activities ......................... 44,038 53,397
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt .............................................. (100,284) (18,434)
Issuance of long-term debt ........................................................ 202,660 35,000
Payments of debt issuance costs ................................................... (5,531) --
Issuance of stock under employee stock purchase plan .............................. 127 136
Exercise of stock options ......................................................... 706 389
--------- ---------
Net cash provided by financing activities ......................... 97,678 17,091
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures .............................................................. (130,680) (74,716)
Purchases of marketable equity securities and investments.......................... (412) (100)
Proceeds from sales of marketable equity securities and investments ............... 1,240 692
Distribution from equity method investee .......................................... -- 1,300
Increase in notes and other receivables ........................................... (11,164) (12,119)
Repayments of notes and other receivables ......................................... -- 9,887
--------- ---------
Net cash used in investing activities ............................. (141,016) (75,056)
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ............................... 700 (4,568)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ................................... 22,252 28,148
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ......................................... $ 22,952 $ 23,580
========= =========
</TABLE>
See notes to consolidated financial statements.
8
<PAGE>
The following Notes to Unaudited Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations, contain estimates and forward-looking statements as indicated
herein by use of such terms as "estimated", "anticipates", "believes",
"approximate", "expects" or "projected". Such statements reflect management's
current views, are based on certain assumptions and are subject to risks and
uncertainties. No assurance can be given that actual results or events will
not differ materially from those projected, estimated, assumed or anticipated
in any such forward-looking statements. Important factors that could result
in such differences, in addition to the other factors noted with such
forward-looking statements, include: general economic conditions in the
Company's markets, including inflation, recession, interest rates and other
economic factors; casualty to or other disruption of the Company's facilities
and equipment; disruption of the Company's relationship with NASCAR; and
other factors that generally affect the business of sports and recreational
companies.
Notes to Unaudited Consolidated Financial Statements
----------------------------------------------------
1. DESCRIPTION OF BUSINESS
The consolidated financial statements include the accounts of
Speedway Motorsports, Inc. (SMI), and its wholly-owned subsidiaries,
Atlanta Motor Speedway, Inc. (AMS), Bristol Motor Speedway, Inc.
(BMS), Charlotte Motor Speedway, Inc. and subsidiaries (CMS), Sears
Point Raceway (SPR), Texas Motor Speedway, Inc. (TMS), Speedway
Systems LLC d/b/a Finish Line Events (FLE), Oil-Chem Research Corp.
and subsidiary (ORC), Speedway Funding Corp. and Sonoma Funding Corp.
(collectively, the Company).
See Note 1 to the December 31, 1997 Consolidated Financial Statements for
further description of the Company's business operations, properties and
scheduled events.
In October 1996, the Company signed a joint management and development
agreement with Quad-Cities International Raceway Park. The Company will serve
in an advisory capacity for the development of a multi-use facility, which is
expected to include a speedway located in northwest Illinois. The agreement
also grants the Company the option to purchase up to 40% equity ownership in
the facility. The option has not been exercised.
2. SIGNIFICANT ACCOUNTING POLICIES
These unaudited consolidated financial statements should be read in
conjunction with the Company's consolidated financial statements for the
fiscal year ended December 31, 1997 included in its 1997 Annual Report on
Form 10-K.
In management's opinion, these unaudited consolidated financial statements
contain all adjustments necessary for their fair presentation at interim
periods. All such adjustments are of a normal recurring nature.
The results of operations for interim periods are not necessarily indicative
of operating results that may be expected for the entire year due to the
seasonal aspect of event revenues.
Revenue Recognition - The Company recognizes revenues and operating
9
<PAGE>
expenses for all events in the calendar quarter in which conducted except for
major NASCAR racing events which occur on the last weekend of a calendar
quarter. When major NASCAR racing events occur on the last weekend of a
calendar quarter, the race event revenues and operating expenses are
recognized in the current or immediately succeeding calendar quarter that
corresponds to the calendar quarter of the prior year in which the same major
NASCAR racing event was conducted. The Company has adopted this accounting
policy to help ensure comparability and consistency between quarterly
financial statements of successive years.
A major NASCAR sanctioned racing event occurred at SPR on the weekends of
May 3-4, 1997 and June 27-28, 1998. Accordingly, the revenues and direct
expenses of these race events were recognized in the second quarter of both
calendar years. No major NASCAR race events were held at the Company's
speedways on the last weekend of the calendar quarters ended in fiscal 1997
or September 30, 1998. As such, the reporting periods for the three and nine
months ended September 30, 1997 and 1998 are comparable.
The Busch Grand National series race at AMS, originally scheduled to be held
March 7, 1998, was rescheduled to November 7, 1998 due to poor weather
conditions. Certain advance revenues and direct expenses related to the
rescheduled Busch race were deferred. Rescheduling did not materially impact
revenues and operating expenses as reported for the three or nine months
ended September 30, 1998.
Speedway Condominiums Held for Sale - Speedway condominiums held for sale
represent 46 condominiums at AMS and 76 condominiums at TMS, of which 41 and
66, respectively, have been sold or contracted for sale as of September 30,
1998. The remaining condominiums are substantially complete and are in the
process of being sold. CMS has constructed 52 condominiums overlooking the
main speedway, all of which have been sold.
Property and Equipment - In the fourth quarter ended December 31, 1997, the
Company revised the estimated useful lives of certain property and equipment
based on new information obtained from a third party review of applicable
lives for these assets. Management believes the revised lives are more
appropriate and result in better estimates of depreciation. The revised lives
decreased depreciation expense by $1,575,000 and $3,802,000, and increased
net income by $945,000 and $2,281,000, or approximately $0.02 and $0.05 per
share, for the three and nine months ended September 30, 1998 compared to
using former estimated lives.
Marketable Equity Securities - The Company's marketable equity securities
are classified as "available for sale" and are not bought and held
principally for the purpose of selling them in the near term. Valuation
allowances for unrealized losses of $303,000 and $441,000 (net of $219,000
and $319,000 in tax benefits), are reflected as a charge to stockholders'
equity to reduce the carrying amount of long-term marketable equity
securities to market value as of December 31, 1997 and September 30, 1998,
respectively.
Deferred Income - Deferred income includes Texas Motor Speedway Preferred
Seat License (PSL) fees of $12,862,000 and $12,616,000, net of expenses of
$1,036,000 and $1,050,000 at December 31, 1997 and September 30, 1998,
respectively. Fees received under PSL agreements were deferred prior to TMS
hosting its first Winston Cup race on April 6, 1997. The Company began
10
<PAGE>
amortizing net PSL fees into income over the estimated useful life of TMS's
speedway facility upon its opening. Amortization income recognized in the
three months ended September 30, 1997 and 1998 was $132,000 and $125,000, and
in the nine months ended September 30, 1997 and 1998 was $264,000 and
$489,000.
Certain sales contracts, aggregating approximately $17,500,000 as of
September 30, 1998, provide buyers the right to require the Company to
repurchase real estate within three years from the purchase date. Gain
recognition has been deferred until the buyer's right expires. Management
believes the likelihood of buyers exercising such rights, in amounts that at
any one time or in the aggregate would be significant, is remote.
Preoperating Expense Of New Facility - Preoperating expenses in 1997 consist
of non-recurring and non-event related costs to develop, organize and open
TMS, which hosted its first racing event on April 6, 1997.
3. INVENTORIES
Inventories as of December 31, 1997 and September 30, 1998 consist of the
following components (in thousands):
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
------------ -------------
<S> <C> <C>
Souvenirs..................................... $ 3,839 $ 4,628
Finished vehicles, parts and accessories...... 4,907 5,256
Food and other................................ 154 752
-------- -------
Total $ 8,900 $10,636
======== =======
</TABLE>
4. PROPERTY AND EQUIPMENT AND CONSTRUCTION IN PROGRESS
Texas Motor Speedway - The construction of TMS, a 1.5-mile, banked, lighted,
quad-oval superspeedway, located on 1,360 acres in Fort Worth, Texas, was
complete at March 31, 1997, with TMS hosting its first major NASCAR Winston
Cup race on April 6, 1997.
Construction In Progress - At September 30, 1998, the Company has various
construction projects underway to increase and improve grandstand seating
capacity, facilities for fan amenities, and make various other site
improvements at each of its speedways. Also, TMS is constructing an office
and entertainment complex which overlooks the main speedway. Construction is
expected to be completed in 1999, and TMS plans to derive rental, catering,
dining and dues revenues from the dining-entertainment and health-fitness
club complex. The estimated aggregate cost of capital expenditures in 1998,
excluding exercise of the SPR purchase option (see Note 5), will approximate
$100,000,000.
5. LONG-TERM DEBT
Bank Credit Facility - In August 1997, the Company obtained, from a
syndicate of banks led by NationsBank N.A., a long-term, unsecured, senior
revolving credit facility (the Credit Facility) with an overall borrowing
limit of $175,000,000 and a sub-limit of $10,000,000 for standby letters of
credit. Interest is based, at the Company's option, upon (i) LIBOR plus .5%
to 1.125% or (ii) the greater of NationsBank's prime rate or the Federal fund
rate plus .5%. The Credit Facility matures in August 2002. At September 30,
1998, there were $35,000,000 in outstanding borrowings under the Credit
Facility. At December 31, 1997, there were no outstanding borrowings.
11
<PAGE>
Senior Subordinated Notes - In August 1997, the Company issued 8 1/2% senior
subordinated notes (the Senior Notes) in the aggregate principal amount of
$125,000,000. The Senior Notes are unsecured, mature in August 2007 and are
redeemable at the Company's option after August 15, 2002. Interest payments
are due semi-annually on February 15 and August 15, commencing February 15,
1998.
Convertible Subordinated Debentures - In October 1996, the Company issued
5 3/4% convertible subordinated debentures in the aggregate principal amount
of $74,000,000. The debentures are unsecured, mature on September 30, 2003,
are convertible into common stock at the holder's option at $31.11 per share
until maturity and are redeemable at the Company's option after September 29,
2000. In conversion, 2,378,565 shares of common stock are issuable (see Note
6). Interest payments are due semi-annually on March 31 and September 30.
Capital Lease Obligation and Exercise of Purchase Option (Sears Point
Raceway) - SPR, located on approximately 1,550 acres in Sonoma, California,
owns and operates a 1.9-mile, seven-turn road course, a one-quarter mile
dragstrip, and a 157,000 square foot industrial park. In connection with its
SPR asset acquisition in November 1996, the Company executed a fourteen year
capital lease, including a purchase option, with the seller for all real
property of the SPR complex. On February 17, 1998, the purchase transaction
was consummated for $18,100,000, net cash outlay, thereby transferring
ownership of the SPR racetrack facilities and real property to the Company
and eliminating its capital lease obligation. The purchase transaction was
funded with borrowings under the Company's Credit Facility, and has been
reflected in the accompanying September 30, 1998 consolidated financial
statements.
Interest Expense - Interest expense, net for the three months ended
September 30, 1997 and 1998 includes interest expense of $3,182,000 and
$3,605,000, and interest income of $594,000 and $734,000. The Company
capitalized interest costs of $1,115,000 and $771,000 during the three months
ended September 30, 1997 and 1998.
Interest expense, net for the nine months ended September 30, 1997 and 1998
includes interest expense of $4,664,000 and $10,432,000, and interest income
of $1,694,000 and $1,949,000. The Company capitalized interest costs of
$4,630,000 and $2,418,000 during the nine months ended September 30, 1997 and
1998.
6. PER SHARE DATA
In 1997, the Company adopted SFAS No. 128 "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements
for basic and diluted earnings per share retroactively restated. The
impact of adoption was not significant.
The computation of diluted earnings (loss) per share was antidilutive for
the three months ended September 30, 1997 and 1998; therefore, the amounts
reported for basic and diluted earnings (loss) per share are the same.
Dilution assumes conversion of the convertible debentures into common stock
and elimination of interest expense, net of taxes, on such debt (see Note 5).
The following schedule reconciles basic and diluted earnings per share:
12
<PAGE>
<TABLE>
<CAPTION>
Weighted Earnings
Net Income Average (Loss)
(Loss) Shares Per Share
---------- -------- ---------
(In thousands)
<S> <C> <C> <C>
Three Months Ended
September 30, 1997:
Basic loss per share ....................... $ (981) 41,329 $(0.02)
Dilution adjustments:
Common stock equivalents - stock options... -- 762
5 3/4% Convertible debentures.............. 464 2,379
------- ------
Diluted loss per share...................... $ (517) 44,470 $(0.02)
======= ======
September 30, 1998:
Basic earnings per share.................... $ 1,895 41,488 $0.05
Dilution adjustments:
Common stock equivalents - stock options... -- 660
5 3/4% Convertible debentures.............. 523 2,379
------- ------
Diluted earnings per share.................. $ 2,418 44,527 $0.05
======= ======
Nine Months Ended
September 30, 1997:
Basic earnings per share ................... $28,273 41,313 $0.68
Dilution adjustments:
Common stock equivalents - stock options... -- 779
5 3/4% Convertible debentures ............. 788 2,379
------- ------
Diluted earnings per share.................. $29,061 44,471 $0.65
======= ======
September 30, 1998:
Basic earnings per share.................... $33,586 41,479 $0.81
Dilution adjustments:
Common stock equivalents - stock options... -- 741
5 3/4% Convertible debentures ............. 1,551 2,379
------- ------
Diluted earnings per share.................. $35,137 44,599 $0.79
======= ======
</TABLE>
7. RELATED PARTY TRANSACTIONS
Notes receivable at December 31, 1997 and September 30, 1998 include a note
receivable of $747,000 and $785,000, respectively, due from a partnership in
which the Company's Chairman and Chief Executive Officer is a partner. The
note bears interest at 1% over prime, is collateralized by certain
partnership land and is payable on demand. Because the Company does not
anticipate repayment of the note before September 30, 1999, the balance has
been classified as a noncurrent asset in the accompanying consolidated
balance sheets.
Notes receivable also include a note receivable from the Company's Chairman
and Chief Executive Officer for $1,876,000 at December 31, 1997 and $801,000
at September 30, 1998. The principal balance of the note represents premiums
paid by the Company under a split-dollar life insurance trust arrangement on
behalf of the Chairman, in excess of cash surrender value. The note bears
interest at 1% over prime.
From time to time during 1997 and 1998, the Company paid certain expenses
and made cash advances for various corporate purposes on behalf of Sonic
Financial Corp. (Sonic Financial), an affiliate of the Company through common
ownership. The Company had a net receivable from Sonic Financial of
approximately $3,875,000 at December 31, 1997 and $614,000 at September 30,
13
<PAGE>
1998. The amount due the Company at December 31, 1997 was substantially
repaid by Sonic Financial in January 1998.
Amounts payable to affiliated company of approximately $2,603,000 at
December 31, 1997 and September 30, 1998 represents acquisition and other
expenses paid on behalf of AMS by Sonic Financial in prior years. Of such
amounts, approximately $1,800,000 bears interest at 3.83% per annum. The
remainder of the amount bears interest at prime plus 1%. The entire account
balance is classified as long-term based on expected repayment dates.
8. STOCK OPTION PLANS
1994 Stock Option Plan - The Company's stockholders approved, at the 1998
annual meeting on May 5, 1998, an amendment to the 1994 Stock Option Plan to
increase the number of shares of common stock issuable under that plan from
2,000,000 to 3,000,000. The amendment allows future grants to key employees.
No options have been granted from January 1, 1998 to September 30, 1998.
Formula Stock Option Plan - On May 5, 1998, the Company's stockholders
approved an amendment to the Formula Stock Option Plan to increase the number
of shares of common stock issuable under that plan from 400,000 to 800,000.
The amendment allows future grants to independent directors. Effective
January 2, 1998, the Company granted options to purchase an additional 20,000
shares to each of the two outside directors at an exercise price per share of
$24.81.
Employee Stock Purchase Plan - On May 5, 1998, the Company's stockholders
approved an amendment to the Employee Stock Purchase Plan to increase the
number of shares of common stock issuable under that plan from 200,000 to
400,000. The amendment allows future grants to employees. Each participant
has been granted an option to purchase up to 500 shares in 1998 at an
exercise price per share of $22.33, or 90% of the fair market value at
exercise date if lower, subject to the terms and conditions of the plan.
14
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
The following discussion and analysis should be read in conjunction with the
Consolidated Financial Statements including the Notes thereto.
Overview
The Company derives revenues principally from the sale of tickets to
automobile races and other events held at each of its speedway facilities,
from the sale of food, beverages and souvenirs during such events, from the
sale of sponsorships to companies that desire to advertise or sell their
products or services at such events, and from the licensing of television,
cable network and radio rights to broadcast such events. The Company derives
additional revenue from The Speedway Club, a dining and entertainment
facility at CMS, Legends Car operations, SPR industrial park rentals, and
from Oil-Chem, a wholly-owned subsidiary, that produces an environmentally
friendly motor oil additive that the Company intends to promote in
conjunction with its speedways.
The Company classifies its revenues as admissions, event related revenues
and other operating revenue. "Admissions" includes ticket sales for all of
the Company's events. "Event related revenues" includes food, beverage and
souvenir sales, luxury suite rentals, sponsorship fees and broadcast right
fees. "Other operating revenue" includes the Speedway Club, Legends Car, SPR
industrial park rental and Oil-Chem revenues.
The Company classifies its expenses to include direct expense of events and
other direct operating expense, among other things. "Direct expense of
events" principally consists of race purses, sanctioning fees, cost of
concession and souvenir sales, compensation of certain employees and
advertising. "Other direct operating expense" includes the cost of The
Speedway Club and Legends Car sales, SPR industrial park rentals and Oil-Chem
revenues.
The Company's revenue items produce different operating margins.
Sponsorships, broadcast rights, ticket sales and luxury suite rentals produce
higher margins than concessions and souvenir sales, as well as Legends Car
sales.
The Company sponsors and promotes outdoor motorsports events. Weather
conditions affect sales of tickets, concessions and souvenirs, among other
things at these events. Although the Company sells tickets well in advance of
its events, poor weather conditions can have an effect on the Company's
results of operations.
Significant growth in the Company's revenues will depend on consistent
investment in facilities. The Company has several capital projects underway
at each of its speedways.
The Company does not believe that its financial performance has been
materially affected by inflation. The Company has been able to mitigate the
effects of inflation by increasing prices.
15
<PAGE>
Automated Systems and the Year 2000
The ability of automated systems to recognize the date change from December
31, 1999 to January 1, 2000 is commonly referred to as the Year 2000 matter.
The Company has assessed the potential impact of the Year 2000 matter on its
operations based on current and foreseeable computer and other automated
system applications, including those of its third party vendors, suppliers
and customers. Management believes costs associated with modifying its
computer software and other automated systems for Year 2000 matters will not
be significant. In addition, management is not aware of any Year 2000 issues
which would materially adversely affect the Company's financial condition,
liquidity or future results of operations.
Seasonality and Quarterly Results
The Company derived a substantial portion of its total revenues from
admissions and event related revenue attributable to 15 major NASCAR
sanctioned races held in 1997. In 1998, the Company again is holding 15 major
NASCAR sanctioned races. The Company is also hosting four Indy Racing League
("IRL"), two of which are new events, three NASCAR Craftsman Truck Series and
one National Hot Rod Association Nationals, racing events in 1998. As a
result, the Company's business has been, and is expected to remain, highly
seasonal. In 1996 and 1997, the Company's second and fourth quarters
accounted for 75% and 78%, respectively, of its total annual revenues and 96%
and 100%, respectively, of its total annual operating income.
The Company sometimes produces minimal operating income or losses during its
first and third quarters, when it hosts only one major NASCAR race weekend.
The concentration of the Company's racing events in the second quarter and
the growth in the Company's operations with attendant increases in overhead
expenses will tend to increase operating losses or minimize operating income
in future first and third quarters. Additionally, race dates at the Company's
various facilities may be changed from time to time, lessening the
comparability of the financial results of quarters between years and
increasing or decreasing the seasonal nature of the Company's business.
The results of operations for the three and nine months ended September 30,
1997 and 1998 are not indicative of the results that may be expected for the
entire year because of the seasonality discussed above.
Set forth below is certain comparative summary information with respect to
the Company's scheduled major NASCAR-sanctioned racing events for 1997 and
1998:
<TABLE>
<CAPTION>
Number of scheduled major
NASCAR-sanctioned events
-------------------------
1997 1998
---- ----
<S> <C> <C>
1st Quarter....................... 2 1(*)
2nd Quarter....................... 8 8
3rd Quarter....................... 2 2
4th Quarter....................... 3 4(*)
---- ----
Total........................... 15 15
==== ====
</TABLE>
(*) Reflects rescheduling of the Busch Grand National series race at AMS from
March to November 1998 due to poor weather conditions.
16
<PAGE>
RESULTS OF OPERATIONS
In 1998, the Company began operating certain food and beverage concession
activities through its wholly-owned subsidiary, Speedway Systems LLC d/b/a
Finish Line Events (FLE), which previously had been procured from a third
party. As a result, revenues and expenses associated with such concession
activities for the three and nine months ended September 30, 1998 are
included in event related revenues, direct expense of events and general and
administrative expense. For the three and nine months ended September 30,
1997, the Company's operating profits from such activities under its
arrangement with the outside vendor were reported as event related revenue.
The NASCAR sanctioned Busch Grand National series race at AMS, originally
scheduled to be held March 7, 1998, was rescheduled to November 7, 1998 due
to poor weather conditions. Rescheduling did not materially impact revenues
and operating expenses as reported for the three or nine months ended
September 30, 1998.
Three Months Ended September 30, 1998 Compared To Three Months Ended
September 30, 1997
Total Revenues. Total revenues for the three months ended September 30, 1998
increased by $15.4 million, or 58.2%, to $41.7 million, over such revenues
for the same period in 1997. This improvement was due to increases in all
revenue items, particularly admissions and event related revenues.
Admissions for the three months ended September 30, 1998
increased by $6.8 million, or 49.0%, over admissions for the same period
in 1997. This increase was due primarily to hosting new IRL racing events
at AMS and TMS, and to growth in NASCAR sanctioned racing events held at
BMS, in the current quarter. The growth in admissions reflects the
continued increases in attendance, additions to permanent seating capacity
and, to a lesser extent, ticket prices.
Event related revenue for the three months ended September 30,
1998 increased by $7.8 million, or 85.8%, over such revenue for the same
period in 1997. This increase was due to hosting new IRL racing events at
AMS and TMS, to the growth in attendance, including related increases in
concessions and souvenir sales, at BMS, and to increases in broadcast
rights and sponsorship fees. This increase also reflects that the Company
now operates certain food and beverage concession activities previously
procured from a third party as described above.
Other operating revenue for the three months ended September
30, 1998 increased by $740,000, or 22.1%, over such revenue for the same
period in 1997. This increase was primarily attributable to an increase in
Legend Car revenues of 600 Racing, a wholly-owned subsidiary of CMS.
Direct Expense of Events. Direct expense of events for the three months
ended September 30, 1998 increased by $8.3 million, or 74.9%, over such
expense for the same period in 1997. This increase was due to hosting new IRL
events at AMS and TMS, and to higher operating costs associated with the
growth in attendance and seating capacity at BMS, including related increases
in concessions and souvenir sales, during the current quarter. This increase
17
<PAGE>
also reflects that the Company now operates certain food and beverage
concession activities previously procured from a third party.
As a percentage of admissions and event related revenues combined, direct
expense of events for the three months ended September 30, 1998 was 51.4%
compared to 48.1% for the same period in 1997. Such increase, which was
anticipated, results primarily from proportionately higher operating expenses
associated with hosting IRL racing events relative to operating margins
historically achieved with NASCAR sanctioned events. The increase also
results because operating profits from certain food and beverage concession
activities previously procured from a third party were reported as event
related revenue in 1997.
Other Direct Operating Expense. Other direct operating expense for the three
months ended September 30, 1998 increased by $825,000, or 40.2%, over such
expense for the same period in 1997. The increase includes expenses
associated with the increase in other operating revenues derived from Legend
Cars of 600 Racing.
General and Administrative. As a percentage of total revenues, general and
administrative expense decreased from 29.9% for the three months ended
September 30, 1997 to 20.5% for the three months ended September 30, 1998.
This improvement reflects continuing scale efficiencies associated with
revenue increases outpacing increases in general and administrative expenses.
General and administrative expense for the three months ended September 30,
1998 increased by $648,000, or 8.2%, over such expense for the same period in
1997. The increase primarily reflects costs associated with the Company now
operating certain food and beverage concession activities previously procured
from a third party.
Depreciation and Amortization. Depreciation and amortization expense for the
three months ended September 30, 1998 increased by $515,000 or 11.2%, over
such expense for the same period in 1997. This increase was primarily due to
additions to property and equipment at AMS, BMS and CMS.
Operating Income. Operating income for the three months ended September 30,
1998 increased by $5.1 million, or 662.0%, over such income for the same
period in 1997. This increase was due to the factors discussed above.
Interest Expense, Net. Interest expense, net for the three months ended
September 30, 1998 was $2.9 million compared to $2.6 million for the same
period in 1997. This change was due to higher average borrowings outstanding
in the three months ended September 30, 1998 as compared to the same period
in 1997. The change also reflects lower capitalized interest costs of
$771,000 during the three months ended September 30, 1998 as compared to $1.1
million in the same period in 1997.
Other Income, Net. Other income, net for the three months ended September
30, 1998 was $189,000 compared to $255,000 for the same period in 1997. This
decrease was primarily due to fewer gains recognized on sales of marketable
equity securities during the three months ended September 30, 1998 compared
to the same period in 1997.
Income Tax Provision (Benefit). The Company's effective income tax rate for
the three months ended September 30, 1998 and 1997 was 40%.
18
<PAGE>
Net Income (Loss). Net income for the three months ended September 30, 1998
was $1.9 million compared to net loss of $981,000 for the three months ended
September 30, 1997. This change was due to the factors discussed above.
Nine Months Ended September 30, 1998 Compared To Nine Months Ended
September 30, 1997
Total Revenues. Total revenues for the nine months ended September 30, 1998
increased by $31.5 million, or 21.6%, to $177.4 million, over such revenues
for the same period in 1997. This improvement was due to increases in all
revenue items, particularly admissions and event related revenues.
Admissions for the nine months ended September 30, 1998
increased by $11.8 million, or 16.7%, over admissions for the same period
in 1997. This increase was due primarily to growth in NASCAR sanctioned
racing events, and to hosting new IRL racing events at AMS and TMS during
the current period. The growth in admissions reflects the continued
increases in attendance, additions to permanent seating capacity and, to a
lesser extent, ticket prices.
Event related revenue for the nine months ended September 30,
1998 increased by $18.5 million, or 28.8%, over such revenue for the same
period in 1997. This increase was due to the growth in attendance,
including related increases in concessions and souvenir sales, to hosting
new IRL racing events at AMS and TMS, and to increases in broadcast rights
and sponsorship fees. The increase also reflects that the Company now
operates certain food and beverage concession activities previously
procured from a third party.
Other operating revenue for the nine months ended September
30, 1998 increased by $1.2 million, or 10.9%, over such revenue for the
same period in 1997. This increase was primarily attributable to an
increase in Legend Car revenues of 600 Racing.
Direct Expense of Events. Direct expense of events for the nine months ended
September 30, 1998 increased by $15.2 million, or 29.7%, over such expense
for the same period in 1997. This increase was due to hosting new IRL events
at AMS and TMS, to increased operating costs associated with the growth in
attendance and seating capacity, including related increases in concessions
and souvenir sales, and to higher race purses and sanctioning fees required
for NASCAR sanctioned racing events held during the current period. This
increase also reflects that the Company now operates certain food and
beverage concession activities previously procured from a third party.
As a percentage of admissions and event related revenues combined, direct
expense of events for the nine months ended September 30, 1998 was 40.1%
compared to 37.9% for the same period in 1997. Such increase, which was
anticipated, results primarily from proportionately higher operating expenses
associated with hosting IRL racing events relative to operating margins
historically achieved with NASCAR sanctioned events. The increase also
results because operating profits from certain food and beverage concession
activities previously procured from a third party were reported as event
related revenue in 1997.
Other Direct Operating Expense. Other direct operating expense for the nine
19
<PAGE>
months ended September 30, 1998 increased by $1.2 million, or 17.9%, over
such expense for the same period in 1997. The increase includes expenses
associated with the increase in other operating revenues derived from Legend
Cars of 600 Racing.
General and Administrative. As a percentage of total revenues, general and
administrative expense decreased from 16.2% for the nine months ended
September 30, 1997 to 14.4% for the nine months ended September 30, 1998.
This improvement reflects continuing scale efficiencies associated with
revenue increases outpacing increases in general and administrative expenses.
General and administrative expense for the nine months ended September 30,
1998 increased by $1.8 million, or 7.6%, over such expense for the same
period in 1997. The increase reflects costs associated with the Company now
operating certain food and beverage concession activities previously procured
from a third party. This increase was also due to increases in operating
costs associated with the growth and expansion at the Company's speedways.
Depreciation and Amortization. Depreciation and amortization expense for the
nine months ended September 30, 1998 increased by $3.1 million, or 26.8%,
over such expense for the same period in 1997. This increase was primarily
due to property and equipment of TMS placed into service upon hosting of its
first racing event in April 1997, and to additions to property and equipment
at AMS, BMS and CMS.
Preoperating Expense Of New Facility. Preoperating expenses for the nine
months ended September 30, 1997 of $1.85 million consist of non-recurring and
non-event related costs to develop, organize and open TMS.
Operating Income. Operating income for the nine months ended September 30,
1998 increased $12.0 million, or 23.6%, compared to the same period in 1997.
This increase was due to the factors discussed above.
Interest Expense, Net. Interest expense, net for the nine months ended
September 30, 1998 was $8.5 million compared to $3.0 million for the same
period in 1997. This increase was due to higher average borrowings
outstanding in the nine months ended September 30, 1998 as compared to the
same period in 1997. The change also reflects lower capitalized interest
costs of $2.4 million during the nine months ended September 30, 1998 as
compared to $4.6 million in the same period in 1997. The lower capitalized
interest reflects property and equipment of TMS being placed into service
upon its opening in April 1997.
Other Income. Other income for the nine months ended September 30, 1998
increased by $1.3 million over such income for the same period in 1997. This
increase resulted primarily from gains on sales of thirteen TMS condominiums
during the nine months ended September 30, 1998. No sales of TMS condominiums
were recognized in the nine months ended September 30, 1997. In addition, the
increase reflects recognition of the Company's loss from equity method
investee of $90,000 in the nine months ended September 30, 1998 compared to
$315,000 for the same period in 1997.
Income Tax Provision. The Company's effective income tax rate for the nine
months ended September 30, 1998 and 1997 was 40% and 41%, respectively.
Net Income. Net income for the nine months ended September 30, 1998
increased by $5.3 million, or 18.8%, compared to the nine months ended
20
<PAGE>
September 30, 1997. This increase was due to the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically met its working capital and capital expenditure
requirements through a combination of cash flow from operations, bank
borrowings and other debt and equity offerings. The Company has expended
significant amounts of cash in the first three quarters of 1998 for
improvements and expansion of BMS, CMS and TMS, and the exercise of the SPR
purchase option on February 17, 1998 as further described below. Significant
changes in the Company's financial condition and liquidity during the nine
months ended September 30, 1998 resulted primarily from: (1) net cash
generated by operations amounting to $53.4 million; (2) net long-term
borrowings of $16.6 million; and (3) capital expenditures amounting to $74.7
million.
Management anticipates that cash from operations and funds available through
the Credit Facility will be sufficient to meet the Company's operating needs
into 1999, including planned capital expenditures at its speedway facilities.
At September 30, 1998, the Company had $35,000,000 in outstanding borrowings
under the $175,000,000 Credit Facility. Based upon anticipated future growth
and financing requirements of the Company, management expects that the
Company will, from time to time, engage in additional financing of a
character and in amounts to be determined. While the Company expects to
continue to generate positive cash flows from its existing speedway
operations, and has generally experienced improvement in its financial
condition, liquidity and credit availability, such resources, as well as
possibly others, could be needed to fund the Company's continued growth,
including the continued expansion and improvement of its speedway facilities.
Exercise of SPR Purchase Option
On February 17, 1998, the Company's purchase option on SPR was consummated
for $18,100,000, net cash Company outlay, thereby transferring ownership of
the SPR complex to the Company and eliminating its capital lease obligation.
The purchase transaction was funded with borrowings from the Company's Credit
Facility.
Capital Expenditures
Significant growth in the Company's revenues depends, in large part, on
consistent investment in facilities. Therefore, the Company expects to
continue to make substantial capital improvements in its facilities to meet
increasing demand and to increase revenue. Currently, a number of significant
capital projects are underway.
In 1998, AMS installed lighting for its inaugural IRL night race in August.
At BMS, the Company added approximately 18,000 permanent seats, including 45
new luxury suites, and made other site improvements. At CMS, the Company
added approximately 12,000 permanent seats, including 12 new luxury suites.
SPR further expanded and improved seating and viewing areas to increase
spectator comfort and enjoyment. Consistent with management's commitment to
quality and customer satisfaction, the Company continues to improve and
expand fan amenities at all its facilities, as well as reconfiguring traffic
patterns, entrances, and expanding on-site roads and significantly increasing
21
<PAGE>
available parking to ease congestion caused by the growth in attendance. In
1998, after adding more than 30,000 permanent seats and 57 luxury suites,
exclusive of SPR, the Company's total permanent seating capacity exceeds
555,000 and the total number of luxury suites is approximately 550. In 1999,
the Company expects to begin major renovations at SPR, including its
reconfiguration into a "stadium-style" road racing course, the addition of
approximately 44,000 permanent seats, and improving and expanding
concessions, restroom facilities and other fan amenities. Also, TMS is
constructing an office and entertainment complex which overlooks the main
speedway. Construction is expected to be completed in 1999, and TMS plans to
derive rental, catering and dining revenues from the dining-entertainment and
health-fitness club complex.
The estimated aggregate cost of capital expenditures in 1998, excluding
exercise of the SPR purchase option, will approximate $100 million. Numerous
factors, many of which are beyond the Company's control, may influence the
ultimate costs and timing of various capital improvements at the Company's
facilities, including undetected soil or land conditions, additional land
acquisition costs, increases in the cost of construction materials and labor,
unforeseen changes in the design, litigation, accidents or natural disasters
affecting the construction site and national or regional economic changes. In
addition, the actual cost could vary materially from the Company's estimates
if the Company's assumptions about the quality of materials or workmanship
required or the cost of financing such construction were to change.
Construction is also subject to state and local permitting processes, which
if changed, could materially affect the ultimate cost.
In addition to expansion and improvements of its existing speedway
facilities and business operations, the Company is continually evaluating new
opportunities that will add value for the Company's stockholders, including
the acquisition and construction of new speedway facilities, the expansion
and development of its existing Legends Cars and Oil-Chem products and
markets and the expansion into complementary businesses.
Dividends
The Company does not anticipate paying any cash dividends in the foreseeable
future. Any decision concerning the payment of dividends on the Common Stock
will depend upon the results of operations, financial condition and capital
expenditure plans of the Company, as well as such factors as permissibility
under the Credit Facility, the Senior Notes and as the Board of Directors, in
its sole discretion, may consider relevant. The Credit Facility and Senior
Notes presently preclude the payment of any dividends by the Company.
22
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27. Financial data schedule for the nine month period ended September 30,
1998.
(b) No reports were filed on Form 8-K during the fiscal quarter covered by
this Form 10-Q.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPEEDWAY MOTORSPORTS, INC.
(Registrant)
Date: November 10, 1998 By: /s/ O. Bruton Smith
----------------- ---------------------------
O. Bruton Smith
Chairman and Chief Executive Officer
Date: November 10, 1998 By: /s/ William R. Brooks
----------------- ---------------------------
William R. Brooks
Vice President, Chief Financial
Officer, Treasurer and Director
24
<PAGE>
INDEX TO EXHIBITS TO
QUARTERLY REPORT ON FORM 10-Q FOR
SPEEDWAY MOTORSPORTS, INC.
FOR THE QUARTER ENDED SEPTEMBER 30, 1998
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------ -----------------------
27 Financial data schedule for the nine month period ended September
30, 1998.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Speedway Motorsports, Inc. for the nine months ended
September 30, 1998 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000934648
<NAME> Speedway Motorsports, Inc.
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1.00
<CASH> 24,847
<SECURITIES> 929
<RECEIVABLES> 30,686
<ALLOWANCES> 0
<INVENTORY> 10,636
<CURRENT-ASSETS> 65,670
<PP&E> 498,118
<DEPRECIATION> 74,786
<TOTAL-ASSETS> 633,672
<CURRENT-LIABILITIES> 82,117
<BONDS> 234,312
0
0
<COMMON> 415
<OTHER-SE> 277,672
<TOTAL-LIABILITY-AND-EQUITY> 633,672
<SALES> 12,616
<TOTAL-REVENUES> 177,447
<CGS> 8,138
<TOTAL-COSTS> 114,603
<OTHER-EXPENSES> (1,626)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,483
<INCOME-PRETAX> 55,987
<INCOME-TAX> 22,401
<INCOME-CONTINUING> 33,586
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,586
<EPS-PRIMARY> 0.81
<EPS-DILUTED> 0.79
</TABLE>
