-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LqAQAMtx8gb34uvSKWJzCcJ2S/DgIus8ZOS2iWr0dA0FMx3LnNVSVeqMwfGvGwyy WuNWsiWOaCq7Z59IQ1JsZg== 0000944209-97-000878.txt : 19970716 0000944209-97-000878.hdr.sgml : 19970716 ACCESSION NUMBER: 0000944209-97-000878 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970531 FILED AS OF DATE: 19970715 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRAND PRIX ASSOCIATION OF LONG BEACH INC CENTRAL INDEX KEY: 0001014957 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-RACING, INCLUDING TRACK OPERATION [7948] IRS NUMBER: 952945353 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-28594 FILM NUMBER: 97641072 BUSINESS ADDRESS: STREET 1: 3000 PACIFIC AVE CITY: LONG BEACH STATE: CA ZIP: 90806 BUSINESS PHONE: 5629812600 MAIL ADDRESS: STREET 1: 3000 PACIFIC AVE CITY: LONG BEACH STATE: CA ZIP: 90806 10QSB 1 FORM 10-QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 FOR THE PERIOD ENDED MAY 31, 1997 OR [_] Transaction report pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934 COMMISSION FILE NUMBER: 1-11837 GRAND PRIX ASSOCIATION OF LONG BEACH, INC. (Exact name of registrant as specified in it's charter) CALIFORNIA 95-2945353 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 3000 PACIFIC AVENUE LONG BEACH, CA 90806 (Address of principal executive offices) TELEPHONE NUMBER (562) 981-2600 (Registrant's telephone number, including area code) Check 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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As of July 11, 1997, there were 3,768,286 shares of the Registrant's Common stock outstanding. Transitional small business disclosure format (check one) Yes No X --- --- This report contains 14 pages. There is 1 exhibit to this report. GRAND PRIX ASSOCIATION OF LONG BEACH, INC. FORM 10-QSB INDEX
PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets - May 31, 1997 (unaudited) and November 30, 1996 3 Condensed Consolidated Statements of Operations (unaudited) - Three months and six months ended May 31, 1997 and May 31, 1996 5 Condensed Consolidated Statements of Cash Flows (unaudited) - Six months ended May 31, 1997 and May 31, 1996 7 Notes to Condensed Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis 9 PART II. OTHER INFORMATION Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 14 SIGNATURES 14
2 PART I. FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS GRAND PRIX ASSOCIATION OF LONG BEACH, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
November 30, May 31, 1996 1997 ------------ ------------ (unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 10,214 $ 6,662 Accounts receivable 456 2,189 Prepaid expenses and other current assets 245 505 Deferred major event expenses 194 62 Deferred income tax asset 860 860 ---------- ---------- Total current assets 11,969 10,278 Property and equipment, net 22,279 41,372 Restricted cash 11,546 3,874 Other assets 1,092 1,120 ---------- ---------- Total assets $ 46,886 $ 56,644 ========== ==========
The accompanying notes are an integral part of these condensed consolidated balance sheets. 3 GRAND PRIX ASSOCIATION OF LONG BEACH, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS)
November 30, 1996 May 31, 1997 ----------------- ------------ (unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable, current $ 73 $ 71 Accounts payable 680 3,172 Accrued interest 817 610 Other accrued liabilities 49 2,186 Deferred major event revenues 1,424 3,500 ---------- ---------- Total current liabilities 3,043 9,539 Notes and bonds payable, long term 22,932 23,057 Deferred income tax liability 928 928 Other liabilities - 213 ---------- ---------- Total liabilities 26,903 33,737 ---------- ---------- Series B mandatorily redeemable Convertible Preferred stock 250,000 shares issued and outstanding 2,500 2,500 ---------- ---------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY Preferred stock, no par value 10,000,000 shares authorized - - Common stock, no par value 20,000,000 shares authorized 3,750,000 and 3,641,000 shares issued and outstanding as of May 31, 1997 and November 30, 1996, respectively 15,544 15,643 Paid-in capital 129 572 Retained earnings 2,193 4,562 Shareholders' notes (383) (370) ---------- ---------- Total shareholders' equity 17,483 20,407 ---------- ---------- Total liabilities and shareholders' equity $ 46,886 $ 56,644 ========== ==========
The accompanying notes are an integral part of these condensed consolidated balance sheets. 4 GRAND PRIX ASSOCIATION OF LONG BEACH, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) (unaudited)
Three months ended May 31, 1996 May 31, 1997 ------------ ------------ Revenues Major event revenues Admissions $ 4,686 $ 7,676 Sponsorships 2,840 3,525 Ancillary 3,496 5,641 ------------ ------------ Total major event revenues 11,022 16,842 Other operating revenues 624 1,366 ------------ ------------ Total revenues 11,646 18,208 ------------ ------------ Expenses Major event expenses 6,017 10,788 Other operating expenses 580 626 General and administrative 892 1,159 Depreciation 151 334 ------------ ------------ Total expenses 7,640 12,907 ------------ ------------ Income from operations 4,006 5,301 ------------ ------------ Interest income 119 128 Interest expense, net of capitalized interest of $494,000 and $0 for 1997 and 1996, respectively (34) (82) Other, net (65) 38 ------------ ------------ Total other 20 84 ------------ ------------ Income before provision for income taxes 4,026 5,385 Provision for income taxes 1,691 2,200 ------------ ------------ Net income 2,335 3,185 Dividends on Series B mandatorily redeemable Convertible Preferred stock - (26) ------------ ------------ Net income applicable to common stock $ 2,335 $ 3,159 ============ ============ Net income per share $ 1.14 $ 0.75 ============ ============ Weighted average number of common and common equivalent shares outstanding 2,040,590 4,212,030
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 GRAND PRIX ASSOCIATION OF LONG BEACH, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) (unaudited)
Six months ended May 31, 1996 May 31, 1997 ------------ ------------ Revenues: Major event revenues Admissions $ 4,686 $ 7,676 Sponsorships 2,840 3,525 Ancillary 3,496 5,641 ------------ ------------- Total major event revenues 11,022 16,842 Other operating revenues 936 1,769 ------------ ------------- Total revenues 11,958 18,611 ------------ ------------- Expenses: Major event expenses 6,017 10,788 Other operating expenses 811 849 General and administrative 1,670 2,371 Depreciation 239 643 ------------ ------------- Total expenses 8,737 14,651 ------------ ------------- Income from operations 3,221 3,960 ------------ ------------- Interest income 119 375 Interest expense, net of capitalized interest of $824,000 and $0 for 1997 and 1996, respectively (52) (324) Other, net 16 163 ------------ ------------- Total other 83 214 ------------ ------------- Income before provision for income taxes 3,304 4,174 Provision for income taxes 1,423 1,753 ------------ ------------- Net income 1,881 2,421 Dividends on Series B mandatorily redeemable Convertible Preferred stock - (52) ------------ ------------- Net income applicable to common stock $ 1,881 $ 2,369 ============ ============= Net income per share $ 0.93 $ 0.60 ============ ============= Weighted average number of common and common equivalent shares outstanding 2,033,120 3,952,163
The accompanying notes are an integral part of these condensed consolidated financial statements. 6 GRAND PRIX ASSOCIATION OF LONG BEACH, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (unaudited)
Six months ended May 31, 1996 May 31, 1997 ------------ ------------ Cash flows from operating activities $ 2,206 $ 6,870 ------------ ------------ Cash flows from investing activities (1,413) (11,261) ------------ ------------ Cash flows from financing activities 2,255 839 ------------ ------------ Net increase (decrease) in cash 3,048 (3,552) Cash and cash equivalents at beginning of period 1,350 10,214 ------------ ------------ Cash and cash equivalents at end of period $ 4,398 $ 6,662 ============ ============
The accompanying notes are an integral part of these condensed consolidated financial statements. 7 GRAND PRIX ASSOCIATION OF LONG BEACH, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS May 31, 1997 1. The interim condensed data is unaudited; however, in the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The condensed financial statements included herein have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to make the information presented not misleading. The organization and business of the Company, accounting policies followed by the Company and other information are contained in the notes to the Company's financial statements filed as part of the Company's November 30, 1996 Form 10- KSB. This quarterly report should be read in conjunction with such annual report. 2. The earnings per share calculations are based on the treasury stock method. Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No. 83, common stock issued for consideration below the offering price of $10.00 per share and stock options and warrants issued with exercise prices below the offering price during the twelve month period preceding the filing of the Company's initial public offering, have been included in the calculation of common shares, using the treasury stock method, for the period ending May 31, 1996. The effect of the Series A Convertible Preferred stock issued at consideration below the initial public offering price was to increase the weighted average shares outstanding for the three and six month periods ended May 31, 1996 by 62,500 shares. The Series A Convertible Preferred stock was converted to common stock on June 28, 1996. 8 SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The statements contained in this report on Form 10-QSB that are not purely historical are forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and involve risks and uncertainties, including statements regarding the Company's expectations, hopes, intentions or strategies regarding the future. All forward looking statements included 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 in such forward looking statements due to risks and uncertainties related to the Company's ability to obtain and keep major sanctions and sponsorships, construction delays, competition, dilution of manpower, government regulation and seasonality. You should consult the risk factors listed from time to time in the Company's reports on Form 10-QSB, 10-KSB, and annual reports to shareholders. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS DEFINITIONS: There are numerous acronyms used in the motorsports industry and otherwise, several of which are used herein. For the facility of the reader, acronyms used herein are defined below: ARCA - Automobile Racing Club of America CART - Championship Auto Racing Teams, Inc. NASCAR - The National Association for Stock Car Auto Racing, Inc. NHRA - The National Hot Rod Association SWIDA - Southwestern Illinois Development Authority USAC - United States Auto Club OVERVIEW The Grand Prix Association of Long Beach, Inc. ("Company") operates the Grand Prix of Long Beach ("Grand Prix"), a three day, temporary circuit motorsports event run every spring on the streets of the City of Long Beach, California. The Company also owns and operates Gateway International Raceway ("Gateway"), in Madison, Illinois, and Memphis Motorsports Park ("Memphis"), in Millington, Tennessee, both of which are permanent multi-purpose racing facilities, at one or both of which major racing events sanctioned by CART, NHRA, NASCAR, ARCA and USAC are held. 9 During the period covered by this report, the Company operated the 23rd Grand Prix and the inaugural Motorola 300 at Gateway, both sanctioned by CART. Revenues are generated from admission ticket sales, corporate sponsorships and hospitality services (including rental of corporate suites, tents and chalets), broadcast production services, merchandise sales, concessions and other related event revenues. Although prior to 1996, over 80% of the Company's annual revenues were generated from operation of the Grand Prix, that percentage has dropped as the result of major events held within the past year at both Gateway and Memphis. It is anticipated that the Company's reliance on the Grand Prix for the majority of its revenue will continue to decrease. In May, 1997, the Company completed construction of the oval track at Gateway. It is anticipated that the Company will continue to incur costs related to the redevelopment of Gateway into a major regional multipurpose facility. Expenditures for this redevelopment were accelerated when the Company obtained major event sanctions for 1997 earlier than originally anticipated. The Company anticipates that total expenditures related to the redevelopment of this facility will be approximately $26,100,000 (not including approximately $1,500,000 to establish and equip the Gateway Law Enforcement Driving School and approximately $500,000 in miscellaneous improvements, both of which are anticipated to use proceeds from the initial public stock offering). The Company recently completed a new 0.25-mile dirt oval at Memphis. Construction of a new 0.75-mile paved oval at Memphis is currently in progress. The Company anticipates total expenditures for this project will be approximately $3,000,000. The Company anticipates funding the additional costs of capital improvements primarily through cash generated from operations supplemented by equipment financing and the potential issuance of new stock. BASIS OF PRESENTATION Revenues: Major event revenues are derived from nationally sanctioned events at the Grand Prix, Memphis and Gateway; including Admissions from ticket sales, Sponsorships and Ancillary, comprising hospitality services, broadcast services, merchandising, lifestyle/auto expo and concessions. The Company generates Other operating revenues from promotion, marketing and public relations consulting services and rentals of grandstands, structures and related equipment services. Expenses: Major event expenses principally include sanction fees, temporary- circuit construction costs, operational direct expenses, marketing, advertising and public relations, costs of merchandise sales, ticket sales expenses and city service fees. Sanction agreements require race promoters to pay fees and provide services to the relevant sanctioning body during the event. Other operating expenses include expenses directly related to public relations consulting services, 10 structures and equipment rental services, broadcast services and the direct expenses of operating Gateway and Memphis. THREE MONTHS ENDED MAY 31, 1997 COMPARED TO THREE MONTHS ENDED MAY 31, 1996 Major Event Revenues and Expenses: The Company's major event revenues and expenses for the three months ended May 31, 1997 increased $5,820,000 and $4,771,000, respectively, compared to the three months ended May 31, 1996, primarily due to the addition of a major event, the Motorola 300, at Gateway. Other Operating Revenues: Other operating revenues of $1,366,000 for the three months ended May 31, 1997 consist of grandstand and equipment rentals, event electrical services, consulting services and weekly race activities at Memphis and Gateway. Other operating revenues increased $742,000 primarily due to the commencement of weekly racing activities at Memphis. In addition, the Company earned approximately $240,000 from the early termination of a public relations consulting contract. Other Operating Expenses: Other operating expenses of $626,000 for the three months ended May 31, 1997 increased $46,000 compared to the three months ended May 31, 1996 primarily due to the commencement of weekly racing activities at Memphis. General and Administrative Expenses: General and administrative expenses were $1,159,000 for the three months ended May 31, 1997, an increase of $267,000 compared to the three months ended May 31, 1996. The increase is primarily due to increased payroll and facilities costs associated with Memphis and Gateway and the addition of a national ticket office located at Long Beach. Depreciation: Depreciation expense of $334,000 for the three months ended May 31, 1997 increased $183,000 compared to the three months ended May 31, 1996 due to additions of property and equipment, primarily at Memphis and Gateway. 11 SIX MONTHS ENDED MAY 31, 1997 COMPARED TO SIX MONTHS ENDED MAY 31, 1996 Major Event Revenues and Expenses: The Company's major event revenues and expenses for the six months ended May 31, 1997 increased $5,820,000 and $4,771,000, respectively, compared to the six months ended May 31, 1996, primarily due to the addition of a major event, the Motorola 300, at Gateway. Other Operating Revenues: Other operating revenues of $1,769,000 for the six months ended May 31, 1997 consist of grandstand and equipment rentals, event electrical services, consulting services and weekly race activities at Memphis and Gateway. Other operating revenues increased $833,000 compared to the six months ended May 31, 1996, primarily due to the commencement of weekly racing activities at Memphis. In addition, the Company earned approximately $240,000 from the early termination of a public relations consulting contract. Other Operating Expenses: Other operating expenses of $849,000 for the six months ended May 31, 1997 increased $38,000 compared to the six months ended May 31, 1996 primarily due to the commencement of weekly racing activities at Memphis. General and Administrative Expenses: General and administrative expenses were $2,371,000 for the six months ended May 31, 1997, an increase of $701,000 compared to the six months ended May 31, 1996. The increase is primarily due to increased payroll and facilities costs associated with Memphis and Gateway and the addition of a national ticket office located at Long Beach. Depreciation: Depreciation expense of $643,000 for the six months ended May 31, 1997 increased $404,000 compared to the six months ended May 31, 1996 primarily due to additions of property and equipment, primarily at Memphis and Gateway. 12 LIQUIDITY AND CAPITAL RESOURCES For working capital during the six months ended May 31, 1997, the Company relied on cash generated from operating revenues and on the proceeds of its initial public offering. In addition, the proceeds of the SWIDA Loan and the initial public offering and cash generated from operations were used to fund the redevelopment at Gateway and Memphis. The Company anticipates funding the additional costs of capital improvements primarily through cash generated from operations supplemented by equipment financing and the potential issuance of new stock. The Company's bank borrowings consist of short and long term obligations incurred in connection with specific capital improvements and expenditures. Long term debt includes first and second trust deed notes, which together had an outstanding principal balance of approximately $1,668,000 on May 31, 1997, and the SWIDA Loan with a balance of approximately $21,460,000. The Company's cash and cash equivalents as of May 31, 1997 are $6,662,000, a net decrease of $3,552,000 from November 30, 1996. The decrease in cash is primarily the result of funding redevelopment activities at Gateway and Memphis. Restricted cash pursuant to the terms of the SWIDA Loan as of May 31, 1997 was $3,874,000. Cash used by the Company from restricted and non-restricted cash in capital improvements totaled $18,911,000 for the six months ended May 31, 1997, primarily for the redevelopment at Gateway and Memphis. OUTLOOK FOR THE REMAINDER OF 1997 The Company's capital requirements will depend on numerous factors, including the rate at which the Company completes the redevelopment and improvements at Gateway and Memphis, establishes such facilities as profitable operations and acquires other motorsports facilities. In addition, the Company will have various ongoing needs for capital, including: (i) working capital for operations; (ii) routine capital expenditures to maintain and expand its Long Beach temporary circuit and permanent facilities; and (iii) funds required to service corporate obligations, including the $21,500,000 obligation under the SWIDA Loan. Due to the seasonality of racing events, the Company generates the majority of its revenues in the months of April through October. Therefore, the results of operations for the Company's second quarter cannot be expected to be indicative of annual results. 13 PART II. OTHER INFORMATION ITEM 5. OTHER INFORMATION. On April 11, 1997, the Company's wholly owned subsidiary, Gateway International Motorsports Corporation, obtained 49 acres of undeveloped land in the vicinity of Gateway for approximately 400,000, pursuant to an agreement with SWIDA, which it anticipates using for major event parking. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit 27 - Financial Data Schedule SIGNATURES In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GRAND PRIX ASSOCIATION OF LONG BEACH, INC. /s/ Christopher R. Pook ----------------------- Christopher R. Pook Chairman of the Board, Chief Executive Officer and President /s/ Ronald C. Shirley --------------------- Ronald C. Shirley Chief Financial Officer Dated: July 15, 1997 14 EX-27 2 FINANCIAL DATA SCHEDULE -- ARTICLE 5
5 3-MOS NOV-30-1996 MAR-01-1997 MAY-31-1997 6,662 0 2,189 0 292 10,278 46,394 5,022 56,644 9,539 21,460 2,500 0 15,643 4,764 56,644 16,842 18,208 11,414 12,907 38 0 324 5,385 2,200 3,159 0 0 0 3,159 .75 .75
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