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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 1997
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 0-2384
INTERNATIONAL SPEEDWAY CORPORATION
(Exact name of registrant as specified in its charter)
FLORIDA 59-0709342
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
1801 WEST INTERNATIONAL SPEEDWAY BOULEVARD, DAYTONA BEACH, FLORIDA 32114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 904-254-2700
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of each exchange on which registered
Class A Common Stock - $.01 par value NASDAQ/National Market System
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock - $.10 par value
Class B Common Stock - $.01 par value
(Title of Class)
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. [x] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of January 16, 1998 was $416,028,925 based upon the last
reported sale price of the Class A Common Stock on the NASDAQ National Market
System that date and the assumption that all directors and officers of the
Company, and their families, are affiliates. At January 1, 1998, there were
no shares of Common Stock, $.10 par value per share, 5,381,647 shares of Class
A Common Stock, $.01 par value per share, and 33,107,075 shares of Class B
Common Stock, $.01 par value per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE. - NONE -
UNLESS OTHERWISE INDICATED, (I) ALL SHARE AND PER SHARE DATA FOR PERIODS PRIOR
TO NOVEMBER 4, 1996 HAS BEEN RETROACTIVELY ADJUSTED TO GIVE EFFECT TO A
RECAPITALIZATION AND RELATED 15-1 STOCK SPLIT WHICH BECAME EFFECTIVE ON
NOVEMBER 4, 1996, AND (II) A REFERENCE TO A "FISCAL" YEAR FOR PERIODS PRIOR TO
AND INCLUDING AUGUST 31, 1996 MEANS THE TWELVE MONTHS ENDED AUGUST 31 OF SUCH
YEAR AND FOR PERIODS SUBSEQUENT TO AUGUST 31, 1996 MEANS THE TWELVE MONTHS
ENDED NOVEMBER 30 OF SUCH YEAR. THE COMPANY CHANGED ITS FISCAL YEAR EFFECTIVE
DECEMBER 1, 1996.
PART I
ITEM 1. BUSINESS
GENERAL
International Speedway Corporation (together with its wholly-owned
subsidiaries, "ISC" or the "Company" unless otherwise required by the context)
is a leading promoter of motorsports activities in the United States. The
Company owns and/or operates four of the nation's premier superspeedways --
Daytona International Speedway in Florida ("Daytona"), home of the Daytona
500, widely recognized as the most prestigious stock car race in the world;
Talladega Superspeedway in Alabama ("Talladega"), the fastest stock car track;
Phoenix International Raceway in Arizona ("Phoenix"), the fastest 1-mile oval;
and Darlington Raceway in South Carolina("Darlington"), the first stock car
superspeedway. The Company also owns the Watkins Glen International road
course in New York ("Watkins Glen") and operates Tucson Raceway Park in
Arizona ("Tucson"). In addition the Company holds (i) an approximately 11%
interest in Penske Motorsports, Inc. ("PMI"), which owns and operates, through
its subsidiaries, Michigan International Speedway, The California Speedway
near Los Angeles, The North Carolina Motor Speedway and Pennsylvania's
Nazareth Speedway; (ii) an approximately 8% interest in the Grand Prix
Association of Long Beach, Inc. ("Long Beach"), which owns and/or operates the
Grand Prix of Long Beach, California, Gateway International Raceway, in
Madison, Illinois and Memphis Motorsports Park in Millington, Tennessee; and
(iii) a 40% interest in Homestead Miami Speedway, LLC ("Homestead") the
operators of the Metro-Dade Homestead Motorsports Complex.
The Company currently promotes over 80 stock car, sports car, truck,
motorcycle and other racing events annually, including ten National
Association for Stock Car Auto Racing, Inc. ("NASCAR") Winston Cup Series
races (including two special non-points events), five NASCAR Busch Series-
Grand National Division races, the premier sports car endurance event in the
United States (the Rolex 24 at Daytona) and a number of prestigious motorcycle
races.
DEVELOPMENTS DURING FISCAL 1997
Fiscal 1997 was a year of significant developments. The Company began the
year poised for growth and expansion. On November 4, 1996 the Company had
sold 4,000,000 shares of its newly created Class A Common Stock in an
underwritten public offering at a price to the public of $20 per share. The
net proceeds to the Company from the sale of the stock were approximately
$74.3 million. Approximately $7.8 million of the net proceeds of this Offering
was used to repay borrowings previously incurred under one of the Company's
lines of credit in September 1996. The balance of the proceeds, together with
significant internally generated cash flow, were used to help finance the most
significant growth and acquisition in the Company's history.
During the year significant seating capacity and suites were added at
the Company's existing Daytona, Talladega and Darlington facilities and
customer amenities were enhanced. The relocation of the start/finish line at
Darlington was accomplished and lighting of Daytona was begun.
External expansion began on April 1, 1997, when Watkins Glen
International, Inc. became a wholly-owned subsidiary as a result of the
Company exercising its contractual option to acquire the 50% interest it did
not already own in Watkins Glen from Corning, Inc. for approximately $3.1
million. Sole ownership of this winding 3.4 mile road course in upstate New
York, affords the Company a stronger presence in an important northeastern
market and a broader national presence.
Expansion continued on July 14, 1997, when Phoenix Speedway Corporation,
a newly formed wholly-owned subsidiary of the Company, acquired substantially
all of the assets comprising the business and motorsports complex known as
"Phoenix International Raceway" from the prior owners for consideration
consisting of $46.4 million cash, notes payable of $13.8 million, and related
acquisition costs. This acquisition gave the Company a key western presence
in one of the country's largest markets.
During the third quarter, the Company established its presence in South
Florida, as well as on the West Coast and in Midwestern markets through
investments in Homestead and Long Beach. In July of 1997, the Company
invested $11.8 million (plus related acquisition costs) for a 40% interest in
Homestead. The Company invested $3.9 million (plus related acquisition costs)
in August of 1997 for a 7.2% interest in Long Beach. PMI, in which the
Company holds an 11% indirect interest, also acquired interests of 40% and
7.2% in Homestead, and Long Beach, respectively. The investment in Homestead
and the strategic alliances with PMI and Long Beach provide equity interests
in eight other motorsports venues, solidifying the Company's national
presence.
During the year the Company continued to explore new venues for
motorsports in Kansas City, Kansas and the Chicagoland area.
OPERATIONS
The Company's operations consist principally of racing events at its
tracks. In addition, the Company owns and operates the DAYTONA USA
entertainment complex, provides catering and concession services to third
parties through its wholly-owned subsidiary, Americrown Service Corporation
("Americrown"), and operates the MRN Radio network and NASCAR Truck Network.
Approximately $110 million, or 77.6%, of the Company's fiscal 1997 revenues
were attributable to NASCAR-sanctioned races at the Company's facilities,
including applicable admissions, luxury suite rental, sponsorship, television
and radio broadcast rights, food and beverage concession and catering,
souvenir, advertising and other revenues.
RACING EVENTS
The 1998 race schedule for the Company includes eight NASCAR Winston Cup
Championship Series races (not including the BUD Shootout - all star event or
the Gatorade 125's - qualifying races for the Daytona 500), five NASCAR Busch
Series - Grand National Division races and various other races and events
sanctioned by the NASCAR. In addition, the Company promotes a number of other
stock car, sports car, open wheel, motorcycle and go-kart racing events,
including events sanctioned by the American Historic Racing Motorcycle
Association ("AHRMA"), the American Motorcyclist Association ("AMA"), the
Automobile Racing Club of America ("ARCA"), the Championship Cup Series
("CCS"), the Federation Internationale de l'Automobile ("FIA"), the Federation
Internationale Motocycliste ("FIM"), the International Race of Champions
("IROC"), the Indy Racing League ("IRL"), the Sports Car Club of America
("SCCA"), the Sportscar Vintage Racing Association ("SVRA"), the United States
Auto Club ("USAC"), the United States Road Racing Championship ("USRRC"), and
the World Karting Association ("WKA"). The 1997 racing schedule for events
promoted by the Company at its wholly-owned facilities is as follows:
Date Event Sanctioning Body Track
--------------------------------------------------------------------------------------------------------------
January 1 Featherlite Southwest Tour 150 NASCAR Tucson
January 12 NASCAR Late Models NASCAR Tucson
January 19 NASCAR Winston West Series NASCAR Tucson
January 31 Two-Hour Street Stock Endurance Championship IMSA Daytona
February 1-2 Rolex 24 at Daytona IMSA Daytona
February 8 Busch Pole Day (Daytona 500) NASCAR Daytona
February 9 Busch Clash of '97 NASCAR Daytona
Daytona ARCA 200 ARCA Daytona
February 13 Gatorade 125's NASCAR Daytona
February 14 Discount Auto Parts 200 NASCAR Daytona
True Value Firebird IROC XXI IROC Daytona
February 15 Gargoyles 300 NASCAR Daytona
February 16 Daytona 500 NASCAR Daytona
February 16 - NASB / Formula USA Championship NASB / CCS Daytona
March 2 Opening Rounds
March 1 Napa 200 NASCAR Tucson
March 3-4 AHRMA Vintage Road Races and AHRMA Daytona
BMW "Battle of the Legends"
March 6 Arai Qualifying Day for the AMA Daytona
Daytona 200 By Arai
March 7 Int'l Lightweight 250cc GP AMA Daytona
750 Supersport AMA Daytona
BMW "Battle of the Legends" AHRMA Daytona
March 8 Daytona Supercross By Honda AMA Daytona
March 9 Daytona 200 By Arai AMA Daytona
600 Supersport AMA Daytona
March 21 Busch Pole Day (TranSouth 400) NASCAR Darlington
March 22 Diamond Hill Plywood 200 NASCAR Darlington
March 23 TranSouth Financial 400 NASCAR Darlington
April 5 Opening Night NASCAR Tucson
April 12 NASCAR Super Late Models NASCAR Tucson
April 19 NASCAR Super Late Models NASCAR Tucson
April 25 Advance Auto Parts Pole Day(Winston 500) NASCAR Talladega
April 26 NASCAR Super Late Models NASCAR Tucson
Birmingham Auto Dealers Association 500K NASCAR Talladega
April 27 Winston 500 NASCAR Talladega
May 3 NASCAR Limited Late Models NASCAR Tucson
May 3-4 SCCA National / Regional SCCA Daytona
May 10 NASCAR Winston West NASCAR Tucson
May 17 NASCAR Limited Late Models NASCAR Tucson
May 23-25 SCCA Regional SCCA Watkins Glen
May 24 NASCAR Winston 100 NASCAR Tucson
May 31 NASCAR Super Late Models NASCAR Tucson
Speedvision Cup Endurance Championship SportsCar Watkins Glen
June 1 Black Magic Pro Series SportsCar Watkins Glen
First Union Six Hours of the Glen SportsCar Watkins Glen
June 7 NASCAR Super Late Models NASCAR Tucson
June 14 NASCAR Super Late Models NASCAR Tucson
June 14-15 SCCA Regional SCCA Watkins Glen
June 21 NASCAR Super Late Models NASCAR Tucson
June 28 4th of July Fireworks NASCAR Tucson
Polaroid 125 NASCAR Watkins Glen
June 29 Barber Dodge SCCA World Challenge SCCA Watkins Glen
Lysol 200 NASCAR Watkins Glen
July 3 Busch Pole Day (Pepsi 400) NASCAR Daytona
July 5 Pepsi 400 NASCAR Daytona
NASCAR Limited Late Models NASCAR Tucson
July 12 Larry Brandon Memorial NASCAR Tucson
July 12-13 SCCA Glen U.S. Nationals SCCA Watkins Glen
July 19 NASCAR Super Late Models NASCAR Tucson
July 26 NASCAR Super Late Models NASCAR Tucson
August 2 NASCAR Super Late Models NASCAR Tucson
August 2-3 SCCA Regional SCCA Watkins Glen
August 8 Atcall Qualifying Day (Bud at the Glen) NASCAR Watkins Glen
August 9 Serengeti Eyewear Trans-Am SCCA Watkins Glen
Burnham Boilers 150 NASCAR Watkins Glen
NASCAR Super Late Models NASCAR Tucson
August 9-10 SCCA Regional SCCA Daytona
August 10 Bud at the Glen NASCAR Watkins Glen
August 16 NASCAR Limited Late Models NASCAR Tucson
August 23 Troy Rouse Memorial NASCAR Tucson
August 23-24 Formula Ford 2000 Series SCCA / USAC Watkins Glen
August 24 Ruffles 125 NASCAR Watkins Glen
Parts America 150 NASCAR Watkins Glen
August 29 Busch Pole Day (Mountain Dew Southern 500) NASCAR Darlington
August 30 Dura - Lube 200 NASCAR Darlington
NASCAR Super Late Models NASCAR Tucson
August 31 Mountain Dew Southern 500 NASCAR Darlington
September 5-7 Zippo U.S. Vintage Grand Prix SVRA Watkins Glen
September 6 NASCAR Super Late Models NASCAR Tucson
September 13 NASCAR Limited Late Models NASCAR Tucson
September 13-14 SCCA Regional SCCA Watkins Glen
September 20 NASCAR Featherlite Southwest Tour NASCAR Tucson
September 27 NASCAR Limited Late Models NASCAR Tucson
October 3-5 HSR Brumos Daytona Continental Historics HSR Daytona
October 4 Bud Shootout NASCAR Tucson
October 10 LCI Pole Day (DieHard 500) NASCAR Talladega
October 11 Winn-Dixie 500K ARCA Talladega
October 12 DieHard 500 NASCAR Talladega
October 26 Vintage Motorcycle Races NASB / CCS Daytona
October 28 - Fall Cycle Scent NASB / CCS Daytona
November 2
October 31 Ralston Purina Pole Day (Dura-Lube 500) NASCAR Phoenix
RE / MAX 300K NASCAR Phoenix
November 1 GM Goodwrench / Delco Battery 300 NASCAR Phoenix
November 2 Dura-Lube 500 Presented by Kmart NASCAR Phoenix
December 6 NASCAR Late Models NASCAR Tucson
December 14 NASCAR Featherlight Southwest Tour NASCAR Tucson
December 21 NASCAR Late Models NASCAR Tucson
December 26-30 WKA Enduro World Championship WKA Daytona
Racing events compete not only with other sports and other recreational
events scheduled at the same dates, but with other racing events sanctioned by
various racing bodies such as NASCAR, IRL, USAC, SCCA, USRRC, ARCA and others.
Racing events sanctioned by different organizations are often held on the same
dates at separate tracks. Management believes that the type and caliber of
promoted racing events, facility location, sight lines, pricing and level of
customer conveniences are the principal factors that distinguish competing
motorsports facilities.
OTHER OPERATIONS
The Company operates DAYTONA USA--The Ultimate Motorsports Attraction. This
motorsports-themed entertainment complex is located at Daytona. DAYTONA USA
includes (i) the Velocitorium, which covers approximately 50,000 square feet,
stands nearly four stories high and contains numerous highly interactive
motorsports exhibits, many of which are sponsored by leading consumer brands;
(ii) Western Auto's Speedway Tours, a tram tour of the Speedway's garage area,
pit road and high banked track; (iii) the Richard Petty Riding Experience at
Daytona; and (iv) for groups of fifteen or more, the VIP Tour, which includes
a tour of the Winston Tower suites. Adjoining DAYTONA USA are (a) the Daytona
Beach Area Convention and Visitors Official Welcome Center; (b) the Daytona
ticket office; (c) Sega Speedway, a high tech arcade using state of the art
video technology and computerized, "virtual" racing simulators; (d) Pit Shop,
which sells DAYTONA USA, Daytona International Speedway, NASCAR and race team
clothing, books, collectibles and other officially licensed merchandise; and
(e) the Fourth Turn Grill concessions facility. Management believes that
DAYTONA USA and these adjoining facilities appeal to individual tourists, tour
groups, conventions and the Company's corporate sponsors.
Americrown has conducted the food, beverage and souvenir concession
operations at Daytona and Talladega since September 1992 and at Darlington
since 1989. Americrown is also responsible for providing catering services to
corporate customers both in suites and entertainment chalets at these three
superspeedway facilities.
The Company's proprietary MRN Radio network and NASCAR Truck network
produce and syndicate NASCAR Winston Cup Series, NASCAR Busch Series - Grand
National Division, NASCAR Craftsman Truck Series and other races promoted by
the Company and others. The networks also produce daily and weekly NASCAR
racing programs, as well as Ned Jarrett's "World of Racing" program. Network
radio programs are currently carried by over 600 radio stations. The Company
derives revenue from the sale of advertising on the networks and rights fees
paid by broadcast affiliates. In addition, management believes that MRN Radio
and the NASCAR Truck Network enhance the Company through increased media
exposure to an expanding radio audience.
The Company from time to time uses its track facilities for car shows, auto
fairs, vehicle testing and settings for television commercials, print
advertisements and motion pictures. For example, Harley Davidson uses
Talladega Superspeedway as a test facility for its motorcycles. The Company
also operates Talladega Municipal Airport, which is located adjacent to the
Talladega Superspeedway.
As of November 30, 1997, the Company had approximately 395 full-time
employees. The Company also engages a significant number of temporary
personnel to assist during periods of peak attendance at its events. For
example, the Daytona International Speedway engages approximately 1,500
persons during Speedweeks, some of whom are volunteers.
ITEM 2. PROPERTIES
MOTORSPORTS FACILITIES
The following table sets forth the track name, location, approximate
acreage and approximate track length of each of the Company's speedway
facilities.
APPROXIMATE APPROXIMATE
TRACK NAME LOCATION ACREAGE TRACK LENGTH
- -------------------------------- --------------------------- -------------- ---------------
Daytona International Speedway Daytona Beach, Florida 440 2.5 miles
Talladega Superspeedway ........ Talladega, Alabama 1,365 2.6 miles
Phoenix International Raceway... Phoenix, Arizona 320 1.01 miles
Darlington Raceway ............. Darlington, South Carolina 230 1.3 miles
Tucson Raceway Park ............ Tucson, Arizona 58 .4 miles
Watkins Glen International ..... Watkins Glen, New York 1,100 3.4 miles
- -------------------
DAYTONA INTERNATIONAL SPEEDWAY. Daytona International Speedway, is located
on approximately 440 acres of leased land in Daytona Beach, Florida. The
Company's lease with the Daytona Beach Racing and Recreational Authority
expires in 2032, including renewal options. The Company also owns
approximately 15 acres of property adjacent to the Daytona International
Speedway. The Daytona International Speedway is a high banked, asphalt
superspeedway which also includes a 3.6 mile road course. Management believes
that this superspeedway, completed in 1959, includes a number of unique
features that provide a significant competitive advantage, including (i) a
tri-oval design which provides optimum viewing for race fans, (ii) a twin
tunnel underground entry system which offers easy access before and during
events, and (iii) 31-degree banking which, when combined with the track's 2.5
mile length, permits exceptionally high lap speeds.
At November 30, 1997, Daytona International Speedway had 122,207 grandstand
seats, 38 suites (including air conditioned luxury sky boxes and Winston Tower
suites that include access to hospitality areas) that include a total of 2,541
additional seats, and 30 "Paddock Club" suites that provide seating for 1,500
along Daytona's Pit Road. During major events, the Company also uses a chalet
village containing up to 73 hospitality tents that seat up to 9,600.
TALLADEGA SUPERSPEEDWAY. Talladega Superspeedway, which holds the record
for the fastest lap speed attained in stock car racing, is a high banked,
tri-oval track with an infield road course. The facility is located about
1-1/2 hours from Atlanta, Georgia and 45 minutes from Birmingham, Alabama. The
track and related parking areas are located on approximately 1,365 acres owned
by the Company, most of which is reserved for agricultural uses. The Company
also owns an additional 115 acres of undeveloped property located immediately
north of the entrance to the Talladega track. At November 30, 1997, the
facility included 108,118 grandstand seats, 22 luxury suites containing an
additional 1680 seats, a Paddock Club Suite for up to 240 spectators, and 71
hospitality chalets providing seating for approximately 10,000.
PHOENIX INTERNATIONAL RACEWAY. Phoenix International Raceway is a
motorsports complex located just outside Phoenix, Arizona on 320 acres owned
by the Company. The complex has a 1 mile oval racing surface and a 1.51 road
course. There are 67,477 grandstand seats and 25 suites which accommodate 875
guests.
DARLINGTON RACEWAY. Darlington Raceway, the first superspeedway to host a
NASCAR-sanctioned race, is a high banked track located on approximately 230
acres owned by the Company. The Darlington facility includes the 1.3 mile
track commonly known as "too tough to tame/registered trademark/," grandstands
that seat 49,883 spectators, nine luxury suites containing an additional 639
seats and 18 hospitality chalets providing seating for 3,800.
WATKINS GLEN INTERNATIONAL. Watkins Glen International is a 3.4 mile road
course track located on approximately 1,100 acres owned by the Company. The
grandstands at Watkins Glen International seat 35,244 spectators. There are
four suites seating 60 and 42 hospitality chalets providing seating for 8,186.
TUCSON RACEWAY PARK. Tucson Raceway Park includes a progressively banked,
3/8 mile paved oval track, grandstands providing seating for approximately
5,400 spectators, a luxury suite and other spectator facilities located on
part of the Pima County Fairgrounds. The Company's sublease with the
fairground manager expires in 2013, including renewals. The Company has no
current plans to expand this facility.
OTHER FACILITIES. In addition to its motorsports facilities, the Company
(i) owns concession facilities in Daytona Beach and in Talladega, (ii) leases
real estate and office space in Talladega, and (iii) leases the property and
premises at the Talladega Municipal Airport. The lease for the Company's
Talladega business offices, located within the International Motorsports Hall
of Fame, expires in 2002, including renewals. The Company's lease for the
Talladega Municipal Airport expires in 2022, including renewals.
The Company owns a recently renovated 67,000 square foot building located
on approximately nine acres across International Speedway Boulevard from
Daytona International Speedway which serve as corporate headquarters. The
Company also owns approximately 14 acres of real property, including three
buildings containing an aggregate of approximately 180,000 square feet,
located in close proximity to Daytona International Speedway and the Company's
new corporate headquarters facility.
TRADEMARKS. The Company has various registered and common law trademark
rights to "DAYTONA USA," the "Daytona 500," "Daytona International Speedway,"
"Talladega Superspeedway," "Darlington," "World Center of Racing" and related
logos. The Company also has licenses from NASCAR, various drivers and other
businesses to use names and logos for merchandising programs and product
sales. Management's policy is to protect its intellectual property rights
vigorously, through litigation if necessary, chiefly because of their
proprietary value in merchandise and promotional sales.
ITEM 3. LEGAL PROCEEDINGS
The Company is from time to time a party to routine litigation
incidental to its business. Management does not believe that the resolution of
any or all of such litigation is likely to have a material adverse effect on
the Company's financial condition or results of operations.
On October 21, 1996, the Company's indirect corporate subsidiary, Americrown
Service Corporation ("Americrown"), was served with a Class Action Complaint
filed in the Circuit Court of Talladega County, Alabama by Howard Padgett,
Bill Lutz and Tommy Jones. The complaint was filed in September 1996 and
alleged, among other things, that Americrown engaged in price-fixing
activities in connection with the sale of racing souvenirs and merchandise at
the Talladega Superspeedway. The complaint seeks at least $500 for each
member of the putative class (persons buying racing souvenirs at Talladega
Superspeedway since September 1992), but does not otherwise seek to recover
compensatory or punitive damages or statutory attorneys' fees. Although
Americrown attempted to remove the suit to Federal District Court, it was
remanded to the Circuit Court of Talladega County, Alabama, where discovery
and the class certification process are proceeding. Americrown disputes the
allegations and intends to defend the action fully and vigorously.
In March 1997, two purported class action companion lawsuits were filed in the
United States District Court, Northern District of Georgia, against the
Company, its indirect corporate subsidiary, Americrown Service Corporation,
and a number of other persons alleging, in substance, that the defendants
unlawfully conspired to fix prices of souvenirs and merchandise sold to
consumers in violation of federal antitrust laws. One suit was filed by
Florida residents and the other suit was filed by Georgia residents. Both
suits seek damages and injunctive relief on behalf of all persons who
purchased souvenirs or merchandise from certain vendors at any NASCAR Winston
Cup stock car race or supporting event in the United States during the period
1991 to present. The two suits have been consolidated and the court has
established a timetable to consider class certification. Discovery is
proceeding. The Company and Americrown dispute the allegations and intend to
defend the actions fully and vigorously.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of the fiscal year
covered by this report to vote of security holders.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
At November 30, 1997 International Speedway Corporation had two issued
classes of capital stock: Class A Common Stock, $.01 par value per share and
Class B Common Stock, $.01 par value per share. The Class A Common Stock is
traded on the NASDAQ National Market System under the symbol "ISCA". The Class
B Common Stock is traded on NASDAQ's Over-The-Counter Bulletin Board under the
symbol "ISCB" and, at the option of the holder, is convertible to Class A
Common Stock at any time. As of November 30, 1997 there were a total of
2,537 record holders of both classes of stock.
Prior to November 4, 1996 the Company had only one class of capital
stock - common stock, $.10 par value per share. This single class of stock
was traded on NASDAQ's Over-The-Counter Bulletin Board. The symbol on the
stock was ISWY. Effective with the November 4, 1996 recapitalization and
related 15-1 stock split, each share of this class of stock was converted into
15 shares of the Class B Common Stock, $.01 par value per share and began
trading under the symbol ISCB, still on NASDAQ's Over-The-Counter Bulletin
Board. The newly created Class A Common Stock trades on the NASDAQ National
Market under the symbol ISCA. The reported high and low sales prices or high
and low bid information, as applicable [as adjusted for the 15-1 split] for
each quarter indicated are as follows:
ISWY ISCA ISCB
Quarter Ending High Low High Low High Low
November 1995 $16.666 $13.666 N/A N/A N/A N/A
February 1996 $19.333 $12.333 N/A N/A N/A N/A
May 1996 $23.333 $16.666 N/A N/A N/A N/A
August 1996 $19.333 $16.666 N/A N/A N/A N/A
November 1996 $25.000 $17.333 $22.250 $18.500 $24.000 $19.250
February 1997 N/A N/A $24.750 $19.375 $24.000 $16.500
May 1997 N/A N/A $22.500 $17.250 $21.750 $17.000
August 1997 N/A N/A $22.000 $18.625 $21.875 $18.750
November 1997 N/A N/A $22.500 $17.000 $22.625 $19.750
ISCA quotations were obtained from NASDAQ. ISWY and ISCB quotations were
obtained from NASDAQ Bulletin Board and represent prices between dealers and
do not include mark-up, mark-down or commission. ISWY and ISCB quotations do
not necessarily represent actual transactions.
DIVIDENDS
Annual dividends of 5.33 cents per share and 6 cents per share were
declared in the quarter ending in May and paid in June in fiscal years 1996
and 1997, respectively on all classes of common stock which existed at the
time.
ITEM 6. SELECTED FINANCIAL DATA
For comparability, certain prior period results have been reclassified
to conform to the presentation adopted in fiscal 1997. The following selected
financial data should be read in conjunction with the Company's Consolidated
Financial Statements, including the notes thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Report.
Three Months Twelve Months Year Ended
YEAR ENDED AUGUST 31,(1) Ended Nov. 30, Ended Nov. 30, Nov. 30,
(Unaudited)
-------------------------------------------- ------------- ------------- ----------
1993 1994 1995 1996 1996 1996 1997
---- ---- ---- ----- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
INCOME STATEMENT DATA:
Revenues:
Admissions, net .................... $ 32,078 $ 36,935 $ 43,274 $ 50,140 $ 4,191 $ 50,705 $ 69,487
Motorsports related income ......... 16,557 18,764 24,033 27,433 3,972 28,376 46,650
Food, beverage and souvenir income . 9,515 12,291 14,442 17,505 1,943 17,723 23,408
Other income ....................... 1,003 943 423 964 390 1,192 1,829
-------- -------- -------- -------- -------- -------- --------
Total revenues .................... 59,153 68,933 82,172 96,042 10,496 97,996 141,374
Expenses:
Direct expenses:
Prize and point fund monies and
NASCAR sanction fees .......... 8,251 9,412 11,765 13,865 1,301 13,724 20,567
Motorsports related expenses ...... 10,470 11,470 11,604 15,336 2,814 16,384 23,075
Food, beverage and souvenir expenses 4,775 7,867 8,107 10,278 1,536 10,559 13,435
General and administrative expenses . 13,046 14,307 18,202 20,930 5,057 21,721 29,486
Depreciation and amortization ....... 3,006 3,828 4,798 6,302 2,353 7,368 9,910
-------- -------- -------- -------- -------- -------- --------
Total expenses ..................... 39,548 46,884 54,476 66,711 13,061 69,756 96,473
-------- -------- -------- -------- -------- -------- --------
Operating income (loss)............... 19,605 22,049 27,696 29,331 (2,565) 28,240 44,901
Interest income, net ................. 724 972 1,436 872 261 843 2,687
Equity in net income (loss) from
equity investments ............... (27) 207 285 1,441 (304) 1,291 366
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income taxes .... 20,302 23,228 29,417 31,644 (2,608) 30,374 47,954
Income taxes (benefit) ............... 7,827 8,662 11,054 11,963 (741) 11,540 18,158
-------- -------- -------- -------- -------- -------- --------
Income (loss) before cumulative effect
of change in accounting principle .. 12,475 14,566 18,363 19,681 (1,867) 18,834 29,796
Cumulative effect of change in
accounting principle ............... 288 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss) .................... $ 12,763 $ 14,566 $ 18,363 $ 19,681 $ (1,867) $ 18,834 $ 29,796
======== ======== ======== ======== ======== ======== ========
Earnings (loss) per share:
Before cumulative effect of change
in accounting principle ........ $ .36 $ .42 $ .53 $ .57 $ (.05) $ .54 $ .77
Cumulative effect of change in
accounting principle .............. .01 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) per share ........... $ .37 $ .42 $ .53 $ .57 $ (.05) $ .54 $ .77
=======- =======- ======== -======= ======== ======== ========
Dividends per share .................. $ .03 $ .04 $ .05 $ .05 $ -- $ .05 $ .06
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA (END OF PERIOD):
Working capital (deficit) ............ $ 16,356 $ 11,839 $ 20,821 $ (6,751) $ 52,922 $ 52,922 $(24,976)
Total assets ......................... 78,487 96,401 119,571 152,791 234,069 234,069 302,823
Long-term debt ....................... -- -- -- -- -- -- 1,007
Total shareholders' equity ........... 55,236 68,277 85,247 106,667 179,289 179,289 209,907
- ----------------------
(1) The Company changed its fiscal year end to November 30 effective
December 1, 1996. This resulted in a three month transition period
commencing September 1, 1996 and ending November 30, 1996. The
unaudited results of the twelve month period ended November 30, 1996 are
presented for the purpose of comparison to the fiscal year ended
November 30, 1997. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Seasonality and Quarterly
Results."
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company derives revenues primarily from (i) admissions to racing events
held at its motorsports facilities, (ii) revenue generated in conjunction with
or as a result of motorsports events conducted at the Company's facilities,
and (iii) catering, concession and souvenir sales made during or as a result
of such events.
"Admissions" revenue includes ticket sales from all of the Company's events,
track tours and the DAYTONA USA Velocitorium. Admissions revenue for racing
events is recorded upon completion of the related motorsports event.
"Motorsports related income" primarily includes television and radio broadcast
rights fees, promotion and sponsorship fees, hospitality rentals (including
luxury suites and chalets), advertising revenues, royalties from licenses of
the Company's trademarks and track rentals. The Company negotiates directly
with television and cable networks for coverage of substantially all of its
televised motorsports events. The Company's revenues from corporate
sponsorships are paid in accordance with negotiated contracts, with the
identities of sponsors and the terms of sponsorship changing from time to
time.
"Food, beverage and souvenir income" includes revenues from concession stands,
hospitality catering and direct sales of souvenirs, programs and other
merchandise, as well as fees paid by third party vendors for the right to sell
souvenirs and concessions at the Company's facilities.
Expenses include (i) prize and point fund monies and NASCAR sanction fees,
(ii) motorsports related expenses, which include costs of competition paid to
sanctioning bodies other than NASCAR, labor, advertising and other expenses
associated with the Company's promotion of its racing events, and (iii) food,
beverage and souvenir expenses, consisting primarily of labor and costs of
goods sold.
The following table sets forth, for each of the indicated periods, certain
selected income statement data as a percentage of total revenues:
Three Months Twelve Months Year Ended
YEAR ENDED AUGUST 31, Ended Nov. 30, Ended Nov. 30, Nov. 30,
(Unaudited)
---------------------- ------------- -------------- -----------
1995 1996 1996 1996 1997
---- ---- ---- ----- ----
Revenues:
Admissions, net ...................................... 52.7% 52.2% 39.9% 51.7% 49.1%
Motorsports related income ........................... 29.2 28.6 37.9 29.0 33.0
Food, beverage and souvenir income ................... 17.6 18.2 18.5 18.1 16.6
Other income ......................................... 0.5 1.0 3.7 1.2 1.3
-------- -------- -------- -------- --------
Total revenues ...................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Expenses:
Direct expenses:
Prize and point fund monies and NASCAR sanction fees 14.3 14.4 12.4 14.0 14.5
Motorsports related expenses ........................ 14.1 16.0 26.8 16.7 16.3
Food, beverage and souvenir expenses ................ 9.9 10.7 14.6 10.8 9.5
General and administrative expenses .................. 22.2 21.8 48.2 22.2 20.9
Depreciation and amortization ........................ 5.8 6.6 22.4 7.5 7.0
-------- -------- -------- -------- --------
Total expenses ...................................... 66.3 69.5 124.4 71.2 68.2
-------- -------- -------- -------- --------
Operating income (loss) ............................... 33.7 30.5 (24.4) 28.8 31.8
Interest income, net .................................. 1.7 0.9 2.5 0.9 1.9
Equity in net income (loss )from equity investments .. .3 1.5 (2.9) 1.3 0.2
-------- -------- -------- -------- --------
Income (loss) before income taxes ..................... 35.7 32.9 (24.8) 31.0 33.9
Income taxes (benefit)................................. 13.4 12.4 (7.0) 11.8 12.8
-------- -------- -------- -------- --------
Net income (loss)...................................... 22.3% 20.5% (17.8%) 19.2% 21.1%
======== ======== ======== ======== ========
The Company changed its fiscal year end to November 30 effective December 1,
1996. Management believes that, due to the continued expansion of the
Company's business, a comparison of the year ended November 30, 1997 to the
twelve months ended November 30, 1996 is more meaningful than a comparison of
the year ended November 30, 1997 to the year ended August 31, 1996.
Therefore, the discussion and analysis of results of operations for fiscal
1997 is compared to the unaudited twelve months ended November 30, 1996.
COMPARISON OF FISCAL 1997 TO THE TWELVE MONTHS ENDED NOVEMBER 30, 1996
During fiscal 1997, the Company acquired the 50% interest it did not already
own in Watkins Glen International ("Watkins Glen") and acquired Phoenix
International Raceway ("Phoenix") - see the discussion under the caption
"Capital Expenditures". The consolidation of Watkins Glen, effective April 1,
1997, and the July 14, 1997 purchase of Phoenix resulted in the addition of
numerous events to the Company's fiscal 1997 event schedule including two
NASCAR Winston Cup Series events, a NASCAR Busch Series event and two NASCAR
Craftsman Truck Series events. These acquisitions have resulted in
significant increases in both revenues and expenses in fiscal 1997 as compared
to the same period of the prior year.
Admissions revenue increased approximately $18.8 million, or 37%, during
fiscal 1997 as compared to the same period of the prior year. Approximately
one-third of this increase is a result of increased seating capacity and
attendance at Daytona International Speedway ("Daytona"), Talladega
Superspeedway ("Talladega") and Darlington Raceway ("Darlington").
Approximately one-quarter of the increase is attributable to an increase in
the weighted average price of tickets sold at Daytona, Talladega and
Darlington. The remainder of the increase is primarily attributable to the
impact of admissions to events conducted at Watkins Glen and Phoenix.
Motorsports related income increased approximately $18.3 million, or 64.4%,
during fiscal 1997 as compared to the same period of the prior year.
Approximately one-half of this increase is a result of an increase in
broadcast rights fees, the rentals of hospitality facilities and promotion and
sponsorship fees related to events conducted at Daytona, Talladega and
Darlington. The remaining increase is attributable to the events conducted at
Watkins Glen and Phoenix, advertising revenue, other promotion and sponsorship
fees and royalties.
Food, beverage and souvenir income increased approximately $5.7 million, or
32.1%, for fiscal 1997 as compared to the same period of the prior year.
Increased attendance at events conducted at Daytona, Talladega and Darlington,
and, to a lesser extent, increases in certain prices accounted for
approximately one-half of the increase. The remaining increase is a result of
events conducted at Watkins Glen and Phoenix and direct sales of souvenirs at
the gift shop adjacent to DAYTONA USA.
Prize and point fund monies and NASCAR sanction fees increased by
approximately $6.8 million, or 49.9%, during fiscal 1997 as compared to the
same period of the prior year. Over one-half of this increase is due to
events conducted at Watkins Glen and Phoenix. The remaining increase is
primarily the result of increases in the prize and point fund monies paid by
NASCAR to participants in the Company's events. This increase is primarily
attributable to increases in the Company's TV broadcast rights as standard
NASCAR sanction agreements require that a specified percentage of TV broadcast
rights be paid as part of the prize money.
Motorsports related expenses increased approximately $6.7 million, or 40.8%,
for fiscal 1997 as compared to the same period of the prior year. This
increase is primarily attributable to operating costs related to the events
held at Watkins Glen and Phoenix, increases in direct race expenses related to
events conducted at Daytona, Talladega and Darlington, including increases in
operating costs related to the rain out and rescheduling of Talladega's second
quarter NASCAR Winston Cup event and, to a lesser extent, the operation of
DAYTONA USA. Motorsports related expenses remained relatively constant as a
percentage of combined admissions and motorsports related income during both
periods.
Food, beverage and souvenir expenses increased approximately $2.9 million, or
27.2%, in fiscal 1997 as compared to the same period of the prior year,
primarily due to increases in personnel and product costs. Food, beverage and
souvenir expenses as a percentage of food, beverage and souvenir income
decreased from approximately 59.6% for the twelve months ended November 30,
1996 to 57.4% in fiscal 1997 primarily due to the use of third party vendors
at the Company's Phoenix facility.
General and administrative expenses increased approximately $7.8 million, or
35.7%, during fiscal 1997 as compared to the same period of the prior year.
The increases are due to the acquisition of Phoenix, the consolidation of
Watkins Glen, and expenses related to the ongoing expansion of the Company's
business. General and administrative expenses as a percentage of total
revenue decreased from approximately 22.2% for the twelve months ended
November 30, 1997 to 20.9% in fiscal 1997.
The Company's depreciation and amortization expense increased approximately
$2.5 million, or 34.5%, during fiscal 1997 as compared to the same period of
the prior year, primarily as a result of DAYTONA USA, the ongoing expansion of
the Company's motorsports facilities and amortization of goodwill related to
the acquisition of Phoenix. This increase was partially mitigated by an
approximately $1 million decrease in depreciation associated with the
lengthening of the estimated service lives of grandstands and other
significant assets as a result of Management's review of actual service lives
of these types of assets conducted at the beginning of the current fiscal
year.
The approximately $1.8 million increase in the Company's net interest income
during fiscal 1997 as compared to the same period of the prior year, is
attributable primarily to the investment of proceeds, pending their usage,
from the November 1996 Class A Common Stock offering.
Equity in net income from equity investments represents the Company's prorata
share of the current income and losses from its equity investments and the
amortization of the Company's investment in excess of its share of the
investee's underlying net assets, accounted for using the equity method of
accounting. In fiscal 1997 this included the Company's 11% indirect interest
in Penske Motorsports, Inc. ("PMI"), its 40% investment in Homestead-Miami
Speedway, LLC ("Homestead") from July of 1997, its approximately 7% investment
in the Grand Prix Association of Long Beach, Inc. ("Long Beach") from August
of 1997, and its 50% investment in Watkins Glen through March 31, 1997. The
approximately $900,000, or 71.6% decrease in equity in net income from equity
investments during fiscal 1997, as compared to the same period of the prior
year, is due to the changes in the Company's equity investments and the timing
of those changes.
As a result of the foregoing, the Company's net income increased approximately
$11 million, or 58.2%, during fiscal 1997 as compared to the same period of
the prior year.
COMPARISON OF FISCAL 1996 TO FISCAL 1995
Admissions revenue increased approximately $6.9 million, or 15.9%, from
fiscal 1995 to fiscal 1996. Approximately three-quarters of this increase was
attributable to an increase in the Company's weighted average price of tickets
sold. This increase was the result of general price increases and additional
sales of premium seats. Increased attendance at the Company's racing events
and admissions to DAYTONA USA accounted for the remainder of the increase.
Motorsports related income increased approximately $3.4 million, or 14.1%,
from fiscal 1995 to fiscal 1996. This increase is attributed to increases in
broadcast rights fees, promotion and sponsorship fees and hospitality rentals,
partially offset by a decrease in royalties from the Company's trademark
license to a single licensee.
Food, beverage and souvenir income increased approximately $3.1 million, or
21.2%, from fiscal 1995 to fiscal 1996. Over one-half of this increase was
attributable to expanded food and beverage services at outdoor sporting events
unrelated to the motorsports events promoted by the Company. The remainder of
the increase was primarily attributable to increased attendance at the
Company's racing events and, to a lesser extent, price increases.
Prize and point fund monies and NASCAR sanction fees increased
approximately $2.1 million, or 17.8%, from fiscal 1995 to fiscal 1996.
Approximately three-quarters of this increase was due to increases in the
prize and point fund monies paid by NASCAR to participants in the Company's
motorsports events. This increase was primarily attributable to increases in
the Company's broadcast revenues as standard NASCAR sanctioning agreements
require that a specified percentage of broadcast revenues be paid as prize
money.
Motorsports related expenses increased approximately $3.7 million, or
32.2%, from fiscal 1995 to fiscal 1996, reflecting increased labor,
advertising and other costs associated with the promotion of the Company's
racing events. Motorsports related expenses as a percentage of combined
admissions and motorsports related income increased from approximately 17.2%
in fiscal 1995 to approximately 19.8% in fiscal 1996, which management
attributes primarily to pre-opening expenses associated with DAYTONA USA,
which was open for only two months in fiscal 1996, as well as the impact of
inclement weather on the results from the Company's 1996 motorcycle week
events.
Food, beverage and souvenir expenses increased approximately $2.2 million,
or 26.8%, from fiscal 1995 to 1996, reflecting increases in labor, product
costs and other expense items attributable to the Company's expanded
concessions and catering operations. Food, beverage and souvenir expenses as a
percentage of food, beverage and souvenir income increased from approximately
56.1% in fiscal 1995 to 58.7% in fiscal 1996, reflecting the lower margins
associated with the expansion of concession and catering operations to third
party events.
General and administrative expenses increased approximately $2.7 million,
or 15.0%, from fiscal 1995 to fiscal 1996. The increase was primarily due to
increases in life insurance, travel expenses, wages and other compensation,
and professional fees, as well as a wide variety of other expense items
associated with the ongoing expansion of the Company's business. General and
administrative expenses as a percentage of total revenues decreased from
approximately 22.2% in fiscal 1995 to 21.8% in fiscal 1996.
The Company's depreciation expense increased approximately $1.5 million, or
31.3%, primarily as a result of the ongoing expansion of the Company's
motorsports facilities and the opening of DAYTONA USA in July 1996.
The approximately $550,000 decrease in the Company's net interest income
was primarily attributable to lower average investment balances resulting from
the funding of construction of DAYTONA USA, the Company's indirect investment
in PMI and a variety of facility expansion and improvement projects.
The approximately $1.2 million increase in net income from equity
investments was attributable to the Company's indirect investment in PMI and,
to a lesser extent, an increase in Watkins Glen net income.
As a result of the foregoing, the Company's net income increased $1.3
million, or 7.2%, from $18.4 million in fiscal 1995 to $19.7 million in fiscal
1996.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
The Company has historically generated sufficient cash flow from
operations to fund its working capital needs and capital expenditures at
existing facilities, as well as to pay annual cash dividends. At November 30,
1997, the Company had a working capital deficit of $25 million, compared to
working capital of $52.9 million at November 30, 1996, which is primarily
attributable to the funding of the Company's purchase of Phoenix International
Raceway and its investments in Homestead and Long Beach as described below
under the caption "Capital Expenditures".
The Company also has a $10 million line of credit with a financial
institution which expires in March 1999. There were no borrowings under the
Company's credit facility at November 30, 1997.
CASH FLOWS
Net cash provided by operating activities was approximately $54.9 million
for fiscal 1997. The difference between the Company's fiscal 1997 net income
of $29.8 million and the $54.9 million of operating cash flow was primarily
attributable to $10 million in depreciation and amortization, a $6.8 million
increase in deferred income, a $4.4 million increase in deferred income taxes,
a combined increase of $4.5 million in accounts payable and other current
liabilities and $1 million in amortization of deferred compensation, partially
offset by a combined increase of $1.4 million in receivables and prepaid
expenses and other current assets.
Net cash used in investing activities was $50.5 million for fiscal 1997.
The Company's use of cash for investing activities for fiscal 1997 reflects
$43.9 million for the purchase of Phoenix, $38.6 million in capital
expenditures, $16.2 million for the Company's investments in Homestead and
Long Beach, a $1.5 million investment in the stock of PMI and $1 million, net
of cash acquired, for the Company's acquisition of the 50% interest in Watkins
Glen that it did not already own, partially offset by net proceeds from
maturities of investments of $52 million. See "Capital Expenditures".
Net cash used in financing activities was approximately $2.5 million for
fiscal 1997. The use of cash in financing activities during fiscal 1997 is
primarily attributable to $2.3 million in cash dividends. The cash provided
by financing activities for the twelve months ended November 30, 1996 included
the proceeds of the November 1996 Class A Common Stock offering.
CAPITAL EXPENDITURES
Capital expenditures totaled $38.6 million for fiscal 1997 compared to
$41.4 million for the same period of the prior year. Capital expenditures
during fiscal 1997 related primarily to additions to spectator capacity at
Daytona, Talladega and Darlington, the addition of track lighting at Daytona
and renovation of the Company's new corporate headquarters.
The Company expects to make approximately $55.3 million of additional
capital expenditures for approved projects within the next 24 months to
increase seating capacity, to construct luxury suites, to complete track
lighting at Daytona and for a number of other improvements to the Company's
motorsports facilities.
On April 1, 1997, the Company exercised its contractual option to acquire
the 50% interest it did not already own in Watkins Glen from Corning, Inc. for
approximately $3.1 million. The transaction price represented the stock's
book value at December 31, 1996. The Company's option to purchase Corning's
interest for its book value was part of a shareholder agreement between the
two companies in place since 1988.
During the third quarter, the Company established its presence in South
Florida, as well as on the West Coast and in Midwestern markets through
investments in Homestead and Long Beach. In July of 1997, the Company
invested $11.8 million, plus related acquisition costs, for a 40% interest in
Homestead, the operator of the Metro-Dade Homestead Motorsports Complex. The
Company invested $3.9 million, plus related acquisition costs, in August of
1997 for an approximately 7% interest in Long Beach, the operator of Grand
Prix of Long Beach, California, Gateway International Raceway in Madison,
Illinois and Memphis Motorsports Park in Millington, Tennessee. PMI, in which
the Company holds an 11% indirect interest, also acquired interests of 40% and
approximately 7% in Homestead and Long Beach, respectively. The Company's
investment in Homestead represents a portion of the security in support of
this investee's credit facility.
The Homestead and Long Beach transactions have been accounted for using
the equity method of accounting and are included in equity investments along
with the Company's investment in PSH Corp.
FUTURE LIQUIDITY
The Company believes that funds generated from operations, along with
funds available under the existing line of credit, if necessary, will be
sufficient to satisfy the Company's working capital requirements through at
least fiscal 1998, as well as the Company's planned capital expenditures
described above.
The Company is currently pursuing the development of new facilities in
several major markets. In December 1997, the Company announced that it
reached an agreement with the Unified Government of Wyandotte County/Kansas
City, Kansas for the construction of a 1.5-mile oval motor speedway in western
Kansas City, Kansas. Assuming certain conditions precedent are met, the
Company expects to commit approximately $55.6 million in mid-1998 for its
portion of project costs associated with the initial phase of the project.
The Company is currently negotiating a credit facility to finance these
anticipated project costs.
The Company also believes that it will be able to obtain financing to
fund the acquisition, development and/or construction of additional
motorsports facilities, if necessary, should the Company implement this
element of its growth strategy. However, there can be no assurance that
adequate debt or equity financing will be available on satisfactory terms.
[see FACTORS THAT MAY AFFECT OPERATING RESULTS and UNCERTAIN PROSPECTS OF NEW
MOTORSPORTS FACILITIES]
SEASONALITY AND QUARTERLY RESULTS
The Company derives most of its income from event admissions and related
revenue from a limited number of NASCAR-sanctioned races. As a result, the
Company's business has been, and is expected to remain, highly seasonal based
on the timing of major race events. For example, the Darlington Southern 500
is traditionally held on the Sunday preceding Labor Day. Accordingly, the
revenue and expenses for that race and/or certain of its supporting events may
be recognized in either the fiscal quarter ending August 31 or the fiscal
quarter ending November 30. Partly in response to this seasonality and the
desire to better conform to the traditional racing season, the Company changed
its fiscal year end from August 31 to November 30 effective December 1, 1996.
This resulted in a three-month transition period commencing September 1, 1996
and ending November 30, 1996.
Historically, the Company has incurred net losses in the fiscal quarter
ending November 30, and achieved its highest net income in the fiscal quarter
ending February 28. In fiscal 1997 the Company had net income for the quarter
ended November 30, primarily due to the acquisition of Phoenix, which resulted
in the addition of a NASCAR Winston Cup Series event in the quarter ending
November 30, and the date change for the Company's Talladega DieHard 500 race,
which moved the event from the quarter ended August 31 to the quarter ended
November 30.
The following table presents certain unaudited financial data for each
fiscal quarter of fiscal 1996 and fiscal 1997 and for the transition quarter
ended November 30, 1996 (in thousands, except per share amounts):
FISCAL QUARTER ENDED TRANSITION QUARTER
----------------------------------------------------------------------------------
NOVEMBER 30, FEBRUARY 29, MAY 31, AUGUST 31, NOVEMBER 30,
1995 1996 1996 1996 1996
--------------- --------------- ---------- ------------- ------------------
Total revenues ............ $ 8,542 $40,277 $24,176 $23,047 $10,496
Operating income (loss) ... (1,474) 20,338 6,230 4,237 (2,565)
Net income (loss) ......... (1,020) 12,089 3,817 4,795 (1,867)
Earnings (loss) per share . (.03) .35 .11 .14 (.05)
FISCAL QUARTER ENDED
----------------------------------------------------------------------------------
FEBRUARY 28, MAY 31, AUGUST 31, NOVEMBER 30,
1997 1997 1997 1997
--------------- ---------- ------------- ------------------
Total Revenues ............ $51,866 $29,630 $ 33,106 $26,772
Operating Income .......... 27,103 7,075 8,762 1,961
Net Income ................ 17,475 4,486 5,985 1,850
Earnings per share ........ .45 .12 .16 .05
INFLATION
Management does not believe that inflation has had a material impact on
operating costs and earnings of the Company.
FACTORS THAT MAY AFFECT OPERATING RESULTS
Statements contained in this document that state the Company's or
Management's anticipations, beliefs, expectations, hopes, intentions,
predictions and/or strategies which are not purely historical fact or which
apply prospectively are "forward-looking" statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21 of the Securities
Exchange Act of 1934. All forward-looking statements contained in this
document are based on information available to the Company on the date hereof,
and the Company assumes no obligation to update any such forward-looking
statements. It is important to note that the Company's actual results could
differ materially from those contained or projected in, or even implied by,
such forward-looking statements. Some of the factors that could cause the
actual results to differ materially are set forth below. Additional
information concerning these, or other, factors which could cause actual
results to differ materially from those in the forward-looking statements is
contained from time to time in the Company's other SEC filings. Copies of
those filings are available from the Company and/or the SEC.
IMPACT OF THE YEAR 2000
The Year 2000 issue is the result of computer programs and other
business systems being written using two digits rather than four to represent
the year. Many of the Company's time sensitive applications and business
systems may recognize a date using "00" as the year 1900 rather than the year
2000, which could result in system failure or disruption of operations. The
Year 2000 problem will impact the Company and its business partners.
An assessment of the Year 2000 exposure has been made by the Company and
the plans to resolve the related issues are being implemented. Most major
systems have already been updated or replaced with applications that are year
2000 compliant in the normal course of business. The Company believes it will
be able to achieve Year 2000 compliance by the end of fiscal 1998.
The Company has also developed a plan of communication with significant
business partners to ensure that the Company's operations are not disrupted
through these relationships and that the Year 2000 issues are resolved timely.
The Company believes that it will satisfactorily resolve all significant
Year 2000 problems and that the related costs will not be material. Estimates
of Year 2000 related costs are based on numerous assumptions, including the
continued availability of certain resources, the ability to correct all
relevant applications and third party modification plans. There is no
guarantee that the estimates will be achieved and actual costs could differ
materially from those anticipated.
DEPENDENCY UPON NASCAR
The Company's success has been and will primarily remain dependent upon
maintaining a good working relationship with NASCAR, the sanctioning body for
the NASCAR Winston Cup Series, NASCAR Busch Series, and certain other races
promoted by the Company. The Company has sanctioning agreements to promote and
market eight NASCAR Winston Cup Series Championship races, five NASCAR Busch
Series races and a number of other NASCAR races for the 1998 racing season.
Each NASCAR event sanctioning agreement is awarded on an annual basis. In the
fiscal years 1996 and 1997, NASCAR-sanctioned races at the Company's
facilities accounted for approximately 78.3% and 77.6%, respectively, of the
Company's total revenues. Although William C. France and James C. France
presently control both the Company and NASCAR, and management believes that
the Company will continue to maintain an excellent relationship with NASCAR
for the foreseeable future, NASCAR is under no obligation to continue to enter
into sanctioning agreements with the Company to promote any event. Failure to
obtain a sanctioning agreement for a major NASCAR event would have a material
adverse effect on the Company's financial condition and results of operations.
Moreover, although the Company is engaged in the development of additional
motorsports facilities, there can be no assurance that NASCAR will enter into
sanctioning agreements with the Company to promote races at such facilities.
DEPENDENCE ON KEY PERSONNEL
The Company's continued success will depend upon the availability and
performance of its senior management team, particularly William C. France, the
Company's Chairman of the Board and Chief Executive Officer, James C. France,
its President and Chief Operating Officer, and Lesa D. Kennedy, its Executive
Vice President, each of whom possesses unique and extensive industry knowledge
and experience. While the Company believes that its senior management team has
significant depth, the loss of any of the Company's key personnel or its
inability to attract and retain key employees in the future could have a
material adverse effect on the Company's operations and business plans.
INDUSTRY SPONSORSHIPS AND GOVERNMENT REGULATION
The motorsports industry and the Company generate significant recurring
revenue from the promotion, sponsorship and advertising of various companies
and their products. Government regulation can adversely impact the
availability to motorsports of this promotion, sponsorship and advertising
revenue. Advertising by the tobacco and alcoholic beverage industries is
generally subject to greater governmental regulation than advertising by other
sponsors of the Company's events. In August 1996, the U.S. Food and Drug
Administration (the "FDA") issued regulations concerning advertising and sales
of cigarettes and smokeless tobacco to minors which would, in part, restrict
tobacco industry sponsorship of all sporting events, including motorsports,
effective August 1998. The FDA regulations prohibit the present practice of
tobacco product brand name sponsorship of, or identification with, motorsports
events, entries and teams. If these rules become effective, no assurance can
be given that suitable alternative sponsors for the events, entries and teams
could be located. Management is aware of pending legal challenges, as well as
legislative initiatives, which could change or prevent the scheduled
implementation of these regulations. The tobacco industry has reached a
widely publicized settlement of pending liability lawsuits which would have an
effect similar to the pending FDA regulations. This proposed settlement would
require legislative approval and enabling legislation. However, the final
outcome of the challenges to the FDA regulations or the implementation of the
proposed settlement is uncertain, and the ultimate impact on the motorsports
industry and the Company, if any, is unclear. The Company is not aware of any
proposed governmental regulation which would materially limit the availability
to motorsports of promotion, sponsorship or advertising revenue from the
alcoholic beverage industry. Advertising and sponsorship revenue from the
tobacco and alcoholic beverage industries accounted for approximately 1.5% of
the Company's total revenues in both fiscal 1996 and 1997. In addition, the
tobacco and alcoholic beverage industries provide financial support to the
motorsports industry through, among other things, their purchase of
advertising time, their sponsorship of racing teams and their sponsorship of
racing series such as the NASCAR Winston Cup Series and the NASCAR Busch
Series.
COMPETITION
The Company's racing events face competition from other
spectator-oriented sporting events and other leisure and recreational
activities. As a result, the Company's revenues will be affected by the
general popularity of motorsports, the availability of alternative forms of
recreation and changing consumer preferences. The Company's racing events also
compete with other racing events sanctioned by various racing bodies such as
NASCAR, Championship Auto Racing Teams, Inc. ("CART"), the United States Auto
Club ("USAC"), the National Hot Rod Association ("NHRA"), the Sports Car Club
of America ("SCCA"), United States Road Racing Championship ("USRRC"), the
Automobile Racing Club of America ("ARCA") and others. Management believes
that the primary elements of competition in attracting motorsports spectators
and corporate sponsors to a racing event and facility are the type and caliber
of promoted racing events, facility location, sight lines, pricing and
customer amenities that contribute to a total entertainment experience. Many
sports and entertainment businesses have resources that exceed those of the
Company.
IMPACT OF CONSUMER SPENDING ON RESULTS
The success of the Company's operations depends to a significant extent
upon a number of factors relating to discretionary consumer spending,
including economic conditions affecting disposable consumer income such as
employment, business conditions, interest rates and taxation. These factors
can impact both attendance at the Company's events and the financial results
of the motorsports industry's principal sponsors. There can be no assurance
that future consumer spending will not be adversely affected by economic
conditions, thereby impacting the Company's growth, revenue and profitability.
UNCERTAIN PROSPECTS OF NEW MOTORSPORTS FACILITIES
The Company is engaged in the development of new motorsports facilities.
The Company's ability to implement successfully this element of its growth
strategy will depend on a number of factors, including (i) the Company's
ability to obtain one or more additional sanctioning agreements to promote
NASCAR Winston Cup Series, NASCAR Busch Series or other major events at these
new facilities, (ii) the cooperation of local government officials, (iii) the
Company's capital resources and the availability of debt or equity financing
on satisfactory terms, (iv) the Company's ability to control construction and
operating costs, and (v) the Company's ability to hire and retain qualified
personnel. The Company's inability to implement its expansion plans for any
reason would adversely affect its business prospects. In addition, expenses
associated with developing, constructing and opening a new facility may have a
negative effect on the Company's financial condition and results of operations
in one or more future reporting periods. The cost of any such transaction
will depend on a number of factors, including the facility's location, the
extent of the Company's ownership interest and the degree of any municipal or
other public support. Moreover, although management believes that it will be
able to obtain financing, if necessary, to fund the acquisition, development
and/or construction of additional motorsports facilities should the Company
implement this element of its growth strategy, there can be no assurance that
adequate debt or equity financing will be available on satisfactory terms.
FINANCIAL IMPACT OF BAD WEATHER
The Company promotes outdoor motorsports events. Weather conditions
affect sales of, among other things, tickets, concessions and souvenirs at
these events. Although the Company sells tickets well in advance of its most
popular events, poor weather conditions could have a material adverse effect
on the Company's results of operations, particularly any interruption of the
Company's February "Speedweeks" events.
LIABILITY FOR PERSONAL INJURIES
Motorsports can be dangerous to participants and to spectators. The
Company maintains insurance policies that provide coverage within limits that
management believes should generally be sufficient to protect the Company from
material financial loss due to liability for personal injuries sustained by
persons on the Company's premises in the ordinary course of Company business.
Nevertheless, there can be no assurance that such insurance will be adequate
or available at all times and in all circumstances. The Company's financial
condition and results of operations would be adversely affected to the extent
claims and associated expenses exceed insurance recoveries.
ENVIRONMENTAL AND ZONING MATTERS
Management believes that the Company's operations are in substantial
compliance with all applicable federal, state and local environmental laws and
regulations. Nonetheless, if damage to persons or property or contamination of
the environment is determined to have been caused or exacerbated by the
conduct of the Company's business or by pollutants, substances, contaminants
or wastes used, generated or disposed of by the Company, or which may be found
on the property of the Company, the Company may be held liable for such damage
and may be required to pay the cost of investigation and/or remediation of
such contamination or any related damage. The amount of such liability as to
which the Company is self-insured could be material. State and local laws
relating to the protection of the environment also include noise abatement
laws that may be applicable to the Company's racing events. Changes in the
provisions or application of federal, state or local environmental laws,
regulations or requirements, or the discovery of theretofore unknown
conditions, could also require additional material expenditures by the
Company.
In addition, the development of new motorsports facilities (and, to a
lesser extent, the expansion of existing facilities) requires compliance with
applicable federal, state and local land use planning, zoning and
environmental regulations. Regulations governing the use and development of
real estate may prevent the Company from acquiring or developing prime
locations for motorsports facilities, substantially delay or complicate the
process of improving existing facilities, and/or materially increase the costs
of any of such activities.
LEGAL PROCEEDINGS
The Company and its indirect subsidiary, Americrown Service Corporation,
are parties to certain legal proceedings described in "Part II - Other
Information". While the Company and Americrown dispute the allegations and
intend to defend the actions fully and vigorously, the cost of defending the
suits is not insured. Management is presently unable to predict or quantify
the outcome of these matters. But, there can be no assurance the defense of
the suits, or a possible adverse resolution, will not require material
expenditures by the Company.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors and Shareholders
International Speedway Corporation
We have audited the accompanying consolidated balance sheets of
International Speedway Corporation and subsidiaries as of November 30, 1996
and 1997, and the related consolidated statements of income, shareholders'
equity and cash flows for the years ended August 31, 1995 and 1996, the three
month period ended November 30, 1996, and the year ended November 30,
1997. Our audits also included the financial statement schedule listed in the
index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of International Speedway Corporation and subsidiaries at November 30, 1996
and 1997, and the consolidated results of their operations and their cash
flows for the years ended August 31, 1995 and 1996, the three month period
ended November 30, 1996 and the year ended November 30, 1997, in conformity
with generally accepted accounting principles. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
Ernst & Young LLP
Jacksonville, Florida
January 22, 1998
INTERNATIONAL SPEEDWAY CORPORATION
CONSOLIDATED BALANCE SHEETS
November 30,
--------------------------
1996 1997
------------ -------------
(IN THOUSANDS)
ASSETS
Current Assets:
Cash and cash equivalents ................................... $ 8,057 $ 9,974
Short-term investments (Note 4) ............................. 75,557 23,601
Receivables, less allowances of $35 and $100, respectively... 4,860 7,425
Inventories ................................................. 1,253 866
Prepaid expenses and other current assets ................... 2,906 4,077
------------ ------------
Total Current Assets ......................................... 92,633 45,943
Property and Equipment: ......................................
Land and leasehold improvements ............................. 3,668 15,177
Buildings, grandstands and tracks ........................... 104,152 153,044
Furniture and equipment ..................................... 27,173 33,168
Construction in progress .................................... 15,618 18,606
------------ ------------
150,611 219,995
Less: accumulated depreciation .............................. 39,258 53,917
------------ ------------
111,353 166,078
Other Assets:
Cash surrender value of life insurance ...................... 2,337 3,590
Equity investments (Note 2) ................................. 26,952 45,844
Goodwill, less accumulated amortization of $382 (Note 3) .... -- 40,400
Long-term investments (Note 4) .............................. 500 500
Other ....................................................... 294 468
------------ ------------
30,083 90,802
------------ ------------
Total Assets ................................................. $234,069 $ 302,823
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable ............................................ $ 3,306 $ 6,898
Income taxes payable (Note 5) ............................... 87 7
Deferred income ............................................. 35,760 49,338
Current portion of note payable ............................. -- 13,295
Other current liabilities ................................... 558 1,381
------------ -------------
Total Current Liabilities .................................... 39,711 70,919
Notes Payable ................................................ -- 1,007
Deferred Income Taxes (Note 5) ............................... 15,069 20,990
Commitments and Contingencies (Note 8)
Shareholders' Equity (Notes 1 and 7):
Class A Common Stock, $.01 par value, 80,000,000 shares
authorized; 4,000,000 and 5,342,042 issued and outstanding
in 1996 and 1997, respectively ............................. 40 53
Class B Common Stock, $.01 par value, 40,000,000 shares
authorized; 34,406,325 and 33,154,920 issued and outstanding
in 1996 and 1997, respectively ............................ 344 332
Additional paid-in capital .................................. 82,236 86,437
Retained earnings ........................................... 98,119 125,457
------------ ------------
180,739 212,279
Less unearned compensation--restricted stock (Note 11) ....... 1,450 2,372
------------ ------------
Total Shareholders' Equity ................................... 179,289 209,907
------------ ------------
Total Liabilities and Shareholders' Equity ................... $ 234,069 $ 302,823
============ ============
See accompanying notes.
INTERNATIONAL SPEEDWAY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Year Ended
YEAR ENDED AUGUST 31, November 30, Ended Nov. 30,
------------------------- ------------------ -----------
1995 1996 1996 1997
------------ ------------ ------------ -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenues:
Admissions, net ............................ $ 43,274 $ 50,140 $ 4,191 $ 69,487
Motorsports related income ................. 24,033 27,433 3,972 46,650
Food, beverage and souvenir income ........ 14,442 17,505 1,943 23,408
Other income ............................... 423 964 390 1,829
------------ ------------ -------- --------
82,172 96,042 10,496 141,374
Expenses:
Direct expenses:
Prize and point fund monies
and NASCAR sanction fees ................ 11,765 13,865 1,301 20,567
Motorsports related expenses .............. 11,604 15,336 2,814 23,075
Food, beverage and souvenir expenses ..... 8,107 10,278 1,536 13,435
General and administrative expenses ....... 18,202 20,930 5,057 29,486
Depreciation and amortization .............. 4,798 6,302 2,353 9,910
------------ ------------ -------- --------
54,476 66,711 13,061 96,473
------------ ------------ -------- --------
Operating income (loss) ..................... 27,696 29,331 (2,565) 44,901
Interest income, net ........................ 1,436 872 261 2,687
Equity in net income (loss) from equity .....
investments ................................ 285 1,441 (304) 366
------------ ------------ -------- --------
Income (loss) before income taxes ........... 29,417 31,644 (2,608) 47,954
Income taxes (benefit) (Note 5) ............. 11,054 11,963 (741) 18,158
------------ ------------ -------- --------
Net income (loss)............................ $ 18,363 $ 19,681 $ (1,867) $ 29,796
============ ============ ======== ========
Earnings (loss) per share (Note 1) .......... $ .53 $ .57 $ (.05) $ .77
============ ============ -------- ========
Dividends per share (Note 1) ................ 4.7/cent/ 5.3/cent/ == 6.0/cent/
============ ============ ======== ========
See accompanying notes.
INTERNATIONAL SPEEDWAY CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
CLASS A CLASS B
COMMON COMMON UNEARNED
STOCK STOCK ADDITIONAL COMPENSATION- TOTAL
$.01 PAR $.01 PAR PAID-IN RETAINED RESTRICTED SHAREHOLDERS'
VALUE VALUE CAPITAL EARNINGS STOCK EQUITY
-------- ------- ---------- ---------- ----------- ------------
(IN THOUSANDS)
BALANCE AT AUGUST 31, 1994 ....... $ -- $ 344 $ 1,364 $ 67,194 $ (625) $ 68,277
Net income ...................... -- -- -- 18,363 -- 18,363
Cash dividends (4.7/cent/ per share) -- -- -- (1,605) -- (1,605)
Reacquisition of previously issued
common stock .................. -- -- -- (106) -- (106)
Restricted stock granted
(Note 11) ..................... -- -- 489 -- (489) --
Amortization of unearned compensation
(Note 11) ..................... -- -- -- -- 318 318
-------- -------- --------- ---------- ----------- ------------
BALANCE AT AUGUST 31, 1995 ....... -- 344 1,853 83,846 (796) 85,247
Net income ...................... -- -- -- 19,681 -- 19,681
Cash dividends (5.3/cent/ per share) -- -- -- (1,836) -- (1,836)
Reacquisition of previously issued
common stock .................. -- (1) (2) (1,705) -- (1,708)
Restricted stock granted
(Note 11) ..................... -- 1 1,599 -- (1,600) --
Amortization of unearned compensation
(Note 11) ..................... -- -- -- -- 606 606
Recapitalization of equity investment -- -- 4,677 -- -- 4,677
-------- -------- --------- ---------- ----------- ------------
BALANCE AT AUGUST 31, 1996 ....... -- 344 8,127 99,986 (1,790) 106,667
Net loss ........................ -- -- -- (1,867) -- (1,867)
Public offering - Class A
Common Stock (Note 7) ......... 40 -- 74,327 -- -- 74,367
Forfeiture of restricted shares . -- -- (218) -- 218 --
Amortization of unearned compensation
(Note 11) ..................... -- -- -- -- 122 122
-------- --------- ---------- ---------- ----------- ------------
BALANCE AT NOVEMBER 30, 1996 40 344 82,236 98,119 (1,450) 179,289
Net income ...................... -- -- -- 29,796 -- 29,796
Cash dividends (6.0/cent/per share) -- -- -- (2,310) -- (2,310)
Increase in equity investments
(Note 2) ...................... -- -- 2,263 -- -- 2,263
Additional expense of Class A Common
Stock offering ................ -- -- (46) -- -- (46)
Restricted stock granted (Note 11) -- 1 1,984 -- (1,985) --
Reacquisition of previously issued
common stock .................. -- -- -- (148) -- (148)
Conversion of Class B Common Stock
to Class A Common Stock ....... 13 (13) -- -- -- --
Amortization of unearned
compensation (Note 11) ........ -- -- -- -- 1,063 1,063
-------- --------- ---------- ---------- ----------- ------------
BALANCE AT NOVEMBER 30, 1997 $ 53 $ 332 $86,437 $125,457 $(2,372) $ 209,907
======== ========= ========== =========== =========== ============
See accompanying notes.
INTERNATIONAL SPEEDWAY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED YEAR ENDED
YEAR ENDED AUGUST 31, NOVEMBER 30, NOVEMBER 30,
---------------------- --------------------------------
1995 1996 1996 1997
--------- --------- --------- ----------
(IN THOUSANDS)
OPERATING ACTIVITIES
Net income (loss).................................... $ 18,363 $ 19,681 $ (1,867) $ 29,796
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization ...................... 4,798 6,302 2,353 9,910
Amortization of unearned compensation .............. 318 606 122 1,063
Deferred income taxes .............................. 1,650 1,500 (766) 4,425
Undistributed income (loss) from equity investments. (285) (1,441) 304 (366)
Gain (loss) on disposition of property and
equipment ......................................... 251 (13) -- --
Changes in Operating Assets and Liabilities:
Receivables ....................................... (447) (1,661) (1,405) (667)
Inventories ....................................... (89) (251) 156 485
Prepaid expenses and other current assets ........ (1,322) 712 651 (689)
Other assets ...................................... (61) (127) -- (204)
Accounts payable .................................. 1,167 1,201 (514) 3,280
Deferred income ................................... 2,702 6,111 9,797 6,791
Income taxes payable .............................. 272 (267) 30 (80)
Other current liabilities ......................... 409 317 (1,038) 1,190
------------ ------------ ---------- ------------
Net Cash Provided by Operating Activities ............ 27,726 32,670 7,823 54,934
INVESTING ACTIVITIES
Acquisition of investments .......................... (125,982) (83,502) (70,959) (145,391)
Proceeds from maturities of investments ............. 119,392 106,330 3,771 197,347
Capital expenditures ................................ (16,831) (34,792) (14,864) (38,627)
Equity investments .................................. -- (15,287) -- (17,725)
Cash surrender value of life insurance .............. (30) (725) (1,123) (1,253)
Proceeds from sale of assets ........................ 80 21 -- --
Acquisition of Watkins Glen International interest,
net of cash acquired ............................... -- -- -- (996)
Acquisition of Phoenix International Raceway,
net of cash acquired ............................... -- -- -- (43,868)
----------- ------------ ------------ ----------
Net Cash Used in Investing Activities ................ (23,371) (27,955) (83,175) (50,513)
FINANCING ACTIVITIES
Reacquisition of previously issued common stock .... (106) (1,708) -- (148)
Additional expense of Class A Common Stock offering . -- -- -- (46)
Cash dividends paid ................................. (1,605) (1,836) -- (2,310)
Issuance of Class A Common Stock -- -- 74,367 --
Short-term borrowings -- -- 7,800 --
Repayment of short-term borrowings -- -- (7,800) --
----------- ------------ ------------ -----------
Net Cash Provided by (Used in) Financing Activities... (1,711) (3,544) 74,367 (2,504)
----------- ------------ ------------ -----------
Net Increase (Decrease) in Cash
and Cash Equivalents ............................... 2,644 1,171 (985) 1,917
Cash and Cash Equivalents at
Beginning of Period ................................ 5,227 7,871 9,042 8,057
----------- ------------ ------------ -----------
Cash and Cash Equivalents at
End of Period ...................................... $ 7,871 $ 9,042 $ 8,057 $ 9,974
=========== ============ ============= ===========
See accompanying notes.
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS: International Speedway Corporation and its
wholly-owned subsidiaries (the "Company") is a leading promoter of motorsports
activities in the United States. The Company owns and operates five premier
motorsports facilities --Daytona International Speedway, a 2.5 mile, tri-oval
track located in Daytona Beach, Florida; Talladega Superspeedway, a 2.6 mile,
tri-oval track located in Talladega, Alabama; Phoenix International Raceway
("Phoenix"), a one mile oval track located outside of Phoenix, Arizona (See
Note 3); Darlington Raceway, a 1.3 mile track located in Darlington, South
Carolina; and Watkins Glen International ("Watkins Glen"), a 3.4 mile road
course located in Watkins Glen, New York (See Note 3). The Company also
operates Tucson Raceway Park in Pima County Arizona.
At these facilities the Company currently promotes over 80 stock car,
sports car, truck, motorcycle and other racing events annually, including
eight NASCAR Winston Cup Series races, five NASCAR Busch Series - Grand
National Division races, three NASCAR Craftsman Truck Series races, and a
number of prestigious sports car and motorcycle races.
The Company also has investments in other motorsports entertainment
companies. The Company holds an 11% indirect interest in Penske Motorsports,
Inc. ("PMI"), which owns and operates Michigan International Speedway,
Pennsylvania's Nazareth Speedway, the California Speedway, and the North
Carolina Motor Speedway. The Company also holds a 40% interest in Homestead-
Miami Speedway, LLC ("Homestead"), the operator of the Metro-Dade Homestead
Motorsports Complex, and an approximately 7% interest in Grand Prix
Association of Long Beach ("Long Beach"), the operator of Grand Prix of Long
Beach, California, Gateway International Raceway in Madison, Illinois and
Memphis Motorsports Park in Millington, Tennessee.
The Company owns and operates DAYTONA USA--The Ultimate Motorsports
Attraction, a motorsports theme-entertainment complex that includes
interactive media, theaters, historical memorabilia and exhibits.
Americrown Service Corporation ("Americrown"), one of the Company's
wholly-owned subsidiaries, conducts the food, beverage and souvenir concession
operations at the Daytona, Talladega and Darlington facilities. Americrown is
also responsible for providing catering services to corporate customers both
in suites and entertainment chalets at these facilities and at unaffiliated
sporting events.
The Company's proprietary MRN radio network and NASCAR Truck Network
produces and syndicates NASCAR Winston Cup Series, NASCAR Busch Series - Grand
National Division, NASCAR Craftsman Truck Series and other races promoted by
the Company and others. MRN Radio also produces daily and weekly NASCAR racing
programs.
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1 -- DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
BASIS OF PRESENTATION: On September 5, 1996 the Company's Board of
Directors approved a recapitalization of the Company which became effective
November 4, 1996, concurrently with the effectiveness of the Registration
Statement filed on September 6, 1996 with the Securities and Exchange
Commission in connection with the offering of 4,000,000 shares of the
Company's newly authorized Class A Common Stock (discussed below). The
recapitalization modified the Company's authorized capital to include one
million shares of Preferred Stock, eighty million shares of Class A Common
Stock and forty million shares of Class B Common Stock. Pursuant to the
recapitalization, all of the Company's existing outstanding shares of Common
Stock were automatically converted, on a 15-for-one basis, into the newly
authorized shares of Class B Common Stock and the shares of Common Stock
previously held as treasury stock were retired. Shareholders' equity and all
share information and per share data have been adjusted to give effect to the
recapitalization and related stock split.
Effective December 1, 1996, the Company changed its fiscal year end from
August 31 to November 30. This resulted in a three-month transition period
commencing September 1, 1996 and ending November 30, 1996.
SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial
statements include the accounts of International Speedway Corporation and its
wholly-owned subsidiaries. All material intercompany accounts and
transactions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS: For purposes of reporting cash flows, cash and
cash equivalents include cash on hand, bank demand deposit accounts,
repurchase agreements and money market accounts at investment firms. Cash and
cash equivalents exclude certificates of deposit, obligations of U.S.
Government Agencies, U.S. Treasury Notes and U.S. Treasury Bills, regardless
of original maturity.
INVESTMENTS (NOTE 4): The Company accounts for investments in accordance
with Statement of Financial Accounting Standard (SFAS) No. 115, "Accounting
for Certain Investments in Debt and Equity Securities".
The Company determines the appropriate classification of investments at
the time of purchase and reevaluates such designation as of each balance
sheet date. Debt securities are classified as held-to-maturity based on the
Company's positive intent and ability to hold the securities to maturity.
These securities are stated at cost. Interest and dividends are included in
interest income.
Short-term investments consist of certificates of deposit and securities
held-to-maturity which are due in one year or less. Certificates of deposit
are readily convertible to cash and are stated at cost.
Long-term investments consist of securities held-to-maturity which are due
after one year and are stated at cost.
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1 -- DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
INVENTORIES: Inventories of items for resale are stated at the lower of
cost, determined on the first-in, first-out basis, or market.
PROPERTY AND EQUIPMENT: Property and equipment, including improvements to
existing facilities, are stated at cost. Depreciation is provided for
financial reporting purposes using either the straight-line or accelerated
methods over estimated useful lives as follows:
Buildings, grandstands and tracks .... 5-34 years
Furniture and equipment ............... 3-20 years
EQUITY INVESTMENTS (NOTE 2): Equity investments at November 30, 1996,
represent a 50% ownership interest in Watkins Glen and a 20% ownership
interest in PSH Corp (resulting in an approximately 11% indirect interest in
PMI). At November 30, 1997, equity investments represent a 40% interest in
Homestead, an approximately 7% interest in Long Beach and a 20% ownership
interest in PSH Corp. These investments are accounted for using the equity
method of accounting. The Company's equity in the net income from equity
investments is recorded as income with a corresponding increase in the
investment. Dividends received and amortization of the Company's investment in
excess of its pro rata share of the underlying assets reduce the investment.
The Company's investment in excess of its pro rata share of the underlying
assets is amortized by the straight-line method over 20 years. The Company
recognizes the effects of transactions involving the sale or distribution by
an equity investee of its common stock as capital transactions.
GOODWILL: Goodwill resulting from acquisitions is being amortized by the
straight-line method over 40 years. Recoverability of intangibles is assessed
using estimated undiscounted cash flows of related operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS: The Company's financial instruments
consist of cash, short- and long-term investments, accounts receivable and
accounts payable. The carrying value of these financial instruments
approximates their fair value at November 30, 1997.
INCOME TAXES (NOTE 5): Income taxes have been provided using the liability
method in accordance with SFAS No. 109, "Accounting for Income Taxes". Under
this method, deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will
be in effect when the differences are expected to reverse.
ADMISSION INCOME: Admission income and all race-related revenue is earned
upon completion of an event and is stated net of admission and sales taxes
collected. Refundable advance ticket sales and all race-related revenue on
future events are deferred until earned.
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1 -- DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
ADVERTISING EXPENSE: Advertising costs are expensed as incurred or, as in
the case of race-related advertising, upon the completion of the event.
Advertising expense was approximately $1.3 million, $1.7 million, $290,000 and
$2.4 million for the years ended August 31, 1995 and 1996, the three months
ended November 30, 1996 and the year ended November 30, 1997, respectively.
EARNINGS PER SHARE: Earnings per share have been computed on the weighted
average total number of common shares outstanding during the respective
periods. Weighted average shares outstanding for the years ended August 31,
1995 and 1996, and the year ended November 30, 1997 were 34,378,830,
34,440,525 and 38,488,767 shares, respectively. Weighted average shares
outstanding for the three month period ended November 30, 1996 were
35,610,510.
USE OF ESTIMATES: The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
NEW ACCOUNTING PRONOUNCEMENTS: In 1997, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of".
SFAS 121 requires recognition of impairment of long-lived assets in the event
the net book value of such assets exceeds the future undiscounted cash flows
attributable to such assets. The adoption of SFAS No. 121 had no impact on
the Company's financial position or results of operations.
The Company accounts for its long-term incentive restricted stock plan in
accordance with provisions of Accounting Principles Board Opinion No. 25 (APB
25), "Accounting for Stock Issued to Employees". In 1995, SFAS No. 123,
"Accounting for Stock Based Compensation" was issued. SFAS No. 123 provides
an alternative to APB 25 and is effective for the Company in fiscal year 1997.
The Company has elected to continue to account for its long-term incentive
plan in accordance with the provisions of APB 25. See Note 11.
In February 1997, SFAS No. 128, "Earnings Per Share", was issued and is
effective for financial statements issued for periods ending after December
15, 1997. This statement requires companies to present earnings per share on
the face of the income statement in two categories called "Basic" and
"Diluted" and requires restatement of all periods presented. The Company will
adopt SFAS No. 128 during the first quarter of 1998. Management believes the
impact on earnings per share will not be material.
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 1 -- DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES - CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In June 1997, SFAS No. 130, "Reporting Comprehensive Income", was issued.
SFAS No. 130 establishes standards for the reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements and is effective for fiscal years beginning after
December 15, 1997. The Company will adopt SFAS No. 130 in fiscal 1999. SFAS
No. 130 expands or modifies disclosures and, accordingly, will have no impact
on the Company's reported financial position, results of operations or cash
flows.
In June 1997, SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information", was issued. SFAS No. 131 establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements and reporting selected information
about operating segments in interim financial reports and is effective for
fiscal years beginning after December 15, 1997. The Company has not yet
determined the effect of SFAS No. 131 on its financial statement disclosures.
COMPARABILITY: For comparability, certain 1995 and 1996 amounts have been
reclassified where appropriate to conform with the presentation adopted in
1997.
NOTE 2--EQUITY INVESTMENTS
Equity investments includes the following:
% %
1996 Ownership 1997 Ownership
-------- --------- ------- ---------
PSH Corp. .................... $23,774 20 $30,628 20
Watkins Glen International, Inc.
(Note 3) ................... 3,178 50 -- --
Grand Prix Association of Long
Beach, Inc. ............... -- -- 3,816 7
Homestead-Miami Speedway, LLC -- -- 11,400 40
------- -------
$26,952 $45,844
======= =======
On December 13, 1996, PMI acquired property adjacent to the California
Speedway for $13.4 million, which was paid with cash of $5 million and the
issuance of 254,298 shares of common stock. As a result of the increase in
PMI's equity, the Company recorded an increase in its equity investment in PSH
Corp. of approximately $650,000 and recorded a corresponding increase in
deferred income taxes and additional paid-in capital of approximately $250,000
and $400,000, respectively.
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 2 -- EQUITY INVESTMENTS - (CONTINUED)
On May 19, 1997, PMI increased its ownership interest in North Carolina
Motor Speedway ("NCMS") to approximately 70% through the issuance of 906,542
shares of common stock valued at $30 per share. As a result of PMI's
increased investment in NCMS, the Company recorded an increase in its equity
investment in PSH Corp. of approximately $3 million and recorded a
corresponding increase in deferred income taxes and additional paid-in capital
of approximately $1.2 million and $1.8 million, respectively.
In July 1997, the Company invested $11.8 million, plus related acquisition
costs, for its 40% interest in Homestead.
On August 8, 1997, the Company invested $3.9 million, plus related
acquisition costs, for an approximately 7% interest in Long Beach. The
Company's investment exceeded its share of the underlying net assets by
approximately $1.9 million. The excess is being amortized into expense by
decreasing the equity in income of equity investments using the straight-line
method over twenty years.
The Company's investment in excess of its share of underlying net assets in
equity investments net of amortization amounted to $7.3 million and $8.8
million in 1996 and 1997, respectively. Amortization of the excess over the
Company's share of the underlying net assets for the year ended August 31,
1996, the three month period ended November 30, 1996 and the year ended
November 30, 1997 was approximately $288,000, $96,000 and $416,000,
respectively.
The Company's share of undistributed equity in the earnings from equity
investments included in retained earnings at November 30, 1996 and 1997 was
approximately $3,002,000 and $3,784,000, respectively.
Summarized financial information for the Company's affiliated companies
accounted for by the equity method (PSH Corp. and Watkins Glen as of August 31
and November 30, 1996, PSH Corp., Homestead and Long Beach as of November 30,
1997) is as follows (in thousands):
THREE MONTHS
YEAR ENDED ENDED YEAR ENDED
AUGUST 31, NOVEMBER 30, NOVEMBER 30,
(IN THOUSANDS) 1996 1996 1997
--------- ------------ -----------
Current assets ...................... $79,900 $ 62,500 $ 22,400
Noncurrent assets .................. 97,100 115,700 379,900
Current liabilities ................ 26,000 19,300 44,100
Noncurrent liabilities .............. 12,500 14,000 116,200
Minority interests ................. 52,900 55,500 84,900
Net revenues ........................ 58,900 24,800 126,800
Operating income .................... 20,500 9,200 29,200
Net income .......................... 7,500 3,800 8,900
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 3 -- ACQUISITIONS
On April 1, 1997, the Company exercised its contractual option to acquire
the 50% interest it did not already own in Watkins Glen from Corning, Inc. for
approximately $3.1 million. The transaction price represented the stock's
book value at December 31, 1996. The Company's option to purchase Corning's
interest for its book value was part of a shareholder agreement between the
two companies in place since 1988.
The Company's equity in Watkins Glen's net loss through March 31, 1997 is
included in equity in net income from equity investments at November 30, 1997.
The acquisition of the additional 50% interest was accounted for under the
purchase method. Subsequent to the acquisition on April 1, 1997, Watkins Glen
International is accounted for on a consolidated basis.
On July 14, 1997, Phoenix Speedway Corporation, a newly formed wholly-owned
subsidiary of the Company, acquired substantially all of the assets comprising
the business and motorsports complex known as "Phoenix International Raceway"
from Phoenix International Raceway, Inc., Phoenix International Raceway,
L.L.C. and Phoenix International Raceway Limited Partnership for consideration
consisting of $46.4 million in cash, notes payable of $13.8 million, and
related acquisition costs. Interest is being accrued on the note payable to
the former principal and shareholder at an annual rate of 9%.
The Phoenix acquisition has been accounted for under the purchase method of
accounting, and accordingly, the results of operations have been included in
the Company's consolidated statements of operations since the date
of acquisition. The purchase price was allocated to the assets and
liabilities acquired based on estimated fair values at the acquisition date.
The excess of the purchase price over the fair value of the net assets
acquired was approximately $40.8 million and has been recorded as goodwill,
which is being amortized on a straight-line basis over 40 years. The amount
amortized for the year ended November 30, 1997 was approximately $382,000.
The following unaudited pro forma financial information presents a summary
of consolidated results of operations as if the Phoenix transaction had
occurred as of September 1, 1995 after giving effect to certain adjustments,
including depreciation, amortization of goodwill, interest income, interest
expense on acquisition debt and related income tax effects. The pro forma
results have been prepared for comparative purposes only and do not purport to
be indicative of what would have occurred had the acquisition been made on
that date, nor are they necessarily indicative of results which may occur in
the future.
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 3 -- ACQUISITIONS - (CONTINUED)
(PRO FORMA)
(Unaudited)
YEAR ENDED THREE MONTHS ENDED YEAR ENDED
AUGUST 31, NOVEMBER 30, NOVEMBER 30,
1996 1996 1997
---------- ---------------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Total revenues $107,343 $17,449 $146,135
Net income 19,752 119 28,953
Net income per share .57 .00 .75
NOTE 4 -- INVESTMENTS
The following is a summary of short-term and long-term Investments:
NOVEMBER 30, 1996
------------------------------------------------------
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---------- ------------- ------------- --------------
(IN THOUSANDS)
HELD-TO-MATURITY SECURITIES
Municipal Securities ..... $74,642 $ -- $ 3 $ 74,639
CERTIFICATES OF DEPOSIT ..... 1,415 -- -- 1,415
---------- ------------- ------------- ------------
$76,057 $ -- $ 3 $ 76,054
========== ============= ============= ============
NOVEMBER 30, 1997
-----------------------------------------------------
GROSS GROSS ESTIMATED
UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ------------- ------------- --------------
(IN THOUSANDS)
HELD-TO-MATURITY SECURITIES
Obligations of U.S. Government
Agencies ............... $ 11,936 $ 36 $ -- $ 11,972
Municipal Securities ..... 957 -- 2 955
-------- ----- ----- ---------
12,893 36 2 12,927
CERTIFICATES OF DEPOSIT ... 11,208 -- -- 11,208
-------- ----- ----- ---------
$ 24,101 $ 36 $ 2 $ 24,135
======== ======= ======= =========
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 4 -- INVESTMENTS - (CONTINUED)
The cost and market values of held-to-maturity securities include accrued
investment income of approximately $81,000 and $12,000 at November 30, 1996
and 1997, respectively.
The cost and estimated market value of the held-to-maturity securities at
November 30, 1997, by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because the issuers of
certain securities have the right to prepay obligations.
NOVEMBER 30, 1997
-------------------------
ESTIMATED
COST MARKET VALUE
--------- ---------------
(IN THOUSANDS)
HELD-TO-MATURITY SECURITIES
Due in one year or less ................ $ 12,393 $ 12,429
Due after one year through three years 500 498
--------- ---------
$ 12,893 $ 12,927
========== =========
NOTE 5 -- FEDERAL AND STATE INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes.
Substantially all of the deferred tax liability results from the excess of
tax accelerated depreciation over depreciation for financial reporting
purposes and from different bases in the equity investments for tax and
financial reporting purposes.
Significant components of the provision for income taxes are as follows:
YEARS ENDED THREE MONTHS YEAR ENDED
AUGUST 31, ENDED NOV. 30, NOVEMBER 30,
1995 1996 1996 1997
------- ------- ---------- -----------
(IN THOUSANDS)
Current tax expense (benefit):
Federal ................... $ 8,274 $ 9,117 $ (1,140) $ 12,973
State ..................... 1,150 1,310 (3) 2,042
Deferred tax expense:
Federal ................... 1,369 1,341 352 2,181
State ..................... 261 195 50 962
--------- ------- --------- --------
PROVISION FOR INCOME TAXES $11,054 $11,963 $ (741) $ 18,158
========= ======= ========= =========
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 5 -- FEDERAL AND STATE INCOME TAXES - (CONTINUED)
The reconciliation of income tax computed at the federal statutory tax
rates to income tax expense is as follows:
YEARS ENDED THREE MONTHS YEAR ENDED
AUGUST 31, ENDED NOV. 30, NOVEMBER 30,
1995 1996 1996 1997
---- ---- ------------ ------------
% OF % OF % OF % OF
PRE-TAX PRE-TAX PRE-TAX PRE-TAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
--------- ----------- ---------- ----------- ---------- ------------ --------- ---------
(IN THOUSANDS)
Income tax computed at federal
statutory rates ................ $10,296 35.0% $11,075 35.0% $(913) (35.0%) $16,784 35.0%
State income taxes, net of
federal tax benefit ............ 884 3.0 977 3.1 26 1.0 2,053 4.3
Non-taxable share of (income) loss
from unconsolidated affiliates .. (100) (.3) (504) (1.6) 73 2.8 (238) (.5)
Officers' life insurance expense (2) -- 162 .5 17 .7 23 --
Other, net ....................... (24) (.1) 253 .8 56 2.1 (464) (.9)
---------- ---------- ---------- ---------- ------- ------- -------- -------
$11,054 37.6% $11,963 37.8% $(741) (28.4%) $18,158 37.9%
========= ========== ========== ========== ========== ========== ========= =======
NOTE 6--LINES OF CREDIT
The Company has a $10 million line of credit with a financial institution
which expires in March 1999. There were no borrowings under the Company's
credit facility at November 30, 1997.
NOTE 7 -- CAPITAL STOCK
The Company's authorized capital includes 80 million shares of Class A
Common Stock, par value $.01 ("Class A Common Stock"), 40 million shares of
Class B Common Stock, par value $.01 ("Class B Common Stock"), and one million
shares of Preferred Stock, par value $.01 (the "Preferred Stock"). The shares
of Class A Common Stock and Class B Common Stock are identical in all
respects, except for voting rights and certain dividend and conversion rights
as described below. Each share of Class A Common Stock entitles the holder to
one-fifth (1/5) vote on each matter submitted to a vote of the Company's
shareholders and each share of Class B Common Stock entitles the holder to one
(1) vote on each such matter, in each case including the election of
directors. Holders of Class A Common Stock and Class B Common Stock are
entitled to receive dividends at the same rate if and when declared by the
Board of Directors out of funds legally available therefrom, subject to the
dividend and liquidation rights of any Preferred Stock that may be issued and
outstanding. Class A Common Stock has no conversion rights. Class B Common
Stock is convertible into Class A Common Stock, in whole or in part, at any
time at the option of the holder on the basis of one share of Class A Common
Stock for each share of Class B Common Stock converted. Each share of Class B
Common Stock will also automatically convert into one share of Class A Common
Stock if, on the record date of any meeting of the shareholders, the number of
shares of Class B Common Stock then outstanding is less than 10% of the
aggregate number of shares of Class A Common Stock and Class B Common Stock
then outstanding.
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 7 -- CAPITAL STOCK - (CONTINUED)
The Board of Directors of the Company is authorized, without further
shareholder action, to divide any or all shares of the authorized Preferred
Stock into series and fix and determine the designations, preferences and
relative rights and qualifications, limitations, or restrictions thereon of
any series so established, including voting powers, dividend rights,
liquidation preferences, redemption rights and conversion privileges. The
Board of Directors has not authorized any series of Preferred Stock, and there
are no plans, agreements or understandings for the authorization or issuance
of any shares of Preferred Stock.
On November 4, 1996 the Company sold 4,000,000 shares of its newly created
Class A Common Stock in an underwritten public offering (the "Offering"). The
price to the public was $20 per share. The net proceeds to the Company from
the sale of the stock sold by the Company in the Offering were approximately
$74.3 million, after deduction of underwriting discounts and commissions and
expenses of the Offering. Approximately $7.8 million of the net proceeds of
this Offering was used to repay borrowings incurred under one of the Company's
lines of credit in September 1996. The Company used approximately $3.1
million of the net proceeds to acquire the 50% interest it did not already own
in Watkins Glen International, Inc., $43.9 million to acquire Phoenix
International Raceway and $16.2 million for equity investments in Homestead-
Miami Speedway, LLC and Grand Prix Association of Long Beach, Inc. The
remaining net proceeds were used for working capital and other general
corporate purposes, including continued improvements to and expansion of the
Company's facilities and operations. Pending such uses, the Company had
invested the net proceeds of the Offering in short-term interest-bearing
obligations.
No shares of Preferred Stock are outstanding. See also Note 1--Basis of
Presentation.
NOTE 8 -- COMMITMENTS AND CONTINGENCIES
A. In 1985, International Speedway Corporation ("ISC") established a salary
incentive plan designed to qualify under Section 401(k) of the Internal
Revenue Code. Employees of ISC and certain participating subsidiaries who have
completed 1,000 hours and 12 months continuous service are eligible to
participate in the plan. Matching contributions are made to a savings trust
(subject to certain limits) concurrent with employees' contributions. The
level of the matching contribution depends upon the amount of the employee
contribution. Employees become 100% vested upon entrance to the plan.
The contribution expense for the plan was approximately $228,000, $307,000,
$85,000 and $376,000 for the years ended August 31, 1995 and 1996, for the
three month period ended November 30, 1996 and the year ended November 30,
1997, respectively.
B. The estimated cost to complete construction in progress at November 30,
1997, is approximately $55.3 million.
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 8 -- COMMITMENTS AND CONTINGENCIES - (CONTINUED)
C. On October 21, 1996, Americrown was served with a Class Action
Complaint filed in the Circuit Court of Talladega County, Alabama by Howard
Padgett, Bill Lutz and Tommy Jones. The complaint was filed in September 1996
and alleged, among other things, that Americrown engaged in price-fixing
activities in connection with the sale of racing souvenirs and merchandise at
the Talladega Superspeedway. The complaint seeks at least $500 for each
member of the putative class (persons buying racing souvenirs at Talladega
Superspeedway since September 1992), but does not otherwise seek to recover
compensatory or punitive damages or statutory attorneys' fees. Although
Americrown attempted to remove the suit to Federal District Court, it was
remanded to the Circuit Court of Talladega County, Alabama, where discovery
and the class certification process are proceeding. Americrown disputes the
allegations and intends to defend the action fully and vigorously.
In March 1997, two purported class action companion lawsuits were filed in
the United States District Court, Northern District of Georgia, against the
Company, Americrown, and a number of other persons alleging, in substance,
that the defendants unlawfully conspired to fix prices of souvenirs and
merchandise sold to consumers in violation of federal antitrust laws. One
suit was filed by Florida residents and the other suit was filed by Georgia
residents. Both suits seek damages and injunctive relief on behalf of all
persons who purchased souvenirs or merchandise from certain vendors at any
NASCAR Winston Cup Series stock car race or supporting event in the United
States during the period 1991 to present. The two suits have been
consolidated and the court has established a timetable to consider class
certification. Discovery is proceeding. The Company and Americrown dispute
the allegations and intend to defend the actions fully and vigorously.
Management is presently unable to predict or quantify the outcome of these
matters.
NOTE 9 -- RELATED PARTY DISCLOSURES AND TRANSACTIONS
All of the racing events that take place during the Company's fiscal year
are sanctioned by various racing organizations such as the American Historic
Racing Motorcycle Association (AHRMA), the American Motorcyclist Association
(AMA), the Automobile Racing Club of America (ARCA), the Championship Cup
Series (CCS), the Federation Internationale de l'Automobile (FIA), the
Federation Internationale Motocycliste (FIM), the International Race of
Champions (IROC), the Indy Racing League (IRL), the National Association for
Stock Car Auto Racing, Inc. (NASCAR), the Sports Car Club of America (SCCA),
the Sportscar Vintage Racing Association (SVRA), the United States Auto Club
(USAC), the United States Road Racing Championship (USRRC), and the World
Karting Association (WKA). NASCAR, which sanctions some of the Company's
principal racing events, is a member of the France Family Group which controls
in excess of 55% of the outstanding stock of the Company and some members of
which serve as directors and officers. Standard NASCAR sanction agreements
require racetrack operators to pay sanction fees and prize and point fund
monies for each sanctioned event conducted. The prize and point fund monies
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 9 -- RELATED PARTY DISCLOSURES AND TRANSACTIONS - (CONTINUED)
are distributed by NASCAR to participants in the events. Prize and point fund
monies paid by the Company to NASCAR for disbursement to competitors totaled
approximately $10.1, $11.6 and $17.0 million for the years ended August 31,
1995, 1996 and November 30, 1997, respectively. For the three month period
ended November 30, 1996, monies paid by the Company to NASCAR for
disbursements to competitors totaled approximately $1.1 million.
In October 1995, the Company entered into collateral assignment
split-dollar insurance agreements covering the lives of William C. France and
James C. France and their respective spouses. Pursuant to the agreements, the
Company will advance the annual premiums of approximately $1,205,000 each year
for a period of eight years. Upon surrender of the policies or payment of the
death benefits thereunder, the Company is entitled to repayment of an amount
equal to the cumulative premiums previously paid by the Company. The Company
may cause the agreements to be terminated and the policies surrendered at any
time after the cash surrender value of the policies equals the cumulative
premiums advanced under the agreements. The Company recorded a net insurance
expense of approximately $450,000 and $38,000, representing the excess of the
premiums paid over the increase in cash surrender value of the policies
associated with these agreements for the year ended August 31, 1996, and the
three months ended November 30, 1996, respectively. During the year ended
November 30, 1997, premiums paid were approximately equal to the increase in
the cash surrender value of the policies.
Poe & Brown, Inc., the servicing agent for the split-dollar insurance
agreements, received a commission from an insurance company for its
participation in the transactions. J. Hyatt Brown, President and Chief
Executive Officer of Poe & Brown, Inc., is a Director of the Company.
NOTE 10 -- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for income taxes and interest for respective periods is
summarized as follows:
(IN THOUSANDS)
THREE MONTHS
YEARS ENDED ENDED YEAR ENDED
AUGUST 31, NOVEMBER 30, NOVEMBER 30,
1995 1996 1996 1997
---- ---- ---- ----
INCOME TAXES PAID $9,806 $10,763 $ 185 $13,652
======= ======== ====== =======
INTEREST PAID $ -- $ -- $ 69 $ 31
======= ======== ====== =======
See Note 2 for discussion of non-cash equity investment transactions.
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 11 -- LONG-TERM INCENTIVE RESTRICTED STOCK PLAN
In November 1993, the Company's Board of Directors and a majority of the
Company shareholders approved a Long-term Incentive Restricted Stock Plan (the
"Plan") for certain officers and managers of the Company. Under the Plan, up
to 750,000 shares of the Company's Class B Common Stock were authorized to be
granted as restricted stock at no cost to Plan participants. Shares awarded
under the Plan vest at the rate of 50% of each award on the third anniversary
of the award date and the remaining 50% on the fifth anniversary of the award
date. Shares awarded under the Plan generally are subject to forfeiture in the
event of termination of employment prior to the vesting dates. The Plan
participants own the shares and may vote and receive dividends, but are
subject to restrictions under the Plan. Restrictions include the prohibition
of the sale or transfer of the shares during the period prior to vesting of
the shares. The Company also has a right of first refusal to purchase any
shares of stock issued under the Plan which are offered for sale.
On January 1, 1995, 1996 and 1997, a total of 70,410, 102,075 and 98,010
restricted shares of the Company's Class B Common Stock, respectively, were
awarded to certain officers and managers. The market value of shares on
January 1, 1995, 1996 and 1997 amounted to approximately $489,000, $1,600,000,
and $1,985,000 respectively, and has been recorded as "Unearned compensation
- -- restricted stock", which is shown as a separate component of shareholders'
equity in the accompanying consolidated balance sheets. The unearned
compensation is being amortized over the vesting periods of the shares. The
total expense charged against operations during the years ended August 31,
1995, and 1996, for the three month period ended November 30, 1996 and the
year ended November 30, 1997 was approximately $318,000, $606,000, $122,000
and $1,063,000, respectively. In accordance with APB 25, the Company will
recognize a compensation charge over the vesting periods equal to the fair
market value of these shares on the date awarded. The SFAS No. 123 expense is
equal to the APB 25 expense.
In September 1996, the Company and the Board of Directors adopted a new
Long-term Incentive Plan (the "1996 Plan") for certain employees and
consultants of the Company. Under the 1996 Plan up to 1,000,000 shares of
Class A Common Stock may be granted as stock options (incentive and
nonstatutory), stock appreciation rights (SARS) and restricted stock. No
grants have been made under the 1996 Plan.
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 12 -- CHANGE IN FISCAL YEAR END
Effective December 1, 1996, the Company changed its fiscal year end from
August 31 to November 30. This resulted in a three-month transition period
commencing September 1, 1996 and ending November 30, 1996. Consequently, the
consolidated audited financial statements contain information as of and for
the three months ended November 30, 1996. The following supplemental
unaudited consolidated statement of operations and unaudited consolidated
statement of cash flows for the three months ended November 30, 1995 are
presented for comparative purposes only and were presented in the Transition
Form 10-Q filed for the period ended November 30, 1996.
Consolidated Statement of Operations
Three Months Ended
November 30, 1995
(Unaudited)
(In Thousands, Except Per Share Amounts)
----------------------------------------
Revenues $ 8,542
Expenses 10,016
-------------
Operating loss (1,474)
Interest income (net) 290
Equity in net loss from equity investments (154)
-------------
Loss before income taxes 1,338)
Income tax benefit (318)
-------------
Net loss $(1,020)
=============
Loss per share ($0.03)
=============
Weighted average number of
common shares outstanding 34,395,975
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 12 -- CHANGE IN FISCAL YEAR END -(CONTINUED)
Consolidated Statement of Cash Flows
Three Months Ended
November 30, 1995
(Unaudited)
-------------------
(In Thousands)
Net cash provided by operating activities $ 3,673
Investing Activities
Proceeds from maturities of
investments (net) 21,053
Capital expenditures (8,229)
Investment in PSH Corp. (14,975)
Other investing activities (732)
-------------
Net cash used in investing activities (2,883)
Net cash provided by financing activities --
-------------
Net increase in cash and cash equivalents 790
Cash and cash equivalents at beginning of period 7,871
-------------
Cash and cash equivalents at end of period $ 8,661
=============
INTERNATIONAL SPEEDWAY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
NOTE 13 -- QUARTERLY DATA (UNAUDITED)
The Company derives most of its income from event admissions and related
revenue from a limited number of NASCAR-sanctioned races. As a result, the
Company's business has been, and is expected to remain, highly seasonal based
on the timing of major race events. For example, the Darlington Southern
500 is traditionally held on the Sunday preceding Labor Day. Accordingly, the
revenue and expenses for that race and/or certain of its supporting events may
be recognized in either the fiscal quarter ending August 31 or the fiscal
quarter ending November 30. Partly in response to this seasonality and the
desire to better conform to the traditional racing season, the Company changed
its fiscal year end from August 31 to November 30 effective December 1, 1996.
This resulted in a three-month transition period commencing September 1, 1996
and ending November 30, 1996.
Historically, the Company has incurred net losses in the fiscal quarter
ending November 30, and achieved its highest net income in the fiscal quarter
ending February 28. In fiscal 1997, the Company had net income for the
quarter ended November 30. This was primarily due to the acquisition of
Phoenix, which resulted in the addition of a NASCAR Winston Cup Series event
in the quarter ending November 30, and the date change for the Company's
DieHard 500 race, which moved the event from the quarter ended August 31 to
the quarter ended November 30.
The following table presents certain unaudited financial data for each
fiscal quarter of fiscal 1996 and fiscal 1997 and for the transition quarter
ended November 30, 1996 (in thousands, except per share amounts):
FISCAL QUARTER ENDED TRANSITION QUARTER
----------------------------------------------------------------------------------
NOVEMBER 30, FEBRUARY 29, MAY 31, AUGUST 31, NOVEMBER 30,
1995 1996 1996 1996 1996
--------------- --------------- ---------- ------------- ------------------
Total revenues ............ $ 8,542 $40,277 $24,176 $23,047 $10,496
Operating income (loss) ... (1,474) 20,338 6,230 4,237 (2,565)
Net income (loss) ......... (1,020) 12,089 3,817 4,795 (1,867)
Earnings (loss) per share . (.03) .35 .11 .14 (.05)
FISCAL QUARTER ENDED
----------------------------------------------------------------------------------
FEBRUARY 28, MAY 31, AUGUST 31, NOVEMBER 30,
1997 1997 1997 1997
--------------- ---------- ------------- ------------------
Total Revenues ............ $51,866 $29,630 $ 33,106 $26,772
Operating Income .......... 27,103 7,075 8,762 1,961
Net Income ................ 17,475 4,486 5,985 1,850
Earnings per share ........ .45 .12 .16 .05
International Speedway Corporation
Schedule II Valuation and Qualifying Accounts
Additions
Balance Charged to Balance
Beginning Costs and Deductions at End
Description of Period Expenses (A) Period
_____________________________________________
(Thousands of Dollars)
For the year ended
November 30, 1997
Allowance for
doubtful accounts $ 35 $ 170 $ 105 $ 100
For the three months ended
November 30, 1996
Allowance for
doubtful accounts $ 35 $ (2) $ (2) $ 35
For the year ended
August 31, 1996
Allowance for
doubtful accounts $ 35 $ 52 $ 52 $ 35
For the year ended
August 31, 1995
Allowance for
doubtful accounts $ 35 $ 62 $ 62 $ 35
(A) Uncollectible accounts written off, net of recoveries.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers and directors of the Company are as follows:
NAME AGE POSITION WITH THE COMPANY
- -----------------------------------------------------------------------------------------
William C. France 64 Chairman of the Board, Chief Executive Officer and Director
James C. France 53 President, Chief Operating Officer and Director
Lesa D. Kennedy 36 Executive Vice President and Director
H. Lee Combs 44 Senior Vice President--Operations and Director
Robert E. Smith 65 Vice President--Administration
Susan G. Schandel 34 Treasurer and Chief Financial Officer
Gregory J. Sullivan 42 Vice President-Marketing
John E. Graham, Jr. 49 Vice President
W. Grant Lynch, Jr. 44 Vice President
James H. Hunter 58 Vice President
John R. Saunders 41 Vice President
W. Garrett Crotty 34 Secretary and General Counsel
J. Hyatt Brown 60 Director
John R. Cooper 65 Director
Robert R. Dyson 51 Director
James H. Foster 70 Director
Brian Z. France 35 Director
Christy F. Harris 52 Director
Raymond K. Mason, Jr. 42 Director
Edward H. Rensi 53 Director
Lloyd E. Reuss 61 Director
Chapman Root, II 48 Director
Thomas W. Staed 66 Director
The Company's Articles provide that the Board of Directors be divided into
three classes, with regular three year staggered terms. Messrs. William C.
France, Combs, Foster, Harris and Root will hold office until the annual
meeting of shareholders to be held in 1998, Messrs. James C. France, Cooper,
Brian Z. France, Mason and Reuss will hold office until the annual meeting of
shareholders to be held in 1999, and Ms. Kennedy and Messrs. Brown, Dyson,
Rensi and Staed will hold office until the annual meeting of shareholders to
be held in 2000.
William C. France and James C. France are brothers. Lesa D. Kennedy and
Brian Z. France are the children of William C. France. There are no other
family relationships among the Company's executive officers and directors.
Mr. William C. France, a director since 1958, has served as Chairman of the
Board of the Company since 1987 and as Chief Executive Officer since 1981. Mr.
France also serves as a director of Penske Motorsports.
Mr. James C. France, a director since 1970, has served as President and
Chief Operating Officer of the Company since 1987.
Ms. Lesa D. Kennedy, a director since 1984, was appointed Executive Vice
President of the Company in January 1996. Ms. Kennedy served as the Company's
Secretary from 1987 until January 1996 and served as its Treasurer from 1989
until January 1996.
Mr. H. Lee Combs, a director since 1987, was appointed the Company's Senior
Vice President-Operations in January 1996. Mr. Combs served as a Vice
President and the Company's Chief Financial Officer from 1987 until such time.
He also serves as a director of Penske Motorsports and Grand Prix Association
of Long Beach, Inc.
Mr. Robert E. Smith has served as Vice President--Corporate Administration
of the Company for more than five years.
Ms. Susan G. Schandel was appointed the Company's Treasurer and Chief
Financial Officer in January 1996. From November 1992 until such time, Ms.
Schandel served as the Company's Controller.
Mr. Gregory J. Sullivan, appointed the Company's Vice President-Marketing
in November 1994, joined the Company in September 1994. Prior to joining the
Company, Mr. Sullivan was employed by Kraft Foods (a division of Phillip
Morris) for more than five years, where he most recently served as Director of
Marketing Services for Kraft's Maxwell House division.
Mr. John E. Graham, Jr., appointed as a Vice President in November 1994,
joined the Company as President of Daytona International Speedway in September
1994. Prior to joining the Company, Mr. Graham was employed by First Union
National Bank of Florida for more than five years, where he most recently
served as President of First Union National Bank of Volusia and Flagler
Counties.
Mr. W. Grant Lynch, Jr. has served as a Vice President and as President of
Talladega Superspeedway since joining the Company in November 1993. Prior to
such time, Mr. Lynch was employed by R.J. Reynolds Tobacco Company, Sports
Marketing Division, where from 1990 until 1993 he served as Senior Operations
and Public Relations Manager for the Winston Cup Racing Program.
Mr. James H. Hunter has served as a Vice President and as President of
Darlington Raceway since joining the Company in November 1993. Prior to
joining the Company, Mr. Hunter served as NASCAR's Vice President of
Administration and Marketing for more than five years.
Mr. John R. Saunders has served as a Vice President since 1997 and has been
President of Watkins Glen International since 1983.
Mr. W. Garrett Crotty has served as Secretary and General Counsel since
1996. Prior to that time he had been in the private practice of law for more
than five years.
Mr. J. Hyatt Brown, a director since 1987, serves as the President and
Chief Executive Officer of Poe & Brown, Inc. and has been in the insurance
business with Brown & Brown, Inc., its predecessor, since 1959. Mr. Brown also
serves as a director of Rock Tenn Co, SunTrust Banks, Inc., BellSouth
Corporation, and FPL Group, Inc.
Mr. John R. Cooper, a director since 1987, served as Vice President -
Corporate Development of the Company from December 1987 until July 1994. Since
January 1996, Mr. Cooper has served as a special project facilitator for the
Company.
Mr. Robert R. Dyson, a director since January 1997, has served as Chairman
and Chief Executive Officer of the Dyson-Kissner-Moran Corporation (DKM) since
November 1992.
Mr. James H. Foster, a director since 1968, served as the Company's Senior
Vice President - Special Projects from January 1994 until his retirement in
1997. Mr. Foster served as President of Daytona International Speedway from
1988 until 1994.
Mr. Brian Z. France, a director since 1994, has served as NASCAR's Vice
President of Marketing and Corporate Communications since December 1992 and as
the Company's Manager--Group Projects since February 1994. From 1983 until
such time, Mr. France served in a number of other capacities with NASCAR,
including Winston Racing Series Administrative Assistant and National Tour
Director.
Mr. Christy F. Harris, a director since 1984, has been engaged in the
private practice of business and commercial law with Harris, Midyette, Geary,
Darby, & Morrell, P.A. for more than twenty years.
Mr. Raymond K. Mason, Jr., a director since 1981, has served as Chairman
and President of American Banks of Florida, Inc., Jacksonville, Florida, since
1978.
Mr. Lloyd E. Reuss, a director since January 1996, served as President of
General Motors Corporation from 1990 until his retirement in January 1993. Mr.
Reuss also serves as a director of Handleman Co., Detroit Mortgage and Realty,
Co. and United States Sugar Company.
Mr. Edward H. Rensi, a director since January 1997, is an executive
consultant with McDonald's Corporation. He served as President and Chief
Executive Officer of McDonald's USA from 1991 until 1997. He is a Director of
McDonald's Corporation and Snap-On Incorporated.
Mr. Chapman Root, II, a director since 1992, has served as President of the
Root Company, a private investment company, since 1989. Mr. Root also serves
as a director of First Financial Corp. and Terre Haute First National Bank.
Mr. Thomas W. Staed, a director since 1987, has served as President of
Oceans Eleven Resorts, Inc., a hotel/motel business, for more than five years.
DIRECTOR COMPENSATION
The Company pays each non-employee director a monthly retainer of $500, a
$1,000 fee for each meeting of the Board of Directors attended and a $500 fee
for each Board committee meeting attended. The aggregate retainers and fees
paid to directors with respect to fiscal 1997 services totaled $115,500. The
Company also reimburses directors for all expenses incurred in connection with
their activities as directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto,
and written representations furnished to the Company, W. Garrett Crotty has
been identified as failing to file on a timely basis reports required by
section 16(a) of the Exchange Act during the fiscal year ended November 30,
1997. Mr. Crotty had one transaction which should have been reported on Form
4 which was reported late on Form 5.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid by the Company,
for services rendered during the last three fiscal years, to the Company's
Chief Executive Officer and the Company's other four most highly compensated
executive officers during fiscal 1997 (collectively the "Named Officers").
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- ----------------
NAME AND FISCAL RESTRICTED ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS STOCK AWARDS(1) COMPENSATION(2)
- ------------------------- --------- ----------- ----------- ---------------- ----------------
William C. France 1997 $330,538 $150,282 $ 0 $769,351
Chairman and Chief 1996 $278,707 $130,679 $ 0 $771,368
Executive Officer 1995 $241,981 $126,860 $ 0 $ 6,015
James C. France 1997 $264,644 $ 96,231 $ 0 $474,575
President and Chief 1996 $224,778 $ 83,679 $ 0 $473,923
Operating Officer 1995 $200,121 $ 83,140 $ 0 $ 12,406
Lesa D. Kennedy 1997 $213,488 $ 75,837 $372,398 $ 8,355
Executive Vice President 1996 $173,553 $ 69,223 $149,695 $ 8,648
1995 $109,608 $ 32,573 $ 53,168 $ 8,482
H. Lee Combs 1997 $208,335 $ 69,672 $372,398 $ 12,373
Senior Vice President-- 1996 $172,226 $ 72,179 $172,020 $ 11,102
Operations 1995 $116,972 $ 35,218 $ 60,986 $ 9,581
John E. Graham 1997 $198,125 $ 64,863 $235,406 $ 10,721
Vice President 1996 $190,922 $ 65,806 $293,750 $ 7,724
1995 $180,462 $110,228 $ 0 $ 1,607
- ---------------------
(1) Reflects the aggregate market value of shares awarded under the Company's
1994 Long-Term Incentive Plan (calculated as of the date of the award).
The indicated awards were made in January with respect to services
rendered in the prior fiscal year. See Note 11 of Notes to the Company's
Consolidated Financial Statements.
(2) The compensation reported in this column consists of (i) payments for
insurance, including premium payments and related expense for
split-dollar and other life insurance, accidental death and dismemberment
insurance and group health insurance, (ii) medical expense
reimbursements, and (iii) contributions to the Company's 401(k) plan. The
amounts applicable to each Named Officer for each category for fiscal
1997 are as follows: William C. France ($768,351, $1,000 and $0,
respectively); James C. France ($466,500, $1,675 and $6,400,
respectively); Lesa D. Kennedy ($1,955, $0 and $6,400, respectively); H.
Lee Combs ($1,955, $4,018 and $6,400, respectively); and John E. Graham
($1,955, $2,366 and $6,400, respectively). Pursuant to the Company's
split-dollar life insurance arrangements, the premiums will be repaid to
the Company in future periods. See Note 9 of Notes to the Company's
Consolidated Financial Statements.
COMMITTEE REPORT ON EXECUTIVE OFFICER COMPENSATION
The Company's Executive Officer Compensation is overseen by the
Compensation Committee of the Board of Directors which is composed entirely of
independent directors.
PHILOSOPHY AND POLICIES. Executive Officer Compensation is structured and
administered to offer competitive compensation based on the Executive
Officer's contribution and personal performance in support of the Company's
strategic plan and business mission.
In 1989, based upon recommendation of the Compensation Committee, the
Company retained TPF&C to perform a salary study to determine benchmark salary
ranges. TPF&C made recommendations to the Company concerning salary ranges and
a bonus structure. The recommendations were followed in establishing the
corporate compensation plan which is reviewed and reevaluated every year. As
part of the overall compensation plan the Company's Executive Officers are
grouped in structured pay grades based upon job responsibility and
description. Each grade has an established range for annual salary. The
salary ranges for each grade were originally established based upon the TPF&C
salary study and have been reevaluated and adjusted annually by the
Compensation Committee based upon changes in market conditions and Company
performance factors.
CORPORATE PERFORMANCE MEASURES USED TO
DETERMINE EXECUTIVE OFFICER COMPENSATION.
Based on Company performance (determined subjectively by the Committee in
accordance with the sound business judgment of its members after consideration
of earnings per share, revenue growth and established salary ranges, the
Committee established a total pool of dollars which was used to provide for
increases in annual salary compensation to all employees including the
Executive Officers other than the Chairman/CEO and President/COO. The
Compensation Committee recommended a proposed salary for the Chairman/CEO and
President/COO to the entire Board of Directors (other than the Chairman/CEO
and President/COO) which approved the salaries as recommended.
SALARY COMPENSATION. All other Executive Officers' annual salaries were
set by the Chairman/CEO and President/COO who were given the authority to set
all salaries other than their own so long as (1) the total pool of available
dollars allocated for annual salary compensation for Executive Officers was
not exceeded and (2) provided each Executive Officer's annual salary was
within the established range for the salary grade. In setting Executive
Officer salaries the Chairman/CEO and President/COO considered (1) Company
performance as measured against management goals approved by the Board of
Directors, (2) personal performance in support of Company goals as measured by
annual evaluation criteria, and (3) intangible factors and criteria such as
payments by competitors for similar positions although no particular weighting
of the factors or formula was used.
In recommending the annual salaries of the Chairman/CEO and President/COO,
the Committee considered similar criteria as well as the Committee members'
assessment of the Company's financial size and condition.
INCENTIVE COMPENSATION. The Company has an Annual Incentive Compensation
Plan for Management in which the Executive Officers participate. As a result
Executive Officer Compensation is significantly at risk. Incentive
compensation for Executive Officers can be as high as 29% of total annual
compensation.
Each Executive Officer is assigned a target bonus opportunity based on
corporate and personal goals for the year. The actual bonus for each
Executive Officer will range from 0% to 125% of the target depending upon
results of corporate and personal performance during the year. The current
corporate financial measurements are earnings per share and revenue growth.
These may vary from year to year as established by the Compensation Committee.
Personal performance factors are based on individual (functional) objectives
and are tailored for each Executive Officer. A portion of each Executive
Officer's incentive award will be based upon the Chairman/CEO and
President/COO's discretionary judgment of the individual's overall performance
during the plan year.
The incentive compensation for the Chairman/CEO and President/COO is,
again, proposed by the Compensation Committee and presented to the full Board
of Directors for ratification.
LONG TERM INCENTIVE PLAN COMPENSATION
1994 LONG-TERM INCENTIVE PLAN. In 1993, based upon recommendation of
the Compensation Committee, the Company retained the HayGroup to assist in the
design of a long term incentive compensation plan for specified key employees,
which is known as the "International Speedway Corporation 1994 Long-Term
Incentive Plan" (the "1994 Plan"). The 1994 Plan was recommended by the
Compensation Committee of the Board of Directors, unanimously approved by all
outside directors and ratified by the entire Board of Directors on November
17, 1993. It was approved by the written consent of the holders of a majority
of the outstanding shares of the Company on the same date. The purpose of the
1994 Plan was to attract and retain qualified and competent executives by
providing significant opportunities for capital accumulation and to enhance
the growth and profitability of International Speedway Corporation (the
"Company") by focusing on long-term goals and creation of increases in
shareholder value. The 1994 Plan set aside restricted stock in the amount of
50,000 old pre 15-1 split shares of common stock for its implementation, which
were converted, on the 15-1 basis, into 750,000 shares of Class B Common
Stock. Awards of restricted shares of stock were assigned to officers and key
employees who were capable of having a significant impact on the performance
of the Company. The amount of shares for each initial participant was based
primarily on an analysis and recommendations by compensation specialists of
the HayGroup. Awards were granted based upon Company performance in fiscal
years 1994, 1995 and 1996. The ability to issue additional shares under the
1994 Plan expired after the grants based on fiscal 1996 results. The
restricted shares were granted to participants each year based upon the
Company's performance as measured against annual financial goals established
in advance by the Board of Directors. Several aspects of the 1994 Plan and
its implementation are subject to the discretion of the Compensation
Committee.
The shares which were granted under the 1994 Plan are initially restricted
and do not immediately vest to the participant, but, instead carry a continued
employment restriction of 3 years on 50% of the grant and 5 years on the other
50% of the grant. If employment ends prior to the expiration of the vesting
period for reasons acceptable to the Compensation Committee (death,
disability, retirement, etc.) the Company may determine to vest all or a
portion of the unvested and unearned restricted shares. Termination of
employment for any other reason will result in forfeiture of all unvested and
unearned shares.
Prior to vesting the participant may vote the shares and receive dividends
on the restricted shares as granted. Prior to vesting the certificates for
the restricted shares are held in escrow by the Company. After vesting the
certificates for the restricted shares will be delivered to the participant.
The Company has the right of first refusal to buy any stock issued (and
vested) under the 1994 Plan which any participant wishes to sell.
1996 LONG-TERM INCENTIVE PLAN
The Company's 1996 Long-term Incentive Plan (the "1996 Plan") was adopted
by the Board of Directors in September 1996. The purpose of the 1996 Plan is
to attract and retain key employees and consultants of the Company, to provide
an incentive for them to achieve long-range performance goals, and to enable
them to participate in the long-term growth of the Company.
The 1996 Plan authorizes the grant of stock options (incentive and
nonstatutory), stock appreciation rights ("SARs") and restricted stock to
employees and consultants of the Company capable of contributing to the
Company's performance. The Company has reserved an aggregate of 1,000,000
shares (subject to adjustment for stock splits and similar capital changes) of
Class A Common Stock for grants under the 1996 Plan. Incentive Stock Options
may be granted only to employees eligible to receive them under the Internal
Revenue Code of 1996, as amended.
The Board of Directors has appointed the Compensation Committee (the
"Committee") to administer the 1996 Plan. Awards under the 1996 Plan will
contain such terms and conditions consistent with the 1996 Plan as the
Committee in its discretion approves.
The Committee has discretion to administer the 1996 Plan in the manner which
it determines, from time to time, is in the best interest of the Company. For
example, the Committee will fix the terms of stock options, SARs and
restricted stock grants and determine whether, in the case of options and
SARs, they may be exercised immediately or at a later date or dates. Awards
may also be granted subject to conditions relating to continued employment
and restrictions on transfer. In addition, the Committee may provide, at the
time an award is made or at any time thereafter, for the acceleration of a
participant's rights or cash settlement upon a change in control of the
Company. The terms and conditions of awards need not be the same for each
participant. The foregoing examples illustrate, but do not limit, the manner
in which the Committee may exercise its authority in administering the 1996
Plan. In addition, all questions of interpretation of the 1996 Plan will be
determined by the Committee.
The first awards under the 1996 Plan will be made in April 1998, based upon
fiscal 1997 results. The amount of the awards are based upon the Company's
performance as measured against annual financial goals established in advance
by the Board of Directors. These awards will be restricted shares of Class A
Common Stock and will be initially restricted and will not immediately vest to
the participant, but, instead carry a continued employment restriction of 3
years on 50% of the grant and 5 years on the other 50% of the grant. If
employment ends prior to the expiration of the vesting period for reasons
acceptable to the Compensation Committee (death, disability, retirement, etc.)
the Company may determine to vest all or a portion of the unvested and
unearned restricted shares. Termination of employment for any other reason
will result in forfeiture of all unvested and unearned shares.
Prior to vesting the participant may vote the shares and receive dividends
on the restricted shares as granted. Prior to vesting the certificates for
the restricted shares will be held in escrow by the Company. After vesting the
certificates for the restricted shares will be delivered to the participant.
The Company has the right of first refusal to buy any stock issued (and
vested) under the 1996 Plan which any participant wishes to sell.
COLLATERAL ASSIGNMENT SPLIT-DOLLAR INSURANCE
In October 1995, based upon evaluation and recommendation of the
Compensation Committee, the Company entered into collateral assignment split-
dollar insurance agreements covering the lives of the Chairman/CEO, the
President/COO and their respective spouses. Pursuant to the agreements, the
Company will advance annual premiums of approximately $1,205,000 each year for
a period of eight years. Upon surrender of the policies or payment of the
death benefits thereunder, the Company is entitled to the repayment of an
amount equal to the cumulative premiums paid by the Company. Although
Securities and Exchange Commission (SEC) rules require disclosure of the
entire premium advanced by the Company in the Summary Compensation Table, the
Compensation Committee determined the compensation aspect of the plan was
actually less than the total premium because of the repayment requirement and
represented reasonable and appropriate compensation to the covered executives,
when considered in light of their total compensation package.
CHAIRMAN/CEO COMPENSATION BASES. The Compensation Committee determined a
15% increase in Chairman/CEO compensation was appropriate in light of the
continued growth in earnings per share in 1996.
Thomas W. Staed
Chapman J. Root, II
Lloyd E. Reuss
PERFORMANCE GRAPH
The rules of the Securities and Exchange Commission ("SEC") require the
Company to provide a line graph covering at least the last five fiscal years
and comparing the yearly percentage change in the Company's total shareholder
return on common stock with the cumulative total return of a broad equity
index assuming reinvestment of dividends and the cumulative total return,
assuming reinvestment of dividends, of a published industry or
line-of-business index; peer issuers selected in good faith; or issuers with
similar market capitalization. The graph below compares the cumulative total
five year return of the Company's common stock (upon the assumption that an
original $100 investment was made in pre-split common stock which
automatically converted to Class B Common Stock on November 4, 1996) with that
of the index of all NASDAQ stocks and with the 40 NASDAQ issues listed in SIC
codes 7900-7999, which encompasses service businesses in the amusement, sports
and recreation industry, which includes indoor operations which are not
subject to the impact of weather on operations and pari-mutual and other
wagering operations. The Company conducts large outdoor sporting and
entertainment events which are subject to the impact of weather, and is not
involved in pari-mutual or other wagering. The stock price shown has been
estimated from the high and low prices for each quarter for which the close is
not available. Because of the unique nature of the Company's business and the
fact that only short-term public information is available concerning a limited
number of companies involved in the same line of business, and no public
information is available concerning other companies in that line of business,
the Company does not believe that the information presented below is
meaningful.
COMPARISON OF FIVE YEAR CUMULATIVE RETURN AMONG
INTERNATIONAL SPEEDWAY CORP., NASDAQ Market Index and NASDAQ SIC 7900 Index
[The line graph on the information statement furnished to shareholders depicts
the plotting of the following information.]
Measurement Period ISC NASDAQ NASDAQ
(Fiscal Year Covered) Market SIC 7900
Index Index
Measurement Pt - 11/30/92 $100.00 $100.00 $100.00
FYE* 11/30/93 $131.84 $115.80 $184.90
FYE* 11/30/94 $135.59 $116.00 $110.60
FYE* 11/30/95 $324.64 $165.40 $ 89.30
FYE* 11/30/96 $406.87 $202.60 $ 79.80
FYE 11/30/97 $418.11 $252.30 $ 97.90
* Adjusted to reflect current fiscal year end for comparability purposes.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of January 8, 1998 with
respect to the beneficial ownership of the Company's outstanding Class B
Common Stock by (i) each person known by the Company to be the beneficial
owner of more than 5% of the Class B Common Stock, (ii) each director or Named
Officer of the Company who beneficially owns any Class B Common Stock, and
(iii) all directors and executive officers of the Company as a group. As
described in the notes to the table, voting and/or investment power with
respect to certain shares of Common Stock is shared by the named individuals.
Consequently, such shares may be shown as beneficially owned by more than one
person.
PERCENTAGE OF
NUMBER OF SHARES OF COMMON STOCK PERCENTAGE OF COMMON STOCK COMBINED VOTING
NAME OF BENEFICIALLY OWNED (2) BENEFICIALLY OWNED POWER OF ALL
BENEFICIAL ----------------------------------- -------------------------------- CLASSES OF
OWNER (1) CLASS A CLASS B TOTAL CLASS A CLASS B TOTAL COMMON STOCK
- ------------------------- ----------------------------------- -------------------------------- --------------------
France Family Group(3) . 12,100 21,158,081 21,170,181 * 63.91% 55.00% 61.90%
James C. France(4) ...... 3,000 15,329,788 15,332,788 * 46.30% 39.84% 44.85%
William C. France(5) .... 1,600 15,327,568 15,329,168 * 46.30% 39.83% 44.84%
Stephen L. Farley(6)..... 434,100 0 434,100 8.07% * 1.13% *
Lesa D. Kennedy(7) ...... 3,000 383,355 386,355 * 1.16% 1.00% 1.12%
Labrador Partners, LP(8). 383,000 0 383,000 7.12% * 1.00% *
Raymond K. Mason, Jr.(9). 0 346,740 346,740 * 1.05% * 1.01%
TCW Group, Inc(10)....... 336,600 0 336,300 6.25% * * *
Brian Z. France.......... 0 261,740 286,740 * * * *
James H. Foster(11) ..... 23,205 176,007 199,212 * * * *
H. Lee Combs............. 1,500 52,428 53,928 * * * *
Thomas W. Staed(12)...... 2,450 45,000 47,450 * * * *
Robert R. Dyson(13)...... 5,000 29,500 34,500 * * * *
James H. Hunter.......... 150 32,293 32,443 * * * *
John E. Graham, Jr....... 1,000 30,375 31,375 * * * *
W. Grant Lynch, Jr....... 1,500 25,468 29,968 * * * *
John R. Saunders......... 500 20,055 20,555 * * * *
Chapman J. Root, II ..... 2,500 13,500 16,000 * * * *
Susan G. Schandel........ 1,500 13,245 14,745 * * * *
Robert E. Smith(14) ..... 1,500 11,173 12,673 * * * *
J. Hyatt Brown(15) ...... 2,400 9,000 11,400 * * * *
Gregory J. Sullivan...... 1,500 8,775 10,275 * * * *
John R. Cooper .......... 5,000 1,500 6,500 * * * *
W. Garrett Crotty(16).... 1,500 4,495 5,995 * * * *
Lloyd E. Reuss........... 5,000 0 5,000 * * * *
Christy F. Harris(17).... 4,600 150 4,750 * * * *
Edward H. Rensi.......... 0 1,500 1,500 * * * *
All directors and
executive officers
as a group
(23 persons)(18) ...... 68,405 21,779,160 21,847,565 1.27% 65.78% 56.76% 63.75%
- ---------------------
* Less than 1%.
(1) Unless otherwise indicated the address of each of the beneficial owners
identified is c/o the Company, 1801 West International Speedway
Boulevard, Daytona Beach, Florida 32114.
(2) Unless otherwise indicated, each person has sole voting and investment
power with respect to all such shares.
(3) Reflects the aggregate of 7,600 Class A and 20,312,861 Class B shares
indicated in the table as beneficially owned by James C. France,
William C. France, Lesa D. Kennedy and Brian Z. France, as well as
4,500 Class A and 845,220 Class B shares held of record by the adult
children of James C. France. See footnotes (4), (5) and (7).
(4) Includes (i) 1,500 Class A and 304,725 Class B shares held of record by
Sharon M. France, his spouse, (ii) 9,115,125 Class B shares held of
record by Western Opportunity Limited Partnership ("Western
Opportunity"), (iii) 3,763,750 Class B shares held of record by Carl
Investment Limited Partnership ("Carl"), and (iv) 1,874,465 Class B
shares held of record by White River Investment Limited Partnership
("White River"). James C. France is the sole shareholder and director
of (x) Principal Investment Company, one of the two general partners of
Western Opportunity, (y) Quaternary Investment Company, the general
partner of Carl, and (z) Secondary Investment Company, one of the two
general partners of White River. Also see footnote (5). Does not include
an aggregate of 4,500 Class A and 845,220 Class B shares held of record
by the adult children of James C. France.
(5) Includes (i) 600 Class A and 304,725 Class B shares held of record by
Betty Jane France, his spouse, (ii) 9,115,125 Class B shares held of
record by Western Opportunity, (iii) 3,763,750 Class B shares held of
record by Polk City Limited Partnership ("Polk City"), and (iv)
1,874,465 Class B shares held of record by White River. William C.
France is the sole shareholder and director of each of (x) Sierra
Central Corp., one of the two general partners of Western Opportunity,
(y) Boone County Corporation, the general partner of Polk City, and (z)
Cen Rock Corp., one of the two general partners of White River. Also
see footnote (4). Does not include the aggregate of 3,000 Class A and
645,095 Class B shares shown in the table as beneficially owned by Lesa
D. Kennedy and Brian Z. France, adult children of William C. France.
(6) Mr. Farley's address is 655 Third Avenue, Suite 2520, New York, New York
10017. The shares shown include 383,000 Class A shares held by Labrador
Partners, L.P. and 51,100 Class A shares held by Farley Capital L.P.
(7) Includes (i) 1,500 Class A and 17,295 Class B shares held of record by
Ms. Kennedy as custodian for her minor son, Benjamin, and (iii) 15,750
Class B shares held of record as joint tenants with Bruce S. Kennedy,
her spouse.
(8) This owner's address is 655 Third Avenue, Suite 2520, New York, New York
10017.
(9) Includes 150,000 Class B shares owned by American Banks of Florida, Inc.
(Mr. Mason serves as President and a director of, and has an 18%
interest in, this entity), as to which Mr. Mason disclaims beneficial
ownership.
(10) This owner's address is 865 S. Figueroa St., Los Angeles, CA 90017.
(11) Includes (i) 75,000 Class B shares held of record by Mr. Foster as
trustee, and (ii) 65,000 Class B shares held of record by Barbara S.
Foster, his spouse, as trustee, as to which Mr. Foster disclaims
beneficial ownership.
(12) Owned jointly with Barbara Staed, his spouse.
(13) Includes 5,000 Class A shares held in the Robert R. Dyson 1987 Family
Trust.
(14) Includes 795 Class B shares held of record as joint tenants with his
spouse.
(15) Held of record as joint tenants with Cynthia R. Brown, his spouse.
(16) Includes 100 Class B shares held by Mr. Crotty as Trustee for his son
and 1,500 shares held by Bellows Falls Investment, Inc.
(17) Includes (i) 500 Class A shares held by M. Dale Harris, his spouse,
(ii) 1,500 Class A shares held by Mr. Harris as trustee of The Harris,
Midyette, Geary, Darby, & Morrell, P.A. Profit Sharing Plan and Trust,
(iii) 100
Class A shares held by Mr. Harris as Trustee of the Harris Children's
Trust as to which Mr. Harris disclaims beneficial ownership.
(18) See footnotes (4),(5), (7), (9) and (11) through (17).
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
NASCAR, which sanctions most of the Company's major racing events, is
controlled by William C. France and James C. France. Standard NASCAR sanction
agreements require racetrack operators to pay various monies to NASCAR for
each sanction event conducted. Included are sanction fees and prize and point
fund monies. The prize and point fund monies are distributed by NASCAR to
participants in the events. The aggregate NASCAR sanction fees and prize and
point fund monies paid by the Company with respect to fiscal 1995, 1996 and
1997 were $11.8 million, $13.9 million, and $20.6 million, respectively.
In addition, NASCAR and the Company share a variety of expenses in the
ordinary course of business. NASCAR pays rent to the Company for office space
based upon estimated fair market lease rates for comparable facilities. NASCAR
also reimburses the Company for 50% of the compensation paid to personnel
working in the Company's legal and risk management departments, as well as 50%
of the compensation expense associated with receptionists and the Company's
archive departments. The Company's payments to NASCAR for MRN Radio's
broadcast rights to Craftsman Truck Series races represents an agreed-upon
percentage of the Company's advertising revenues attributable to such race
broadcasts. NASCAR's reimbursement for use of the Company's mail room,
graphics and publications departments, and the Company's reimbursement of
NASCAR for use of corporate aircraft, is based on actual usage. The aggregate
amount paid by the Company to NASCAR for shared expenses, net of the amounts
received from NASCAR for shared expenses, totaled approximately $71,000,
$359,000, and $720,000 during fiscal 1995, 1996 and 1997, respectively. The
Company strives to ensure, and management believes that, the terms of the
Company's transactions with NASCAR are no less favorable to the Company than
could be obtained in arms'-length negotiations.
J. Hyatt Brown, a director of the Company, serves as President and Chief
Executive Officer of Poe & Brown, Inc. ("Poe"). Poe has received commissions
for serving as the Company's insurance broker for several of the Company's
insurance policies, including its property and casualty policy, certain
employee benefit programs and the split-dollar arrangements established for
the benefit of William C. France, James C. France and their respective
spouses. The aggregate commissions received by Poe in connection with Company
policies were approximately $80,000, $294,000 and $166,000 during fiscal 1995,
1996 and 1997, respectively.
All of these transactions, payments and exchanges are considered normal
in the ordinary course of business. Transactions, payments and exchanges
similar to all of the above are planned during the Company's current fiscal
year.
PART IV
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
(a) Documents filed as a part of this report
1. Consolidated Financial Statements listed below:
Consolidated Balance Sheets
- November 30, 1996 and 1997
Consolidated Statements of Income
- Years ended August 31, 1995 and 1996,
three months ended November 30, 1996 and
year ended November 30, 1997
Consolidated Statements of Shareholders' Equity
- Years ended August 31, 1995 and 1996,
three months ended November 30, 1996 and
year ended November 30, 1997
Consolidated Statements of Cash Flows
- Years ended August 31, 1995 and 1996,
three months ended November 30, 1996 and
year ended November 30, 1997
Notes to Consolidated Financial Statements
2. Consolidated Financial Statement Schedules listed below:
II - Valuation and qualifying accounts
All other schedules are omitted since the required information is not present
or is not present in amounts sufficient to require submission of the schedule,
or because the information required is included in the financial statements
and notes thereto.
3. Exhibits:
Exhibit
Number Description of Exhibit Filing Status
1. (3)(i) - Articles of Incorporation filed herewith
2. (3)(ii) - By-Laws filed herewith
3. (10) - Daytona Property Lease filed herewith
4. (10) - 1994 Long-Term Incentive Plan* filed herewith
5. (10) - 1996 Long-Term Incentive Plan* filed herewith
6. (10) - Split-Dollar Agreement (WCF)* filed herewith
7. (10) - Split-Dollar Agreement (JCF)* filed herewith
8. (22) - Subsidiaries of the Registrant filed herewith
9. (27) - Financial Data Schedule filed herewith
* Compensatory Plan required to be filed as an exhibit pursuant to Item 14(c).
(b) Reports on Form 8-K
During the fourth quarter of the period covered by this report the Company
filed no reports on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
INTERNATIONAL SPEEDWAY CORPORATION
DATE: February 18, 1998 /s/ William C. France
William C. France, Chairman,
Chief Executive Officer & Director
DATE: February 18, 1998 /s/ Susan G. Schandel
Susan G. Schandel
Chief Financial Officer
DATE: February 18, 1998 /s/ James C. France
James C. France
Director
DATE: February 18, 1998 /s/ Lesa D. Kennedy
Lesa D. Kennedy
Director
DATE: February 18, 1998 /s/ H. Lee Combs
H. Lee Combs
Director
DATE: February 18, 1998 /s/ James H. Foster
James H. Foster
Director
DATE: February 18, 1998 /s/ J. Hyatt Brown
J. Hyatt Brown
Director
DATE: February 18, 1998 /s/ Brian Z. France
Brian Z. France
Director
DATE: February 18, 1998 /s/ Raymond K. Mason, Jr.
Raymond K. Mason, Jr.
Director
DATE: February 18, 1998 /s/ Daniel W. Houser
Daniel W. Houser
Controller