EXHIBIT 99.2
INTERNATIONAL SPEEDWAY CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial
statements of International Speedway Corporation ("International Speedway")
reflect adjustments to the historical consolidated balance sheets and statements
of income of International Speedway and Penske Motorsports, Inc. ("Penske
Motorsports") to give effect to International Speedway's acquisition of Penske
Motorsports, consummated on July 26, 1999 (the "Penske Acquisition), using the
purchase method of accounting for a business combination. International
Speedway's unaudited pro forma condensed consolidated balance sheet as of May
31, 1999 assumes the Penske Acquisition was effected as of May 31, 1999.
International Speedway's unaudited pro forma condensed consolidated statements
of income for the six months ended May 31, 1999 and for the year ended November
30, 1998 assume the Penske Acquisition was effected as of the beginning of each
period presented.
The fiscal year-ends of International Speedway and Penske Motorsports
occur at different dates. International Speedway's fiscal year-end is November
30 and Penske Motorsports' fiscal year-end was December 31. International
Speedway's unaudited pro forma condensed consolidated balance sheet and
statements of income have been prepared by combining the following periods of
operations of International Speedway and Penske Motorsports:
PRO FORMA PERIOD INTERNATIONAL SPEEDWAY PENSKE MOTORSPORTS
- ---------------- ---------------------- ------------------
May 31, 1999 May 31, 1999 June 30, 1999
Six months ended Six months ended Six months ended
May 31, 1999 May 31, 1999 June 30, 1999
Year ended Year ended Year ended
November 30, 1998 November 30, 1998 December 31, 1998
Prior to consummation of the Penske Acquisition, each of International
Speedway and Penske Motorsports owned 45% of Homestead-Miami Speedway
("Homestead-Miami") and each entity recorded its respective investment using the
equity method of accounting. For purposes of pro forma presentations,
Homestead-Miami's June 30, 1999 historical consolidated balance sheet and its
historical statements of income for the six months ended June 30, 1999, and the
year ended December 31, 1998, have been combined with Penske Motorsports'
historical financial information.
The following unaudited pro forma condensed consolidated financial
statements have been prepared from, and should be read in conjunction with,
International Speedway's historical consolidated financial statements contained
in its Annual Report on Form 10-K for the fiscal year ended November 30, 1998,
as well as the historical consolidated financial statements of Penske
Motorsports contained in its Annual Report on Form 10-K for the fiscal year
ended December 31, 1998. The following unaudited pro forma condensed
consolidated statements of income are not necessarily indicative of the results
of operations that would have occurred had the Penske Acquisition occurred at
the dates indicated, nor are they necessarily indicative of International
Speedway's future operating results as a combined company.
UNAUDITED PRO FORMA BALANCE SHEET
MAY 31, 1999
PENSKE
MOTORSPORTS
INTERNATIONAL AND HOMESTEAD- PRO FORMA PRO FORMA
SPEEDWAY MIAMI ADJUSTMENTS CONSOLIDATED
------------- -------------- ----------- ------------
(IN THOUSANDS)
ASSETS
Current Assets:
Cash, cash equivalents and short-term
investments ........................... $ 96,625 $ 775 $ (47,900)(3)(4) $ 49,500
Receivables ............................. 11,181 12,637 0 23,818
Inventories ............................. 1,534 2,792 0 4,326
Prepaid expenses and other current assets 5,079 6,229 4,677 (3) 15,985
-------- -------- --------- ----------
Total Current Assets .................. 114,419 22,433 (43,223) 93,629
Property and equipment, net .............. 257,892 296,686 26,500 (1) 581,078
Other Assets:
Equity investments ...................... 54,948 11,930 (56,371) 10,507
Goodwill, net ........................... 38,423 71,588 435,387 (1)(2) 545,398
Restricted investments .................. 105,567 0 0 105,567
Other ................................... 11,127 1,260 2,600 (1)(4) 14,987
-------- -------- --------- ----------
210,065 84,778 381,616 676,459
-------- -------- --------- ----------
Total Assets .......................... $582,376 $403,897 $ 364,893 $1,351,166
======== ======== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable ........................ $ 5,009 $ 7,044 $ 0 $ 12,053
Income taxes payable .................... 2,817 0 0 2,817
Deferred income ......................... 68,092 40,089 0 108,181
Current portion of long-term debt ....... 685 3,016 0 3,701
Other current liabilities ............... 5,202 7,778 0 12,980
-------- -------- --------- ----------
Total Current Liabilities ............. 81,805 57,927 0 139,732
Long-term debt ........................... 71,745 88,889 101,853 (4) 262,487
Deferred income taxes .................... 31,299 26,644 10,389 (1)(7) 68,332
Minority interest ........................ 0 0 2,337 (6) 2,337
Stockholders' Equity:
Class A common stock .................... 127 142 (42)(5) 227
Class B common stock .................... 304 0 0 304
Additional paid-in capital .............. 206,886 159,371 321,764 (5)(7) 688,021
Members' capital ........................ 0 23,368 (23,368)(6) 0
Retained earnings ....................... 192,602 55,942 (56,426)(3)(5) 192,118
-------- -------- --------- ----------
399,919 238,823 241,928 880,670
Less unearned compensation--
restricted stock ...................... 2,392 0 0 2,392
Less treasury stock ..................... 0 8,386 (8,386)(5) 0
-------- -------- --------- ----------
Total Stockholders' Equity ............ 397,527 230,437 250,314 878,278
-------- -------- --------- ----------
Total Liabilities and
Stockholders' Equity ................ $582,376 $403,897 $ 364,893 $1,351,166
======== ======== ========= ==========
See accompanying notes to unaudited pro forma financial statements.
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED MAY 31, 1999
PENSKE
MOTORSPORTS
INTERNATIONAL AND HOMESTEAD- PRO FORMA PRO FORMA
SPEEDWAY MIAMI ADJUSTMENTS TOTAL
------------- -------------- ------------ ---------
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
REVENUES
Admissions, net ...................... $ 58,279 $ 29,484 $ 0 $ 87,763
Motorsports related income ........... 50,449 24,974 0 75,423
Food, beverage and merchandise income 18,313 16,250 0 34,563
Other income ......................... 830 0 0 830
Total revenues .................... 127,871 70,708 0 198,579
EXPENSES
Direct expenses:
Prize and point fund monies and
NASCAR sanction fees .............. 19,449 10,216 0 29,665
Motorsports related expenses ........ 21,500 13,387 0 34,887
Food, beverage and
merchandise expenses .............. 9,365 10,587 0 19,952
General and administrative expenses .. 20,206 13,604 0 33,810
Depreciation and amortization ........ 7,531 7,525 5,857 (8)(9) 20,913
------------ ------------ ------------ ---------
Total expenses .................... 78,051 55,319 5,857 139,227
------------ ------------ ------------ ---------
Operating income (loss) ............... 49,820 15,389 (5,857) 59,352
Interest income ....................... 4,713 86 (1,198)(11) 3,601
Interest expense ...................... (925) (2,924) (3,310)(10) (7,159)
Equity in net (loss) income from equity
investments .......................... (466) (730) 290 (6) (906)
Minority interest ..................... 0 0 162 (6) 162
------------ ------------ ------------ ---------
Income (loss) before income taxes ..... 53,142 11,821 (9,913) 55,050
Income tax expense (benefit) .......... 20,359 5,270 (1,505)(12) 24,124
------------ ------------ ------------ ---------
Net income (loss) ..................... $ 32,783 $ 6,551 $ (8,408) $ 30,926
============ ============ ============ =========
Basic earnings per share .............. $ 0.76 $ 0.58
Diluted earnings per share ............ $ 0.76 $ 0.58
Basic weighted average shares ......... 42,871,220 10,029,861 (13) 52,901,081
Diluted weighted average shares ....... 42,997,923 10,029,861 (13) 53,027,784
See accompanying notes to unaudited pro forma financial statements.
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED NOVEMBER 30, 1998
PENSKE
MOTORSPORTS
INTERNATIONAL AND HOMESTEAD- PRO FORMA PRO FORMA
SPEEDWAY MIAMI ADJUSTMENTS TOTAL
------------ -------------- ------------ ---------
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
REVENUES
Admissions, net ...................... $ 86,946 $ 55,609 $ 0 $ 142,555
Motorsports related income ........... 71,793 46,064 0 117,857
Food, beverage and merchandise income 28,597 29,571 0 58,168
Other income ......................... 1,632 0 0 1,632
------------ ------------ ------------ ---------
Total revenues .................... 188,968 131,244 0 320,212
EXPENSES
Direct expenses:
Prize and point fund monies and
NASCAR sanction fees .............. 28,767 15,520 0 44,287
Motorsports related expenses ........ 33,283 28,122 0 61,405
Food, beverage and
merchandise expenses .............. 15,025 20,917 0 35,942
General and administrative expenses .. 37,842 22,700 0 60,542
Depreciation and amortization ........ 13,137 13,766 11,715 (8)(9) 38,618
------------ ------------ ------------ ---------
Total expenses .................... 128,054 101,025 11,715 240,794
------------ ------------ ------------ ---------
Operating income (loss) ............... 60,914 30,219 (11,715) 79,418
Interest income ....................... 4,414 246 (2,395)(11) 2,265
Interest expense ...................... (582) (6,111) (6,620)(10) (13,313)
Equity in net (loss) income from equity
investments .......................... (905) (1,382) 2,163 (6) (124)
Minority interest ..................... 0 0 320 (6) 320
Gain on sale of equity investment ..... 1,245 1,108 0 2,353
------------ ------------ ------------ ---------
Income (loss) before income taxes ..... 65,086 24,080 (18,247) 70,919
Income tax expense (benefit) .......... 24,894 10,697 (2,630)(12) 32,961
------------ ------------ ------------ ---------
Net income (loss) ..................... $ 40,192 $ 13,383 $ (15,617) $ 37,958
============ ============ ============ =========
Basic earnings per share .............. $ 1.00 $ 0.76
Diluted earnings per share ............ $ 1.00 $ 0.76
Basic weighted average shares ......... 40,025,643 10,029,861 (13) 50,055,504
Diluted weighted average shares ....... 40,188,800 10,029,861 (13) 50,218,661
See accompanying notes to unaudited pro forma financial statements.
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
Under the terms of the Penske Acquisition, each outstanding share of Penske
Motorsports common stock, other than shares held directly or indirectly by
International Speedway, was converted into the right to receive at the election
of each Penske Motorsports stockholder, subject to the transaction's collar
provision, (a) $15.00 in cash and $35.00 worth of International Speedway's Class
A common stock (30% cash and 70% stock) or (b) $50.00 worth of International
Speedway's Class A common stock.
The volume-weighted average price for International Speedway's Class A common
stock during the 20-day trading period ending two trading days before the
closing of the Penske Acquisition was $47.98 per share, which resulted in an
exchange ratio, pursuant to the Penske Acquisition agreement, of 1.042 shares of
International Speedway's Class A common stock for each of the 12,222,477 shares
of Penske Motorsports common stock converted in the Penske Acquisition (total
shares outstanding of 14,208,898 less treasury shares of 377,400 less 1,609,021
shares of Penske Motorsports common stock owned directly or indirectly by
International Speedway).
Of such 12,222,477 shares of Penske Motorsports common stock:
o 8,655,402 shares were converted into 30% cash and 70% stock; and
o 3,567,075 shares were converted entirely into stock.
Accordingly, based on the exchange ratio, International Speedway issued
10,029,861 shares of Class A common stock and paid approximately $129.8 million
in cash consideration in the Penske Acquisition.
(1) The actual costs of the Penske Acquisition are as follows:
Cash consideration............................... $129,848
Stock consideration.............................. 481,272
Transaction costs................................ 7,005
-----
Total acquisition cost........................... $618,125
========
Under purchase accounting, Penske Motorsports' assets and liabilities are
required to be adjusted to their estimated fair values. The estimated fair value
adjustments have been determined by International Speedway based upon a
preliminary valuation and are subject to adjustments based on a final valuation.
These estimated fair values may not be the fair values that will ultimately be
determined. The following are the pro forma adjustments made to reflect Penske
Motorsports' estimated fair values assuming the Penske Acquisition was completed
on May 31, 1999:
Net assets acquired.............................. $165,750
ADJUSTMENT
----------
Fixed assets..................................... $26,500
Intangibles...................................... 900
Deferred taxes................................... (10,412)
--------
16,988
Goodwill......................................... 428,382
Transaction costs................................ 7,005
-----
Total acquisition cost........................... $618,125
========
(2) To reflect the excess purchase price over the fair value of the net
assets acquired, goodwill of $499,970 plus transaction costs of $7,005,
less the elimination of historical goodwill recorded by Penske
Motorsports and Homestead-Miami of $71,588.
(3) To reflect the accelerated vesting of 464,000 Penske Motorsports
employee stock options and the cancellation of those options in an
amount equal to the excess of the cash/stock consideration paid in
connection with the Penske Acquisition over the per share exercise
price of the Penske Motorsports stock options, $11,200 in cash, and the
associated equity adjustment to retained earnings of $6,832, net of
income tax benefit of $4,368. In addition, to reflect International
Speedway's decrease to retained earnings of $484 related to
International Speedway's pro rata share of the adjustment by Penske
Motorsports under the equity method of accounting, net of income tax
benefit of $309.
(4) To record long-term debt of $101,853 and cash paid of $35,000 for the
cash portion of the consideration for the merger of $129,848 and
transaction costs of $7,005. Also, to record $1,700 of cash paid for
deferred financing costs.
(5) To record the issuance of 10,029,861 shares of International Speedway's
Class A common stock for approximately 79% of the total consideration,
which increases common stock $100 and additional paid-in capital
$481,172. Also, to record the elimination of Penske Motorsports common
stock of $142, additional paid-in capital of $159,371 and retained
earnings of $49,110 (after option adjustment--note 3), and treasury
stock of $8,386.
(6) To eliminate (a) International Speedway's investment in Penske
Motorsports of $31,298 (including adjustments for stock options--note
3, (b) International Speedway's and Penske Motorsports' investment in
Homestead-Miami of $25,073, and (c) Homestead-Miami's members capital
of $23,368, and to record the 10% minority interest in
Homestead-Miami's members capital for $2,337. In addition, to reflect
the elimination of equity earnings (losses) and record minority
interest for those investments in the pro forma statements of income
for the six months ended May 31, 1999, and the year ended November 30,
1998.
(7) To reflect International Speedway's change in equity investment, which
was subsequently eliminated, and the decrease in additional paid-in
capital of $37 and deferred taxes of $23 related to Penske Motorsports'
purchase of common shares which was recorded by International Speedway
subsequent to May 31, 1999.
(8) Amortization expense of $5,532 and $11,065 for the six months ended May
31, 1999 and year ended November 30, 1998, respectively, representing
amortization of the excess purchase price over the fair value of the
net assets acquired (including transaction costs) of $435,387, over a
period of 40 years and amortization of other intangibles of $900 over a
period of 5 years.
(9) Depreciation expense of $325 and $650 for the six months ended May 31,
1999, and the year ended November 30, 1998, respectively, representing
additional depreciation expense that would have been recorded if the
transaction had occurred on December 1, 1997 assuming current fair
value adjustments and a depreciable life of 30 years.
(10) Interest expense recorded on the long term debt to be borrowed for a
portion of the cash consideration of $101,853, including transaction
costs of $7,005, at a borrowing rate of 6.5%, inclusive of the
amortization of deferred financing costs.
(11) Interest income foregone on the cash paid for the stock options of
$11,200 (discussed in note 3), cash paid for a portion of the cash
consideration of $35,000 (discussed in note 4), and cash paid of $1,700
for deferred financing costs (discussed in note 4) at an assumed rate
of 5%.
(12) Reduction in income taxes as a result of pro forma adjustments,
primarily interest expense.
(13) Reflects International Speedway's historical basic weighted average
shares outstanding and diluted weighted average shares outstanding plus
the 10,029,861 shares issued by International Speedway in the Penske
Acquisition.