EXHIBIT 99.2
GRAND PRIX ASSOCIATION OF LONG BEACH, INC.
PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
The following unaudited pro forma condensed combining balance sheet as of
March 31, 1996, pro forma statements of operations for the nine months ended
March 31, 1996 and for the year ended June 30, 1995 illustrate the effect of
the acquisition by the Company of substantially all of the net assets of the
Memphis Motorsports Facility (including, but not limited to cash, prepaid
expenses, property and equipment, certain accrued liabilities and deferred
revenues) which is currently anticipated to occur in late June 1996, in
exchange for the assumption of approximately $2,500,000 in liabilities of the
seller which will be repaid by the Company at the closing of the initial
public offering and issuance of $2,500,000 of the Company's Series B
Convertible Preferred Stock as described elsewhere herein (Note 3), the
private placement of 312,500 shares of the Company's Series A Convertible
Preferred Stock for net proceeds of $2,300,000 which private placement closed
concurrently with the Municipal Bond Offering on June 21, 1996 (Note 1), the
issuance in late June 1996 of $21,500,000 in principal amount of Bonds issued
by SWIDA (Note 2), and the issuance of 1,350,000 shares of Common Stock in
this offering for net proceeds estimated to be $12,065,500 (Note 4). The
Memphis Motorsports Facility acquisition is being accounted for as a purchase,
with the assets acquired and liabilities assumed being recorded at estimated
fair market value. The unaudited pro forma combining balance sheet assumes
that each of these transactions occurred on March 31, 1996 and the unaudited
pro forma combining statements of operations assumes that each of these
transactions occurred at the beginning of the periods presented.
The pro forma adjustments are based upon currently available information and
upon certain assumptions that the Company believes are reasonable. The
acquisition of the Memphis Motorsports Facility has been recorded based upon
the estimated fair market value of the tangible assets acquired at the date of
acquisition. The adjustments included in the unaudited pro forma combining
financial statements represents the Company's preliminary determination of
these adjustments based upon available information. There can be no assurance
that the actual adjustments will not differ significantly from the pro forma
adjustments reflected in the pro forma financial information.
The unaudited pro forma combining financial statements are not necessarily
indicative of either future results of operations or results that might have
been achieved if the foregoing transactions had been consummated as of the
indicated dates. The unaudited pro forma combining financial statements should
be read in conjunction with the historical financial statements of the Company
and the Memphis Motorsports Facility, together with the related notes thereto,
included elsewhere in this Prospectus.
PF-1
GRAND PRIX ASSOCIATION OF LONG BEACH, INC.
PRO FORMA CONDENSED COMBINING BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
INITIAL
PRIVATE BOND MEMPHIS PUBLIC ADJUSTED
THE COMPANY MEMPHIS (11) PLACEMENT (1) OFFERING (2) ACQUISITION (3) OFFERING (4) PRO FORMA
----------- ------------ ------------- ------------ --------------- ------------ ---------
ASSETS (NOT COVERED BY ACCOUNTANTS' REPORTS)
Current
Cash and cash
equivalents........... $ 1,696 $ 168 $ (100) $ -- $ -- $9,565 $11,329
Accounts receivable.... 274 101 -- -- (101) -- 274
Notes receivable....... 15 -- -- -- -- -- 15
Prepaid expenses and
other assets.......... 1,626 16 -- -- -- -- 1,642
Deferred major event
expenses.............. 3,102 -- -- -- -- -- 3,102
Deferred income taxes,
current............... 29 -- -- -- -- -- 29
Inventories............ 93 15 -- -- -- -- 108
------- ------- ------ ------- ------ ------ -------
Total Current Assets... 6,835 300 (100) -- (101) 9,565 16,499
Restricted cash--
redevelopment fund.... -- -- -- 18,127 -- -- 18,127
Restricted cash--debt
service fund.......... -- -- 2,400 2,550 -- -- 4,950
Property and equipment,
net................... 3,573 3,857 -- -- 1,143 -- 8,573
Deferred loan costs,
net................... 132 -- -- 823 -- -- 955
Intangible assets,
net................... 29 -- -- -- 636 -- 665
Deferred income taxes,
noncurrent............ 169 -- -- -- -- -- 169
------- ------- ------ ------- ------ ------ -------
TOTAL ASSETS........... $10,738 $ 4,157 $2,300 $21,500 $1,678 $9,565 $49,938
======= ======= ====== ======= ====== ====== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable, current. $ 230 $ 841 $ -- $ -- $ (841) $ -- $ 230
Accounts payable....... 294 6 -- -- -- -- 300
Accrued liabilities.... 119 22 -- -- -- -- 141
Income taxes payable... -- 2 -- -- -- -- 2
Accrued interest....... -- 38 -- -- -- -- 38
Deferred revenue....... 6,341 310 -- -- -- -- 6,651
Notes payable to former
Memphis shareholders.. -- -- -- -- 2,500 (2,500) --
------- ------- ------ ------- ------ ------ -------
Total Current
Liabilities............ 6,984 1,219 -- -- 1,659 (2,500) 7,362
Long-term debt, less
current maturities
Notes payable.......... 1,585 3,207 -- -- (3,207) -- 1,585
Other liabilities...... -- -- -- -- -- -- --
Deferred income taxes.. -- -- -- -- 457 -- 457
Bonds payable, long
term.................. -- -- -- 21,500 -- -- 21,500
------- ------- ------ ------- ------ ------ -------
Total Liabilities...... 8,569 4,426 -- 21,500 (1,091) (2,500) 30,904
------- ------- ------ ------- ------ ------ -------
Series B Mandatorily
Redeemable Convertible
Preferred Stock........ -- -- -- -- 2,500 -- 2,500
------- ------- ------ ------- ------ ------ -------
Preferred stock, Series
A..................... -- -- 2,300 -- -- (2,300) --
Common stock, no par
value................. 1,281 1,743 -- -- (1,743) 14,365 15,646
Paid-in capital........ 129 3,889 -- -- (3,889) -- 129
Retained earnings
(deficit)............. 1,150 (5,901) -- -- 5,901 -- 1,150
Shareholder notes...... (391) -- -- -- -- -- (391)
------- ------- ------ ------- ------ ------ -------
2,169 (269) 2,300 -- 269 12,065 16,534
------- ------- ------ ------- ------ ------ -------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY... $10,738 $ 4,157 $2,300 $21,500 $1,678 $9,565 $49,938
======= ======= ====== ======= ====== ====== =======
PF-2
GRAND PRIX ASSOCIATION OF LONG BEACH, INC.
PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1995(12)
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
PRIVATE BOND MEMPHIS ADJUSTED
THE COMPANY MEMPHIS PLACEMENT OFFERING ACQUISITION PRO FORMA
----------- ------- --------- -------- ----------- ---------
(NOT COVERED BY ACCOUNTANTS' REPORTS)
Major event revenues:
Admissions............ $ 4,271 $2,025 $-- $ -- $-- $ 6,296
Sponsorships.......... 2,523 209 -- -- -- 2,732
Ancillary............. 2,988 512 -- -- -- 3,500
--------- ------ ---- ------- ---- ---------
Total major event
revenues............... 9,782 2,746 -- -- -- 12,528
Other operating
revenues............. 1,845 105 -- -- -- 1,950
--------- ------ ---- ------- ---- ---------
Total revenues.......... 11,627 2,851 -- -- -- 14,478
--------- ------ ---- ------- ---- ---------
Expenses:
Major event expenses.. 5,638 1,832 -- -- -- 7,470
Other operating
expenses............. 1,458 86 -- -- -- 1,544
General and
administrative
expenses............. 2,250 597 -- -- -- 2,847
Depreciation &
amortization......... 371 309 -- -- 45 (7) 725
--------- ------ ---- ------- ---- ---------
9,717 2,824 -- -- 45 12,586
--------- ------ ---- ------- ---- ---------
Income (loss) from
operations............. 1,910 27 -- -- (45) 1,892
(55)(5)
Other income (expense).. (133) (336) 72 (6) (1,960)(6) 319 (8) (2,093)
--------- ------ ---- ------- ---- ---------
Income (loss) before
taxes.................. 1,777 (309) 72 (2,015) 274 (201)
Benefit (provision) for
income taxes........... (735) -- (30)(9) 771 (9) 14 (9) 20 (9)
--------- ------ ---- ------- ---- ---------
Net income (loss)....... $ 1,042 $ (309) $ 42 $(1,244) $288 $ (181)
========= ====== ==== ======= ==== =========
Pro forma earnings
(loss) per share....... $ 0.51 $ (0.05)(10)
========= =========
Weighted average number
of common shares
outstanding............ 2,026,640 3,959,340 (10)
========= =========
PF-3
GRAND PRIX ASSOCIATION OF LONG BEACH, INC.
PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 1996(12)
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
PRIVATE BOND MEMPHIS ADJUSTED
THE COMPANY MEMPHIS PLACEMENT OFFERING ACQUISITION PRO FORMA
----------- ------- --------- -------- ----------- ----------
(NOT COVERED BY ACCOUNTANTS' REPORTS)
Major event revenues:
Admissions............ $ -- $ 451 $-- $ -- $-- $ 451
Sponsorships.......... -- 103 -- -- -- 103
Ancillary............. -- 176 -- -- -- 176
---------- ----- ---- ------- ---- ----------
Total major event
revenues............... -- 730 -- -- -- 730
Other operating
revenues............. 2,116 77 -- -- -- 2,193
---------- ----- ---- ------- ---- ----------
Total revenues.......... 2,116 807 -- -- -- 2,923
---------- ----- ---- ------- ---- ----------
Expenses:
Major event expenses.. -- 391 -- -- -- 391
Other operating
expenses............. 1,376 55 -- -- -- 1,431
General and
administrative
expenses............. 2,200 400 -- -- -- 2,600
Depreciation &
amortization......... 300 231 -- -- 33 (7) 564
---------- ----- ---- ------- ---- ----------
3,876 1,077 -- -- 33 4,986
---------- ----- ---- ------- ---- ----------
Income (loss) from
operations............. (1,760) (270) -- -- (33) (2,063)
(41)(5)
Other income (expense).. (134) (275) 54 (6) (1,470)(6) 239 (8) (1,627)
---------- ----- ---- ------- ---- ----------
Income (loss) before
taxes.................. (1,894) (545) 54 (1,511) 206 (3,690)
Benefit (provision) for
income taxes........... 784 -- (22)(9) 578 (9) 140 (9) 1,480 (9)
---------- ----- ---- ------- ---- ----------
Net income (loss)....... $ (1,110) $(545) $ 32 $ (933) $346 $ (2,210)
========== ===== ==== ======= ==== ==========
Pro forma earnings
(loss) per share....... $ (0.55) $ (0.56)(10)
========== ==========
Weighted average number
of common shares
outstanding............ 2,029,806 3,959,340 (10)
========== ==========
PF-4
GRAND PRIX ASSOCIATION OF LONG BEACH, INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
1. Represents the net proceeds of approximately $2,300,000 received in a
private placement of 312,500 shares of the Company's Series A Convertible
Preferred Stock, which private placement closed concurrently with the
closing of the Municipal Bond Offering on June 21, 1996. These shares of
Series A Convertible Preferred Stock have an $8.00 liquidation and
redemption value and will automatically be converted into shares of Common
Stock upon completion of this offering at the lower of $8.00 per share or
80% of the initial public offering price. The net proceeds from the
private placement will be used by the Company to establish the debt
service reserve fund required with respect to the Municipal Bond Offering
(see Note 2).
2. Represents proceeds from the borrowing of $21,500,000 pursuant to the
SWIDA Loan net of issuance costs estimated to be $823,000. The SWIDA Loan
bears interest at varying rates ranging from 8.35% to 9.25% with an
effective yield of approximately 9.1% with interest only payable through
August 1999, with debt service payments beginning in February 2000 through
February 2017. The net proceeds from the SWIDA Loan are to be used to fund
the redevelopment and expansion of the Gateway Raceway Facility and debt
service as required under the terms of the SWIDA Loan. See "Description of
Securities -- the Bonds."
3. Represents the acquisition of substantially all of the net assets of the
Memphis Motorsports Facility by the Company in June 1996, allocated as
follows:
Cash paid at closing of initial public offering to
pay notes payable to former Memphis shareholders.. $2,500,000
Series B Mandatorily Reedemable Convertible
Preferred Stock issued............................ 2,500,000
----------
Total consideration 5,000,000
Net deficit of Memphis as of March 31, 1996...... (268,940)
add--Notes payable paid at closing of initial
public offering................................. 2,500,000
add--Notes payable not assumed................... 1,548,126
less--Accounts receivable, not purchased......... (100,785)
---------
Net assets acquired.............................. 3,678,401
----------
Excess of cost over net book value of assets
acquired.......................................... $1,321,599
==========
The Series B Mandatorily Reedemable Convertible Preferred Stock has been
valued at $10.00 per share (the issuance price of the Common Stock in this
offering). An aggregate of 250,000 shares of Series B Mandatorily
Convertible Preferred Stock will be issued upon the closing of the
acquisition of the Memphis Motorsports Facility based on the initial price
to the public of the shares sold in this offering. See "Description of
Securities -- Preferred Stock." The Series B Mandatorily Reedemable
Convertible Preferred Stock will bear a cumulative 4.185% dividend rate and
is convertible on a one-for-one basis at the option of the holders on or
after June 30, 1997 into the Company's Common Stock. If the Series B
Mandatorily Redeemable Convertible Preferred Stock has not been converted
into Common Stock by December 31, 1998, the Company is obligated to redeem
any outstanding Series B Mandatorily Redeemable Convertible Preferred Stock
at a nominal consideration plus unpaid dividends and assume specified
liabilities of the seller not to exceed $1,500,000. The excess of cost over
fair value of assets acquired has been allocated to fixed assets (including
land) and intangible assets in the pro forma balance sheet as of March 31,
1996 based upon management's preliminary estimates. The Company is in the
process of working with independent consultants to obtain valuations of
individual assets and the excess purchase price will be determined based
upon these valuations. Deferred tax liabilities have been recorded for the
basis
PF-5
differential of the assets, as this acquisition has been structured as a
non-taxable transaction. This transaction will be accounted for using the
purchase method.
4. Represents the estimated net proceeds of $12,065,500 in connection with
the issuance of 1,350,000 shares of Common Stock offered in this offering
together with the payment of the note payable to the former Memphis
shareholders and mandatory conversion of the Series A Convertible
Preferred Stock (See Note 1) into Common Stock.
5. Represents the amortization of the debt issuance costs related to the
Bonds.
6. Represents Bond interest expense, net of interest earned on restricted
cash in the debt service fund.
7. Represents the depreciation of fixed assets over ten years (except land)
and amortization of the intangible assets over a 20 year life obtained in
the acquisition of the Memphis Motorsports Facility.
8. Represents the elimination of the interest expense of Memphis notes
payable paid at closing of the initial public offering and not assumed by
the Company.
9. To adjust tax provision to the Company's historical effective rate.
10. Computes earnings (loss) per share as if all transactions occurred as of
the beginning of the periods presented computed as follows:
Common Stock outstanding as of March 31, 1996..................... 1,978,090
Shares issued in initial public offering.......................... 1,350,000
Series A Convertible Preferred Stock, as converted................ 312,500
Series B Convertible Preferred Stock, as converted................ 250,000
---------
3,890,590
Dilutive impact of Series A Convertible Stock, issued below
initial public offering price.................................... 68,750
---------
3,959,340
Dilutive impact of stock options.................................. 321,909
---------
4,281,249
=========
Stock options and warrants have not been included as they would be anti-
dilutive.
The pro forma earnings (loss) per share calculated assuming that the Series
B Convertible Preferred Stock is not converted and deducting dividends
related to the Series B Convertible Preferred Stock ($105,000 for the year
ended June 30, 1995 and $78,000 for the nine months ended March 31, 1996)
would be $(0.08) per share for the year ended June 30, 1995 and $(0.62) per
share for the nine months ended March 31, 1996.
11. Certain balances in the Memphis Motorsports Facility historical financial
statements have been reclassified to conform to the Company's financial
statement presentation.
12. The proforma condensed combining statement of operations for the nine
months ended March 31, 1996 combines the unaudited statement of operations
of the Company for the nine months ended March 31, 1996 with the unaudited
results of operations of the Memphis Motorsports Facility for the nine
months ended March 31, 1996. The proforma condensed combining statement of
operations for the year ended June 30, 1995 combines the audited statement
of operations of the Company for the year ended June 30, 1995 with the
audited statement of operations of the Memphis Motorsports Facility for
the year ended December 31, 1995. The revenues and net loss for the six
months ended December 31, 1995 (unaudited) that are included both as part
of the fiscal year and the subsequent interim period for the Memphis
Motorsports Facility are $780,000 and $(292,000), respectively.
PF-6