UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
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): December 1, 1998
----------------
SPEEDWAY MOTORSPORTS, INC.
----------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 1-13582 51-0363307
- -------- ------- ----------
(State or other jurisdiction Commission File (I.R.S. Employer
of incorporation) Number Identification No.)
U.S. Highway 29 North, Concord, North Carolina 28026
- ---------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code): (704)455-3239
----------------------------------
- --------------------------------------------------------------------------------
(Former name of former address, if changed since last report)
<PAGE>
This report is an amendment to the Registrant's report on Form 8-K dated
December 1, 1998 that was filed with the Securities and Exchange Commission on
December 15, 1998 (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:
LAS VEGAS MOTOR SPEEDWAY, INC.:
Independent Auditors' Report
Financial Statements:
Balance sheet at September 30, 1998
Statement of income and stockholders' equity for the nine months ended
September 30, 1998
Statement of cash flows for the nine months ended September 30, 1998 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 ACQUISITION OF LAS
VEGAS MOTOR SPEEDWAY
Description of unaudited pro forma financial statements Unaudited pro forma
balance sheet at September 30, 1998 and notes Unaudited pro forma statement of
income for the nine months ended
September 30, 1998 and notes
Unaudited pro forma statement of income for the year ended
December 31, 1997 and notes
(C) EXHIBITS
Exhibit No. Description
- ----------- ----------------------------------------------------------------
99.1(*) Asset Purchase Agreement and Escrow Instructions dated November
17, 1998 between Speedway Motorsports, Inc., as buyer, and Las
Vegas Motor Speedway, Inc., as seller.
99.2(*) First Amendment to Amended and Restated Credit Agreement dated as
of November 18, 1998 among Speedway Motorsports, Inc. and
Speedway Funding Corp., as borrowers, certain subsidiaries of
Speedway Motorsports, Inc., as guarantors, and NationsBank, N.A.,
as the lender.
99.3(*) Second Amended and Restated Credit Agreement dated as of November
23, 1998 among Speedway Motorsports, Inc. and Speedway Funding
Corp., as borrowers, certain subsidiaries of Speedway
Motorsports, Inc., as guarantors, and NationsBank, N.A., as agent
for the lenders and a lender.
2
<PAGE>
99.4(*) Press Release dated December 10, 1998.
99.5(*) Press Release dated December 14, 1998.
99.6 Financial Statements of Las Vegas Motor Speedway, Inc. for the
nine months ended September 30, 1998, including Independent
Auditors' Report.
99.7 Unaudited Pro Forma Financial Statements for the nine months ended
September 30, 1998 reflecting the acquisition of Las Vegas Motor
Speedway.
99.8 Unaudited Pro Forma Income Statement for the year ended December
31, 1997 reflecting the acquisition of Las Vegas Motor Speedway.
- ---------------------
* Previously filed.
3
<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 hereunto duly authorized.
SPEEDWAY MOTORSPORTS, INC.
(REGISTRANT)
Date: February 12, 1999 By: /s/ William R. Brooks
----------------- ----------------------
William R. Brooks
Vice President, Chief Financial
Officer, Treasurer and Director
4
<PAGE>
EXHIBIT LIST
------------
Exhibit No. Description
- ---------- ---------------------------------------------------------------
99.1(*) Asset Purchase Agreement and Escrow Instructions dated November
17, 1998 between Speedway Motorsports, Inc., as buyer, and Las
Vegas Motor Speedway, Inc., as seller.
99.2(*) First Amendment to Amended and Restated Credit Agreement dated as
of November 18, 1998 among Speedway Motorsports, Inc. and
Speedway Funding Corp., as borrowers, certain subsidiaries of
Speedway Motorsports, Inc., as guarantors, and NationsBank, N.A.,
as the lender.
99.3(*) Second Amended and Restated Credit Agreement dated as of November
23, 1998 among Speedway Motorsports, Inc. and Speedway Funding
Corp., as borrowers, certain subsidiaries of Speedway
Motorsports, Inc., as guarantors, and NationsBank, N.A., as agent
for the lenders and a lender.
99.4(*) Press Release dated December 10, 1998.
99.5(*) Press Release dated December 14, 1998.
99.6 Financial Statements of Las Vegas Motor Speedway, Inc. for the
nine months ended September 30, 1998, including Independent
Auditors' Report.
99.7 Unaudited Pro Forma Financial Statements for the nine months
ended September 30, 1998 reflecting the Acquisition of Las Vegas
Motor Speedway.
99.8 Unaudited Pro Forma Income Statement for the year ended
December 31, 1997 reflecting the Acquisition of Las Vegas Motor
Speedway.
- ---------------------
* Previously filed.
5
LAS VEGAS MOTOR SPEEDWAY, INC.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
----
Independent Auditors' Report 7
Audited Financial Statements for the Nine Months
Ended September 30, 1998:
Balance Sheet 8
Statement of Income and Stockholders' Equity 9
Statement of Cash Flows 10
Notes to Financial Statements 11-14
6
<PAGE>
INDEPENDENT AUDITORS' REPORT
We have audited the balance sheet of Las Vegas Motor Speedway, Inc. (the
Company) as of September 30, 1998, and the related statements of income and
stockholders' equity and of cash flows for the nine months then ended. These
financial statements are the responsibility of management of Speedway
Motorsports, Inc. 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 September 30, 1998, and the
results of its operations and its cash flows for the nine months then ended in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Charlotte, North Carolina
February 12, 1999
7
<PAGE>
LAS VEGAS MOTOR SPEEDWAY, INC.
BALANCE SHEET
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Notes 2 and 6)......... $ 14,523,000
Accounts receivable (Note 2)...................... 673,000
Due from affiliate (Note 6)....................... 96,000
Inventories (Note 3).............................. 223,000
Prepaid expenses ................................. 21,000
------------
Total current assets ........................... 15,536,000
PROPERTY AND EQUIPMENT, NET (Notes 4, 5 and 6)..... 163,499,000
------------
TOTAL ASSETS.................................... $179,035,000
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable (Note 5)............................ $ 401,000
Accounts payable ................................. 212,000
Deferred event income, net (Note 2)............... 7,929,000
Accrued expenses and other liabilities ........... 460,000
Payable to affiliates (Note 6).................... 1,886,000
------------
Total current liabilities ..................... 10,888,000
------------
CONTINGENCIES and COMMITMENTS (Notes 4 and 7)
STOCKHOLDERS' EQUITY............................... 168,147,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..... $179,035,000
============
See notes to financial statements.
8
<PAGE>
LAS VEGAS MOTOR SPEEDWAY, INC.
STATEMENT OF INCOME AND STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
REVENUES (Note 2):
Admissions ...................................... $10,483,000
Event related revenue ........................... 17,766,000
Other operating revenue ......................... 14,000
------------
Total revenues ............................. 28,263,000
------------
OPERATING EXPENSES:
Direct expense of events ........................ 10,949,000
General and administrative (Note 6).............. 5,493,000
Depreciation .................................... 3,039,000
------------
Total operating expenses ................... 19,481,000
------------
OPERATING INCOME ................................. 8,782,000
Interest income .................................. 360,000
Interest expense (Note 5) ........................ (21,000)
Other income, net ................................ 6,000
------------
NET INCOME (Note 2) .............................. 9,127,000
STOCKHOLDERS' EQUITY, JANUARY 1, 1998 ............ 135,020,000
Capital Contributions ............................ 24,000,000
------------
STOCKHOLDERS' EQUITY, SEPTEMBER 30, 1998 ......... $168,147,000
============
See notes to financial statements.
9
<PAGE>
LAS VEGAS MOTOR SPEEDWAY, INC.
STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ....................................... $ 9,127,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation .................................... 3,039,000
Changes in operating assets and liabilities:
Accounts receivable............................ 5,017,000
Inventories ................................... (49,000)
Prepaid expenses .............................. (19,000)
Accounts payable .............................. (181,000)
Deferred event income.......................... (5,144,000)
Accrued expenses and other liabilities ........ 295,000
-----------
Net cash provided by operating activities. ...... 12,085,000
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on notes payable................ (335,000)
Capital contributions ............................. 24,000,000
-----------
Net cash provided by financing activities........ 23,665,000
-----------
CASH FLOWS FROM INVESTING ACTIVITIES - Capital
expenditures (Note 6).............................. (25,834,000)
-----------
NET INCREASE IN CASH AND CASH EQUIVALENTS........... 9,916,000
CASH AND CASH EQUIVALENTS AT JANUARY 1, 1998 ....... 4,607,000
-----------
CASH AND CASH EQUIVALENTS AT SEPTEMBER 30, 1998 .... $14,523,000
===========
See notes to financial statements.
10
<PAGE>
LAS VEGAS MOTOR SPEEDWAY, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1998
1. DESCRIPTION OF BUSINESS AND CHANGE IN OWNERSHIP
Las Vegas Motor Speedway, Inc. ("the Company") owns and operates a business
known as Las Vegas Motor Speedway ("LVMS") which consists of a 1.5 mile,
lighted, superspeedway, several other on-site race tracks and a 1.4 million
square foot on-site industrial park, located on approximately 1,300 acres in Las
Vegas, Nevada. The other race tracks include a 1/4 mile dragstrip, 1/8 mile
dragstrip, 2.5 mile road course, 1/2 mile clay oval, 3/8 mile paved oval and
several other race courses, including motocross and other off-road race courses.
At September 30, 1998, LVMS had permanent seating capacity of approximately
107,000, including 102 luxury suites. LVMS currently hosts several annual
NASCAR-sanctioned racing events, including a Winston Cup Series, Busch Grand
National Series, Craftsman Truck Series, two Winston West Series, and two
Winston Southwest Series racing events. Additional major events held annually
include Indy Racing League ("IRL"), American Motorcycle Association, and drag
racing events, among others. The racetrack is also rented throughout the year
for non-racing activities such as driving schools and automobile testing.
Construction of LVMS was substantially completed in 1997 and its first major
NASCAR Winston Cup race was held in March 1998 (see Note 4). As of September 30,
1998, construction of the 1.4 million square foot industrial park was nearing
completion and is expected to commence operations in early 1999.
On December 1, 1998, Speedway Motorsports, Inc. ("SMI"), a publicly-held
company, acquired certain tangible and intangible operating assets, including
the real and personal property and operations of LVMS, the industrial park, and
certain adjacent unimproved land, and assumed deferred revenue, for
approximately $215.0 million. SMI will operate the facilities as Las Vegas Motor
Speedway.
2. SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION -- Admissions revenue consists of ticket sales. Event
related revenues consist of amounts received from sponsorships, broadcasting
rights, concessions, luxury suite rentals, commissions and souvenir sales. Other
operating revenue consists of miscellaneous real property rental income.
The Company recognizes admissions and other event 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 typically include race purses, sanctioning fees and concessionaire
advances for upcoming scheduled events. Deferred race event income as of
September 30, 1998 relates primarily to sponsorship fees, advance ticket sales
and luxury suite rentals for upcoming scheduled events. 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 recognized
immediately except for race purses which would be refundable from NASCAR, IRL or
other sanctioning bodies.
CASH AND CASH EQUIVALENTS -- The Company classifies as cash equivalents all
highly liquid investments with original maturities at date of purchase of three
11
<PAGE>
months or less. Cash equivalents principally consist of money market funds.
ACCOUNTS RECEIVABLE -- Accounts receivable are shown net of allowance for
doubtful accounts of $78,000 as of September 30, 1998.
INVENTORIES -- Inventories consist of souvenirs, accessories and racing fuel
which are stated at the lower of cost, determined on a first-in, first-out
basis, or market.
PROPERTY AND EQUIPMENT -- Property and equipment is recorded at cost less
accumulated depreciation. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets which range from 5 to 40
years. Expenditures for repairs and maintenance are charged to expense when
incurred. Construction in progress includes all direct costs on fixed assets
under construction. Management periodically evaluates long-lived assets for
possible impairment based on expected future undiscounted operating cash flows
attributable to such assets.
ADVERTISING EXPENSES -- Advertising costs are expensed as incurred. Advertising
expenses amounted to $552,000 for the nine months ended September 30, 1998.
INCOME TAXES -- The Company had elected to be treated as an S Corporation for
federal income tax purposes. Also, the Company has not been subject to state
income tax. Accordingly, no provision for federal or state income taxes has been
reflected in the accompanying September 30, 1998 financial statements.
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. INVENTORIES
Inventories as of September 30, 1998 consist of the following components:
Souvenirs and accessories................................ $ 199,000
Racing fuel ............................................. 24,000
---------
Total ................................................... $ 223,000
=========
4. PROPERTY AND EQUIPMENT
Property and equipment as of September 30, 1998 is summarized as follows:
Land and land improvements .............................. $ 32,569,000
Racetracks, grandstands, buildings and luxury suites .... 86,933,000
Machinery and equipment ................................. 14,522,000
Furniture and fixtures .................................. 1,125,000
Autos, trucks and trailers .............................. 347,000
Construction in progress - Industrial Park and other..... 37,095,000
------------
Total (Note 6) .......................................... 172,591,000
Less accumulated depreciation ........................... (9,092,000)
------------
Net .................................................... $163,499,000
============
12
<PAGE>
CONSTRUCTION IN PROGRESS -- In late 1997, the Company began constructing a 1.4
million square foot industrial park on site at LVMS (see Note 6). As of
September 30, 1998, construction was nearing completion and commencement of
operations was expected in early 1999. As of September 30, 1998, remaining
construction costs of the Industrial Park and other projects, which consist
principally of an on-site dragstrip and facility amenities, approximate
$5,000,000. The industrial park is expected to be leased under triple net
operating leases primarily to businesses and individuals involved in racing and
related industries.
5. NOTES PAYABLE
Notes payable as of September 30, 1998 consist of the following:
Note payable to individual, interest at 7.5%, final
scheduled payment due January 1999. Land costing
approximately $10,000,000 pledged as collateral. .......... $377,000
Note payable to individual, non-interest bearing, remaining
balance scheduled due December 1998........................ 24,000
--------
$401,000
========
6. RELATED PARTY TRANSACTIONS
DUE FROM STOCKHOLDER AND AFFILIATE -- At September 30, 1998, due from affiliate
represents amounts due from a Company stockholder and an affiliate which is
commonly owned and controlled by the stockholder. The amount was non-interest
bearing and payable upon demand.
PAYABLE TO AFFILIATES -- At September 30, 1998, payable to affiliates represents
amounts payable to two affiliates which are commonly owned and controlled by a
Company stockholder. The amounts payable principally pertain to construction
costs paid on behalf of the Company. The amounts were non-interest bearing and
payable upon demand.
These amounts due from, and payable to, affiliates were settled by payment prior
to the December 1, 1998 acquisition (see Note 1).
CONSTRUCTION OF LVMS AND INDUSTRIAL PARK (NOTE 4) -- The LVMS and Industrial
Park ("LVMS complex") was constructed principally by a construction company
commonly owned and controlled by a Company stockholder. Substantially all real
and personal property development, acquisition, construction, and improvement
costs of the LVMS complex were billed by and paid to the affiliated construction
company. These construction and other related costs were principally funded with
capital contributions by the Company's stockholders from 1995 through 1998.
DIVIDENDS AND OTHER PAYMENTS SUBSEQUENT TO SEPTEMBER 30, 1998 -- In October
1998, cash dividends aggregating $10,000,000 were declared and paid to the
Company's stockholders. The dividends are not reflected in the accompanying
September 30, 1998 financial statements.
In November 30, 1998, the Company paid approximately $1,031,000 to an affiliate
and a Company stockholder. These payments are not reflected in the accompanying
September 30, 1998 financial statements.
13
<PAGE>
7. CONTINGENCIES
The Company is party to certain 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 results
of operations.
14
DESCRIPTION OF UNAUDITED PRO FORMA FINANCIAL STATEMENTS
REFLECTING THE ACQUISITION OF LAS VEGAS MOTOR SPEEDWAY
The following unaudited pro forma financial statements have been prepared giving
effect to Speedway Motorsports, Inc.'s (SMI) acquisition of Las Vegas Motor
Speedway (LVMS) as if the transaction had taken place as of September 30, 1998
for the pro forma balance sheet, and as of January 1, 1997 for the statements of
income for the year ended December 31, 1997 and the nine months ended September
30, 1998. Interim financial statements included in SMI's Report on Form 10-Q for
the nine months ended September 30, 1998 represent the latest filed with the
Securities and Exchange Commission.
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. SMI has obtained an independent appraisal of
the LVMS property and equipment, the fair values of which have been used in the
accompanying pro forma financial statements. In the near future, SMI plans to
obtain an independent appraisal of the fair value of other net assets acquired,
including identifiable intangibles, if any. Accordingly, the purchase price
allocation is preliminary. However, based on current information, SMI 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 LVMS.
15
<PAGE>
PRO FORMA BALANCE SHEET
SPEEDWAY MOTORSPORTS, INC.
SEPTEMBER 30, 1998
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
12/31/97 9/30/98
Exhibit No. 99.7 Historical(1) Historical Pro Forma
------------ -------------------------- Pro Forma Adjustments 9/30/98
LVMS SMI LVMS Adjustments Notes Pro Forma
------------ ----------- ---------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $4,607 $23,580 $14,523 ($13,530) J $24,573
Restricted cash -- 1,267 -- -- 1,267
Accounts and notes receivable 5,786 19,759 769 (769) C 19,759
Inventories 174 10,636 223 -- 10,859
Speedway condominiums held for sale -- 8,308 -- -- 8,308
Prepaid expenses 2 2,120 21 (21) D 2,120
------------ ----------- ---------- -------------- -------------
Total current assets 10,569 65,670 15,536 (14,320) 66,886
------------ ----------- ---------- -------------- -------------
PROPERTY AND EQUIPMENT, NET 139,309 498,118 163,499 48,112 A 709,729
------------ ----------- ---------- -------------- -------------
GOODWILL AND OTHER INTANGIBLE ASSETS, NET -- 49,008 -- 7,593 B 56,601
------------ ----------- ---------- -------------- -------------
OTHER ASSETS
Marketable equity securities -- 929 -- -- 929
Notes receivable -- 10,927 -- -- 10,927
Other assets -- 9,020 -- -- 9,020
------------ ----------- ---------- -------------- -------------
Total other assets -- 20,876 -- -- 20,876
------------ ----------- ---------- -------------- -------------
TOTAL $149,878 $633,672 $179,035 $41,385 $854,092
============ =========== ========== ============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt $736 $481 $401 ($401) E $481
Revolving bank credit facility borrowings -- -- -- 210,680 E 210,680
Accounts payable 393 11,465 212 (212) F 11,465
Deferred race event income, net 13,073 51,076 7,929 -- 59,005
Accrued income taxes -- 6,433 -- -- 6,433
Accrued expenses and other liabilities 656 12,662 2,346 (2,099) G 12,909
------------ ----------- ---------- -------------- -------------
Total current liabilities 14,858 82,117 10,888 207,968 300,973
LONG-TERM DEBT -- 234,312 -- -- 234,312
PAYABLE TO AFFILIATED COMPANIES -- 2,603 -- -- 2,603
DEFERRED INCOME, NET -- 15,579 -- -- 15,579
DEFERRED INCOME TAXES -- 18,695 -- -- 18,695
OTHER LIABILITIES -- 2,279 -- 1,564 H 3,843
------------ ----------- ---------- -------------- -------------
Total liabilities 14,858 355,585 10,888 209,532 576,005
------------ ----------- ---------- -------------- -------------
TOTAL STOCKHOLDERS' EQUITY 135,020 278,087 168,147 (168,147) I 278,087
------------ ----------- ---------- -------------- -------------
TOTAL $149,878 $633,672 $179,035 $41,385 $854,092
============ =========== ========== ============== =============
See notes to pro forma financial statements.
</TABLE>
(1) Presented for informational purposes only.
16
<PAGE>
SPEEDWAY MOTORSPORTS, INC.
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
AT SEPTEMBER 30, 1998
(IN THOUSANDS)
A. Increase in property and equipment acquired to fair value
at acquisition date based on independent appraisal:
- Non-depreciable land and construction in progress not
placed into service...................................... 44,401
- Depreciable property and equipment ...................... 3,711
--------
$ 48,112
========
B. Increase in excess of cost over fair values assigned to net
assets acquired (goodwill)(amortized on straight-line basis
over 40 years)............................................. 7,593
========
C. Decrease in accounts receivable to eliminate amounts not
acquired in purchase ...................................... (769)
========
D. To eliminate prepaid expenses not acquired in purchase..... (21)
========
E. Net increase in debt:
- To eliminate LVMS debt not assumed in purchase .......... (401)
- Increase in SMI revolving bank credit facility borrowings
for pro forma purposes (see Note L below)................ 210,680
--------
(210,279)
========
F. To eliminate accounts payable not assumed in purchase...... (212)
========
G. Decrease in accrued expenses and other liabilities:
- To record accrued expenses for direct acquisition costs.. 247
- To eliminate accrued expenses and other liabilities not
assumed in purchase...................................... ( 2,346)
--------
( 2,099)
========
H. Increase in non-current other liabilities for obligation
issued to former LVMS stockholder ......................... 1,564
========
I. To eliminate historical equity of LVMS..................... (168,147)
========
J. Cash retained by seller.................................... (13,530)
========
K. Purchase price summary:
- Cash paid at closing .................................... 210,779
- Direct costs of acquisition ............................. 889
--------
- Total purchase price .................................... 211,668
========
Allocation of purchase price:
- Book value of net assets acquired ....................... 155,963
- Step-up in fair value of property and equipment ......... 48,112
- Excess of cost over fair values assigned (goodwill) ..... 7,593
--------
- Total purchase price .................................... $211,668
========
L. Increase in revolving bank credit facility borrowings for pro forma purposes:
For pro forma presentation purposes, as set forth in Note E above, SMI borrowed
an aggregate of $210,680 under its revolving bank credit facility to effect the
December 1, 1998 acquisition. Cash disbursed was assumed to be funded with
credit facility borrowings at 7.75% interest. The additional pro forma interest,
net of amounts retroactively capitalized for construction in progress, has been
reflected in the pro forma statements of income. Interest costs of $1,570 for
the nine months ended September 30, 1998, and $2,793 for the year ended
December 31, 1997, were assumed capitalizable for pro forma presentation
purposes.
17
<PAGE>
PRO FORMA STATEMENT OF INCOME
SPEEDWAY MOTORSPORTS, INC.
NINE MONTHS ENDED SEPTEMBER 30, 1998
(Unaudited)
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Exhibit No. 99.7
Historical Pro Forma
---------------------------- Pro Forma Adjustments
SMI LVMS Adjustments Notes Pro Forma
--------- ---------- -------------------- ---------------- ---------------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Admissions $82,157 $10,483 -- $92,640
Event related revenue 82,674 17,766 -- 100,440
Other operating revenue 12,616 14 -- 12,630
--------- ---------- --------------- ---------------------
Total revenues 177,447 28,263 -- 205,710
--------- ---------- --------------- ---------------------
OPERATING EXPENSES:
Direct expenses of events 66,132 10,949 -- 77,081
Other direct operating expenses 8,138 0 -- 8,138
General and administrative 25,486 5,493 -- 30,979
Depreciation and amortization 14,847 3,039 421 A 18,307
--------- ---------- --------------- ---------------------
Total operating expenses 114,603 19,481 421 134,505
--------- ---------- --------------- ---------------------
OPERATING INCOME 62,844 8,782 (421) 71,205
Interest Income (Expense), Net (8,483) 339 (10,723) B (18,867)
Other Income, Net 1,626 6 -- 1,632
--------- ---------- --------------- ---------------------
INCOME BEFORE INCOME TAXES 55,987 9,127 (11,144) 53,970
Income Tax Provision (Benefit) 22,401 -- (807) C 21,594
--------- ---------- --------------- ---------------------
NET INCOME $33,586 $9,127 ($10,337) $32,376
========= ========== =============== ========================
BASIC EARNINGS PER SHARE $0.81 $0.78
========= ========================
Weighted Average Shares Outstanding 41,479 41,479
========= ========================
DILUTED EARNINGS PER SHARE $0.79 $0.76
========= ========================
Weighted Average Shares Outstanding 44,599 44,599
========= ========================
See notes to pro forma financial statements.
</TABLE>
18
<PAGE>
SPEEDWAY MOTORSPORTS, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS)
A. Increase in depreciation and amortization:
- Depreciation of step-up in fair value of property and
equipment using straight-line basis ....................... 278
- Amortization of goodwill (amortized on straight-line
basis over 40 years) ...................................... 143
-------
$421
=======
B. Change in interest income (expense), net:
- Interest expense on increase in revolving bank credit
facility borrowings for pro forma purposes using assumed
7.75% interest (see Note L of September 30, 1998 pro forma
balance sheet)............................................. (10,675)
- Interest expense on SMI obligation issued to former LVMS
stockholder - imputed interest at 6.4%..................... (69)
- Elimination of interest expense on notes payable not
assumed in purchase ....................................... 21
-------
(10,723)
=======
C. Decrease in income tax provision:
- Income tax benefit of pro forma adjustments and income
before income taxes of LVMS on consolidated income tax
provision using SMI effective income tax rate of 40%......... $ (807)
=======
19
PRO FORMA STATEMENT OF INCOME
SPEEDWAY MOTORSPORTS, INC.
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
EXHIBIT NO. 99.8 HISTORICAL
--------------------------------- PRO FORMA ADJUSTMENTS
SMI LVMS (1) ADJUSTMENTS NOTES PRO FORMA
----------- -------------- --------------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Admissions $94,032 $3,789 -- $97,821
Event related revenue 83,177 10,355 -- 93,532
Other operating revenue 14,917 34 -- 14,951
----------- -------------- ------------ --------------
Total revenues 192,126 14,178 -- 206,304
----------- -------------- ------------ --------------
OPERATING EXPENSES:
Direct expenses of events 65,347 9,093 -- 74,440
Other direct operating expenses 9,181 0 -- 9,181
General and administrative 31,623 6,166 -- 37,789
Depreciation and amortization 15,742 4,250 363 A 20,355
Preoperating expenses of new speedway 1,850 -- 1,850
----------- -------------- ------------ --------------
Total operating expenses 123,743 19,509 363 143,615
----------- -------------- ------------ --------------
OPERATING INCOME 68,383 (5,331) (363) 62,689
Interest Expense, Net (5,313) (7) (13,570) B (18,890)
Other Income (Expense), Net 991 (107) -- 884
----------- -------------- ------------ --------------
INCOME BEFORE INCOME TAXES 64,061 (5,445) (13,933) 44,683
Income Tax Provision (Benefit) 25,883 -- (7,751) C 18,132
----------- -------------- ------------ --------------
NET INCOME (LOSS) $38,178 ($5,445) ($6,182) $26,551
=========== ============== ============ ==============
BASIC EARNINGS PER SHARE $0.92 $0.64
=========== ==============
Weighted Average Shares Outstanding 41,338 41,338
=========== ==============
DILUTED EARNINGS PER SHARE $0.89 $0.62
=========== ==============
Weighted Average Shares Outstanding 44,491 44,491
=========== ==============
(1) LVMS held its first NASCAR-sanctioned Winston Cup race in March 1998.
See notes to pro forma financial statements.
</TABLE>
20
<PAGE>
SPEEDWAY MOTORSPORTS, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
A. Increase in depreciation and amortization:
- Depreciation of step-up in fair value of property and
equipment using straight-line basis ....................... 173
- Amortization of goodwill (amortized on straight-line
basis over 40 years) ...................................... 190
-------
$363
=======
B. Change in interest expense, net:
- Interest expense on increase in revolving bank credit
facility borrowings for pro forma purposes using assumed
7.75% interest (see Note L of September 30, 1998 pro forma
forma balance sheet)....................................... (13,535)
- Interest expense on SMI obligation issued to former LVMS
stockholder - imputed interest at 6.4%..................... (91)
- Elimination of interest expense on notes payable not
assumed in purchase ....................................... 56
-------
(13,570)
=======
C. Decrease in income tax provision:
- Income tax benefit of loss before income taxes and pro
forma adjustments of LVMS on consolidated income tax
provision using SMI effective income tax rate of 40%....... $(7,751)
=======
21
