-----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, OA1tNPMklaw1XGBlol81ygcZdOvfdKoeue4F0P7OBccPhWYnIPBXnF+Xiih0Y7ea xPiduOabCnKnxIDuIlIgGA== 0000925751-99-000001.txt : 19990210 0000925751-99-000001.hdr.sgml : 19990210 ACCESSION NUMBER: 0000925751-99-000001 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19981130 FILED AS OF DATE: 19990209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL SPEEDWAY CORP CENTRAL INDEX KEY: 0000051548 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-RACING, INCLUDING TRACK OPERATION [7948] IRS NUMBER: 590709342 STATE OF INCORPORATION: FL FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 000-02384 FILM NUMBER: 99525465 BUSINESS ADDRESS: STREET 1: 1801 W INTERNATIONAL SPEEDWAY BLVD CITY: DAYTONA BEACH STATE: FL ZIP: 32114-1243 BUSINESS PHONE: 9042542700 MAIL ADDRESS: STREET 1: 1801 WEST INTERNATIONAL SPEEDWAY CORP CITY: DAYTONA BEACH STATE: FL ZIP: 32114-1243 FORMER COMPANY: FORMER CONFORMED NAME: DAYTONA INTERNATIONAL SPEEDWAY CORP DATE OF NAME CHANGE: 19691130 FORMER COMPANY: FORMER CONFORMED NAME: FRANCE BILL RACING INC DATE OF NAME CHANGE: 19670227 10-K405 1 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, 1998 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 13, 1999 was $844,051,914 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 executive officers of the Company, and their families, are affiliates. At January 1, 1999, there were no shares of Common Stock, $.10 par value per share, 11,783,598 shares of Class A Common Stock, $.01 par value per share, and 31,291,621 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), a leading promoter of motorsports activities in the United States, owns and/or operates five of the nation's premier motorsports facilities--Daytona International Speedway in Florida; Talladega Superspeedway in Alabama; Phoenix International Raceway in Arizona; Darlington Raceway in South Carolina; and the Watkins Glen International road course facility in upstate New York. Other motorsports interests include the operation of Tucson Raceway Park in Arizona, a 45% indirect interest in the operations of the Miami Homestead Speedway in Miami, Florida and an approximately 12% indirect interest in Penske Motorsports, Inc. The Company currently promotes over 80 stock car, sports car, truck, motorcycle and other racing events annually, including eight NASCAR Winston Cup Series championship point races, two Winston Cup Series non-championship point events, five Busch Grand National Series races, the premier sports car endurance event in the United States (the Rolex 24 at Daytona) and a number of prestigious motorcycle races. The Company also owns and operates MRN Radio, the nation's largest independent sports radio network, and DAYTONA USA--The Ultimate Motorsports Attraction, a motorsports-themed entertainment complex that includes interactive media, theaters, historical memorabilia, exhibits and tours of Daytona International Speedway. In fiscal 1998, NASCAR-sanctioned races at the Company's facilities accounted for approximately 79% of the Company's total revenues. DEVELOPMENTS DURING FISCAL 1998 During fiscal 1998, the Company continued to expand and enhance its existing facilities. The Company added approximately 41,800 grandstand seats, growing the Company's seating capacity by approximately 11%. In addition to grandstand seating, 43 luxury suites were added at the Company's superspeedways. This 43 percent increase in luxury suites includes 28 "Superstretch" additions at Daytona, marking the first time that suites have been added on the famed backstretch of the historic facility. The Company also completed the $5.8 million track lighting project at Daytona that permits night racing events. In March 1998, the Company sold its entire equity interest in Grand Prix Association of Long Beach, Inc., for approximately $5.3 million. The Company recorded a gain of approximately $1.2 million from the sale. The after tax impact of this transaction was a gain of approximately $850,000. In May 1998, the Company entered into a five-year unsecured, $100 million revolving line of credit facility (the "Credit Facility"). The Credit Facility is intended to be used for short-term working capital and to finance the development and/or acquisition of additional motorsports facilities. There were no borrowings under the Credit Facility at November 30, 1998. In July 1998, the Company announced the postponement of the NASCAR Winston Cup Series Pepsi 400 at Daytona from July 4, 1998 to October 17, 1998 as a result of the nationally publicized forest fire emergency throughout the state of Florida. This resulted in event-related revenues and expenses being recognized in the fourth quarter of fiscal 1998, compared to the third quarter of fiscal 1997. Despite the postponement and rescheduling of the 1998 Pepsi 400 at Daytona, the event marked the first ever NASCAR Winston Cup Series event run under the new lights at Daytona and the first sellout of that event since its inception. During July of 1998, the Company sold an additional 4,600,000 shares of Class A Common Stock in a primary offering, including the Underwriters' over- allotment, at a price to the public of $27.00. The net proceeds to the Company were approximately $117.7 million, after deduction of underwriting discounts and commissions and expenses of the offering. As of November 30, 1998, the Company had used approximately $24.4 million of the net proceeds for the acquisition of land and preliminary construction related to Kansas International Speedway and designated an additional $53.5 million for the further funding of its investment in that facility. The Company intends to use the remaining net proceeds to partially fund completion of additions and improvements to the Company's existing motorsports facilities, and for working capital and other corporate purposes, including the pursuit of further expansion opportunities. As noted above, the Company continued to pursue the development of Kansas International Speedway during fiscal 1998. An agreement was formed between the Company and the Unified Government of Wyandotte County/Kansas City, Kansas ("Unified Government") for the construction of a 1.5-mile oval motor speedway near Kansas City, Kansas. The aggregate cost of acquiring and developing the first phase of Kansas International Speedway (which will accommodate approximately 75,000 spectators) is estimated to be approximately $224 million, which will be financed through a variety of mechanisms and government incentives. See "Managements' Discussion and Analysis - Future Liquidity". During the year the Company continued to explore potential locations for development of a motorsports facility in the Chicago area through the Motorsports Alliance (owned 50% by the Company and 50% by Indianapolis Motor Speedway). Subsequent to year end, the Motorsports Alliance announced that the City Council of Joliet, Illinois had approved plans to build a 1.5-mile oval superspeedway on land contiguous to the existing Route 66 Raceway. The aggregate cost of acquiring the approximately 930 acres and developing the facility (which will accommodate approximately 75,000 spectators) is estimated to be $100 million. OPERATIONS The Company's operations consist principally of racing events at its six tracks. The Company also owns a 45% indirect interest in the operations of the Miami Homestead Speedway in Florida and an approximately 12% indirect interest in Penske Motorsports, Inc. In addition, the Company owns and operates the DAYTONA USA motorsports-themed entertainment complex, provides catering, merchandising and concession services at certain of its facilities through its wholly-owned subsidiary, Americrown Service Corporation ("Americrown"), and operates two radio networks--MRN Radio and the NASCAR Truck Network (collectively "MRN Radio"). Approximately $149 million, or 79%, of the Company's fiscal 1998 revenues were attributable to NASCAR-sanctioned races at the Company's facilities, including applicable admissions, luxury suite rentals, sponsorship, television and MRN Radio broadcast rights fees, food and beverage concession and catering, souvenir, advertising and other revenues. The Company's fiscal 1998 revenues that were not attributable to NASCAR-sanctioned races at the Company's facilities were derived from a number of sources, including (i) admission and luxury suite rental revenue from racing events sanctioned by bodies other than NASCAR, (ii) admissions and sponsorship fees attributable to DAYTONA USA, (iii) MRN Radio's revenues from the sale of advertising and rights fees paid by broadcast affiliates with respect to events other than NASCAR-sanctioned races at the Company's facilities, (iv) merchandising, food and beverage revenues from the gift shop and snackbar adjacent to DAYTONA USA, (v) Americrown's catering, merchandising and concession revenues for the Company's non-NASCAR racing events, (vi) broadcast and sponsorship fees for such non-NASCAR racing events, and (vii) other revenues unrelated to racing events such as hangar rentals and gas sales at the Talladega Municipal Airport. None of the foregoing non-NASCAR revenue sources accounted for over 5% of the Company's fiscal 1998 revenues. RACING EVENTS The 1998 race schedule for the Company included eight NASCAR Winston Cup Series races (not including the Bud Shootout at Daytona all star event or the Gatorade 125s qualifying races for the Daytona 500), five NASCAR Busch Series - - Grand National Division races and approximately 50 other NASCAR races and events. In addition, in fiscal 1998 the Company promoted over 20 other stock car, sports car, motorcycle and go-kart racing events, including events sanctioned by the United States Road Racing Championship ("USRRC"), the Automobile Racing Club of America ("ARCA"), the Indy Racing League ("IRL"), the United States Auto Club ("USAC"), the Sports Car Club of America ("SCCA"), the American Motorcyclist Association ("AMA"), the World Karting Association ("WKA"), the Championship Cup Series ("CCS"), the American Historic Racing Motorcycle Association ("AHRMA"), Historic Sportscar Racing ("HSR"), and the Sportscar Vintage Racing Association ("SVRA"). 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, Championship Auto Racing Teams, Inc. ("CART"), 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 MIAMI HOMESTEAD SPEEDWAY. In July 1997, the Company acquired a 40% indirect interest in the operations of the Miami Homestead Speedway located south of Miami, Florida. The Company increased its stake to 45% in March 1998. The Miami facility has a 1.5 mile oval racing track on 320 acres of leased property. The state-of-the-art facility has grandstands that seat approximately 36,000 spectators, 50 suites containing an additional 2,260 seats, and temporary seating for approximately 5,700 additional persons. The Miami facility was the site of a number of significant racing events in 1998, including the Grand Prix of Miami (a CART event) and a NASCAR Busch Series - Grand National Division event. In addition, the facility was recently awarded a NASCAR Winston Cup Series event to be held in November 1999. PENSKE MOTORSPORTS. The Company beneficially owns an approximately 12% indirect interest in Penske Motorsports, Inc. ("PMI"), a publicly traded promoter and marketer of motorsports events. PMI owns and operates The California Speedway near Los Angeles, California, Michigan International Speedway in Brooklyn, Michigan, North Carolina Motor Speedway in Rockingham, North Carolina and Nazareth Speedway in Nazareth, Pennsylvania. Major racing events promoted by Penske Motorsports in 1998 included five NASCAR Winston Cup Series races, five NASCAR Busch Series - Grand National Division races and three Champ Car races sanctioned by CART. Two of the Company's directors serve on the Board of Directors of Penske Motorsports. DAYTONA USA. The Company's DAYTONA USA--The Ultimate Motorsports Attraction motorsports-themed entertainment complex is located adjacent to the Daytona International Speedway. 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) Speedway Tours, a tram tour of the Daytona International 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. Adjoining DAYTONA USA are (a) the Daytona Beach Area Convention and Visitors Official Welcome Center; (b) the Daytona ticket office; (c) a high tech arcade using state of the art video technology and computerized, "virtual" racing simulators; (d) the 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, thereby (i) increasing the use of the Company's Daytona facility, (ii) expanding the Company's concessions and souvenir sales, and (iii) providing greater visibility for the Company's business and motorsports generally, which in turn is expected to increase spectator interest. MRN RADIO. MRN Radio, which includes the NASCAR Truck Network, produces and syndicates NASCAR Winston Cup Series, NASCAR Busch Series - Grand National Division, Craftsman Truck Series and other races promoted by the Company and others. These networks also produce daily and weekly NASCAR racing programs. 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. AMERICROWN. The Company's Americrown subsidiary conducts the food, beverage and souvenir concession operations at Daytona, Talladega and Darlington. Americrown also provides catering services to corporate customers both in suites and entertainment chalets at these facilities and at Miami. Americrown was formed in 1989 to conduct concessions operations as part of the Company's ongoing efforts to enhance race spectators' total entertainment experience. OTHER ACTIVITIES 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, 1998, the Company had approximately 440 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 2,500 persons during Speedweeks, some of whom are volunteers. None of the Company's employees are represented by a labor union. Management believes that the Company enjoys a good relationship with its employees. ITEM 2. PROPERTIES MOTORSPORTS FACILITIES The following table sets forth certain information relating to each of the Company's speedway facilities.
NUMBER OF APPROXIMATE TRACK NAME LOCATION SEATS* ACREAGE TRACK LENGTH - - -------------------------------- ---------------------------- ----------- ------------ ------------- Daytona International Speedway Daytona Beach, Florida 147,823 440 2.5 miles Talladega Superspeedway Talladega, Alabama 121,306 1,365 2.6 miles Phoenix International Raceway Phoenix, Arizona 72,542 440 1.0 miles Darlington Raceway Darlington, South Carolina 55,381 230 1.3 miles Watkins Glen International Watkins Glen, New York 38,884 1,377 3.4 miles Tucson Raceway Park Tucson, Arizona 5,372 58 .4 miles
- - ---------------- *At November 30, 1998 and consisting of seating in grandstands and luxury suites (excludes infield admission). 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 to the infield 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. 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 Company has recently completed a $5.8 million track lighting project that will permit night racing events, which included The Pepsi 400 at Daytona in October 1998. At November 30, 1998, Daytona International Speedway had 142,295 grandstand seats, 66 suites (including air conditioned luxury sky boxes and Winston Tower suites that include access to hospitality areas) that include a total of 3,528 additional seats, and 40 "Paddock Club" suites that provide seating for 2,000 along "Pit Road" in Daytona's infield. During major events, The Company also uses chalet villages and other pre-race hospitality facilities that service approximately 15,000. Pending capital improvement projects include (i) approximately 6,000 premium grandstand seats in the Winston Tower, and (ii) approximately 7,400 seats on the "superstretch", including approximately 3,100 premium seats. 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 90 minutes 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, 1998, the facility included 119,022 grandstand seats, 30 luxury suites containing an additional 2,040 seats, a Paddock Club Suite for up to 244 spectators, and pre-race hospitality chalets providing service for approximately 10,000. The facility also includes a 400-acre campground facility, the International Motorsports Hall of Fame owned by the State of Alabama and hospitality and souvenir villages. Pending capital improvement projects include (i) additional grandstand seating for approximately 10,000 spectators, (ii) renovation of the facility's hospitality village and garage area, and (iii) the purchase of an additional 630 acres of land. PHOENIX INTERNATIONAL RACEWAY. The Phoenix International Raceway motorsports complex is located near Phoenix, Arizona on 440 acres owned by The Company. The complex, which was acquired by The Company in July 1997, has a 1- mile oval racing surface and a 1.5 mile road course. At November 30, 1998, the facility included 70,770 grandstand seats and 31 suites that provide seating for an additional 1,772 spectators. Pending capital improvement projects include (i) additional grandstand seating for approximately 6,000 spectators, (ii) the purchase of an additional 320 acres of land, and (iii) a variety of other facility improvements. 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, "egg shaped" oval track commonly known as "too tough to tame," grandstands that seat 54,419 spectators, ten luxury suites containing an additional 962 seats and pre-race hospitality chalets providing service for approximately 4,700. Pending capital improvement projects include additional grandstand seating for approximately 4,500 spectators. WATKINS GLEN INTERNATIONAL. Watkins Glen International includes 3.4 mile and 2.4 mile road course tracks located on approximately 1,377 acres owned by The Company. The Watkins Glen International facility includes grandstands that seat 35,244 spectators, five suites containing an additional 640 seats and pre-race hospitality chalets providing service for approximately 8,900. Additional temporary seating for approximately 3,000 spectators was added for the NASCAR Winston Cup Series event held in August 1998. Pending capital improvement projects include (i) extensive track paving, and (ii) a variety of other facility improvements. TUCSON RACEWAY PARK. Tucson Raceway Park includes a progressively banked, 3/8 mile paved oval track, grandstands providing seating for 5,372 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. The Company's 67,000 square foot corporate headquarters, acquired and renovated in fiscal 1997, is located on approximately nine acres across International Speedway Boulevard from Daytona International Speedway. 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 corporate headquarters, as well as concession facilities in Daytona Beach and in Talladega. In addition, The Company leases real estate and office space in Talladega, and 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's wholly- owned subsidiaries ISC Properties and Kansas International Speedway Corporation lease administrative office space in Charlotte, North Carolina and Kansas City, Kansas, respectively. TRADEMARKS. The Company has various registered and common law trademark rights, including "DAYTONA USA," the "Daytona 500," "Daytona International Speedway," "Talladega Superspeedway," "Darlington," "World Center of Racing," "Watkins Glen International," "Phoenix International Raceway" 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. In addition to such routine litigation incident to its business the Company faces exposure from other legal proceedings as described below. The Company's indirect corporate subsidiary, Americrown Service Corporation ("Americrown"), is the sole defendant in a class action proceeding in the Circuit Court of Talladega County, Alabama which was filed in October 1996. The plaintiffs allege, 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 suit seeks to recover at least $500 for each member of the class but does not otherwise seek to recover compensatory or punitive damages or statutory attorneys' fees. A class consisting of persons who purchased racing souvenirs at Talladega Superspeedway since September 1992 was certified on July 30, 1998 by the court. Americrown has moved for reconsideration and intends to appeal the ruling to the Alabama Supreme Court. 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 race or supporting event in the United States during the period 1991 to present. The two suits have been consolidated and the court is considering class certification. Discovery has been concluded. 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 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, 1998 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, 1998 there were approximately 2,800 record holders of both classes of stock. The reported high and low sales prices or high and low bid information as applicable for each quarter indicated are as follows:
ISCA ISCB(1) ------------------------- ------------------------- QUARTER ENDING: HIGH LOW HIGH LOW - ---------------------- ----------- ----------- ----------- ----------- February 1997 ......... 24.75 19.38 24.00 16.50 May 1997 .............. 22.50 17.25 21.75 17.00 August 1997 ........... 22.00 18.63 21.88 18.75 November 1997 ......... 22.50 17.00 22.63 19.75 February 1998 ......... 29.75 21.25 29.13 21.50 May 1998 .............. 37.75 27.13 37.50 27.38 August 1998 ........... 36.63 27.00 36.38 27.50 November 1998 ......... 36.00 23.94 35.50 23.75
- - ---------------- (1) ISCB quotations were obtained from the OTC Bulletin Board and represent prices between dealers and do not include mark-up, mark-down or commission. Such quotations do not necessarily represent actual transactions. DIVIDENDS Annual dividends of 6 cents per share were declared in the quarter ending in May and paid in June in fiscal years 1997 and 1998 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 1998. 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, (1) Nov. 30, (Unaudited) ----------------------------- ------------- ------------- -------------------- 1994 1995 1996 1996 1996 1997 1998 ---- ---- ---- ----- ---- ---- ---- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) INCOME STATEMENT DATA: Revenues: Admissions, net .................... $ 36,935 $ 43,274 $ 50,140 $ 4,191 $ 50,705 $ 69,487 $ 86,946 Motorsports related income ......... 18,764 24,033 27,433 3,972 28,376 46,650 71,793 Food, beverage and souvenir income . 12,291 14,442 17,505 1,943 17,723 23,408 28,597 Other income ....................... 943 423 964 390 1,192 1,829 1,632 --------- --------- -------- -------- --------- --------- -------- Total revenues .................... 68,933 82,172 96,042 10,496 97,996 141,374 188,968 Expenses: Direct expenses: Prize and point fund monies and NASCAR sanction fees .......... 9,412 11,765 13,865 1,301 13,724 20,567 28,767 Motorsports related expenses ...... 11,470 11,604 15,336 2,814 16,384 23,075 33,283 Food, beverage and souvenir expenses 7,867 8,107 10,278 1,536 10,559 13,435 15,025 General and administrative expenses . 14,307 18,202 20,930 5,057 21,721 29,486 37,842 Depreciation and amortization ....... 3,828 4,798 6,302 2,353 7,368 9,910 13,137 --------- --------- -------- -------- --------- --------- -------- Total expenses ..................... 46,884 54,476 66,711 13,061 69,756 96,473 128,054 --------- --------- -------- -------- --------- --------- -------- Operating income (loss)............... 22,049 27,696 29,331 (2,565) 28,240 44,901 60,914 Interest income, net ................. 972 1,436 872 261 843 2,687 3,832 Equity in net income (loss) from equity investments ............... 207 285 1,441 (304) 1,291 366 (905) Gain on sale of equity investment ... - - - - - - 1,245 --------- --------- -------- -------- --------- --------- -------- Income (loss) before income taxes .... 23,228 29,417 31,644 (2,608) 30,374 47,954 65,086 Income taxes (benefit) ............... 8,662 11,054 11,963 (741) 11,540 18,158 24,894 --------- --------- -------- -------- --------- --------- -------- Net income (loss) .................... $ 14,566 $ 18,363 $ 19,681 $ (1,867) $ 18,834 $ 29,796 $ 40,192 ========= ========= ======== ======== ========= ========= ======== Basic earnings (loss) per share (2)... $ .43 $ .54 $ .58 $ (.05) $ .55 $ .78 $ 1.00 ========= ========= ======== ======== ========= ========= ======== Diluted earnings (loss) per share (2). $ .43 $ .54 $ .57 $ (.05) $ .54 $ .78 $ 1.00 ========= ======== ======== ======== ========= ======== ======== Dividends per share .................. $ .04 $ .05 $ .05 $ -- $ .05 $ .06 $ .06 ========= ========= ======== ======== ========= ========= ======== BALANCE SHEET DATA (END OF PERIOD): Working capital (deficit) ............ $ 11,839 $ 20,821 $ (6,751) $ 52,922 $ 52,922 $ (24,976) $ 27,490 Total assets ......................... 96,401 119,571 152,791 234,069 234,069 302,823 476,818 Long-term debt ....................... -- -- -- -- 1,007 2,775 Total shareholders' equity ........... 68,277 85,247 106,667 179,289 179,289 209,907 366,855
- ---------------------- (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 12-month period November 30, 1996 are presented for the purpose of comparison to the fiscal year ended November 30, 1997. (2) Earnings per share amounts prior to 1998 have been restated as required to comply with Statement of Financial Accounting Standards No. 128. See Note 1 of Notes to the Company's audited financial statements. 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 and motorsports activities held at its 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 and activities. "Admissions" revenue includes ticket sales from all of the Company's events and DAYTONA USA's Track Tour and 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:
Year Ended Three Months Twelve Months Year Ended Year Ended August 31, Ended Nov. 30, Ended Nov. 30, Nov. 30, Nov. 30. (Unaudited) ---------- ------------- -------------- ----------- ----------- 1996 1996 1996 1997 1998 ---- ---- ---- ----- ---- Revenues: Admissions, net ...................................... 52.2% 39.9% 51.7% 49.1% 46.0% Motorsports related income ........................... 28.6 37.9 29.0 33.0 38.0 Food, beverage and souvenir income ................... 18.2 18.5 18.1 16.6 15.1 Other income ......................................... 1.0 3.7 1.2 1.3 0.9 -------- ------ ------ ------ ------ Total revenues ...................................... 100.0% 100.0% 100.0% 100.0% 100.0% Expenses: Direct expenses: Prize and point fund monies and NASCAR sanction fees 14.4 12.4 14.0 14.5 15.2 Motorsports related expenses ........................ 16.0 26.8 16.7 16.3 17.6 Food, beverage and souvenir expenses ................ 10.7 14.6 10.8 9.5 8.0 General and administrative expenses .................. 21.8 48.2 22.2 20.9 20.0 Depreciation and amortization ........................ 6.6 22.4 7.5 7.0 7.0 -------- ------ -------- ------ ------ Total expenses ...................................... 69.5 124.4 71.2 68.2 67.8 -------- ------ -------- ------ ------ Operating income (loss) ............................... 30.5 (24.4) 28.8 31.8 32.2 Interest income, net .................................. 0.9 2.5 0.9 1.9 2.0 Equity in net income (loss)from equity investments ... 1.5 (2.9) 1.3 0.2 (0.5) Gain on sale of equity investment ..................... - -- -- - 0.7 -------- ------- -------- ------ ------ Income (loss) before income taxes ..................... 32.9 (24.8) 31.0 33.9 34.4 Income taxes (benefit)................................. 12.4 (7.0) 11.8 12.8 13.1 -------- ------- -------- ------ ------ Net income (loss)...................................... 20.5% (17.8%) 19.2% 21.1% 21.3% ======== ======== ======== ======== ====== During the year ended November 30, 1997, the Company acquired the 50% interest it did not already own in Watkins Glen International ("Watkins Glen") and purchased Phoenix International Raceway ("Phoenix"). The consolidation of Watkins Glen, effective April 1, 1997, and the July 14, 1997 purchase of Phoenix resulted in increases in both revenues and expenses when comparing fiscal 1998 with fiscal 1997, as well as when comparing fiscal 1997 with the same period of the prior year. Accordingly, the Company's results of operations are not necessarily comparable on a period to period basis. COMPARISON OF FISCAL 1998 TO FISCAL 1997 Admissions revenue increased approximately $17.5 million, or 25.1%, for fiscal 1998 as compared to fiscal 1997. This increase was primarily attributable to increased seating capacity and attendance, and an increase in the weighted average price of tickets sold for the events conducted at Daytona International Speedway ("Daytona"), Talladega Superspeedway ("Talladega"), Phoenix, Darlington Raceway ("Darlington") and Watkins Glen. Motorsports related income increased approximately $25.1 million, or 53.9%, during fiscal 1998 as compared to fiscal 1997. Approximately one-half of this increase was a result of increases in television broadcast rights fees. The remaining increase was primarily attributable to promotion and sponsorship fees, luxury suite and hospitality rentals, and to a lesser extent, events conducted at Phoenix for which there were no comparable events in fiscal 1997. Food, Beverage and Souvenir income increased approximately $5.2 million, or 22.2%, during fiscal 1998 as compared to fiscal 1997. This increase was primarily attributable to increased attendance and hospitality at the Company's racing events, as well as strong sales of souvenirs at the gift shop adjacent to DAYTONA USA Prize and point fund monies and NASCAR sanction fees increased by approximately $8.2 million, or 39.9%, during fiscal 1998 as compared to fiscal 1997. Approximately three-quarters of this increase was the result of increases in the prize and point fund monies paid by NASCAR to participants in the Company's events. This increase was primarily related to increased television broadcast rights fees because standard NASCAR sanctioning agreements require that a specified percentage of television broadcast rights fees be paid as part of the prize money. Motorsports related expenses increased approximately $10.2 million, or 44.2%, during fiscal 1998 as compared to fiscal 1997. Approximately two-thirds of the increase was primarily attributable to increases in personnel costs, advertising, hospitality and other operating costs. The remaining increase was attributable to expenses for Phoenix and Watkins Glen for which there were no comparable expenses in fiscal 1997 due to the timing of the acquisitions. Motorsports related expenses as a percentage of combined admissions and motorsports related income increased from approximately 19.9% to 21.0%, when comparing fiscal 1997 with fiscal 1998. This increase was primarily due to lower margin events conducted at Phoenix for which there were no comparable events in fiscal 1997. Food, beverage and souvenir expense increased approximately $1.6 million, or 11.8%, during fiscal 1998, as compared to fiscal 1997. These increased expenses were primarily related to increased product and personnel costs. Food, beverage and souvenir expenses as a percentage of food, beverage and souvenir income decreased from 57.4% to 52.5% for fiscal 1998 as compared to fiscal 1997. This decrease was due to economies of scale and cost containment, fees from third party vendors at Phoenix for which there are no associated costs, discontinuation of lower margin events conducted at facilities not operated by the Company and the impact of additional expense associated with the rain out and rescheduling of a NASCAR Winston Cup Series event at Talladega in the prior year. General and administrative expenses increased $8.4 million, or 28.3%, for fiscal 1998 as compared to fiscal 1997. The increase was primarily attributable to personnel costs and professional fees, with over one-quarter of the increase related to the timing of the acquisitions of Phoenix and Watkins Glen in the prior year. General and administrative expenses as a percentage of total revenues remained relatively constant for fiscal 1998 as compared to fiscal 1997. Depreciation and amortization expense increased approximately $3.2 million, or 32.6%, for fiscal 1998 as compared to fiscal 1997. Approximately 45% of this increase was attributable to Phoenix, including the amortization of goodwill, and to Watkins Glen for which there was no comparable expense in fiscal 1997. The remaining increase was attributable to ongoing improvements at the Company's other facilities. The approximately $1.1 million increase in the Company's net interest income for fiscal 1998 as compared to fiscal 1997, is attributable primarily to the investment of the proceeds of the Class A Common Stock Offering in July 1998. Equity in net income (loss) from equity investments represents the Company's pro rata 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. During fiscal 1998 this included the Company's approximately 12% indirect investment in Penske Motorsports, Inc. ("PMI"), its 40% investment in Homestead-Miami Speedway, LLC ("Miami") the operators of the Miami Homestead Speedway, which was increased to 45% in March 1998, and its approximately 7% investment in Grand Prix Association of Long Beach ("Long Beach"), which was sold in March 1998. Fiscal 1997 included the Company's approximately 11% indirect investment in PMI, its 40% investment in Miami acquired in July of 1997, its approximately 7% investment in Long Beach acquired in August of 1997, and the Company's 50% investment in Watkins Glen through March 31, 1997. The gain on sale of equity investments of approximately $1.2 million was a result of the sale of the Company's equity investment in Long Beach in March of 1998. The Company sold its investment in conjunction with Dover Downs Entertainment, Inc.'s announced plans to merge with Long Beach. The after tax impact of this transaction was a gain of approximately $850,000. As a result of the foregoing, the Company's net income increased approximately $10.4 million, or 34.9%, for fiscal 1998 as compared to fiscal 1997. COMPARISON OF FISCAL 1997 TO THE TWELVE MONTHS ENDED NOVEMBER 30, 1996 The Company changed its fiscal year end to November 30 effective December 1, 1996. Management believes that, due to the expansion of the Company's business during the period, 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. 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, Talladega and 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. In fiscal 1997 this included the Company's 11% indirect interest in PMI, its 40% investment in Miami from July of 1997, its approximately 7% investment 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. 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 an annual cash dividend. At November 30, 1998, the Company had working capital of $27.5 million, as well as $53.5 million of investments designated for investment in Kansas International Speedway, as discussed below under "Future Liquidity", compared to a working capital deficit of $25.0 million at November 30, 1997. This was primarily attributable to the Class A Common Stock Offering discussed below under "Cash Flows". There were no borrowings under the Company's credit facility at November 30, 1998. CASH FLOWS Net cash provided by operating activities was approximately $79.5 million for fiscal 1998. The difference between the Company's net income of $40.2 million and the $79.5 million of operating cash flow was primarily attributable to $13.1 million of depreciation and amortization, a $12.9 million increase in deferred income, a $5.5 million increase in deferred income taxes, a $5.3 million increase in income taxes payable and a $5.2 million combined increase in accounts payable and other current liabilities, partially offset by a $3.2 million combined increase in accounts receivable and prepaid expenses and other current assets. Net cash used in investing activities for fiscal 1998 was approximately $152.3 million. Investing activities included the net acquisition of $84.0 million of short-term investments, capital expenditures of $71.9 million and approximately $5.3 million in proceeds from the sale of the Company's investment in Long Beach. Net cash provided by financing activities for fiscal 1998 was approximately $101.5 million. Net cash provided by financing activities included the net proceeds from the July 1998 Class A Common Stock Offering of approximately $117.7 million, partially offset by payments totaling approximately $13.7 million on the note payable related to the Phoenix acquisition and dividends paid of $2.3 million. CAPITAL EXPENDITURES Capital expenditures totaled approximately $71.9 million for fiscal 1998 compared to $38.6 million for fiscal 1997. Approximately three-quarters of the capital expenditures during 1998 were for existing facilities. These expenditures were related primarily to increased seating capacity at the Company's superspeedways, additional luxury suites at Daytona, Talladega and Phoenix and track lighting at Daytona. The remaining capital expenditures were primarily related to the acquisition of land for Kansas International Speedway. The Company expects to make approximately $34.3 million of additional capital expenditures for approved projects at existing facilities within the next 24 months to increase grandstand seating capacity, to construct luxury suite and hospitality areas, and for a number of other improvements to the Company's motorsports facilities. In addition, the Company expects to make additional capital expenditures related to Kansas International Speedway as discussed below. FUTURE LIQUIDITY In May of 1998, the Company entered into a five-year, unsecured, $100 million revolving line of credit facility with First Union National Bank, N.A. (the "Credit Facility"). Borrowings under the Credit Facility will bear interest at the applicable LIBOR rate plus 40-80 basis points depending on certain financial criteria. The Credit Facility includes customary representations and warranties, covenants, defaults and conditions. The Credit Facility is intended to be used for short-term working capital and to finance the development and/or acquisition of additional motorsports facilities. There were no borrowings under the Credit Facility at November 30, 1998. In December 1997, the Company entered into an agreement with the Unified Government of Wyandotte County/Kansas City, Kansas ("Unified Government") for the development of a 1.5-mile oval motor speedway near Kansas City, Kansas. The aggregate cost of acquiring and developing the first phase of Kansas International Speedway (which will accommodate approximately 75,000 spectators) is estimated to be approximately $224 million, which will be financed by i) approximately $77.9 million invested by the Company funded from the proceeds of the July 1998 Class A Common Stock offering, ii) approximately $69.6 million of proceeds, net of accrued interest and original issue discount, from the sale of taxable special obligation ("TIF") bonds that will be serviced through payments by the Company escalating from an annual rate of approximately $4.8 million to $7.7 million, including interest at 6.15% to 6.75%, iii) approximately $24.1 million of proceeds, net of accrued interest and original issue discount, from the sale of tax-exempt sales tax special obligation ("STAR") bonds that will be retired with state and local taxes generated within the project's boundaries, and iv) a variety of other mechanisms and governmental incentives. The Company has invested approximately $26.9 million in the project primarily for land, approximately $24.4 million of which was invested during fiscal 1998. During January 1999, the Company deposited the remaining $51 million of its portion of the project funding into a trust account concurrent with the Unified Government's issuance of the TIF and STAR bonds described above. TIF and STAR bond proceeds are awaiting disbursement subject to certain conditions of the bond insurer. The Motorsports Alliance, LLC (owned 50% by the Company and 50% by Indianapolis Motor Speedway) and Route 66, LLC are currently pursuing the development of a motorsports facility in the Chicago area. In January 1999, the Motorsports Alliance announced that the City Council of Joliet, Illinois had approved its plans to build a 1.5-mile oval motor speedway on land contiguous to the existing Route 66 Raceway. The aggregate cost of acquiring the approximately 930 acres and developing the facility (which will accommodate approximately 75,000 spectators) is estimated to be $100 million. The Company believes that cash flow from operations, along with the remaining net proceeds of the July 1998 Class A Common Stock Offering and available borrowings under the Credit Facility, will be sufficient to fund i) the Company's operations and approved capital projects at existing facilities for the foreseeable future, ii) debt service requirements of the TIF bonds described above prior to the commencement of racing at Kansas International Speedway, and iii) the Company's expected funding requirements for the proposed Chicago project. In addition, the Company intends to pursue further development and/or acquisition opportunities, the timing, size and success as well as associated potential capital commitments of which are unpredictable. Accordingly, a material acceleration in the company's growth strategy could require the Company to obtain additional capital through debt and/or equity financings. Although there can be no assurance, management believes that adequate debt or equity financing would be available on satisfactory terms. 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 events. For example, one of Darlington Raceway's Winston Cup Series events is traditionally held on the Sunday preceding Labor Day. Accordingly, the timing of the Labor Day holiday in 1997 and 1998 resulted in the revenue and expenses for that race and the related supporting events being recognized in the quarter ended August 31 in fiscal 1997, while not being recognized until the quarter ending November 30 in fiscal 1998. Further, in July 1998 the Company announced the postponement of the NASCAR Winston Cup Series Pepsi 400 at Daytona from July 4, 1998 to October 17, 1998 as a result of the nationally publicized forest fire emergency throughout the state of Florida. The rescheduling of the Pepsi 400 at Daytona resulted in event-related revenues and expenses being recognized in the quarter ending November 30, 1998 while corresponding revenues and expenses were recognized in the quarter ended August 31 in fiscal 1997. Accordingly, the Company's results of operations are not necessarily comparable on a period-to-period basis. The following table presents certain unaudited financial data for each fiscal quarter of fiscal 1997 and fiscal 1998 (in thousands, except per share amounts):
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 Basic earnings per share ....... 0.46 0.12 0.16 0.05 Diluted earnings per share ..... 0.46 0.12 0.16 0.05
FISCAL QUARTER ENDED ------------------------------------------------------------ FEBRUARY 28, MAY 31, AUGUST 31, NOVEMBER 30, 1998 1998 1998 1998 -------------- ------------ ------------ ------------- Total Revenues ................. $ 68,284 $ 38,191 $ 17,822 $ 64,671 Operating Income (loss) ........ 33,000 7,784 (4,687) 24,817 Net Income (loss) .............. 20,149 6,046 (1,944) 15,941 Basic earnings (loss) per share 0.53 0.16 (.05) 0.37 Diluted earnings (loss) per share 0.53 0.16 (.05) 0.37
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 time sensitive applications and business systems of the Company and its business partners 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 related to information technology systems has been made and the plans to resolve the related issues are being implemented. Most major information technology 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 readiness with regard to information technology systems during fiscal 1999. The Company suspects that some of its non-information technology systems, such as exhibit controllers, elevators, heating and air-conditioning systems, etc., with date sensitive software and embedded microprocessors may be affected, and evaluation is underway. Preliminary estimates of the costs of correcting or replacing critical non-information technology systems indicate that these costs will not be material. The Company has also developed a plan of communication with significant business partners to identify and minimize disruptions to the Company's operations resulting from the Year 2000 issue. There can be no certainty that the computer programs and business systems of third parties on which the Company relies will not have an adverse effect on the Company's operations. However, because of the nature of its business, the Company believes at this time that a failure of the Company's vendors, sponsors or customers to resolve issues involving the Year 2000 problem will not be material. The Company anticipates completing substantially all of its Year 2000 preparation during fiscal 1999. In the event the Company falls behind on its timetable for achieving Year 2000 compliance, additional internal resources will be focused on completing critical projects and developing contingency plans. The Company at this time believes that it will satisfactorily resolve all significant Year 2000 problems. Preliminary estimates of costs to correct the identified potential problems related to the Year 2000 indicate that these costs will not exceed $500,000. Estimates of Year 2000 related costs are based on numerous assumptions, including the continued availability of certain resources, the ability to correct all relevant information and non-information technology systems and third party modification plans. There is no guarantee that the estimates will be achieved and actual costs could differ materially from those anticipated. 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. DEPENDENCY UPON NASCAR The Company's success has been and will remain dependent upon maintaining a good working relationship with NASCAR, the sanctioning body for NASCAR's Winston Cup Series, the Busch Series - Grand National Division and certain other races promoted by the Company. The Company has sanctioning agreements to promote and market eight NASCAR Winston Cup Series championship point races, two NASCAR Winston Cup Series non-championship point races, five NASCAR Busch Series - Grand National Division 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 fiscal 1998, NASCAR-sanctioned races at the Company's facilities accounted for approximately 79% 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's general growth strategy includes the possible development and/or acquisition 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 (collectively the "France Family Executives"), 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. UNCERTAIN PROSPECTS OF NEW MOTORSPORTS FACILITIES The Company's growth strategy includes the potential acquisition and/or development of new motorsports facilities, including the proposed Kansas International Speedway and the possible development of a motorsports facility near Chicago, Illinois. 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, NASCAR Busch Series - Grand National Division or other major events at these new facilities, (ii) the cooperation of local government officials, (iii) the Company's capital resources, (iv) the Company's ability to control construction and operating costs, (v) the Company's ability to hire and retain qualified personnel and (vi) with respect to the proposed Kansas International Speedway, the resolution of certain pending litigation. The Company's inability to implement its expansion plans for any reason could 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 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. INDUSTRY SPONSORSHIPS AND GOVERNMENT REGULATION The motorsports industry generates significant recurring revenue from the promotion, sponsorship and advertising of various companies and their products. Actual or proposed 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 Corporations's events. Since August of 1996 there have been several thus far unsuccessful governmental attempts to impose restrictions on the advertising and promotion of cigarettes and smokeless tobacco, including sponsorship of motorsports activities. These regulatory efforts if successfully implemented would have prohibited the present practice of tobacco brand name sponsorship of, or identification with, motorsports events, entries and teams. At this point the ultimate outcome of these or future government regulatory and legislative efforts to regulate the advertising and promotion of cigarettes and smokeless tobacco is uncertain and the impact, if any, on the motorsports industry is unclear. Recently major United States companies engaged in the manufacture of cigarettes and smokeless tobacco (collectively the "tobacco industry") entered into various agreements with the Attorneys General of all 50 states to settle certain state initiated litigation against the tobacco industry. These settlement agreements will, among other things, place limits upon the sponsorship of motorsports activities by the tobacco industry. The actual impact of these settlement agreements upon the Company's future revenues has not yet been determined. Even more recently the executive branch of the United States government has publicly stated its intention to initiate certain litigation against the tobacco industry which would be similar to that initiated by the states which was recently settled. The exact parameters of the proposed litigation and the impact, if any, of this proposed litigation upon the Company's future revenues is presently 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. The combined advertising and sponsorship revenue from the tobacco and alcoholic beverage industries accounted for approximately 1.5% and 1.6% of the Company's total revenues in fiscal 1997 and fiscal 1998, respectively. 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 NASCAR's Winston Cup Series and Busch Series - Grand National Division. LEGAL PROCEEDINGS The Company and its indirect subsidiary, Americrown Service Corporation, are parties to certain legal proceedings alleging price-fixing activities in connection with the sale of racing souvenirs and merchandise as described in "Part II - Other Information". While the Company and Americrown dispute the allegations and intend to defend the actions fully and vigorously, neither the cost of defending the suits nor the potential damages or other remedies for which the Company and Americrown might be liable is 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. POTENTIAL CONFLICTS OF INTEREST William C. France and James C. France beneficially own all of NASCAR's capital stock, and each of the France Family Executives, the Company's Vice President--Administration, the Company's General Counsel and certain other non-officer employees (collectively the "Shared Employees") devote portions of their time to NASCAR's affairs. Each of the Shared Employees devotes substantial time to the Company's affairs and all of the Company's other executive officers are available to the Company on a full-time basis. In addition, 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 those which could be obtained in arms'-length negotiations. Nevertheless, certain potential conflicts of interest between the Company and NASCAR exist with respect to, among other things, (i) the terms of any sanctioning agreements that may be awarded to the Company by NASCAR, (ii) the amount of time devoted by the Shared Employees and certain other Company employees to NASCAR's affairs, and (iii) the amounts charged or paid to NASCAR for office rental, transportation costs, shared executives, administrative expenses and similar items. COMPETITION The Company's racing events face competition from other spectator-oriented sporting events and other leisure and recreational activities, including professional football, basketball and baseball. 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"), Indy Racing League ("IRL"), the United States Auto Club ("USAC"), the National Hot Rod Association ("NHRA"), the Sports Car Club of America ("SCCA"), the 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 conveniences 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 consumer spending will not be adversely affected by economic conditions, thereby impacting the Company's growth, revenue and profitability. 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. OTHER REGULATORY 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. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Company's interest income and expense are most sensitive to changes in the general level of U.S. interest rates. In this regard, changes in U. S. interest rates affect the interest earned on the Company's cash equivalents and short term investments as well as interest paid on its debt. The objective of the Company's asset management activities is to provide an adequate level of interest income and liquidity to fund operations and capital expansion, while minimizing market risk. The Company utilizes short term investments consisting of certificates of deposit and obligations of U.S. Government agencies and municipal securities to minimize the interest rate risk. The Company does not believe that its interest rate risk related to its cash equivalents and short term investments is material due to the short term nature of the investments. The Company does not believe that its interest rate risk related to its debt is material due to the balance of approximately $2.8 million. Additionally, the Company maintained its certificates of deposit with one financial institution at November 30, 1998. The Company believes that it is not exposed to any significant credit risk on its certificates of deposit due to the strength of the financial institution and the short term nature of the certificates of deposit. 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, 1997 and 1998, and the related consolidated statements of income, shareholders' equity and cash flows for the year ended August 31, 1996, the three month period ended November 30, 1996, and the years ended November 30, 1997 and 1998. 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, 1997 and 1998, and the consolidated results of their operations and their cash flows for the year ended August 31, 1996, the three month period ended November 30, 1996 and the years ended November 30, 1997 and 1998, 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, 1999 INTERNATIONAL SPEEDWAY CORPORATION CONSOLIDATED BALANCE SHEETS
November 30 ______________________ 1997 1998 (In thousands) ASSETS Current Assets: Cash and cash equivalents ......................... $ 9,974 $ 38,676 Short-term investments (Note 4) ................... 23,601 54,127 Receivables, less allowance of $100 ............... 7,425 9,445 Inventories ....................................... 866 953 Prepaid expenses and other current assets ......... 4,077 5,243 -------- -------- Total Current Assets ................................ 45,943 108,444 Property and Equipment: Land and leasehold improvements ................... 15,177 32,651 Buildings, grandstands and tracks ................. 153,044 198,636 Furniture and equipment ........................... 33,168 36,726 Construction in progress ....... .................. 18,606 23,347 -------- -------- 219,995 291,360 Less: accumulated depreciation .................... 53,917 65,529 -------- -------- 166,078 225,831 Other Assets: Cash surrender value of life insurance ............ 3,590 4,913 Equity investments (Note 2) ....................... 45,844 44,087 Goodwill, less accumulated amortization of $382 and $1,386, respectively (Note 3)................ 40,400 38,927 Designated investments (Note 4) ................... - 53,500 Long-term investments (Note 4) .................... 500 500 Other ............................................. 468 616 -------- -------- 90,802 142,543 -------- -------- Total Assets ........................................ $302,823 $476,818 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable .................................. $ 5,896 $ 10,367 Income taxes payable (Note 5) ..................... 7 5,088 Deferred income ................................... 49,338 62,253 Current portion of note payable ................... 13,295 598 Other current liabilities ......................... 2,383 2,648 ------- -------- Total Current Liabilities ........................... 70,919 80,954 Notes Payable ....................................... 1,007 2,775 Deferred Income Taxes (Note 5) ...................... 20,990 26,234 Commitments and Contingencies (Note 8) Shareholders' Equity (Notes 1 and 7): Class A Common Stock, $.01 par value, 80,000,000 shares authorized; 5,342,042 and 11,529,590 issued and outstanding in 1997 and 1998, respectively .................. 53 115 Class B Common Stock, $.01 par value, 40,000,000 shares authorized; 33,154,920 and 31,573,043 issued and outstanding in 1997 and 1998, respectively .................. 332 316 Additional paid-in capital ........................ 86,437 205,089 Retained earnings ................................. 125,457 163,201 --------- -------- 212,279 368,721 Less unearned compensation--restricted stock (Note 11) 2,372 1,866 --------- -------- Total Shareholders' Equity .......................... 209,907 366,855 --------- -------- Total Liabilities and Shareholders' Equity .......... $302,823 $476,818 ========= ========
See accompanying notes. INTERNATIONAL SPEEDWAY CORPORATION CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS YEAR ENDED ENDED YEAR ENDED AUGUST 31, NOVEMBER 30, NOVEMBER 30, ----------- -------------- -------------- ------------- 1996 1996 1997 1998 ----------- -------------- -------------- ------------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Revenues: Admissions, net ................................... $ 50,140 $ 4,191 $ 69,487 $ 86,946 Motorsports related income ........................ 27,433 3,972 46,650 71,793 Food, beverage and souvenir income ................ 17,505 1,943 23,408 28,597 Other income ...................................... 964 390 1,829 1,632 --------- --------- ---------- ---------- 96,042 10,496 141,374 188,968 Expenses: Direct expenses: Prize and point fund monies and NASCAR sanction fees .................................. 13,865 1,301 20,567 28,767 Motorsports related expenses ..................... 15,336 2,814 23,075 33,283 Food, beverage and souvenir expenses ............. 10,278 1,536 13,435 15,025 General and administrative expenses ............... 20,930 5,057 29,486 37,842 Depreciation and amortization ..................... 6,302 2,353 9,910 13,137 --------- --------- ---------- ---------- 66,711 13,061 96,473 128,054 --------- --------- ---------- ---------- Operating income (loss) ............................ 29,331 (2,565) 44,901 60,914 Interest income, net ............................... 872 261 2,687 3,832 Equity in net income (loss) from equity investments ............................... 1,441 (304) 366 (905) Gain on sale of equity investment .................. - - - 1,245 --------- ---------- ---------- ---------- Income (loss) before income taxes .................. 31,644 (2,608) 47,954 65,086 Income taxes (benefit) (Note 5) .................... 11,963 (741) 18,158 24,894 --------- ---------- ---------- ---------- Net income (loss) .................................. $ 19,681 $ (1,867) $ 29,796 $ 40,192 ========= ========= ========== ========== Basic earnings (loss) per share (Note 1) ........... $ 0.58 $ (0.05) $ 0.78 $ 1.00 ========= ========== ========== ========== Diluted earnings (loss) per share (Note 1) ......... $ 0.57 $ (0.05) $ 0.78 $ 1.00 ========= ========== ========== ========== Dividends per share (Note 1) ....................... 5.3/cent/ -- 6.0/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, 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 ..... 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 ............. -- -- 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 Net income ................................ -- -- -- 40,192 - 40,192 Public offering - Class A Common Stock (Note 7) ................................ 46 - 117,654 -- -- 117,700 Cash dividends (6.0/cent/per share) ....... - -- -- (2,310) -- (2,310) Change in equity investment (Note 2) ...... - -- (7) -- -- (7) Restricted stock granted (Note 11) ........ -- -- 680 -- (680) -- Reacquisition of previously issued common stock ............................ -- -- (57) (138) -- (195) Conversion of Class B Common Stock to Class A Common Stock .................... 16 (16) -- -- -- -- Forfeiture of restricted shares ........... -- -- (110) -- 110 -- Income tax benefit related to restricted stock plan (Note 11) .................... -- -- 492 -- -- 492 Amortization of unearned compensation (Note 11) .................. -- -- -- -- 1,076 1,076 --- ------ --------- --------- -------- --------- BALANCE AT NOVEMBER 30, 1998 ................ $115 $316 $205,089 $163,201 $(1,866) $366,855 ==== ====== ========= ========= ======== =========
See accompanying notes. INTERNATIONAL SPEEDWAY CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS YEAR ENDED ENDED YEAR ENDED AUGUST 31, NOVEMBER 30, NOVEMBER 30, ----------- -------------- ----------- ----------- 1996 1996 1997 1998 ----------- -------------- ----------- ----------- (IN THOUSANDS) OPERATING ACTIVITIES Net income (loss) .................................... $ 19,681 $ (1,867) $ 29,796 $ 40,192 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization ........................ 6,302 2,353 9,910 13,137 Amortization of unearned compensation ................ 606 122 1,063 1.076 Deferred income taxes ................................ 1,500 (766) 4,425 5,545 Undistributed (income) loss from equity investments. ................................ (1,441) 304 (366) 905 Gain on sale of equity investment .................... -- -- (1,245) Changes in Operating Assets and Liabilities: Receivables ......................................... (1,661) (1,405) (667) (2,020) Inventories ......................................... (251) 156 485 (87) Prepaid expenses and other current assets ........... 712 651 (689) (1,166) Other assets ........................................ (127) -- (204) (176) Accounts payable .................................... 1,201 (514) 2,278 4,471 Deferred income ..................................... 6,111 9,797 6,791 12,915 Income taxes payable ................................ (267) 30 (80) 5,277 Other current liabilities ........................... 317 (1,038) 2,192 688 ---------- --------- --------- ---------- Net Cash Provided by Operating Activities ............. 32,683 7,823 54,934 79,512 INVESTING ACTIVITIES Acquisition of investments ............................ (83,502) (70,959) (145,391) (342,146) Proceeds from maturities of investments ............... 106,330 3,771 197,347 258,120 Capital expenditures .................................. (34,784) (14,864) (38,627) (71,858) Equity investments .................................... (15,287) -- (17,725) (410) Cash surrender value of life insurance ................ (725) (1,123) (1,253) (1,323) Proceeds from sale of equity investment ............... - - - 5,270 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 ................. (27,968) (83,175) (50,513) (152,347) FINANCING ACTIVITIES Payment of notes payable .............................. - - - (13,658) Reacquisition of previously issued common stock ....... (1,708) -- (148) (195) Additional expense of Class A Common Stock Offering ............................... -- -- (46) Cash dividends paid ................................... (1,836) -- (2,310) (2,310) Issuance of Class A Common Stock ...................... -- 74,367 - 117,700 Short-term borrowings ................................. -- 7,800 - - Repayment of short-term borrowings .................... -- (7,800) - -- ---------- --------- --------- ----------- Net Cash Provided by (Used in) Financing Activities.... (3,544) 74,367 (2,504) 101,537 ---------- --------- --------- ---------- Net Increase (Decrease) in Cash and Cash Equivalents .. 1,171 (985) 1,917 28,702 Cash and Cash Equivalents at Beginning of Period ....... 7,871 9,042 8,057 9,974 ---------- --------- --------- ---------- Cash and Cash Equivalents at End of Period ............. $ 9,042 $ 8,057 $ 9,974 $ 38,676 ========== ========= ========= ==========
See accompanying notes. INTERNATIONAL SPEEDWAY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOVEMBER 30, 1998 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 ("Daytona"), 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 promoted over 80 stock car, sports car, truck, motorcycle and other racing events in 1998, including eight NASCAR Winston Cup Series championship point races, two NASCAR Winston Cup Series non-championship point 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 a 45% interest in Homestead-Miami Speedway, LLC ("Miami"), the operator of the Miami Homestead Speedway. The Company also holds an approximately 12% 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 owns and operates DAYTONA USA--The Ultimate Motorsports Attraction, a motorsports theme-entertainment complex that includes interactive media, theaters, historical memorabilia and exhibits and tours of Daytona International Speedway. 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. 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. 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, 1997, represent a 40% ownership interest in Miami, a 20% ownership interest in PSH Corp (resulting in an approximately 11% indirect interest in PMI) and an approximately 7% interest in Grand Prix Association of Long Beach ("Long Beach"). At November 30, 1998, equity investments represent a 45% interest in Miami and a 20% ownership interest in PSH Corp. (resulting in an approximately 12% indirect interest in PMI). 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 20-40 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 (NOTE 3): 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. The amount amortized for the years ended November 30, 1997 and November 30, 1998, was approximately $382,000 and $1,004,000, respectively. 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, 1998. 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 AND RACE RELATED REVENUE: 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. 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 $1.7 million, $290,000, $2.4 million and $3.8 million for the year ended August 31, 1996, the three months ended November 30, 1996 and the years ended November 30, 1997 and 1998, respectively. AMORTIZATION OF UNEARNED COMPENSATION (NOTE 11): The Company accounts for its long-term incentive stock plans in accordance with APB 25. EARNINGS PER SHARE: The Company adopted Statement of Financial Accounting Standards No. 128, "Earnings Per Share", during its first quarter ended February 28, 1998. This statement requires the Company to present "Basic" and "Diluted" earnings per share on the face of the income statement for current periods and to restate earnings per share for prior periods. Weighted average shares outstanding for the periods presented are:
BASIC DILUTED ------------ ----------- Year ended August 31, 1996 .................... 34,191,106 34,317,430 Three months ended November 30, 1996 .......... 35,327,263 35,470,048 Year ended November 30, 1997 .................. 38,185,473 38,339,978 Year ended November 30, 1998 .................. 40,025,643 40,188,800
The difference between basic weighted average shares and diluted weighted average shares is related to shares issued under the Company's long-term incentive stock plans, using the treasury stock method as prescribed by the standard. 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 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 the first quarter of 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 will adopt SFAS 131 in its November 30, 1999 annual financial statements. SFAS 131 expands or modifies disclosures and, accordingly, will have no impact on the Company's reported financial position, results of operations or cash flows. COMPARABILITY: For comparability, certain 1996 and 1997 amounts have been reclassified where appropriate to conform with the presentation adopted in 1998. NOTE 2--EQUITY INVESTMENTS Equity investments includes the following:
% % 1997 OWNERSHIP 1998 OWNERSHIP ---------------- ----------- --------------- ---------- (IN THOUSANDS) (IN THOUSANDS) PSH Corp. ............................. $30,628 20 $31,470 20 Grand Prix Association of Long Beach, Inc. .......................... 3,816 7 -- -- Homestead-Miami Speedway, LLC ......... 11,400 40 12,617 45 ------- ------- $45,844 $44,087 ======= =======
During 1998, PMI issued an additional 60,558 shares of common stock in conjunction with the 1997 investment in North Carolina Motor Speedway. The Company recorded an increase in its equity investment of PSH Corp. of approximately $190,000 and recorded a corresponding increase in deferred income taxes and additional paid-in capital of approximately $75,000 and $115,000, respectively. During 1998 PMI announced plans to repurchase, from time to time, up to $10 million of PMI's common stock in open market transactions. As of the Company's year end, 242,500 shares had been repurchased at prices ranging from $19.875 to $22.50 per share. As a result of these transactions, the Company recorded a reduction in its equity investment of PSH Corp. of approximately $200,000 and recorded a corresponding decrease in deferred income taxes and additional paid-in capital of approximately $80,000 and $120,000, respectively. In March of 1998, the Company acquired an additional 5% ownership interest in Miami for approximately $2.8 million, which was substantially financed by a 7.5% interest bearing note, payable on December 31, 2001. The borrower has the option of calling $500,000 of this note on December 31, 2000. In March, 1998, the Company sold its entire equity interest in Long Beach for approximately $5.3 million. The Company recorded a pre-tax gain of approximately $1.2 million from the sale. The Company's investment in excess of its share of underlying net assets in equity investments net of amortization amounted to $8.8 million and $8.0 million in 1997 and 1998, respectively. Amortization of the excess over the Company's share of the underlying net assets for the years ended November 30, 1997 and 1998 was approximately $416,000 and $444,000, respectively. The Company's share of undistributed equity in the earnings from equity investments included in retained earnings at November 30, 1997 and 1998 was approximately $2.3 million and $2.1 million, respectively. Summarized financial information for the Company's affiliated companies accounted for by the equity method is as follows (in thousands):
YEAR ENDED YEAR ENDED NOVEMBER 30, NOVEMBER 30, 1997 1998 -------------- ------------- (IN THOUSANDS) Current assets ................. $ 22,400 $ 14,907 Noncurrent assets .............. 379,900 359,213 Current liabilities ............ 44,100 33,516 Noncurrent liabilities ......... 116,200 117,785 Minority interests ............. 84,900 86,812 Net revenues ................... 126,800 119,007 Operating income ............... 29,200 18,281 Net income ..................... 8,900 739
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 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" 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 income 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 was recorded as goodwill. During fiscal 1998, a reduction of the purchase price in accordance with the original purchase agreement resulted in an approximately $469,000 adjustment to goodwill and notes payable. 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.
PRO FORMA --------------------------------------------------- YEAR ENDED THREE MONTHS ENDED YEAR ENDED AUGUST 31, NOVEMBER 30, NOVEMBER 30, 1996 1996 1997 ------------ -------------------- ------------- (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Total revenues ................... $ 107,343 $17,449 $ 146,135 Net income ....................... 19,752 119 28,953 Basic income per share ........... 0.58 -- 0.76 Diluted income per share ......... 0.58 -- 0.76
NOTE 4--INVESTMENTS The following is a summary of short-term, long-term and designated investments:
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 ======= === === =======
NOVEMBER 30, 1998 ----------------------------------------------------- GROSS GROSS ESTIMATED UNREALIZED UNREALIZED MARKET COST GAINS LOSSES VALUE ---------- ------------ ------------ ---------- (IN THOUSANDS) Held-to-maturity securities Obligations of U.S. Government agencies ...................... $ 5,978 $-- $ -- $ 5,978 Municipal securities ........... 1,149 4 -- 1,153 ------- --- --- -------- 7,127 4 -- 7,131 Certificates of deposit ............ 101,000 -- -- 101,000 ------- --- --- --------- $108,127 $ 4 $ -- $108,131 ======== === === ========
At November 30, 1998, approximately $53.5 million of short-term investments are designated for the Company's investment in Kansas International Speedway. See Note 14. The cost and market values of held-to-maturity securities include accrued investment income of approximately $12,000 and $25,000 at November 30, 1997 and 1998, respectively. The cost and estimated market value of the held-to-maturity securities at November 30, 1998, 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, 1998 -------------------------- ESTIMATED COST MARKET VALUE ---------- ------------- (IN THOUSANDS) Held-to-maturity securities Due in one year or less ........................ $6,627 $6,627 Due after one year through three years ......... 500 504 ------- ------- $7,127 $7,131 ======= =======
The Company maintained its certificates of deposit with one financial institution at November 30, 1998. The Company believes that it is not exposed to any significant credit risk on its certificates of deposit due to the strength of the financial institution and the short-term nature of the certificates of deposit. 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:
YEAR ENDED THREE MONTHS YEAR ENDED YEAR ENDED AUGUST 31, ENDED NOVEMBER 30, NOVEMBER 30, --------- NOVEMBER 30, ------------ ------------ 1996 1996 1997 1998 --------- ----------- ------------ ------------ (IN THOUSANDS) Current tax expense (benefit): Federal ........................... $ 9,117 $(1,140) $12,973 $15,864 State ............................. 1,310 (3) 2,042 1,869 Deferred tax expense: Federal ........................... 1,341 352 2,181 6,158 State ............................. 195 50 962 1,003 ------- -------- ------- ------- Provision for income taxes ......... $11,963 $ (741) $18,158 $24,894 ======= ======== ========= =======
The reconciliation of income tax computed at the federal statutory tax rates to income tax expense is as follows:
THREE MONTHS YEAR ENDED ENDED YEAR ENDED YEAR ENDED AUGUST 31, 1996 NOVEMBER 30, 1996 NOVEMBER 30, 1997 NOVEMBER 30, 1998 ---------------- ----------------- ----------------- ----------------- % 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 .... $11,075 35.0% $ (913) (35.0%) $16,784 35.0% $22,780 35.0% State income taxes, net of federal tax benefit ........ 977 3.1 26 1.0 2,053 4.3 2,010 3.1 Non-taxable share of (income) loss from unconsolidated affiliates... (504) (1.6) 73 2.8 (238) (0.5) (212) (0.3) Officers' life insurance expense .................... 162 0.5 17 0.7 23 (20) - Other, net .................. 253 0.8 56 2.1 (464) (0.9) 336 0.4 ------ ---- ------- ---- ------ ------ ------- ----- $11,963 37.8% $ (741) (28.4%) $18,158 37.9% $24,894 38.2% ======= ===== ======= ======= ======== ====== ======= =====
NOTE 6 CREDIT FACILITY In May of 1998, the Company entered into a five-year, unsecured, $100 million revolving line of credit facility. Borrowings under the Credit Facility will bear interest at the applicable LIBOR rate plus 40-80 basis points depending on certain financial criteria. The Credit Facility includes customary representations and warranties, covenants, defaults and conditions. At November 30, 1998 there were no borrowings under the Credit Facility. 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. 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. No shares of Preferred Stock are outstanding. See also Note 1--Basis of Presentation. During July of 1998, the Company sold an additional 4,600,000 shares of Class A Common Stock in a primary offering, including the Underwriters' over- allotment, at a price to the public of $27.00. The net proceeds to the Company were approximately $117.7 million, after deduction of underwriting discounts and commissions and expenses of the offering. As of November 30, 1998, the Company had used approximately $24.4 million of the net proceeds for the acquisition of land and preliminary construction related to Kansas International Speedway and designated an additional $53.5 million for the further funding of its investment in that facility. The Company intends to use the remaining proceeds to partially fund completion of additions and improvements to the Company's existing motorsports facilities, and for working capital and other corporate purposes, including the pursuit of further expansion opportunities. 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 $307,000, $85,000, $376,000 and $ 523,000 for the year ended August 31, 1996, for the three month period ended November 30, 1996 and the years ended November 30, 1997 and 1998, respectively. B. The estimated cost to complete construction in progress at November 30, 1998 for existing facilities is approximately $34.3 million. At November 30, 1998, approximately $53.5 million of short-term investments is designated for the Company's investment in Kansas International Speedway. C. 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. In addition to such routine litigation incident to its business the Company faces exposure from other legal proceedings as described below. The Company's indirect corporate subsidiary, Americrown Service Corporation ("Americrown"), is the sole defendant in a class action proceeding in the Circuit Court of Talladega County, Alabama which was filed in October 1996. The plaintiffs allege, 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 suit seeks to recover at least $500 for each member of the class but does not otherwise seek to recover compensatory or punitive damages or statutory attorneys' fees. A class consisting of persons who purchased racing souvenirs at Talladega Superspeedway since September 1992 was certified on July 30, 1998 by the court. Americrown has moved for reconsideration and intends to appeal the ruling to the Alabama Supreme Court. 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 race or supporting event in the United States during the period 1991 to present. The two suits have been consolidated and the court is considering class certification. Discovery has been concluded. 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"), Historic Sportscar Racing ("HSR"), 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 60% of the combined voting power 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 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 $11.6, $17.0 and $23.1 million for the years ended August 31, 1996, and November 30, 1997 and 1998, 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. 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 in October 1995. 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 records a net insurance expense representing the excess of the premiums paid over the increase in cash surrender value of the policies associated with these agreements. During the years ended November 30, 1997 and 1998, 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:
YEAR ENDED THREE MONTHS YEARS ENDED AUGUST 31, ENDED NOVEMBER 30, ----------- NOVEMBER 30, ----------------------------- 1996 1996 1997 1998 ---------- ------------- ------------- ------------- (IN THOUSANDS) Income taxes paid ......... $10,763 $185 $13,652 $13,618 ======= ======= ======= ======= Interest paid ............. $ -- $ 69 $ 31 982 ======= ======= ======= =======
See Note 2 for discussion of non-cash equity investment transactions. NOTE 11--LONG-TERM INCENTIVE STOCK PLANS In November 1993, the Company's Board of Directors and a majority of the Company shareholders approved the "International Speedway Corporation 1994 Long-Term Incentive Plan" (the "1994 Plan") for certain officers and managers of the Company. Under the 1994 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 1994 Plan participants. Awards were granted under the 1994 Plan based upon the Company's performance in fiscal years 1994, 1995 and 1996. The ability to issue additional shares under the 1994 Plan expired with the grants based on fiscal 1996 results, which were granted January 1, 1997. In September 1996, the Company's Board of Directors and a majority of the Company shareholders approved the "1996 Long-Term Incentive Plan" (the "1996 Plan") for certain officers, employees and consultants of the Company. The 1996 Plan authorizes the grant of stock options (incentive and nonstatutory), stock appreciation rights ("SARs") and restricted stock. The Company has reserved an aggregate of 1,000,000 shares (subject to adjustment for stock splits and similar capital changes) of the Company's Class A Common Stock for grants under the 1996 Plan. In April 1998, the first awards of restricted stock under the 1996 Plan were made at no cost to Plan participants based upon fiscal 1997 results. There have been no grants of stock options or SARs under the 1996 Plan. Shares of restricted stock awarded under the 1994 and 1996 Plans 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 1994 and 1996 Plans generally are subject to forfeiture in the event of termination of employment prior to the vesting dates. The 1994 and 1996 Plan participants own the shares and may vote and receive dividends, but are subject to certain restrictions. 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 the right of first refusal to purchase any shares of stock issued under the 1994 and 1996 Plans which are offered for sale subsequent to vesting. On January 1, 1996 and 1997 a total of 102,075 and 98,010 of the Company's Class B Common Stock , respectively, were awarded to certain officers and managers under the 1994 Plan. On April 1, 1998, 22,236 restricted shares of the Company's Class A Common Stock were awarded to certain officers and managers under the 1996 Plan. The market value of shares awarded on January 1, 1996 and 1997 and April 1, 1998 amounted to approximately $1,600,000, $1,985,000 and $680,000, 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. 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 expense measured under SFAS No. 123 does not differ from that measured under APB25. The tax effect of income tax deductions that differ from expense under these plans is credited or charged to additional paid-in capital. 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 SHARE AND 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) ========== Basic loss per share ............................................ $ (0.03) ========== Diluted loss per share .......................................... $ (0.03) ========== Weighted average number of common shares outstanding--Basic ..... 34,214,610 Weighted average number of common shares outstanding--Diluted ... 34,315,301
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 ==========
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 events. For example, one of Darlington Raceway's Winston Cup Series events is traditionally held on the Sunday preceding Labor Day. Accordingly, the timing of the Labor Day holiday in 1997 and 1998 resulted in the revenue and expenses for that race and the related supporting events being recognized in the quarter ended August 31 in fiscal 1997, while not being recognized until the quarter ending November 30 in fiscal 1998. Further, in July 1998 the Company announced the postponement of the NASCAR Winston Cup Series Pepsi 400 at Daytona from July 4, 1998 to October 17, 1998 as a result of the nationally publicized forest fire emergency throughout the state of Florida. The rescheduling of the Pepsi 400 at Daytona resulted in event-related revenues and expenses being recognized in the quarter ending November 30, 1998 while corresponding revenues and expenses were recognized in the quarter ended August 31 in fiscal 1997. Accordingly, the Company's results of operations are not necessarily comparable on a period-to-period basis. The following table presents certain unaudited financial data for each fiscal quarter of fiscal 1997 and fiscal 1998 (in thousands, except per share amounts):
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 Basic earnings per share ....... 0.46 0.12 0.16 0.05 Diluted earnings per share ..... 0.46 0.12 0.16 0.05
FISCAL QUARTER ENDED ------------------------------------------------------------ FEBRUARY 28, MAY 31, AUGUST 31, NOVEMBER 30, 1998 1998 1998 1998 -------------- ------------ ------------ ------------- Total Revenues ................. $ 68,284 $ 38,191 $ 17,822 $ 64,671 Operating Income (loss) ........ 33,000 7,784 (4,687) 24,817 Net Income (loss) .............. 20,149 6,046 (1,944) 15,941 Basic earnings (loss) per share 0.53 0.16 (.05) 0.37 Diluted earnings (loss) per share 0.53 0.16 (.05) 0.37
NOTE 14 -- SUBSEQUENT EVENTS In January 1999, the Unified Government of Wyandotte County/Kansas City, Kansas ("Unified Government") issued approximately $71.3 million in taxable special obligation revenue ("TIF") bonds and approximately $24.3 million in sales tax special obligation revenue ("STAR") bonds, in connection with the financing of the phase I construction of the proposed Kansas International Speedway. The STAR bonds will be retired with state and local taxes generated within the project's boundaries. The TIF bonds will be a liability of the Company and will be recorded as long term debt in the Company's first quarter of fiscal 1999. Commencing in 1999 and continuing through 2027, the Company will be required to make principal and interest payments escalating from an annual rate of approximately $4.8 million in 1999 to $7.7 million in 2027. The Company has granted a mortgage and security interest in the Kansas project for its TIF Bond debt service obligations. The Company's phase I equity contribution to Kansas International Speedway is approximately $77.9 million, of which $24.4 million was funded during fiscal 1998, primarily for land acquisition. Subsequent to November 30, 1998, the Company invested an additional approximately $2.5 million in Kansas International Speedway and deposited approximately $51 million into a trust account concurrent with the Unified Government's January 1999 issuance of the TIF and STAR bonds described above. TIF and STAR bond proceeds are awaiting disbursement subject to certain conditions of the bond insurer. 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, 1998 Allowance for doubtful accounts $100 $ 79 $ 79 $ 100 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 (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, directors and nominees for directors of the Company are as follows:
NAME AGE POSITION WITH THE COMPANY William C. France 65 Chairman of the Board, Chief Executive Officer and Director James C. France 54 President, Chief Operating Officer and Director Lesa D. Kennedy 37 Executive Vice President and Director H. Lee Combs 45 Senior Vice President--Operations and Director Robert E. Smith 66 Vice President--Administration Susan G. Schandel 35 Treasurer and Chief Financial Officer Gregory J. Sullivan 43 Vice President--Marketing John E. Graham, Jr. 50 Vice President W. Grant Lynch, Jr. 45 Vice President James H. Hunter 59 Vice President John R. Saunders 42 Vice President--Corporate Administrative Services W. Garrett Crotty 35 Secretary and General Counsel J. Hyatt Brown 61 Director John R. Cooper 66 Director Robert R. Dyson 52 Director James H. Foster 72 Director Brian Z. France 36 Director Christy F. Harris 53 Director Raymond K. Mason, Jr. 43 Director Edward H. Rensi 54 Director Lloyd E. Reuss 62 Director Chapman Root, II 49 Director Thomas W. Staed 67 Director
The Company's Articles provide that the Board of Directors be divided into three classes, with regular three year staggered terms. 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, Ms. Kennedy and Messrs. Brown, Dyson, Rensi and Staed will hold office until the annual meeting of shareholders to be held in 2000, and Messrs. William C. France, Combs, Foster, Harris and Root will hold office until the annual meeting of shareholders to be held in 2001. 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--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 was President of Watkins Glen International from 1983 until 1997. 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. Beginning January 1996 Mr. Cooper rejoined the Company staff. 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, had served as Chairman and President of American Banks of Florida, Inc., Jacksonville, Florida, from 1978 until its sale in 1998. 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 1998 services totaled approximately $111,000. The Company also reimburses directors for all expenses incurred in connection with their activities as directors. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Based upon a review of Forms 3 and 4 and amendments thereto furnished to the Company during the fiscal year ended November 30, 1998, Forms 5 and amendments thereto furnished to the Company with respect to the fiscal year ended November 30, 1998, and written representations furnished to the Company, James H. Foster and Christy F. Harris have 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, 1998. Mr. Foster and Mr. Harris each had one transaction which should have been reported on Form 4 which was reported late on Form 5. Mr. Harris' Form 5 was filed late. Based solely on the review, there is no other person who, at any time during the fiscal year, was a director, officer, beneficial owner of more than ten percent of any class of the Company's securities that failed to file on a timely basis reports required by section 16(a) of the Exchange Act during the fiscal year ended November 30, 1998. 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 1998 (collectively the "Named Officers"). Summary Compensation Table
Long Term Annual Compensation Compensation ----------------------------- ------------- Name and Fiscal Restricted All Other Principal Position Year Salary Bonus (3) Stock Awards(1) Compensation(2) - ------------------- ----------------------------- -------------- ------ --------- William C. France 1998 $380,513 $153,622 $ 0 $774,441 Chairman and Chief 1997 $330,538 $150,282 $ 0 $769,351 Executive Officer 1996 $278,707 $130,679 $ 0 $771,368 James C. France 1998 $341,342 $111,168 $ 0 $477,319 President and Chief 1997 $264,644 $ 96,231 $ 0 $474,575 Operating Officer 1996 $224,778 $ 83,679 $ 0 $473,923 Lesa D. Kennedy 1998 $222,977 $ 71,295 $121,000 $ 9,559 Executive Vice 1997 $213,488 $ 75,837 $372,398 $ 8,355 President 1996 $173,553 $ 69,223 $149,695 $ 8,648 H. Lee Combs 1998 $218,161 $ 70,018 $121,000 $ 13,156 Sr Vice President 1997 $208,335 $ 69,672 $372,398 $ 12,373 Operations 1996 $172,226 $ 72,179 $172,020 $ 11,102 W. Grant Lynch, Jr. 1998 $187,778 $ 97,246 $ 64,406 $ 9,825 Vice President 1997 $176,965 $ 55,028 $177,694 $ 6,663 1996 $150,809 $ 52,570 $235,940 $ 10,255
(1) For fiscal years prior to 1998, 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. For fiscal year 1998, reflects the aggregate market value of shares awarded under the Company's 1996 Long-Term Incentive Plan (calculated as of the date of the award). The indicated awards were made in April 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, group health insurance, and long term disability 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 1998 are as follows: William C. France ($773,577, $864 and $0, respectively); James C. France ($468,161, $2,758 and $6,400, respectively); Lesa D. Kennedy ($3,159, $0 and $6,400, respectively); H. Lee Combs ($3,142, $3,614 and $6,400, respectively); and W. Grant Lynch, Jr. ($3,031, $394 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. (3) The bonus for the Chairman/CEO and President COO are the Company's estimates for fiscal 1998, which have not yet been approved by the Board of Directors of the Company. 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 were made in April 1998, based upon fiscal 1997 results. The amount of the awards was based upon the Company's performance as measured against annual financial goals established in advance by the Board of Directors. These awards were restricted shares of Class A Common Stock and are 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. Awards under the 1996 Plan are to be made in April 1999, based upon fiscal 1998 results and will carry restrictions equivalent to those imposed on the awards in 1998. 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 1997. 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 NASDAQ Stock Market Index (U.S. Companies) and with the 40 NASDAQ issues (U.S. companies) 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 - 11/30/93 $100.00 $100.00 $100.00 FYE* 11/30/94 $102.85 $100.20 $ 59.85 FYE* 11/30/95 $246.24 $142.87 $ 48.28 FYE* 11/30/96 $308.62 $174.91 $ 43.11 FYE 11/30/97 $317.15 $217.89 $ 52.94 FYE 11/30/98 $533.51 $267.00 $ 48.60 * Adjusted to reflect current fiscal year end for comparability purposes. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of February 8, 1999, the Company had 11,783,548 shares of Class A Common Stock and 31,291,621 shares of Class B Common Stock issued and outstanding. Each share of the Class A Common Stock is entitled to one-fifth of one vote on matters submitted to shareholder approval or a vote of shareholders. Each share of the Class B Common Stock is entitled to one vote on matters submitted to shareholder approval or a vote of shareholders. The following table sets forth certain information as of February 8, 1999 with respect to the beneficial ownership of each class of the Company's common stock by: (i) each person known by the Company to be the beneficial owner of more than 5% of the outstanding shares of each class of common stock, (ii) each director of the Company who beneficially owns any such shares, (iii) each of the Company's executive officers who beneficially owns any such shares, and (iv) 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.
NUMBER OF SHARES PERCENTAGE OF PERCENTAGE OF OF COMMON STOCK COMMON STOCK COMBINED VOTING BENEFICIALLY OWNED (2) BENEFICIALLY OWNED POWER OF ALL ------------------------------------- -------------------------- CLASSES OF NAME OF BENEFICIAL OWNER (1) CLASS A CLASS B TOTAL CLASS A CLASS B TOTAL COMMON STOCK - ----------------------------- ------------------------------------- -------------------------- --------------- France Family Group(3) ..... 15,972 21,158,081 21,174,053 * 67.62% 49.16% 62.89% James C. France(4) .......... 3,000 15,352,721 15,355,721 * 49.06% 35.65% 45.63% William C. France(5) ........ 1,600 15,340,501 15,342,101 * 49.02% 35.62% 45.59% Putnam Investments, Inc.(6).. 1,501,477 0 1,501,477 12.74% * 3.49% * The Putnam Advisory Company, Inc.(7).. 761,100 0 761,100 6.46% * 1.77% * Putnam Investment Management, Inc.(8)........ 740,377 0 740,377 6.28% * 1.72% * Lesa D. Kennedy (9).......... 3,000 383,355 386,355 * 1.23% * 1.14% Brian Z. France.............. 0 261,740 261,740 * * * * Raymond K. Mason, Jr.(10).... 0 196,740 196,740 * * * * James H. Foster(11). ........ 22,205 168,884 191,089 * * * * H. Lee Combs................. 5,372 47,116 52,488 * * * * Thomas W. Staed(12).......... 2,450 45,000 47,450 * * * * Robert R. Dyson(13).......... 17,000 29,500 46,500 * * * * James H. Hunter.............. 2,211 29,113 31,324 * * * * John E. Graham, Jr........... 3,765 26,415 30,180 * * * * W. Grant Lynch, Jr........... 3,561 22,160 25,721 * * * * John R. Saunders............. 2,561 17,551 20,112 * * * * Chapman J. Root, II ......... 2,500 13,500 16,000 * * * * Susan G. Schandel............ 2,695 12,392 15,087 * * * * Robert E. Smith(14) ......... 2,090 9,999 12,089 * * * * Gregory J. Sullivan.......... 2,400 8,775 11,470 * * * * J. Hyatt Brown(15) .......... 2,400 9,000 11,400 * * * * 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)........ 3,600 150 3,750 * * * * Edward H. Rensi.............. 0 1,500 1,500 * * * * All directors and executive officers as a group (23 persons)(18) .... 94,205 21,307,593 21,401,798 * 68.09% 49.68% 63.38%
- ------------------------------- * 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 20,325,448 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 shares held of record and 832,633 Class B shares held beneficially by the adult children of James C. France. See footnotes (4), (5) and (9). (4) Includes (i) 1,500 Class A shares held of record and 304,725 Class B shares held beneficially by Sharon M. France, his spouse, (ii) 9,115,125 Class B shares held of record by Western Opportunity Limited Partnership ("Western Opportunity"), (iii) 4,052,369 Class B shares held of record by Carl Investment Limited Partnership ("Carl"), and (iv) 1,880,502 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 832,633 Class B shares held of record by the adult children of James C. France. (5) Includes (i) 600 Class A 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) 1,880,502 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) This owner's address is One Post Office Square, Boston, Massachusetts 02109. Shares reported for Putnam Investment Management, Inc. and The Putnam Advisory Company, Inc. are included. (7) This owner's address is One Post Office Square, Boston, Massachusetts 02109. Shares reported are also included in those reported for Putnam Investments, Inc. (8) This owner's address is One Post Office Square, Boston, Massachusetts 02109. Shares reported are also included in those reported for Putnam Investments, Inc. (9) Includes (i) 1,500 Class A shares held of record by Ms. Kennedy as custodian for her minor son, Benjamin, (ii) 1,500 Class A shares held jointly with her spouse, and (iii) 343,950 Class B shares held of record by BBL Limited Partnership. Mrs. Kennedy is the sole shareholder and a director of BBL Company, the sole general partner of BBL Limited Partnership. (10) Includes 75 Class B shares owned by The Raymond K. Mason, III Trust, as to which Mr. Mason disclaims beneficial ownership. (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 and 7,000 Class A Shares held as Trustee of the Charles H. Dyson Trust No. 2, U/A dated 4/15/76. (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), and (9) 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 1996, 1997 and 1998 were $13.9 million, $20.6 million, and $28.8 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 $359,000, $720,000, and $160,000 during fiscal 1996, 1997 and 1998, 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 $294,000, $166,000, and $240,000 during fiscal 1996, 1997 and 1998, 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, 1997 and 1998 Consolidated Statements of Income - Year ended August 31, 1996, three months ended November 30, 1996 and years ended November 30, 1997 and 1998 Consolidated Statements of Shareholders' Equity - Year ended August 31, 1996, three months ended November 30, 1996 and years ended November 30, 1997 and 1998 Consolidated Statements of Cash Flows - Year ended August 31, 1996, three months ended November 30, 1996 and years ended November 30, 1997 and 1998 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 9, 1999 /s/ William C. France William C. France, Chairman, Chief Executive Officer & Director DATE: February 9, 1999 /s/ Susan G. Schandel Susan G. Schandel Chief Financial Officer DATE: February 9, 1999 /s/ James C. France James C. France Director DATE: February 9, 1999 /s/ Lesa D. Kennedy Lesa D. Kennedy Director DATE: February 9, 1999 /s/ H. Lee Combs H. Lee Combs Director DATE: February 9, 1999 /s/ James H. Foster James H. Foster Director DATE: February 9, 1999 /s/ J. Hyatt Brown J. Hyatt Brown Director DATE: February 9, 1999 /s/ Brian Z. France Brian Z. France Director DATE: February 9, 1999 /s/ Raymond K. Mason, Jr. Raymond K. Mason, Jr. Director DATE: February 9, 1999 /s/ Daniel W. Houser Daniel W. Houser Controller EX-3.(I) 2 ARTICLES OF INCORPORATION OF THE REGISTRANT AMENDED AND RESTATED ARTICLES OF INCORPORATION OF INTERNATIONAL SPEEDWAY CORPORATION Pursuant to Sections 607.0704, 607.1003 and 607.1007 of the Florida Business Corporation Act, the Articles of Incorporation of International Speedway Corporation are hereby amended and restated in their entirety as follows: ARTICLE I The name of the corporation is International Speedway Corporation (hereinafter called the "Corporation"). ARTICLE II The purpose for which the Corporation is organized is to engage in the transaction of any lawful business for which corporations may be incorporated under the laws of the State of Florida. ARTICLE III A. AUTHORIZED CAPITAL STOCK. The aggregate number of shares of all classes of stock which the Corporation shall have authority to issue is one hundred twenty-six million (126,000,000) shares, consisting of: (i) one hundred twenty million (120,000,000) shares of common stock, par value $0.01 per share (the "Common Stock"), of which (A) eighty million (80,000,000) shares are designated as Class A Common Stock (the "Class A Common Stock") and (B) forty million (40,000,000) shares are designated as Class B Common Stock (the "Class B Common Stock"), and (ii) one million (1,000,000) shares of preferred stock, par value $0.01 per share (the "Preferred Stock"); and (iii) five million (5,000,000) shares of common stock, par value $0.10 per share (the "Existing Common Stock"). B. PROVISIONS RELATING TO PREFERRED STOCK. 1. GENERAL. The Preferred Stock may be issued from time to time in one or more classes or series, the shares of each class or series to have such designations and powers, preferences and rights, and qualifications, limitations and restrictions thereof as are stated and expressed herein and in the resolution or resolutions providing for the issue of such class or series adopted by the Board of Directors (the "Board") as hereinafter prescribed. 2. PREFERENCES. Authority is hereby expressly granted to and vested in the Board to authorize the issuance of the Preferred Stock from time to time in one or more classes or series, to determine and take necessary proceedings fully to effect the issuance and redemption of any such Preferred Stock and, with respect to each class or series of the Preferred Stock, to fix and state, by resolution or resolutions from time to time adopted providing for the issuance thereof, the following: (a) whether or not the class or series is to have voting rights, full or limited, or is to be without voting rights; (b) the number of shares to constitute the class or series and the designations thereof; (c) the preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to any class or series; (d) whether or not the shares of any class or series shall be redeemable and if redeemable the redemption price or prices, and the time or times at which and the terms and conditions upon which, such shares shall be redeemable and the manner of redemption; (e) whether or not the shares of a class or series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement, and if such retirement or sinking fund or funds be established, the annual amount thereof and the terms and provisions relative to the operation thereof; (f) the dividend rate, whether dividends are payable in cash, stock of the Corporation or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of the dividends payable on any other class or classes or series of stock, whether or not such dividend shall be cumulative or noncumulative, and, if cumulative, the date or dates from which such dividends shall accumulate; (g) the preferences, if any, and the amounts thereof that the holders of any class or series thereof shall be entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the Corporation; (h) whether or not the shares of any class or series shall be convertible into, or exchangeable for, the shares of any other class or classes or of any other series of the same or any other class or classes of the Corporation and the conversion price or prices or ratio or ratios or the rate or rates at which such conversion or exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided for in such resolution or resolutions; and (i) such other special rights and protective provisions with respect to any class or series as the Board may deem advisable. The shares of each class or series of the Preferred Stock may vary from the shares of any other class or series thereof in any or all of the foregoing respects. The Board may increase the number of shares of Preferred Stock designated for any existing class or series by a resolution adding to such class or series authorized and unissued shares of the Preferred Stock not designated for any other class or series. The Board may decrease the number of shares of the Preferred Stock designated for any existing class or series by a resolution, subtracting from such series unissued shares of the Preferred Stock designated for such class or series, and the shares so subtracted shall become authorized, unissued and undesignated shares of the Preferred Stock. C. PROVISIONS RELATING TO THE COMMON STOCK. The Common Stock shall be subject to the express terms of the Preferred Stock and any class or series thereof. The powers, preferences and rights of the Class A Common Stock and the Class B Common Stock and the qualifications, limitations and restrictions thereof, shall in all respects be identical, except as otherwise required by law or as expressly provided in this Section C. 1. VOTING RIGHTS. Except as otherwise required by law or as may be provided by the resolutions of the Board authorizing the issuance of any class or series of the Preferred Stock, as hereinabove provided, all rights to vote and all voting power shall be vested exclusively in the holders of the Common Stock. The holders of shares of Class A Common Stock and Class B Common Stock shall have the following voting rights: (a) the holders of Class A Common Stock shall be entitled to one-fifth (1/5th) vote for each share of Class A Common Stock held on all matters voted upon by the shareholders of the Corporation and shall vote together with the holders of Class B Common Stock and together with the holders of any other classes or series of stock who are entitled to vote in such manner and not as a separate class; and (b) the holders of Class B Common Stock shall be entitled to one (1) vote for each share of Class B Common Stock held on all matters voted upon by the shareholders of the Corporation and shall vote together with the holders of Class A Common Stock and together with the holders of any other classes or series of stock who are entitled to vote in such manner and not as a separate class. 2. DIVIDENDS. Subject to the rights of the holders of the Preferred Stock, the holders of the Common Stock shall be entitled to receive when, as and if declared by the Board, out of funds legally available therefor, dividends and other distributions payable in cash, property, stock (including shares of any class or series of the Corporation, whether or not shares of such class or series are already outstanding) or otherwise. Each share of Class A Common Stock and each share of Class B Common Stock shall have identical rights with respect to dividends and distributions subject to the following: (a) a dividend or distribution in Common Stock on Class B Common Stock may be paid or made in shares of Class A Common Stock or shares of Class B Common Stock or a combination of both; (b) a dividend or distribution in Common Stock on Class A Common Stock may be paid only in shares of Class A Common Stock; (c) a dividend or distribution with respect to Common Stock payable in shares of the Corporation's capital stock may be paid or made only in shares of Common Stock; (d) whenever a dividend or distribution is payable in shares of Class B Common Stock and/or Class A Common Stock, the number of shares of Common Stock payable as a dividend or distribution per each share of Common Stock shall be equal in number; and (e) a dividend or distribution on Class B Common Stock which is paid or made in shares of Class B Common Stock shall be considered identical to a dividend or distribution on Class A Common Stock which is paid or made in a proportionate number of shares of Class A Common Stock. 3. CONVERSION. (a) OPTIONAL CONVERSION. Each share of Class B Common Stock may from time to time, at the option of the holder of record thereof and without payment of any consideration, be converted into one fully paid and nonassessable share of Class A Common Stock (an "Optional Conversion")(i) upon the Effective Date (as hereinafter defined) if the shares of Class A Common Stock to be issued upon such conversion are to be offered pursuant to the Registration Statement (as hereinafter defined), and (ii) otherwise commencing on the 91st day after the Effective Date. Any holder of any share of Class B Common Stock may effect a conversion by surrendering such holder's certificate r certificates representing the shares of Class B Common Stock to be converted, duly endorsed, during normal business hours at the office of the Corporation or any transfer agent for the Common Stock (the "Transfer Agent"), together with a written notice that the holder elects to convert all or a specified whole number of shares of Class B Common Stock and stating the name or names in which such holder desires the certificate or certificates representing the shares of Class A Common Stock to be issued. If so required by the Corporation or the Transfer Agent, any certificate for shares surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation or the Transfer Agent, duly executed by the holder of such shares or the duly authorized representative of such holder, together with funds for the payment of any transfer tax required pursuant to paragraph (f) of this Subsection 3. In the event that any shares of Class B Common Stock tendered for conversion are subject to restrictions upon transfer noted in a legend on the certificates representing such shares, the Corporation and the Transfer Agent shall require the holder of such shares to submit, as a condition to the conversion of such Class B Common Stock into Class A Common Stock, satisfactory evidence that the proposed conversion will not violate any of the noted restrictions upon transfer of such shares. (b) MANDATORY CONVERSION. If, on the record date for any meeting of shareholders of the Corporation, the number of shares of Class A Common Stock then outstanding constitutes less than 10% of the aggregate number of shares of Class A Common Stock and Class B Common Stock outstanding, as determined by the Board, then each share of Class B Common Stock then issued or outstanding shall thereupon be converted automatically as of such record date into one fully paid and nonassessable share of Class A Common Stock and will have one-fifth vote per share at such meeting (a "Mandatory Conversion"). Upon making such determination, notice of such automatic conversion shall be given by the Corporation as soon as practicable, but no later than the next meeting of shareholders of the Corporation, by means of a press release and written notice to all holders of Class B Common Stock, and the Secretary of the Corporation shall be instructed to and shall promptly request that each holder of Class B Common Stock promptly deliver, and each such holder shall promptly deliver, the certificate or certificates representing each share of such Class B Common Stock to the Corporation or the Transfer Agent. If so required by the Corporation or the Transfer Agent, any certificate for shares surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation or the Transfer Agent, duly executed by the holder of such shares or the duly authorized representative of such holder, together with funds for the payment of any transfer tax required pursuant to paragraph (f) of this Subsection 3. (c) ISSUANCE OF CERTIFICATES REPRESENTING CLASS A COMMON STOCK; EFFECTIVENESS OF CONVERSION. As promptly as practicable following the surrender for conversion of a certificate representing shares of Class B Common Stock in the manner provided in paragraph (a) or (b) of this Subsection 3, as applicable, any required instruments of transfer and the payment in cash of any amount required by the provisions of paragraph (f) of this Subsection 3, the Corporation shall issue and deliver or cause to be issued and delivered to such holder or such holder's nominee or nominees, a certificate or certificates representing the number of shares of Class A Common Stock issued upon such conversion in such name or names as such holder may direct. In the case of an Optional Conversion, if any shares of Class B Common Stock of such holder represented by a certificate surrendered for conversion are not converted, a new certificate or certificates representing such shares of Class B Common Stock shall be issued and delivered to such holder or its nominee or nominees with the certificate or certificates representing shares of Class A Common Stock. Optional Conversions shall be deemed to have been effected immediately prior to the close of business on the date of receipt by the Corporation or the Transfer Agent of the certificate or certificates representing the relevant shares of Class B Common Stock and the related written notice. Mandatory Conversions shall be deemed to have been effected on record date for the relevant shareholders meeting on which the condition set forth in paragraph (b) of this Subsection 3 is determined by the Board to have occurred. Upon the date any conversion is deemed effected, all rights of the holder of such shares of Class B Common Stock so converted, as the holder of such shares, shall cease, and the person or persons in whose name or names the certificate or certificates representing the shares of Class A Common Stock are issued shall be treated for all purposes as having become the record holder or holders of such shares of Class A Common Stock on that date; provided, however, that if any surrender and payment pursuant to a Mandatory Conversion occurs on any date when the stock transfer books of the Corporation shall be closed, the person or persons in whose name or names the certificate or certificates representing shares of Class A Common Stock are issued shall be deemed the record holder or holders thereof for all purposes on the next succeeding day on which the stock transfer books are open. (d) ADJUSTMENTS. No adjustments in respect of dividends shall be made upon the Optional Conversion or Mandatory Conversion of any shares of Class B Common Stock; provided, however, that if a share of Class B Common Stock shall be converted subsequent to the record date for the payment of a dividend or other distribution on Class B Common Stock but prior to such payment, then the registered holder of such share of Class B Common Stock at the close of business on such record date shall be entitled to receive the dividend or other distribution payable on such share of Class B Common Stock on such date notwithstanding the Optional Conversion or Mandatory Conversion thereof or the Corporation's default in payment of the dividend due on such date. (e) AVAILABILITY OF CLASS A COMMON STOCK FOR CONVERSION; REGISTRATION. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Class A Common Stock, solely for the purpose of issuance upon conversion of the outstanding shares of Class B Common Stock, such number of shares of Class A Common Stock that shall be issuable upon the conversion of all such shares of Class B Common Stock then outstanding, in addition to the number of shares of Class A Common Stock then outstanding. If any shares of Class A Common Stock require registration with or approval of any governmental authority under any federal or state law before such shares may be issued upon conversion, the Corporation shall cause such shares to be duly registered or approved, as the case may be. The Corporation shall endeavor to use its best efforts to list the shares of Class A Common Stock to be delivered upon conversion prior to such delivery upon each national securities exchange upon which the outstanding shares of Class A Common Stock are listed at the time of such delivery. All shares of Class A Common Stock that shall be issued upon conversion of the fully paid and nonassessable shares of Class B Common Stock shall, upon issue, be fully paid and nonassessable. (f) CHARGES, PAYMENT OF TAXES UPON CONVERSION. The issuance of certificates for shares of Class A Common Stock issuable upon the conversion of Class B Common Stock shall be made without charge to the converting holder; provided, however, that if any certificate is to be issued in a name other than that of the record holder of the shares being converted, the Corporation shall not be required to issue or deliver any such certificate unless and until the person requesting the issuance thereof shall have paid to the Corporation the amount of any tax that may be payable with respect to any transfer involved in the issuance and delivery of such certificate or has established to the satisfaction of the Corporation that such tax has been paid. (g) REISSUANCE OF CLASS B COMMON STOCK. Shares of Class B Common Stock that are converted into Class A Common Stock as provided herein shall continue to be part of the authorized Class B Common Stock and shall be available for reissue by the Corporation. 4. SPLITS OR COMBINATIONS. If the Corporation shall in any manner split, subdivide or combine the outstanding shares of Class A Common Stock or Class B Common Stock, then the outstanding shares of the other such class of Common Stock shall be proportionately split, subdivided or combined in the same manner and on the same basis as the outstanding shares of the class that has been split, subdivided or combined. 5. MERGERS AND CONSOLIDATIONS. In the event of a merger, consolidation or combination of the Corporation with another entity (whether or not the Corporation is the surviving entity), the holders of Class A Common Stock and Class B Common Stock shall be entitled to receive the same per share consideration in that transaction, except that any common stock that holders of Class A Common Stock are entitled to receive in any such event may differ as to voting rights and otherwise to the extent and only the extent that the Class A Common Stock and the Class B Common Stock differ as set forth in this Section C. 6. LIQUIDATING DISTRIBUTIONS. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, and after the holders of the Preferred Stock shall have been paid in full the amounts to which they shall be entitled, if any, or a sum sufficient or such payment in full shall have been set aside, the remaining net assets of the Corporation, if any, shall be divided among and paid ratably to the holders of Class A Common Stock and Class B Common Stock treated as a single class. 7. SALES AND REPURCHASES. The Board shall have the power to cause the Corporation to issue and sell shares of either class of Common Stock to such individuals, partnerships, joint ventures, limited liability companies, associations, corporations, trusts or other legal entities (collectively, "persons") and for such consideration as the Board shall from time to time in its discretion determine, whether or not greater consideration could be received upon the issue or sale of the same number of shares of the other class of Common Stock, and as otherwise permitted by law. The Board shall have the power to cause the Corporation to purchase, out of funds legally available therefor, shares of either class of Common Stock from such persons and for such consideration as the Board shall from time to time in its discretion determine, whether or not less consideration could be paid upon the purchase of the same number of shares of the other class of Common Stock, and as otherwise permitted by law. D. SHARE RECLASSIFICATION. Immediately prior to the effective date (the "Effective Date") of the Corporation's Registration Statement on Form S-3 (File No. 333-11541), relating to a proposed underwritten public offering of Class A Common Stock and initially filed with the Securities and Exchange Commission on September 6, 1996 (the "Registration Statement"), each outstanding share of the Corporation's Existing Common Stock shall thereby and thereupon, automatically and without any action by the holder, be reclassified and converted into 15 validly issued, fully paid and nonassessable shares of Class B Common Stock. Each certificate that theretofore represented shares of Existing Common Stock shall thereafter represent the number of shares of Class B Common Stock into which the shares of Existing Common Stock represented by such certificate were reclassified and converted hereby; provided, however, that each person holding of record a stock certificate or certificates that represented shares of Existing Common Stock shall receive, upon surrender of each such certificate or certificates, a new certificate or certificates evidencing and representing the number of shares of Class B Common Stock to which such person is entitled. Upon consummation of the reclassification of the Existing Common Stock of the Corporation provided for in this Section D (the "Reclassification"), the holders of the Class B Common Stock of the Corporation shall have all rights accorded them by law and these Amended and Restated Articles of Incorporation. The issuance of certificates representing shares of Class B Common Stock issuable upon the Reclassification shall be made without charge to the holders of Existing Common Stock; provided, however, that if any certificate is to be issued in a name other than that of the record holder of the shares of Existing Common Stock being reclassified pursuant to the Reclassification, the Corporation shall not be required to issue or deliver any such certificate unless and until the person requesting the issuance thereof shall have paid to the Corporation the amount of any tax that may be payable with respect to any transfer involved in the issuance and delivery of such certificate or has established to the satisfaction of the Corporation that such tax has been paid. If so required by the Corporation or the Transfer Agent, any certificate for shares of Existing Common Stock surrendered in connection with the Reclassification shall be accompanied by instruments of transfer, in form satisfactory to the Corporation or the Transfer Agent, duly executed by the holder of such shares or the duly authorized representative of such holder, together with funds for the payment of any transfer tax required as set forth above. As promptly as practicable following the surrender of a certificate representing shares of Class B Common Stock in the foregoing manner, any required instruments of transfer and the payment in cash of any amount for the payment of any transfer tax, the Corporation shall issue and deliver or cause to be issued and delivered to such holder or such holder's nominee or nominees, a certificate or certificates representing the number of shares of Class B Common Stock issued upon the Reclassification to which such holder is entitled, in such name or names as such holder may direct. ARTICLE IV The Corporation shall exist perpetually unless sooner dissolved according to law. ARTICLE V The Corporation's mailing address and the address of the Corporation's principal office is 1801 West International Speedway Boulevard, Daytona Beach, Florida 32114. The address of the Corporation's registered office is 150-A South Palmetto Avenue, Daytona Beach, Florida 32114, and the Corporation's registered agent at such office is Doyle Tumbleson. ARTICLE VI A. NUMBER AND TERM OF DIRECTORS. The Corporation's Board shall consist of not less than five (5) nor more than fifteen (15) members, with the exact number to be fixed from time to time by resolution of the Board. No decrease in the number of directors shall have the effect of shortening the term of any incumbent director. The Board shall be divided into three classes, Class I, Class II and Class III with the directors of each class to be elected for a staggered term of three years and to serve until their successors are duly elected and qualified or until their earlier resignation, death or removal from office. The number of directors elected to each class shall be as nearly equal in number as possible. The Board shall apportion any increase or decrease in the number of directorships among the classes so as to make the number of directors in each class as nearly equal as possible. B. DIRECTOR VACANCIES; REMOVAL. Whenever any vacancy on the Board shall occur due to death, resignation, retirement, disqualification, removal, increase in the number of directors or otherwise, a majority of directors in office, although less than a quorum of the entire Board, may fill the vacancy or vacancies for the balance of the unexpired term or terms, at which time a successor or successors shall be duly elected by the shareholders and qualified. Notwithstanding the provisions of any other Article herein, only the remaining directors of the Corporation shall have the authority, in accordance with the procedure stated above, to fill any vacancy that exists on the Board for the balance of the unexpired term or terms. The Company's shareholders shall not, and shall have no power to, fill any vacancy on the Board. Shareholders may remove a director from office prior to the expiration of his or her term, with or without "cause," by an affirmative vote of a majority of all votes entitled to be case for the election of directors. C. SHAREHOLDER NOMINATIONS OF DIRECTOR CANDIDATES. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation. Nominations of persons for election to the Board at an annual or special meeting of shareholders may be made by or at the direction of the Board by any nominating committee or person appointed by the Board or by any shareholder of the Corporation entitled to vote for the election of directors at such meeting who complies with the procedures set forth in this Section C; provided, however, that nominations of persons for election to the Board at a special meeting may be made only if the election of directors is one of the purposes described in the special meeting notice required by Section 607.0705 of the Florida Business Corporation Act. Nominations of persons for election at a special meeting, other than nominations made by or at the direction of the Board, shall be made pursuant to notice in writing delivered to or mailed and received at the principal executive offices of the Corporation not later than the close of business on the fifth (5th) day following the date on which notice of such meeting is given to shareholders or made public, whichever first occurs. Nominations of persons for election at an annual meeting, other than nominations made by or at the direction of the Board, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than one hundred twenty (120) days nor more than one hundred eighty (180) days prior to the first anniversary of the date of the Corporation's notice of annual meeting provided with respect to the previous year's annual meeting; provided, however, that if no annual meeting was held in the previous year or the date of the annual meeting has been changed to be more than thirty (30) calendar days earlier than the date contemplated by the previous year's notice of annual meeting, such notice by the shareholder to be timely must be so delivered or received not later than the close of business on the fifth (5th) day following the date on which notice of the date of the annual meeting is given to shareholders or made public, whichever first occurs. Such shareholder's notice to the Secretary shall set forth the following information: (a) as to each person whom the shareholder proposes to nominate for election or re-election as a director at the annual meeting, (i) the name, age, business address and residence address of the proposed nominee, (ii) the principal occupation or employment of the proposed nominee, (iii) the class and number of shares of capital stock of the Corporation which are beneficially owned by the proposed nominee, and (iv) any other information relating to the proposed nominee that is required to be disclosed in solicitations for proxies for election of directors pursuant to Rule 14a under the Securities Exchange Act of 1934, as amended; and (b) as to the shareholder giving the notice of nominees for election at the annual meeting, (i) the name and record address of the shareholder, and (ii) the class and number of shares of capital stock of the Corporation which are beneficially owned by the shareholder. The Corporation may require any proposed nominee for election at an annual or special meeting of shareholders to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth herein. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the requirements of this Section C, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. ARTICLE VII The Corporation shall indemnify and may advance expenses to its officers and directors to the fullest extent permitted by law in existence either now or hereafter. ARTICLE VIII A. CALL OF SPECIAL SHAREHOLDERS MEETING. Except as otherwise required by law, the Corporation shall not be required to hold a special meeting of shareholders of the Corporation unless (in addition to any other requirements of law) (i) the holders of not less than fifty (50) percent of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date and deliver to the Corporation's Secretary one or more written demands for the meeting describing the purpose or purposes for which it is to be held; (ii the meeting is called by the Board pursuant to a resolution approved by a majority of the entire Board; or (iii) the meeting is called by the Chairman of the Board of Directors. Only business within the purpose or purposes described in the special meeting notice required by Section 607.0705 of the Florida Business Corporation Act may be conducted at a special shareholders' meeting. B. ADVANCE NOTICE OF SHAREHOLDER-PROPOSED BUSINESS FOR ANNUAL MEETING. At an annual meeting of the shareholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board, (b) otherwise properly brought before the meeting by or at the direction of the Board, or (c) otherwise properly brought before the meeting by a shareholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation, not less than one hundred twenty (120) days nor more than one hundred eighty (180) days prior to the first anniversary of the date of the Corporation's notice of annual meeting provided with respect to the previous year's annual meeting; provided, however, that if no annual meeting was held in the previous year or the date of the annual meeting has been changed to be more than thirty (30) calendar days earlier than the date contemplated by the previous year's notice of annual meeting, such notice by the shareholder to be timely must be so delivered or received not later than the close of business on the fifth (5th) day following the date on which notice of the date of the annual meeting is given to shareholders or made public, whichever first occurs. Such shareholder's notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the shareholder proposing such business, (iii) the class and number of shares of capital stock of the Corporation which are beneficially owned by the shareholder, and (iv) any material interest of the shareholder in such business. The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the requirements of this Section B, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. IN WITNESS WHEREOF, the undersigned, for the purpose of amending and restating the Corporation's Articles of Incorporation pursuant to the laws of the State of Florida, has executed these Amended and Restated Articles of Incorporation as of September 26, 1996. INTERNATIONAL SPEEDWAY CORPORATION By: /s/ W. Garrett Crotty ----------------------------------- W. Garrett Crotty Secretary and General Counsel /TEXT EX-3.(II) 3 BY-LAWS OF THE REGISTRANT AMENDED AND RESTATED BYLAWS OF INTERNATIONAL SPEEDWAY CORPORATION (A FLORIDA CORPORATION) INDEX PAGE NUMBER ------ ARTICLE ONE - OFFICES.....................................................1 1. Registered Office.............................................1 2. Other Offices.................................................1 ARTICLE TWO - MEETINGS OF SHAREHOLDERS....................................1 1. Place.........................................................1 2. Time of Annual Meeting........................................1 3. Call of Special Meetings......................................1 4. Conduct of Meetings...........................................1 5. Notice and Waiver of Notice...................................1 6. Business and Nominations for Annual and Special Meetings......2 7. Quorum........................................................2 8. Voting Rights Per Share.......................................2 9. Voting of Shares..............................................2 10. Proxies.......................................................3 11. Shareholder List..............................................3 12. Action Without Meeting........................................4 13. Fixing Record Date............................................4 14. Inspectors and Judges.........................................4 15. Voting for Directors..........................................5 ARTICLE THREE - DIRECTORS.................................................5 1. Number; Term; Election; Qualification.........................5 2. Resignation; Vacancies; Removal...............................5 3. Powers........................................................5 4. Place of Meetings.............................................5 5. Annual Meetings...............................................5 6. Regular Meetings..............................................5 7. Special Meetings and Notice...................................5 8. Quorum and Required Vote......................................6 9. Action Without Meeting........................................6 10. Conference Telephone or Similar Communications Equipment Meetings..........................................6 11. Committees....................................................7 12. Compensation of Directors.....................................7 ARTICLE FOUR - OFFICERS...................................................7 1. Positions.....................................................7 2. Election of Specified Officers by Board.......................7 3. Election or Appointment of Other Officers.....................7 4. Compensation..................................................7 5. Term; Resignation; Removal; Vacancies.........................7 6. Chairman of the Board.........................................8 7. President.....................................................8 8. Vice Presidents...............................................8 9. Secretary.....................................................8 10. Chief Financial Officer.......................................8 11. Treasurer.....................................................8 12. Other Officers; Employees and Agents..........................9 ARTICLE FIVE - CERTIFICATES FOR SHARES....................................9 1. Issue of Certificates.........................................9 2. Legends for Preferences and Restrictions on Transfer..........9 3. Facsimile Signatures.........................................10 4. Lost Certificates............................................10 5. Transfer of Shares...........................................10 6. Registered Shareholders......................................10 7. Redemption of Control Shares.................................10 ARTICLE SIX - GENERAL PROVISIONS.........................................11 1. Dividends....................................................11 2. Reserves.....................................................11 3. Checks.......................................................11 4. Fiscal Year..................................................11 5. Seal.........................................................11 6. Gender.......................................................11 ARTICLE SEVEN - AMENDMENT OF BYLAWS......................................11 (ii) INTERNATIONAL SPEEDWAY CORPORATION AMENDED AND RESTATED BYLAWS ARTICLE ONE OFFICES Section 1. REGISTERED OFFICE. The registered office of INTERNATIONAL SPEEDWAY CORPORATION, a Florida corporation (the "Corporation"), shall be located at 1801 West International Speedway Boulevard, Daytona Beach, Florida 32114, unless otherwise determined by the Board of Directors of the Corporation (the "Board of Directors") in accordance with applicable law. Section 2. OTHER OFFICES. The Corporation may also have offices at such other places, either within or without the State of Florida, as the Board of Directors may from time to time determine or as the business of the Corporation may require. ARTICLE TWO MEETINGS OF SHAREHOLDERS Section 1. PLACE. All annual meetings of shareholders shall be held at such place, within or without the State of Florida, as may be designated by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof. Special meetings of shareholders may be held at such place, within or without the State of Florida, and at such time as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. TIME OF ANNUAL MEETING. Annual meetings of shareholders shall be held on such date and at such time fixed, from time to time, by the Board of Directors, provided, that there shall be an annual meeting held every calendar year at which the shareholders shall elect a board of directors and transact such other business as may properly be brought before the meeting. Section 3. CALL OF SPECIAL MEETINGS. Special meetings of the shareholders shall be held if called in accordance with the procedures set forth in the Corporation's Amended and Restated Articles of Incorporation (the "Articles of Incorporation") for the call of a special meeting of shareholders. Section 4. CONDUCT OF MEETINGS. The Chairman of the Board (or in his absence, the President or such other designee of the Chairman of the Board) shall preside at the annual and special meetings of shareholders and shall be given full discretion in establishing the rules and procedures to be followed in conducting the meetings, except as otherwise provided by law or in these Bylaws. Section 5. NOTICE AND WAIVER OF NOTICE. Except as otherwise provided by law, written or printed notice stating the place, date and time of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by first-class mail or other legally sufficient means, by or at the direction of the Chairman of the Board, President, the Secretary, or the officer or person calling the meeting, to each shareholder of record entitled to vote at such meeting. If the notice is mailed at least thirty (30) days before the date of the meeting, it may be done by a class of United States mail other than first class. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. If a meeting is adjourned to another time and/or place, and if an announcement of the adjourned time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the Board of Directors, after adjournment, fixes a new record date for the adjourned meeting. Whenever any notice is required to be given to any shareholder, a waiver thereof in writing signed by the person or persons entitled to such notice, whether signed before, during or after the time of the meeting stated therein, and delivered to the Corporation for inclusion in the minutes or filing with the corporate records, shall constitute an effective waiver of such notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the shareholders need be specified in any written waiver of notice. Attendance of a person at a meeting shall constitute a waiver of (a) lack of or defective notice of such meeting, unless the person objects at the beginning to the holding of the meeting or the transacting of any business at the meeting, or (b) lack of or defective notice of a particular matter at a meeting that is not within the purpose or purposes described in the meeting notice, unless the person objects to considering such matter when it is presented. Section 6. BUSINESS AND NOMINATIONS FOR ANNUAL AND SPECIAL MEETINGS. Business transacted at any special meeting shall be confined to the purposes stated in the notice thereof. At any annual meeting of shareholders, only such business shall be conducted as shall have been properly brought before the meeting in accordance with the requirements and procedures set forth in the Articles of Incorporation. Only such persons who are nominated for election as directors of the Corporation in accordance with the requirements and procedures set forth in the Articles of Incorporation shall be eligible for election as directors of the Corporation. Section 7. QUORUM. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Except as otherwise provided in the Articles of Incorporation or applicable law, shares representing a majority of the votes pertaining to outstanding shares which are entitled to be cast on the matter by the voting group constitute a quorum of that voting group for action on that matter. If less than a quorum of shares are represented at a meeting, the holders of a majority of the shares so represented may adjourn the meeting from time to time. After a quorum has been established at any shareholders' meeting, the subsequent withdrawal of shareholders, so as to reduce the number of shares entitled to vote at the meeting below the number required for a quorum, shall not affect the validity of any action taken at the meeting or any adjournment thereof. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting. Section 8. VOTING RIGHTS PER SHARE. Each outstanding share, regardless of class, shall be entitled to vote on each matter submitted to a vote at a meeting of shareholders, except to the extent that the voting rights of the shares of any class are limited or denied by or pursuant to the Articles of Incorporation or the Florida Business Corporation Act. Section 9. VOTING OF SHARES. A shareholder may vote at any meeting of shareholders of the Corporation, either in person or by proxy. Shares standing in the name of another corporation, domestic or foreign, may be voted by the officer, agent or proxy designated by the bylaws of such corporate shareholder or, in the absence of any applicable bylaw, by such person or persons as the board of directors of the corporate shareholder may designate. In the absence of any such designation, or, in -2- case of conflicting designation by the corporate shareholder, the chairman of the board, the president, any vice president, the secretary and the treasurer of the corporate shareholder, in that order, shall be presumed to be fully authorized to vote such shares. Shares held by an administrator, executor, guardian, personal representative, or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name or the name of his nominee. Shares held by or under the control of a receiver, a trustee in bankruptcy proceedings, or an assignee for the benefit of creditors may be voted by such person without the transfer thereof into his name. If shares stand of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or if two or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary of the Corporation is given notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, then acts with respect to voting shall have the following effect: (a) if only one votes, in person or by proxy, his act binds all; (b) if more than one vote, in person or by proxy, the act of the majority so voting binds all; (c) if more than one vote, in person or by proxy, but the vote is evenly split on any particular matter, each faction is entitled to vote the share or shares in question proportionally; or (d) if the instrument or order so filed shows that any such tenancy is held in unequal interest, a majority or a vote evenly split for purposes hereof shall be a majority or a vote evenly split in interest. The principles of this paragraph shall apply, insofar as possible, to execution of proxies, waivers, consents, or objections and for the purpose of ascertaining the presence of a quorum. Section 10. PROXIES. Any shareholder of the Corporation, other person entitled to vote on behalf of a shareholder pursuant to law, or attorney-in-fact for such persons may vote the shareholder's shares in person or by proxy. Any shareholder of the Corporation may appoint a proxy to vote or otherwise act for him by signing an appointment form, either personally or by his attorney-in-fact. An executed telegram or cablegram appearing to have been transmitted by such person, or a photographic, photostatic, or equivalent reproduction of an appointment form, shall be deemed a sufficient appointment form. An appointment of a proxy is effective when received by the Secretary of the Corporation (the "Secretary") or such other officer or agent which is authorized to tabulate votes, and shall be valid for up to 11 months, unless a longer period is expressly provided in the appointment form. The death or incapacity of the shareholder appointing a proxy does not affect the right of the Corporation to accept the proxy's authority unless notice of the death or incapacity is received by the Secretary or other officer or agent authorized to tabulate votes before the proxy exercises his authority under the appointment. An appointment of a proxy is revocable by the shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest. Section 11. SHAREHOLDER LIST. After fixing a record date for a meeting of shareholders, the Corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of the meeting, arranged by voting group with the address of, and the number and class and series, if any, of shares held by each. The shareholders' list must be available for inspection by any shareholder for a period of ten (10) days prior to the meeting or such shorter time as exists between the record date and the meeting and continuing through the meeting at the Corporation's principal office, at a place identified in the meeting notice in the city where the meeting will be held, or at the office of the Corporation's transfer agent or registrar. Any shareholder of the Corporation or his agent or attorney is entitled on written demand to inspect the shareholders' list (subject to the requirements of law), during regular business hours and at his expense, during the period it is available for inspection. The Corporation shall make the shareholders' list available at the meeting of shareholders, and any -3- shareholder or his agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment. The shareholders' list is prima facie evidence of the identity of shareholders entitled to examine the shareholders' list or to vote at a meeting of shareholders. Section 12. ACTION WITHOUT MEETING. Any action required or permitted by law to be taken at a meeting of shareholders may be taken without a meeting or notice if a consent, or consents, in writing, setting forth the action so taken, shall be dated and signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all voting groups and shares entitled to vote thereon were present and voted with respect to the subject matter thereof, and such consent shall be delivered to the Corporation, within the period required by Section 607.0704 of the Florida Business Corporation Act, by delivery to its principal office in the State of Florida, its principal place of business, the Secretary or another officer or agent of the Corporation having custody of the book in which proceedings of meetings of shareholders are recorded. Within ten (10) days after obtaining such authorization by written consent, notice must be given to those shareholders who have not consented in writing or who are not entitled to vote on the action, in accordance with the requirements of Section 607.0704 of the Florida Business Corporation Act. Section 13. FIXING RECORD DATE. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purposes, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy (70) days, and, in case of a meeting of shareholders, not less than ten (10) days, before the meeting or action requiring such determination of shareholders. If no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders or the determination of shareholders entitled to receive payment of a dividend, the date before the day on which the first notice of the meeting is mailed or the date on which the resolutions of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof, except where the Board of Directors fixes a new record date for the adjourned meeting. Section 14. INSPECTORS AND JUDGES. The Board of Directors in advance of any meeting may, but need not, appoint one or more inspectors of election or judges of the vote, as the case may be, to act at the meeting or any adjournment thereof. If any inspector or inspectors, or judge or judges, are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors or judges. In case any person who may be appointed as an inspector or judge fails to appear or act, the vacancy may be filled by the Board of Directors in advance of the meeting, or at the meeting by the person presiding thereat. The inspectors or judges, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots and consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate votes, ballots and consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all shareholders. On request of the person presiding at the meeting, the inspector or inspectors or judge or judges, if any, shall make a report in writing of any challenge, question or matter determined by him or them, and execute a certificate of any fact found by him or them. -4- Section 15. VOTING FOR DIRECTORS. Unless otherwise provided in the Articles of Incorporation, directors shall be elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. ARTICLE THREE DIRECTORS Section 1. NUMBER; TERM; ELECTION; QUALIFICATION. The number of directors of the Corporation shall be fixed from time to time, within the limits specified by the Articles of Incorporation, by resolution of the Board of Directors. Directors shall be elected in the manner and hold office for the term as prescribed in the Articles of Incorporation. Directors must be natural persons who are 18 years of age or older but need not be residents of the State of Florida, shareholders of the Corporation or citizens of the United States; provided, however, that at all times at least one (1) director shall be a resident of the State of Florida and a citizen of the United States. Section 2. RESIGNATION; VACANCIES; REMOVAL. A director may resign at any time by giving written notice to the Board of Directors or the Chairman of the Board. Such resignation shall take effect at the date of receipt of such notice or at any later time specified therein; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. In the event the notice of resignation specifies a later effective date, the Board of Directors may fill the pending vacancy (subject to the provisions of the Corporation's Articles of Incorporation) before the effective date if they provide that the successor does not take office until the effective date. Director vacancies shall be filled, and directors may be removed, in the manner prescribed in the Corporation's Articles of Incorporation. Section 3. POWERS. The business and affairs of the Corporation shall be managed by its Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised and done by the shareholders. Section 4. PLACE OF MEETINGS. Meetings of the Board of Directors, regular or special, may be held either within or without the State of Florida. Section 5. ANNUAL MEETINGS. Unless scheduled for another time by the Board of Directors, the first meeting of each newly elected Board of Directors shall be held, without call or notice, immediately following each annual meeting of shareholders. Section 6. REGULAR MEETINGS. Regular meetings of the Board of Directors may also be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors. Section 7. SPECIAL MEETINGS AND NOTICE. Special meetings of the Board of Directors may be called by the President or Chairman of the Board and shall be called by the Secretary on the written request of any two directors. At least forty-eight (48) hours' prior written notice of the date, time and place of special meetings of the Board of Directors shall be given to each director. Except as required by law, neither the business to be transacted at, nor the purpose of, any regular or special meting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Notices to -5- directors shall be in writing and delivered to the directors at their addresses appearing on the books of the Corporation by personal delivery, mail or other legally sufficient means. Notice by mail shall be deemed to be given at the time when the same shall be received. Notice to directors may also be given by telegram, teletype or other form of electronic communication. Whenever any notice is required to be given to any director, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before, during or after the meeting, shall constitute an effective waiver of such notice. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting and a waiver of any and all objections to the place of the meeting, the time of the meeting and the manner in which it has been called or convened, except when a director states, at the beginning of the meeting or promptly upon arrival at the meeting, any objection to the transaction of business because the meeting is not lawfully called or convened. Section 8. QUORUM AND REQUIRED VOTE. A majority of the prescribed number of directors determined as provided in the Articles of Incorporation shall constitute a quorum for the transaction of business and the act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless a greater number is required by the Articles of Incorporation. Whenever, for any reason, a vacancy occurs in the Board of Directors, a quorum shall consist of a majority of the remaining directors until the vacancy has been filled. If a quorum shall not be present at any meeting of the Board of Directors, a majority of the directors present thereat may adjourn the meeting to another time and place, without notice other than announcement at the time of adjournment. At such adjourned meeting at which a quorum shall be present, any business may be transacted that might have been transacted at the meeting as originally notified and called. Section 9. ACTION WITHOUT MEETING. Any action required or permitted to be taken at a meeting of the Board of Directors or committee thereof may be taken without a meeting if a consent in writing, setting forth the action taken, is signed by all of the members of the Board of Directors or the committee, as the case may be, and such consent shall have the same force and effect as a unanimous vote at a meeting. Action taken under this Section 9 is effective when the last director signs the consent, unless the consent specifies a different effective date. A consent signed under this Section 9 shall have the effect of a meeting vote and may be described as such in any document. Section 10. CONFERENCE TELEPHONE OR SIMILAR COMMUNICATIONS EQUIPMENT MEETINGS. Directors and committee members may participate in and hold a meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in such a meeting shall constitute presence in person at the meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground the meeting is not lawfully called or convened. Section 11. COMMITTEES. The Board of Directors, by resolution adopted by a majority of the whole Board of Directors, may designate from among its members an executive committee and one or more other committees, each of which, to the extent provided in such resolution, shall have and may exercise all of the authority of the Board of Directors in the business and affairs of the Corporation except where the action of the full Board of Directors is required by statute. Each committee must have two or more members who serve at the pleasure of the Board of Directors. The Board of Directors by resolution adopted in accordance with this Article Three, may designate one or more directors as alternate members of any committee, who may act in the place and stead of any absent member or members at any meeting of such committee. Vacancies in the membership of a committee may be filled only by the Board of Directors at a regular or special meeting of the Board of Directors. The executive -6- committee shall keep regular minutes of its proceedings and report the same to the Board of Directors when required. The designation of any such committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed upon it or him by law. Section 12. COMPENSATION OF DIRECTORS. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. Directors may receive such other compensation as may be approved by the Board of Directors. ARTICLE FOUR OFFICERS Section 1. POSITIONS. The officers of the Corporation shall consist of a Chairman of the Board, a President, one or more Vice Presidents (any one or more of whom may be given the additional designation of rank of Executive Vice President or Senior Vice President), a Secretary, a Chief Financial Officer and a Treasurer. Any two or more offices may be held by the same person. Officers other than the Chairman of the Board need not be members of the Board of Directors. The Chairman of the Board must be a member of the Board of Directors. Section 2. ELECTION OF SPECIFIED OFFICERS BY BOARD. The Board of Directors at its first meeting after each annual meeting of shareholders shall elect a Chairman of the Board, President, one or more Vice Presidents (including any Senior or Executive Vice Presidents), a Secretary, a Chief Financial Officer and a Treasurer. Section 3. ELECTION OR APPOINTMENT OF OTHER OFFICERS. Such other officers and assistant officers and agents as may be deemed necessary may be elected or appointed by the Board of Directors, or, unless otherwise specified herein, appointed by the Chairman of the Board. The Board of Directors shall be advised of appointments by the Chairman of the Board at or before the next scheduled Board of Directors meeting. Section 4. COMPENSATION. The salaries, bonuses and other compensation of the Chairman of the Board and all officers of the Corporation to be elected by the Board of Directors pursuant to Section 2 of this Article Four shall be fixed from time to time by the Board of Directors or pursuant to its direction. The salaries of all other elected or appointed officers of the Corporation shall be fixed from time to time by the Chairman of the Board or pursuant to his direction. Section 5. TERM; RESIGNATION; REMOVAL; VACANCIES. The officers of the Corporation shall hold office until their successors are chosen and qualified. Any officer or agent elected or appointed by the Board of Directors or the Chairman of the Board may be removed, with or without cause, by the Board of Directors, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer or agent appointed by the Chairman of the Board pursuant to Section 3 of this Article Four may also be removed from such office or position by the Board of Directors or the -7- Chairman of the Board, with or without cause. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise shall be filled by the board of Directors, or, in the case of an officer appointed by the Chairman of the Board, by the Chairman of the Board or the Board of Directors. Any officer of the Corporation may resign from his respective office or position by delivering notice to the Corporation. Such resignation shall be effective when delivered unless the notice specifies a later effective date. If a resignation is made effective at a later date and the Corporation accepts the future effective date, the Board of Directors may fill the pending vacancy before the effective date if the Board provides that the successor does not take office until such effective date. Section 6. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be the Chief Executive Officer of the Corporation. Subject to the control of the Board of Directors, the Chairman of the Board shall have general and active management of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The Chairman of the Board shall preside at all meetings of the shareholders and the Board of Directors. The Chairman of the Board shall also serve as the chairman of any executive committee. Section 7. PRESIDENT. The President shall be the Chief Operating Officer of the Corporation. In the absence of the Chairman of the Board or in the event the Board of Directors shall not have designated a Chairman of the Board, the President shall preside at meetings of the shareholders and the Board of Directors. The President shall have such powers and perform such duties as may be prescribed by the Board of Directors or the Chairman of the Board. The President shall also serve as the vice-chairman of any executive committee. Section 8. VICE PRESIDENTS. The Vice Presidents, in the order of their seniority, unless otherwise determined by the Board of Directors, shall, in the absence or disability of the President, perform the duties and exercise the powers of the President. They shall perform such other duties and have such other powers as the Board of Directors or Chairman of the Board shall prescribe or as the President may from time to time delegate. Executive Vice Presidents shall be senior to Senior Vice Presidents, and Senior Vice Presidents shall be senior to all other Vice Presidents. Section 9. SECRETARY. The Secretary shall attend all meetings of the shareholders and all meetings of the Board of Directors and record all the proceedings of the meetings of the shareholders and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors and shall keep in safe custody the seal of the Corporation and, when authorized by the Board of Directors, affix the same to any instrument requiring it. He shall perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board or the President. Section 10. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall be responsible for maintaining the financial integrity of the Corporation, shall prepare the financial plans for the Corporation and shall monitor the financial performance of the Corporation and its subsidiaries, as well as performing such other duties as may be prescribed by the Board of Directors, the Chairman of the Board or the President. Section 11. TREASURER. The Treasurer shall have the custody of corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of -8- the Corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements and shall render to the Chairman of the Board and the Board of Directors at its regular meetings or when the Board of Directors so requires an account of all his transactions as Treasurer and of the financial condition of the Corporation. The Treasurer shall perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board or the President. Section 12. OTHER OFFICERS; EMPLOYEES AND AGENTS. Each and every other officer, employee and agent of the Corporation shall possess, and may exercise, such power and authority, and shall perform such duties, as may from time to time be assigned to him by the Board of Directors, the officer so appointing him or such officer or officers who may from time to time be designated by the Board of Directors to exercise such supervisory authority. ARTICLE FIVE CERTIFICATES FOR SHARES Section 1. ISSUE OF CERTIFICATES. The shares of the Corporation shall be represented by certificates, provided that the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates (and upon request every holder of uncertificated shares) shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman of the Board or a Vice Chairman of the Board, or the President or Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, representing the number of shares registered in certificate form. Section 2. LEGENDS FOR PREFERENCES AND RESTRICTIONS ON TRANSFER. The designations, relative rights, preferences and limitations applicable to each class of shares and the variations in rights, preferences and limitations determined for each series within a class (and the authority of the Board of Directors to determine variations for future series) shall be summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the Corporation will furnish the shareholder a full statement of this information on request and without charge. Every certificate representing shares that are restricted as to the sale, disposition, or transfer of such shares shall also indicate that such shares are restricted as to transfer, and there shall be set forth or fairly summarized upon the certificate, or the certificate shall indicate that the Corporation will furnish to any shareholder upon request and without charge, a full statement of such restrictions. If the Corporation issues any shares that are not registered under the Securities Act of 1933, as amended, or not registered or qualified under the applicable state securities laws, the transfer of any such shares shall be restricted substantially in accordance with the following legend: "THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE LAW, OR (2) AT HOLDER'S EXPENSE, AN OPINION (SATISFACTORY TO THE -9- CORPORATION) OF COUNSEL (SATISFACTORY TO THE CORPORATION) THAT REGISTRATION IS NOT REQUIRED" Section 3. FACSIMILE SIGNATURES. Any and all signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon such certificate shall have ceased t be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 4. LOST CERTIFICATES. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Corporation may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. Section 5. TRANSFER OF SHARES. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 6. REGISTERED SHAREHOLDERS. The Corporation shall be entitled to recognize the exclusive rights of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Florida. Section 7. REDEMPTION OF CONTROL SHARES. As provided by the Florida Business Corporation Act, if a person acquiring control shares of the Corporation does not file an acquiring person statement with the Corporation, the Corporation may, at the discretion of the Board of Directors, redeem the control shares at the fair value thereof at any time during the 60-day period after the last acquisition of such control shares. If a person acquiring control shares of the Corporation files an acquiring person statement with the Corporation, the control shares may be redeemed by the Corporation, at the discretion of the Board of Directors, only if such shares are not accorded full voting rights by the shareholders as provided by law. -10- ARTICLE SIX GENERAL PROVISIONS Section 1. DIVIDENDS. The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in cash, property, stock (including its own shares) or otherwise pursuant to law and subject to the provisions of the Articles of Incorporation. Section 2. RESERVES. The Board of Directors may by resolution create a reserve or reserves out of earned surplus for any proper purpose or purposes, and may abolish any such reserve in the same manner. Section 3. CHECKS. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 4. FISCAL YEAR. The fiscal year of the Corporation shall end on August 31 of each year, provided that effective November 1996, the fiscal year of the Corporation shall end on November 30 of each year, in each case unless otherwise fixed by resolution of the Board of Directors. Section 5. SEAL. The corporate seal shall have inscribed thereon the name and state of incorporation of the Corporation. The seal may be used by causing it o a facsimile thereof to be impressed or affixed or in any other manner reproduced. Section 6. GENDER. All words used in these Bylaws in the masculine gender shall extend to and shall include the feminine and neuter genders. ARTICLE SEVEN AMENDMENT OF BYLAWS These Bylaws may be altered, amended or repealed or new Bylaws may be adopted at any meeting of the Board of Directors at which a quorum is present, by the affirmative vote of a majority of the directors present at such meeting. * * * -11- EX-10 4 MATERIAL CONTRACTS - LEASE OF DAYTONA REAL PROPERTY AGREEMENT THIS AGREEMENT, Made and entered into by and between DAYTONA BEACH RACING AND RECREATIONAL FACILITIES DISTRICT, created by Chapter 31343, Special Laws of Florida, 1955 (hereinafter sometimes called the "District"), and BILL FRANCE RACING, INC. to be hereafter known as DAYTONA INTERNATIONAL SPEEDWAY CORPORATION, a corporation organized and existing under and pursuant to the laws of the State of Florida, having its principal office in the City of Daytona Beach, County of Volusia, State of Florida (hereinafter sometimes called the "Corporation"), WITNESSETH: WHEREAS, the District was created and established by Chapter 313432, Special Laws of Florida, 1955, for the purpose of providing racing and recreational facilities within the territorial limits of the District; and, WHEREAS, the District holds a lease for a term of years covering and/or owns the lands in Volusia County, Florida, more particularly described hereinafter; and WHEREAS, the District has determined that the acquisition and construction of a motor vehicular speedway establishment and the operation thereon and thereat of motor vehicular races, exhibitions, exhibits, and other activities and displays of a historical, scientific, educational, and recreational nature will serve a public purpose by providing an educational and recreational facility and attraction to the citizens of and visitors to the City of Daytona Beach and Volusia County, and by aiding the development of the area contiguous to the lands aforementioned as a vacation resort through the attraction of a large number of visitors to the area; NOW, THEREFORE, for and in consideration of the sum of One ($1.00) Dollar in hand paid this date by each of the parties hereto to the other, and other good and valuable considerations, receipt whereof is hereby acknowledged by both parties, and in consideration of the mutual covenants and promises herein contained, the parties agree as follows: The lessor does hereby demise and sub-let and lease unto the lessee, all the following described premises situated and being in Volusia County, Florida, to-wit: Parcel 1: A portion of fractional Section 23 and a portion of Section 39, otherwise known as the Samuel Williams Grant, all being and lying within Township 15 South, Range 32 East, Public Land Surveys of Volusia County, Florida, being more particularly described as follows; Beginning at the intersection of the Westerly line of the said Samuel Williams Grant (Section 39, Township 15 South, Range 32 East) with the Southerly right of way line of the Daytona Beach-DeLand Highway, known as U.S. Route 92; thence South 24 degrees 58' East along the said Westerly line of the Samuel Williams Grant, a distance of 3160.42 feet to a point; thence South 24 degrees 38' East and still along the Westerly line of the said Samuel Williams Grant, a distance of 459.58 feet to a point; thence North 65 degrees 22' East a distance of 2687.7 feet to a point; thence North 11 degrees 45' 30" East a distance of 2347.25 feet to a point; thence due North a distance of 606.36 feet; thence North 10 degrees 38' West a distance of 1745.6 feet to a point in the Southerly right of way line of the aforesaid Daytona Beach-DeLand (U.S. 92) Highway; thence South 67 degrees 48' 30" West a distance of 2890.4 feet along the Southerly right of way line of U.S. Route 92 to a point; thence Counterclockwise along the arc of a circle and along the Southerly right of way line of Daytona Beach-DeLand Highway a distance of 2036.96 feet to the point of beginning, excepting therefrom the following described property now occupied by the low frequency radio range station: Beginning at a point in the South line of aforesaid U.S. 92 at a point which is 934 feet on a bearing of South 67 degrees 48' 30" West of the Northeasterly corner of the above described property; thence South 22 degrees 11' 30" East a distance of 440 feet; thence South 87 degrees 56'30" West a distance of 319.5 feet; thence North 22 degrees 11' 30" West a distance of 330 feet; thence North 67 degrees 48' 30" East a distance of 300 feet to the point of beginning, it being the intention to describe a tract of land comprising an area of approximately 374 acres, more or less. PARCEL 2: A portion of Government Lot 3, Section 23, Township 15 South, Range 32 East, Volusia County, Florida, being more particularly described as follows: Beginning at a point on the Westerly line of the Samuel Williams Grant, being Section 39, Township 15 South, Range 32 East, said point being located a distance of 1066.71 feet South 24 degrees 57' 55" East of an intersection with the southerly right-of-way line of U. S. Highway #92; thence South 13 degrees 35' 35" West a distance of 500 feet to a point; thence South 25 degrees 08' 20" West a distance of 581.23 feet to a point; thence North 89 degrees 54' 30" East a distance of 835.0 feet to a point on the West line of the aforesaid Samuel Williams Grant; thence North 24 degrees 57' 55" West along the West line of the aforesaid Samuel Williams grant, a distance of 1115 feet to the place of beginning, the above circumscribed property comprising an areas of 9.06 acres, and being no nearer than 65' from the Odds Board of Volusia County Kennel Club at its nearest point. PARCEL 3: A portion of Lot 3, Fractional Section 23; a portion of Lots 1 and 2, Fractional Section 26, and a portion of Section 22, all being in Township 15 South, Range 32 East, Public Land Surveys of Volusia County, Florida, and being more particularly described as follows: Beginning at a point in the Westerly line of the Samuel Williams Grant, being otherwise known as section 39 in said Township 15 South, Range 32 East, said point being marked with a concrete monument and being the Southeast corner of said Fractional Sections 23 and the Northeast corner of said Fractional Section 26; thence from said point of beginning, go South 24 degrees 38' East a distance of 459.58 feet to a point; thence South 71 degrees 58' 30" West a distance of 1560.0 feet to a point; thence North 24 degrees 38' West a distance of 1742 feet to a point; thence North 89 degrees 54' 30" West a distance of 335.7 feet to a point on the right of way line of the Daytona Beach-DeLand Highway; thence North 25 degrees 00' 30" East and along the Easterly right of way line of the Daytona Beach-DeLand Highway a distance of 225.33 feet to a point; thence South 89 degrees 54' 30" East along the Southerly boundary of land owned by the Volusia County Kennel Club, a distance of 1844.6 feet to a point in the Westerly line of the Samuel Williams Grant; thence South 24 degrees 58' East along the Westerly line of the Samuel Williams Grant a distance of 978.71 feet to the point of beginning. TO HAVE AND TO HOLD the same, with all rights, privileges, easements and appurtenances thereunto attaching and belonging unto the said Corporation for and during the term of fifty (50) years, commencing on the 8th day of November, A.D. 1957, the said Corporation, its successors and assigns paying rent therefor and yielding possession thereof as hereinafter provided. RENT Said Corporation in consideration of the leasing of the said premises does hereby covenant and agree to pay rent to the District as follows: The sum of Twelve Thousand Five Hundred ($12,500.00) Dollars at the expiration of one year after date hereof; the sum of Sixteen Thousand ($16,000.00) Dollars at the expiration of two years after date hereof, the sum of Sixteen Thousand ($16,000.00) Dollars at the expiration of three years after date hereof; the sum of Eleven Thousand ($11,000.00) Dollars at the expiration of four years after date hereof; the sum of Eleven Thousand ($11,000.00) Dollars at the expiration of five years after date hereof; the sum of Six Thousand ($6,000.00) Dollars at the expiration of six years after date hereof and a like sum upon the anniversary date of said payment for each year for a period of nine (9) years thereafter; the sum of Seven Thousand Five Hundred ($7,500.00) Dollars on the 8th day of November, 1973, and a like sum upon the anniversary date of said payment each year for a period of 19 years after the date thereof; and the sum of Ten Thousand ($10,000.00) Dollars on the 8th day of November, 1993, and a like sum upon the anniversary date of said payment for each year for a period of 14 years after date thereof. In the absence of any default on the part of the Corporation, the Corporation shall have the right at any time during the term hereof, to extend this lease and sub-lease for a further term of 25 years, from, to-wit: the 8th day of November, 2007, to and including the 7th day of November, 2032, paying therefor a yearly rental of Twenty Thousand ($20,000.00) Dollars a year beginning the 8th day of November, 2008, and payable on the 8th day of November of each year thereafter during the said term as extended. Written notice of the Corporation's election to exercise the option to extend the lease and sub-lease as aforesaid shall be served upon the District on or before the 1st day of May, 2007, otherwise this option shall be deemed to be waived. In the event the Corporation elects to exercise the option to extend the term of this lease and sub-lease all other terms, conditions, covenants, and provisions hereof, be and the same shall remain in full force and effect for and during said term as extended. SECTION II. CONSTRUCTION The Corporation covenants and agrees to and with the District to construct, erect and complete at its own cost and expense within five years from the date hereof a racing facility complete with two and one-half mile paved race course, and grandstands, permanent and/or temporary, having a seating capacity of not less than 10,000, and to this end the District shall within 90 days after request therefor by the Corporation remove all buildings and structures now existing upon the premises at its own cost and expense. The District further agrees that the Corporation or its tenants may erect, construct, and maintain other and additional structures and improvements upon said premises from time to time as the Corporation shall determine to be necessary or desirable without securing the consent of the District, so long as said improvements are of such nature as are not contrary to law, and so long as the design and construction complies with all valid rules and regulations of the City of Daytona Beach, County of Volusia, State of Florida, and U.S. Government acting through the Civil Aeronautics Authority. The Corporation agrees that it will provide adequate crash rails, and incorporate into the race course and grandstands such equipment as may be reasonably necessary or required to protect the patrons of the Facility against injury. TAXES (a) The District covenants and agrees that it will hold the Corporation harmless from any and all liability for real property taxes, if any, assessed, levied or imposed upon or with respect to the lands herein let and demised to the Corporation. Any and all other taxes lawfully imposed on the Corporation by virtue of its use of the demised lands shall be paid by the Corporation. (b) It is expressly agreed, however, that the Corporation shall not be required to pay, discharge or remove any tax (including penalties and interest) assessment, tax lien, forfeiture, or other imposition or charge upon or against the Corporation made by reason of or because of the Corporation's use of the improvements at any time made to, on and at the demised premises so long as the Corporation shall in good faith contest the same or the validity thereof by appropriate legal proceedings which shall operate to prevent the collection of the tax, assessment, forfeiture, lien, or imposition so contested or the sale of any such improvements, or any part thereof, to satisfy the same. (c) Any proceeding or proceedings for contesting the validity of the amount of taxes, assessments or other public charges, or to recover back any tax assessment or other imposition, paid by the Corporation, may be brought by the Corporation in the name of the District or in the name of the Corporation or both, as the Corporation may deem advisable; provided, however, if any such proceedings be brought in the name of the District, the Corporation shall indemnify and save harmless the District against any and all loss, costs, or expenses of any kind that may be imposed upon the District in connection therewith. The Corporation shall be entitled to any refund of any taxes, assessments or other public charges or impositions, and penalties and interest thereon which have been paid by the Corporation, or paid by the District and for which the District has been fully reimbursed including interest thereon to the date of reimbursement. If the Corporation shall default in the payment of any taxes, assessments, or public charges above required to be paid by the Corporation, then the District after reasonable notice to the Corporation, shall have the right to pay the same together with any penalties and interest in which event the amount so paid by the District shall be added to the next installment of rental required to be paid the District hereunder together with interest on any such amounts so paid at the rate of 6% per annum. USE (A) The Corporation covenants and agrees that it will not use or permit the premises in question to be used in any manner which might constitute an airport hazard or serious interference with the operation and development of the Daytona Beach Municipal Airport, and that it will not erect or permit to be erected on the premises any structure which might constitute an airport hazard, or hazard to the taking off or landing of aircraft at the Daytona Beach Municipal Airport. The Corporation is cognizant of and familiar with the provisions of Resolution #55-154, reserving and dedicating a right of flight over and across the premises for the use and benefit of those members of the public who use the Daytona Beach Municipal Airport for landing or taking off of aircraft and this lease is executed with full knowledge and subject to such reservation and dedication. (B) The Corporation will comply with all applicable laws, ordinances, and regulations of duly constituted public authorities applicable to the Corporation. The Corporation shall, however, have the right to contest, by appropriate legal proceedings, without cost or expense to the District, the validity of any such law, ordinance or regulation, and the Corporation may postpone compliance therewith until the final determination of any court proceedings, if, in the opinion of counsel selected by the Corporation and approved by the District, there is no possibility that the demised premises or any part thereof will be lost or forfeited or otherwise imperiled during the pendency of such proceedings. All such proceedings shall be prosecuted with all due diligence and dispatch. The District agrees to execute and deliver any papers, documents, or other instruments which may be necessary or proper to permit the Corporation to make any such contest. If as a result of such contest the District shall suffer any penalty or additional expense in any way which would have been avoided by compliance with such law, ordinance, order, rule, regulation or requirement of the nature aforesaid, then this Corporation shall pay to the District upon demand the amount thereof. (C) The Corporation agrees to hold the District financially harmless (a) from the consequences of any violation of such laws, ordinances, or regulations and (b) from all claims or damage on account of injuries, death or property damage resulting from such violation. The Corporation further agrees that it will not permit any unlawful occupation, business or trade to be conducted on the demised property or any use to be made thereof contrary to law, ordinance, or regulation as aforesaid with respect thereto. (D) The Corporation will not at any time permit any mechanic's, laborer's or materialman's lien to stand against the demised property for any labor or material furnished to the Corporation or claimed to have been furnished to the Corporation or to the Corporation's agents, contractors, or tenants in connection with work of any character performed or claimed to have been performed on the demised property by or at the direction or sufferance of the Corporation; provided, however, that the Corporation shall have the right to contest the validity or amount of any such lien or claimed lien, upon giving to the District such reasonable security as may be demanded by the District to insure payment thereof and to prevent any sale, foreclosure, or forfeiture of the demised property by reason of such non-payment, provided such security shall not exceed one and one-half times the amount of such lien or claimed lien. On final determination of the lien or claim for lien the Corporation will immediately pay any final judgment rendered with all proper costs and charges and shall have the lien released or judgment satisfied at the Corporation's own expenses. LIABILITY The Corporation agrees to maintain public liability insurance with a responsible company or companies approved by the District protecting the District and the Corporation from liability in the amount satisfactory to the District but not to exceed the sum of $100,000.00 for injury, sickness, or death to any one person and not to exceed the sum of $1,000,000.00 for injury, sickness or death, or property damage claims arising out of any one accident occurring on or about the demised premises or any part thereof, when racing events are being conducted, and upon request the Corporation will deliver to the District evidence of such insurance. DEFAULT It is further covenanted and agreed by and between the parties hereto that in the event default shall be made by said Corporation, its successors or assigns, in the payment of any rent herein provided for upon the day when the same shall become due and payable, and such default shall continue for thirty days after notice in writing given by said District, its successors or assigns, to said Corporation; or in the event said Corporation, its successors or assigns, shall fail to pay any of the taxes and assessments as hereinbefore provided to be paid within the time provided by law, said District, its successors or assigns, agents, or attorneys, may at its option, after ninety (90) days' notice in writing given to said Corporation, its successors or assigns, declare this lease canceled and the term thereof ended, and may enter upon said premises, with or without process of law, and take possession thereof, with any and all buildings or improvements which may have been erected thereon, the Corporation hereby waiving any demand for possession thereof, and all buildings, fixtures and improvements then situated on said premises shall be and become the property of the District, its successors or assigns. EMINENT DOMAIN The District shall at all times retain fee simple title to the demised premises and leasehold unless the same shall be taken by eminent domain proceedings for other public use by higher governmental authority. It is agreed that if at any time during the continuance of this lease and sub-lease such taking of the entire property shall occur, the District shall be entitled to receive so much of the award given therefor, which shall not be in excess of the sum of One Hundred Twenty Thousand ($120,000.00) Dollars, which is the agreed value of the land at the present date. It is agreed that if at any time during the continuance of this lease and sub-lease such taking of a portion of the property herein demised shall occur, the award shall be apportioned between the parties ratably upon the same basis set forth in the plan specified in the case of taking of the entire property. In the event that they are unable to agree upon the proper proportion of said award to which they are entitled, the entire controversy shall be submitted to a board of arbitration of one arbitrator appointed by each of the parties, and in the event that the said arbitrators are unable to agree then they shall submit the controversy to a third arbitrator, and in that event the parties hereto shall be bound by the decision of a majority of said arbitrators. The arbitration contemplated by this paragraph shall be had within thirty days after the confirmation of said award, and in the event that either party shall fail to name his arbitrator within said thirty day period, the arbitration shall proceed with a single arbitrator. WAIVER OF BREACH No waiver of any breach of any covenant, condition or stipulation hereunder shall be taken to be a waiver of any succeeding breach of the same covenant, condition or stipulation. DESTRUCTION OF IMPROVEMENTS No damage to or destruction of any building or structure on the premises by fire or other casualty shall be taken to entitle the Corporation to surrender possession of the demised premises or termination of this Lease, nor shall the damage to or destruction of any building or structure on said premises by fire or other casualty entitle the Corporation to any abatement of the rent stated in this Lease, it being understood and the Corporation covenanting and agreeing at all times notwithstanding the condition of said Facility to continue to pay rent to the District as herein provided. The Corporation shall have the right and privilege of maintaining fire and other such insurance coverage for and covering improvements installed on and at the demised premises as it may deem necessary and desirable at its own expense and the proceeds of any such insurance so carried or maintained by the Corporation shall be and remain the sole property of the Corporation. RESERVATION The District reserves for the use and benefit of the United States Government, with respect to said premises, all right and interest of the United States Government to all uranium, thorium and other materials determined pursuant to section 5(b)(1) of the Atomic Energy Act of 1946 (60 Stat. 761) to be particularly essential to the production of fissionable materials. GENERAL (A) The Corporation, paying the rent hereby reserved and observing and performing the several covenants and stipulations herein on its part contained, shall peaceably hold and enjoy the demised premises during the said term without any interruption by the District or any person likely claiming under it. (B) The covenants and agreements herein contained shall apply to and bind and inure to the benefit of the successors and assigns of the respective parties. (C) The District is responsible for rental payments required to be paid the City of Daytona Beach, a municipal corporation of the State of Florida, in accordance with the Lease it holds covering a part of the demised property and any real property taxes assessed against the demised premises and if the District shall fail or refuse to pay any such rental or taxes before the same shall become delinquent, then the Corporation shall have the right and option to pay same and to deduct any sums so expended from any rent thereafter to become due the District, pursuant to the terms hereof. (D) The Corporation may assign this Lease and sub-lease and sub- let any part of the demised property; provided, however, that in the event of any such assignment or sub-letting, the Corporation shall remain primarily responsible for the full and faithful performance of all of the terms, conditions, and covenants hereof on its part to be done and performed. (E) The District may terminate this lease at the end of the 20th year of the term herein granted, or at the end of any succeeding 10th year period hereof, upon giving notice to the Corporation of its intention so to do, at least 180 days prior to the end of such 20th year or succeeding 10th year period. In such event, the District shall pay to the Corporation as full compensation for all of its interest in this lease and in the property comprising the facility, a sum of money, in cash, equal to 10 times the gross income to the Corporation from all activities conducted on or at the facility during the last preceding full fiscal year that the Corporation operated said facility, prior to the giving of notice as aforesaid. Upon the making of such payment, all rights of the Corporation under this lease shall be terminated. Any termination of the Corporation's interest in accordance with this provision of this lease shall be subject to any and all sub-leases made by the Corporation and then existing and the rights of those claiming by, though or under the Corporation by assignment, franchise, sub-lease or otherwise, which has not been in existence for a period of twenty (20) years, and provided that same may be terminated by the District when any such sub-lease, assignment, franchise, or the like shall have been in force for a full twenty (20) year period. DISTRICT USE (A) The District shall have the right to use the grandstands, parking area and race course, or race courses, including but not restricted to the area within the race course or race courses, for all proper public uses and purposes for periods aggregating at least three months in each fiscal year hereafter and during the term of this agreement, on dates and for terms when the facility or any such part thereof desired by the District is not being used by the Corporation, and the use of any such part of the facility on any such date or for any such term does not unreasonably interfere with or conflict with the Corporation's plans therefor or use thereof. The District shall have no right to use any such part of said facility for such public uses and purposes on any date or during any period of term when the facility or such part thereof is being used by the Corporation under and pursuant to the terms hereof, even though the total use made of the facility by the District during a particular fiscal year in the aggregate totals less than three months. It is intended that during any and all periods and terms when the Corporation is using the facility or any part thereof, the Corporation shall have the full, exclusive and complete use of the part thereof being used by the Corporation and of all rights, privileges, licenses and other incidents appertaining thereto, of every kind and nature whatsoever. It is further intended that at all times when the grandstands, parking areas, and race course or courses or any part thereof is not being utilized by the Corporation, such part or parts of the said facility as is herein made available to the District, shall be available to the District for all proper public uses and purposes, for periods totaling not more than three months in each fiscal year. The District shall not use nor permit any part of the facility to be used for motorized races, motorized exhibits, motorized exhibitions and displays, and motorized shows, including but not limited to motor vehicular races, motor vehicular thrill shows and other motor vehicular attractions and exhibitions, contests, demonstrations and events of like nature, of every kind and description, excepting only that this prohibition shall not apply to isolated attractions of a motorized nature operated as a side show and a part of and in connection with circuses, carnivals, fairs and other such events of a temporary nature only, and so long as the same are not the primary event or attraction offered or staged. The procedure to be followed by the District in scheduling the dates, periods and terms when it shall have the use of the part or parts of the facility hereinbefore enumerated and actual physical possession thereof or any part thereof is as follows: (1) That no attractions, exhibitions, or other events of any kind or nature shall be staged or produced at or on the Facility by the District on or before 18 months after the beginning of the first fiscal year of this agreement without the written consent of the Corporation, it being the intent and purpose of the parties hereto to give and grant the Corporation a reasonable opportunity to stage and produce on and at the facility and as the first event or attraction thereat, and for the grand opening thereof, a motor vehicular racing event. (2) On or before the expiration of the first fiscal year of this agreement, the District shall furnish the Corporation a written schedule of the dates and terms during which the District desires the use and physical possession of those portions of the facility which it shall be entitled to use for public purposes as aforesaid, for the second fiscal year. If the aggregate of such dates and terms so certified to the Corporation does not total 3 months then the District shall have the right and privilege of adding additional dates and terms to any such schedule from time to time during the second fiscal year, and so long as the total of such dates and terms, in the aggregate, does not exceed a period of three months, and providing further, that the Corporation is given 6 months notice in advance of the dates and term or terms to be added to the said schedule as aforesaid from time to time. (3) That after the first schedule of dates and terms when the District is to have the use of parts of the facility is certified to the Corporation as hereinbefore provided for, then and thereafter during the life of this agreement, the District shall from time to time certify to the Corporation the dates and terms on which the District desires to use parts of the facility and when the District is to have actual physical possession of such portions as it is entitled to use, thereof, during or for any particular fiscal year, giving the Corporation 6 months notice in writing of any such date or term and limiting the total of such dates or terms scheduled by the District with the Corporation to a total of not more than 3 months during any fiscal year. (4) It is fully understood and agreed that any dates or uses requested by the District which conflict with events or uses scheduled or planned by the Corporation may be rejected by the Corporation by written notice to the District given on or before the expiration of 3 months after such request is received from the District. (B) The District shall be responsible for the maintenance, repair and replacement at its own expense of all parts of the facility authorized to be used by it or its licensees under the prior provisions of this lease, including all lands, buildings, structures, equipment and improvements of any kind thereon or therein, during such periods of time as the District or its licensees have actual physical possession of such parts. The District shall make all repairs to such parts of the Facility, including all lands, buildings, structures, equipment and improvements of any kind, both inside and outside, during such periods of time as the District or its licensees have actual physical possession of such parts, as are necessary to maintain them in first class condition and working order and to restore them to the condition in which they were at the time the physical possession thereof was given to the District. The District shall keep all of such parts of the facility, when in its physical possession, in a safe, clean and sanitary condition, and shall comply with all Federal, State, county or municipal requirements relating thereto. The District shall inspect such parts of the facility to which it is to be given physical possession, not less than 10 days before actual possession thereof is to be given to the District under the terms hereof for any period or term, and if any of such parts of the facility are found not to be in a good state of repair, the District shall forthwith notify the Corporation in writing of any and all defects complained of, and if such defects are not forthwith remedied, the acceptance of possession by the District shall be made subject to returning the property in the same condition as received, rather than in first class working order and condition, as would otherwise be required. On or before 5 days after the end of each period or term during which the District had physical possession of any parts of the facility, the Corporation shall cause an inspection to be made of such parts of the facility as have been surrendered and returned to it, and if any of such parts of the facility are found not to be in a good state of repair, the Corporation shall forthwith notify the District in writing of any and all defects complained of and of the repairs or replacements reasonably necessary or required to place such parts of the facility in first class condition and working order, and if the District shall not have commenced the making of such repairs or replacements within 5 days after delivery of such notice or shall not thereafter continue the making of such repairs or replacements with all expedition practicable, then and in that event the Corporation shall have the right and privilege of making such repairs or replacements and the cost or expense of making the same shall be deducted from the next installment of rental required to be paid hereunder. NOTICES Any notice, demand, direction, request or other instrument authorized or required by this agreement to be given or filed with the District or with the Corporation shall be deemed to have been sufficiently given or filed for all purposes of this agreement if and when sent by registered mail, postage prepaid, return receipt requested: To the District, if addressed to: Daytona Beach Racing and Recreational Facilities District 354 North Beach Street Daytona Beach, Florida To the Corporation, if addressed to: DAYTONA INTERNATIONAL SPEEDWAY CORPORATION 27 South Atlantic Avenue Daytona Beach, Florida or to such other addresses as may be designated in writing from time to time by the District or the Corporation, respectively. Any rental payments required to be paid by the Corporation may be paid by check. SURRENDER It is mutually covenanted and agreed that upon the termination of the lease the said Corporation will peaceably and quietly deliver up the said premises and all improvements thereon to the said District upon the prorata adjustment of insurance, or other charges prepaid by the Corporation. IN WITNESS WHEREOF, each of the parties hereto has caused this instrument to be executed and the seal affixed by its proper officers after due corporate authorization this 8th day of November, A. D. 1957. In the presence of: DAYTONA BEACH RACING AND RECREATIONAL FACILITIES DISTRICT By: s/ J. Saxton Lloyd Attest: s/ Thomas T. Cobb Secretary BILL FRANCE RACING, INC. By: s/ William H. G. France Attest: s/ Annie B. France Secretary STATE OF FLORIDA COUNTY OF VOLUSIA On this 8th day of November, 1957, before me, Ellie S. Brown, a Notary Public in and for the County and State aforesaid, personally appeared J. Saxton Lloyd and Thomas T. Cobb, to me known and known to me to be the Chairman and Secretary and Treasurer, respectively, of the Daytona Beach Racing and Recreational District, and to me known to be the persons who executed the foregoing instrument, and each acknowledged the execution thereof to be his free act and deed and the free act and deed of said Daytona Beach Racing and Recreational Facilities District, for the uses and purposes therein mentioned. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year in the certificate first above written. s/ Ellie S. Brown Notary Public, State of Florida at Large, My Commission expires 9-11-59 STATE OF FLORIDA COUNTY OF VOLUSIA On this 8th day of November, 1957, before me, Ellie S. Brown, a Notary Public in and for the County and State aforesaid, personally appeared William H. G. France and Annie B. France, to me known and known to me to be the President and Secretary respectively, of Bill France Racing, Inc., a corporation organized and existing under the laws of the State of Florida, and to me known to be the persons who executed the foregoing instrument, and each acknowledged the execution thereof to be his free act and deed and the free act and deed of said corporation, for the uses and purposes therein mentioned. IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year in the certificate first above written. s/ Ellie S. Brown Notary Public, State of Florida at Large, My Commission expires 9-11-59 EX-10 5 MATERIAL CONTRACTS - 1994 LONG-TERM INCENTIVE PLAN INTERNATIONAL SPEEDWAY CORPORATION 1994 LONG-TERM INCENTIVE PLAN By action of its Board of Directors, International Speedway Corporation has established the following incentive compensation plan for specified key employees, to be known as the "International Speedway Corporation 1994 Long- Term Incentive Plan" and to be effective as of the Effective Date specified below. The purpose of this Plan is 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. Awards of restricted shares of Stock will be assigned to officers and key employees who are capable of having a significant impact on the performance of the Company. ARTICLE I. DEFINITIONS. For purposes of this Plan, the following terms or phrases shall have the indicated meanings. 1.1 Achieved Performance. The Achieved Performance shall be the corporate performance grade earned under the Company's annual incentive compensation plan. 1.2 Award Dates. The Award Dates shall be January 1, 1994 for Initial Awards and January 1, of 1995, 1996 and 1997 for Future Performance Awards. 1.3 Board. The Board of Directors of the Company. 1.4 Company. International Speedway Corporation, a Florida corporation, its successors and assigns. 1.5 Effective Date. The Effective Date of this Plan, which shall be the date upon which this Plan was approved by the Board. 1.6 Fair Market Value. "Fair Market Value" shall mean (a) The closing price of a share of the Company's Stock on the principal exchange on which shares of the Company's Stock are then trading, if any, on such date, or, if shares were not traded on such date, then on the next preceding day during which a sale occurred; (b) if such Stock is not traded on an exchange, but is quoted on NASDAQ or a successor quotation system, (i) the last sales price (if the Stock is then listed as National Market Issue under the NASD National Market System) or (ii) the mean between the closing representative bid and asked prices (in all other cases) for the Stock on such date as reported by NASDAQ or such successor quotation system; or (c) if such Stock is not publicly traded on an exchange and not quoted on NASDAQ or a successor quotation system, the mean between the closing bid and asked prices for the Stock on such date as determined in good faith by the Board. 1.7 Participant. An employee or officer of the Company designated as a Participant in this Plan in accordance with Article II. 1.8 Corporate Performance Multipliers. The Corporate Performance Grade is the Achieved Performance goal at which all or a specified portion of a Participant's award shall be granted and is based upon the corporate performance grade earned under the Company's annual incentive compensation plan. Because this is based on corporate Achieved Performance grades, all Participants will participate at the same Performance Multiplier. The Corporate Performance Grades and related Performance Multipliers are as specified below: Corporate Performance Performance Grade Multiplier ___________ ___________ A 125% B 100% C 80% D 50% EX-10 6 MATERIAL CONTRACTS - 1996 LONG-TERM STOCK INCENTIVE PLAN International Speedway Corporation 1996 Long-Term Stock Incentive Plan 1. Definitions: As used herein, the following definitions shall apply: a. "Board of Directors" shall mean the Board of Directors of the Corporation. b. "Committee" shall mean the Compensation Committee designated by the Board of Directors of the Corporation, or such other committee as shall be specified by the Board of Directors to perform the functions and duties of the Committee under the Plan; provided, however, that the Committee shall comply with the requirements of (I) Rule 16b-3 of the Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (ii) Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder. c. "Common Stock" shall mean Class A Common Stock of the Corporation. d. "Corporation" shall mean International Speedway Corporation, a Florida corporation, or any successor thereof. e. "Discretion" shall mean in the sole discretion of the Committee, with no requirement whatsoever that the Committee follow past practices, act in a manner consistent with past practices, or treat a key employee, consultant or advisor in a manner consistent with the treatment afforded other key employees, consultants or advisors with respect to the Plan. f. "Fair Market Value" shall mean (a) The closing price of a share of the Corporation's Common Stock on the principal exchange on which shares of the Corporation's Common Stock are then trading, if any, on such date, or, if shares were not traded on such date, then on the next preceding day during which a sale occurred; (b) if such Stock is not traded on an exchange, but is quoted on NASDAQ or a successor quotation system, (i) the last sales price (if the Stock is then listed on the NASDAQ National Market) or (ii) the mean between the closing representative bid and asked prices (in all other cases) for the Stock on such date as reported by NASDAQ or such successor quotation system; or (c) if such Stock is not publicly traded on an exchange and not quoted on NASDAQ or a successor quotation system, the mean between the closing bid and asked prices for the Stock on such date as determined in good faith by the Committee. g. "Incentive Option" shall mean an option to purchase Common Stock of the Corporation which meets the requirements set forth in the Plan and also meets the definition of an incentive stock option within the meaning of Section 422 of the Code; provided, however, that Incentive Options may only be granted to persons who are employees of the Corporation or of a subsidiary corporation in which the Corporation owns, directly or indirectly, 50% or more of the combined voting power of all classes of stock of the subsidiary corporation. The stock option agreement for an Incentive Option shall state that the option is intended to be an Incentive Option. h. "Plan Administrator" shall mean the Committee. i. "Nonqualified Option" shall mean an option to purchase Common Stock of the Corporation which meets the requirements set forth in the Plan but does not meet the definition of an incentive stock option within the meaning of Section 422 of the Code. The stock option agreement for a Nonqualified Option shall state that the option is intended to be a Nonqualified Option. j. "Participant" shall mean any individual designated by the Committee under Paragraph 6 for participation in the Plan. k. "Plan" shall mean this International Speedway Corporation 1996 Stock Incentive Plan. l. "Restricted stock award' shall mean a grant of Common Stock of the Corporation which is subject to forfeiture, restrictions against transfer, and such other terms and conditions determined by the Committee, as provided in Paragraph 18. m. "Stock appreciation right" shall mean a right to receive the appreciation in value, or a portion of the appreciation in value, of a specified number of shares of the Common Stock of the Corporation, as provided in Paragraph 12. n. "Subsidiary" shall mean any corporation or similar entity in which the Corporation owns, directly or indirectly, stock or other equity interest ("Stock") possessing more than 25% of the combined voting power of all classes of Stock; provided, however, that an Incentive Option may be granted to an employee of a Subsidiary only if the Subsidiary is a corporation and the Corporation owns, directly or indirectly, 50% or more of the total combined voting power of all classes of Stock of the Subsidiary. 2. Purpose of Plan: The purpose of the Plan is to provide key employees (including officers and directors who are also key employees), consultants and advisors of the Corporation and its Subsidiaries with an increased incentive to make significant and extraordinary contributions to the long-term performance and growth of the Corporation and its Subsidiaries, to join the interests of key employees, consultants and advisors with the interests of the shareholders of the Corporation, by focusing on long-term goals and creation of increases in shareholder value, and to facilitate attracting and retaining key employees, consultants and advisors of exceptional ability by providing significant opportunities for capital accumulation. 3. Administration: The Plan shall be administered by the Committee. Subject to the provisions of the Plan, the committee shall determine, from those eligible to be Participants under the Plan, the persons to be granted stock options, stock appreciation rights and restricted stock, the amount of stock or rights to be optioned or granted to each such person, and the terms and conditions of any stock options, stock appreciation rights and restricted stock. Subject to the provisions of the Plan, the Committee is authorized to interpret the Plan, to make, amend and rescind rules and regulations relating to the Plan and to make all other determinations necessary or advisable for the Plan's administration. Interpretation and construction of any provision of the Plan by the Committee shall, unless otherwise determined by the Board of Directors of the Corporation, be final and conclusive. A majority of the Committee shall constitute a quorum, and the acts approved by a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by a majority of the Committee, shall be the acts of the Committee. 4. Indemnification of Committee Members: In addition to such other rights of indemnification as they may have, the members of the Committee shall be indemnified by the Corporation in connection with any claim, action, suit or proceeding relating to any action taken or failure to act under or in connection with the Plan or any option, stock appreciation right or restricted stock granted hereunder to the full extent provided for under the Corporation's Bylaws with respect to indemnification of directors of the Corporation. 5. Maximum Number of Shares Subject to Plan: The maximum number of shares with respect to which stock options or stock appreciation rights may be granted or which may be awarded as restricted stock under the Plan shall be 1,000,000 shares in the aggregate of Common Stock of the Corporation. The number of shares with respect to which a stock appreciation right is granted, but not the number of shares which the Corporation delivers or could deliver to a Participant upon exercise of a stock appreciation right, shall be charged against the aggregate number of shares remaining available under the Plan; provided, however, that in the case of a stock appreciation right granted in conjunction with a stock option under circumstances in which the exercise of the stock appreciation right results in termination of the stock option and vice versa, only the number of shares subject to the stock option shall be charged against the aggregate number of shares remaining available under the Plan. If a stock option or stock appreciation right expires or terminates for any reason (other than termination as a result of the exercise of a related right) without having been fully exercised, or if shares of restricted stock are forfeited, the number of shares with respect to which the stock option or stock appreciation right was not exercised at the time of its expiration or termination, and the number of forfeited shares of restricted stock, shall again become available for the grant of stock options or stock appreciation rights, or the award of restricted stock, under the Plan, unless the Plan shall have been terminated. Notwithstanding any other provision in this Plan, no employee, consultant or advisor of the Corporation or a Subsidiary may receive options, stock appreciation rights, restricted stock or any combination thereof for more than 200,000 shares of Common Stock of the Corporation over the term of the Plan, as provided in Paragraph 25. For purposes of this 200,000 share per-person limitation, there shall be taken into account all shares covered by stock options and stock appreciation rights granted, and all restricted shares awarded, to an employee regardless of whether such stock options or stock appreciation rights expire or terminate without being fully exercised or whether such restricted shares are forfeited back to the Corporation. The number of shares subject to each outstanding stock option, stock appreciation right or restricted stock award, the option price with respect to outstanding stock options, the grant value with respect to outstanding stock appreciation rights, the aggregate number of shares remaining available under the Plan and the 200,000 share per-person limitation shall be subject to such adjustment as the Committee, in its discretion, deems appropriate to reflect such events as stock dividends, stock splits, recapitalizations, mergers, consolidations or reorganizations of or by the Corporation; provided, however, that no fractional shares shall be issued pursuant to the Plan, no rights may be granted under the Plan with respect to fractional shares, and any fractional shares resulting from such adjustments shall be eliminated from any outstanding stock option, stock appreciation right, or restricted stock award. 6. Participants: The Committee shall determine and designate from time to time, in its Discretion, those key employees, consultants or advisors of the Corporation or any Subsidiary to receive stock options, stock appreciation rights, or restricted stock who, in the judgment of the Committee, are or will become responsible for the direction and financial success of the Corporation or any Subsidiary; provided, however, that Incentive Options may be granted only to persons who are key employees of the Corporation or a Subsidiary, and in the case of a Subsidiary only if (i) the Corporation owns, directly or indirectly, 50% or more of the total combined voting power of all classes of Stock of the Subsidiary and (ii) the Subsidiary is a corporation. For the purposes of the Plan, key employees shall include officers and directors who are also key employees of the Corporation or any Subsidiary. 7. Written Agreement: Each stock option, stock appreciation right and restricted stock award shall be evidenced by a written agreement (each a "Corporation-Participant Agreement") containing such provisions as may be approved by the Committee. Each such Corporation-Participant Agreement shall constitute a binding contract between the Corporation and the Participant and every Participant, upon acceptance of such Agreement, shall be bound by the terms and restrictions of the Plan and of such Agreement. The terms of each such Corporation-Participant Agreement shall be in accordance with the Plan, but each Agreement may include such additional provisions and restrictions determined by the Committee, in its Discretion, provided that such additional provisions and restrictions are not inconsistent with the terms of the Plan. 8. Allotment of Shares: The Committee shall determine and fix, in its Discretion, the number of shares of Common Stock with respect to which a Participant may be granted stock options and stock appreciation rights and the number of shares of restricted stock which a Participant may be awarded; provided, however, that no Incentive Option may be granted under the Plan to any one Participant which would result in the aggregate fair market value, determined as of the date the option is granted, of underlying stock with respect to which incentive stock options are exercisable for the first time by such Participant during any calendar year under any plan maintained by the Corporation (or any parent or subsidiary corporation of the Corporation) exceeding $ 100,000. 9. Stock Options: Subject to the terms of the Plan, the Committee, in its Discretion, may grant to Participants either Incentive Options or Nonqualified Options or any combination thereof. Each option granted under the Plan shall designate the number of shares covered thereby, if any, with respect to which the option is an Incentive Option, and the number of shares covered thereby, if any, with respect to which the option is a Nonqualified Option. 10. Stock Option Price: Subject to the rules set forth in this Paragraph 10, at the time any stock option is granted, the Committee, in its Discretion, shall establish the price per share for which the shares covered by the option may be purchased. With respect to an Incentive Option, such option price shall not be less than 100% of the fair market value of the stock on the date on which such option is granted; provided, however, that with respect to an Incentive Option granted to an employee who at the time of the grant owns (after applying the attribution rules of Section 424(d) of the Code) more than 10% of the total combined voting stock of the Corporation or of any parent or subsidiary, the option price shall not be less than 110% of the fair market value of the stock on the date such option is granted. With respect to a Nonqualified Option, the option price shall not be less than 50% of the fair market value of the stock on the date upon which such option is granted. The option price shall be subject to adjustment in accordance with the provisions of Paragraph 5 of the Plan. 11. Payment of Stock Option Price: To exercise in whole or in part any stock option granted hereunder, payment of the option price in full in cash or, with the consent of the Committee, in Common Stock of the Corporation or by a promissory note payable to the order of the Corporation in a form acceptable to the Committee, shall be made by the Participant for all shares so purchased. Such payment may, with the consent of the Committee, also consist of a cash down payment and delivery of such promissory note in the amount of the unpaid exercise price. In the Discretion of and subject to such conditions as may be established by the Committee, payment of the option price may also be made by the Corporation retaining from the shares to be delivered upon exercise of the stock option that number of shares having a fair market value on the date of exercise equal to the option price of the number of shares with respect to which the Participant exercises the stock option. Such payment may also be made in such other manner as the Committee determines is appropriate, in its Discretion. No Participant shall have any of the rights of a shareholder of the Corporation under any stock option until the actual issuance of shares to said Participant, and prior to such issuance no adjustment shall be made for dividends, distributions or other rights in respect of such shares, except as may be provided in Paragraph 5. 12. Stock Appreciation Rights: Subject to the terms of the Plan, the Committee may grant stock appreciation rights to Participants either in conjunction with, or independently of, any stock options granted under the Plan. A stock appreciation right granted in conjunction with a stock option may be an alternative right wherein the exercise of the stock option terminates the stock appreciation right to the extent of the number of shares purchased upon exercise of the stock option and, correspondingly, the exercise of the stock appreciation right terminates the stock option to the extent of the number of shares with respect to which the stock appreciation right is exercised. Alternatively, a stock appreciation right granted in conjunction with a stock option may be an additional right wherein both the stock appreciation right and the stock option may be exercised. A stock appreciation right may not be granted in conjunction with an Incentive Option under circumstances in which the exercise of the stock appreciation right affects the right to exercise the Incentive Option or vice versa, unless the stock appreciation right, by its terms, meets all of the following requirements: a. the stock appreciation right will expire no later than the Incentive Option; b. the stock appreciation right may be for no more than the difference between the option price of the Incentive Option and the fair market value of the shares subject to the Incentive Option at the time the stock appreciation right is exercised; c. the stock appreciation right is transferable only when the Incentive Option is transferable, and under the same conditions; d. the stock appreciation right may be exercised only when the Incentive Option is eligible to be exercised; and e. the stock appreciation right may be exercised only when the fair market value of the shares subject to the Incentive Option exceeds the option price of the Incentive Option. Upon exercise of a stock appreciation right, a Participant shall be entitled to receive, without payment to the Corporation (except for applicable withholding taxes), an amount equal to the excess of or, in the Discretion of the Committee if provided in the Corporation-Participant Agreement, a portion of the excess of (i) the then aggregate fair market value of the number of shares with respect to which the Participant exercises the stock appreciation right, over (ii) the aggregate fair market value of such number of shares at the time the stock appreciation right was granted. This amount shall be payable by the Corporation, in the Discretion of the Committee, in cash or in shares of Common Stock of the Corporation or any combination thereof. 13. Granting and Exercising of Stock Options and Stock Appreciation Rights: Subject to the provisions of this Paragraph 13, each stock option and stock appreciation right granted hereunder shall be exercisable at any such time or times or in any such installments as may be determined by the Committee at the time of the grant; provided, however, no stock option or stock appreciation right may be exercisable prior to the expiration of six months from the date of grant unless the Participant dies or becomes disabled prior thereto. Notwithstanding anything contained in the Plan to the contrary, stock appreciation rights shall always be granted and exercised in such a manner as to conform to the provisions of rules adopted pursuant to the provisions of §ion 16 the Exchange Act. In addition, the aggregate fair market value (determined at the time the option is granted) of the Common Stock with respect to which Incentive Options are exercisable for the first time by a Participant during any calendar year shall not exceed $100,000. A Participant may exercise a stock option or stock appreciation right, if then exercisable, in whole or in part by delivery to the Corporation of written notice of the exercise, in such form as the Committee may prescribe, accompanied, in the case of a stock option, by (i) payment for the shares with respect to which the stock option is exercised in accordance with Paragraph 11. or (ii) in the Discretion of the Committee, irrevocable instructions to a stock broker to promptly deliver to the Corporation full payment for the shares with respect to which the stock option is exercised from the proceeds of the stock broker's sale of or loan against the shares. Except as provided in Paragraph 17, stock options and stock appreciation rights granted to a Participant may be exercised only while the Participant is an employee of the Corporation or a Subsidiary. Successive stock options and stock appreciation rights may be granted to the same Participant, whether or not the stock option(s) and stock appreciation right(s) previously granted to such Participant remain unexercised. A Participant may exercise a stock option or a stock appreciation right, if then exercisable, notwithstanding that stock options and stock appreciation rights previously granted to such Participant remain unexercised. The Committee in its sole discretion may by giving written notice ("Cancellation Notice") cancel, effective upon the date of any corporate transaction described in Paragraph 22 hereof, any stock option or stock appreciation right that remains unexercised on such date. The Cancellation Notice shall be given a reasonable period of time prior to the proposed date of cancellation and may be given either before or after shareholder approval of such corporate transaction. 14. Non-transferability of Stock Options and Stock Appreciation Rights: No stock option or stock appreciation right granted under the Plan to a Participant shall be transferable by such Participant otherwise than by will or by the laws of descent and distribution, and stock options and stock appreciation rights shall be exercisable, during the lifetime of the Participant, only by the Participant. 15. Term of Stock Options and Stock Appreciation Rights: If not sooner terminated, each stock option and stock appreciation right granted hereunder shall expire not more than 10 years from the date of the granting thereof; provided, however, that with respect to an Incentive Option or a related stock appreciation right granted to a Participant who, at the time of the grant, owns (after applying the attribution rules of Section 424(d) of the Code) more than 10% of the total combined voting stock of all classes of stock of the Corporation or of any parent or subsidiary, such option and stock appreciation right shall expire not more than five (5) years after the date of granting thereof. 16. Continuation of Employment: The Committee may require, in its Discretion, that any Participant under the Plan to whom a stock option or stock appreciation right shall be granted shall agree in writing as a condition of the granting of such stock option or stock appreciation right to remain in the employ of the Corporation or a Subsidiary as an employee, consultant or advisor for a designed minimum period from the date of the granting of such stock option or stock appreciation right as shall be fixed by the Committee. 17. Termination of Employment: If the employment or consultancy of a Participant by the Corporation or a Subsidiary shall terminate, the Committee may, in its Discretion, permit the exercise of stock options and stock appreciation rights granted to such Participant (i) for a period not to exceed three months following termination of employment with respect to Incentive Options or related stock appreciation rights if termination of employment is not due to death or permanent disability of the Participant, (ii) for a period not to exceed one year following termination of employment with respect to Incentive Options or related stock appreciation rights if termination of employment is due to the death or permanent disability of the Participant, and (iii) for a period not to extend beyond the expiration date with respect to Nonqualified Options or related or independently granted stock appreciation rights. In no event, however, shall a stock option or stock appreciation right be exercisable subsequent to its expiration date and, furthermore, unless the Committee in its Discretion determine otherwise, a stock option or stock appreciation right may only be exercised after termination of a Participant's employment or consultancy to the extent exercisable on the date of such termination or to the extent exercisable as a result of the reason for such termination. The period of time, if any, a Participant shall have to exercise stock options or stock appreciation rights upon termination of employment or consultancy shall be set forth in the Corporation-Participant Agreement, subject to extension of such time period by the Committee in its Discretion. 18. Restricted Stock Awards: Subject to the terms of the Plan, the Committee may award shares of restricted stock to Participants. All shares of restricted stock granted to Participants under the Plan shall be subject to the following terms and conditions (and to such other terms and conditions prescribed by the Committee): a. At the time of each award of restricted shares, there shall be established for the shares a restricted period, which shall be no less than six months and no greater than five years. Such restricted period may differ among Participants and may have different expiration dates with respect to portions of shares covered by the same award. b. Shares of restricted stock awarded to Participants may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered during the restricted period applicable to such shares. Except for such restrictions on transfer, a Participant shall have all of the rights of a shareholder in respect of restricted shares awarded to him or her including, but not limited to, the right to receive any dividends on, and the right to vote, the shares. c. If the employment of a Participant as an employee, consultant or advisor of the Corporation or a Subsidiary terminates for any reason (voluntary or involuntary, and with or without cause) other than death or permanent disability, all shares theretofore awarded to the Participant which are still subject to the restrictions imposed by Paragraph 18(b) shall upon such termination of employment be forfeited and transferred back to the Corporation, without payment of any consideration by the Corporation. In the event such employment is terminated by action of the Corporation or a Subsidiary without cause or by agreement between the Corporation or a Subsidiary and the Participant, however, the Committee may, in its Discretion, release some or all of the shares from the restrictions. d. If the employment of a Participant as an employee, consultant or advisor of the Corporation or a Subsidiary terminates by reason of death or permanent disability, the restrictions imposed by Paragraph 18(b) shall lapse upon the expiration of a ten day period following the death or determination of permanent disability of a participant with respect to shares then subject to such restrictions, unless otherwise determined by the Committee prior to the expiration of the ten day period. e. Stock certificates shall be issued in respect of shares of restricted stock awarded hereunder and shall be registered in the name of the Participant. Such certificates shall be deposited with the Corporation or its designee, together with a stock power endorsed in blank, and, in the Discretion of the Committee, a legend shall be placed upon such certificates reflecting that the shares represented thereby are subject to restrictions against transfer and forfeiture. f. At the expiration of the restricted period applicable to the shares, the Corporation shall deliver to the Participant or the legal representative of the Participant's estate the stock certificates deposited with it or its designee and as to which the restricted period has expired. If a legend has been placed on such certificates, the Corporation shall cause such certificates to be reissued without any legend which is no longer applicable. In the case of events such as stock dividends, stock splits, recapitalizations. mergers, consolidations or reorganizations of or by the Corporation, any stock, securities or other property which a Participant receives or is entitled to receive by reason of his or her ownership of restricted shares shall, unless otherwise determined by the Committee, be subject to the same restrictions applicable to the restricted shares and shall be deposited with the Corporation or its designee. 19. Investment Purpose: If the Committee in its Discretion determines that as a matter of law such procedure is or may be desirable, it may require a Participant, upon any acquisition of Common Stock hereunder (whether by reason of the exercise of stock options or stock appreciation rights or the award of restricted stock) and as a condition to the Corporation's obligation to issue or deliver certificates representing such shares, to execute and deliver to the Corporation a written statement, in form satisfactory to the Committee, representing and warranting that the Participant's acquisition of shares of stock shall be for such person's own account, for investment and not with a view to the resale or distribution thereof and that any subsequent offer for sale or sale of any such shares shall be made either pursuant to (a) a registration statement on an appropriate form under the Securities Act of 1933, as amended (the "Securities Act"), which registration statement has become effective and is current with respect to the shares being offered and sold, or (b) a specific exemption from the registration requirements of the Securities Act, but in claiming such exemption the Participant shall, prior to any offer for sale or sale of such shares, obtain a favorable written opinion from counsel for or approved by the Corporation as to the availability of such exemption. The Corporation may endorse an appropriate legend referring to the foregoing restriction upon the certificate or certificates representing any shares issued or transferred to a Participant under the Plan. 20. Corporation's Right of First Refusal. A Participant cannot make a valid transfer (as hereinafter defined) of any shares of Common Stock acquired pursuant to this Plan (whether by reason of the of the exercise of stock options or stock appreciation rights or the award of restricted stock) the other restrictions upon which have lapsed, or any interest in such shares, unless such transfer is made in compliance with the following provisions: a. Before there can be a valid transfer of any shares or any interest therein, the record holder of the shares to be transferred (the "Offered Shares") shall give written notice (by registered or certified mail) to the Corporation of the desire to sell the shares. The date such notice is mailed shall be hereinafter referred to as the "Notice Date" and the record holder of the Offered Shares shall be hereinafter referred to as the "Offeror." b. For a period of ten (10) business days after the Notice Date, the Corporation shall have the option to purchase all (but not less than all) of the Offered Shares at their Fair Market Value in accordance with the terms set forth in this Section 20. This right shall be exercisable by the Corporation by mailing (by registered or certified mail) written notice of exercise to the Offeror prior to the end of such ten (10) business day period. c. As used in this Section 20, the term "transfer" means any sale, encumbrance, pledge, or other form of disposition or transfer of shares of the Corporation's Stock or any legal or equitable interest therein; provided, however, that the term "transfer" does not include a transfer of such shares or interests by will or by the applicable laws of descent and distribution. d. Certificates of Stock evidencing shares of Stock shall bear an appropriate legend referring to the transfer restrictions imposed by this Section 20. 21. No Rights to Continued Employment: Nothing contained in the Plan or in any stock option, stock appreciation right or restricted stock granted or awarded pursuant to the Plan, nor any action taken by the Committee hereunder, shall confer upon any Participant any right with respect to continuation of employment as an employee, consultant or advisor of the Corporation or a Subsidiary nor interfere in any way with the right of the Corporation or a Subsidiary to terminate such person's employment at any time. 22. No Bar to Corporate Restructuring. The existence of this Plan or outstanding awards under this Plan shall not affect in any way the right or power of the Corporation or its stockholders to make or authorize any and all adjustments, recapitalization, reorganizations or other changes in the Corporation's capital structure or its business, or any merger or consolidation of the Corporation, or any issue of bonds, debentures, preferred or preference stocks ahead of or affecting the Stock or the rights thereof, or the dissolution or liquidation of the Corporation, or any sale or transfer of all or part of its assets or business or any other corporate act or proceeding, whether of a similar character or otherwise. 23. Withholding Payments: If upon the exercise of a Nonqualified Option or stock appreciation right, or upon the award of restricted stock or the expiration of restrictions applicable to restricted stock, or upon a disqualifying disposition (within the meaning of Section 422 of the Code) of shares acquired upon exercise of an Incentive Option, there shall be payable by the Corporation or a Subsidiary any amount for income tax withholding, in the Committee's Discretion, either the Corporation shall appropriately reduce the amount of Common Stock or cash to be delivered or paid to the Participant or the Participant shall pay such amount to the Corporation or Subsidiary to reimburse it for such income tax withholding. The Committee may, in its Discretion, permit Participants to satisfy such withholding obligations, in whole or in part, by electing to have the amount of Common Stock delivered or deliverable by the Corporation upon exercise of a stock option or stock appreciation right or upon award of restricted stock appropriately reduced, or by electing to tender Common Stock back to the Corporation subsequent to exercise of a stock option or stock appreciation right or award of restricted stock, to reimburse the Corporation or a Subsidiary for such income tax withholding (any such election being irrevocable), subject to such rules and regulations as the Committee may adopt, including such rules as it determines appropriate with respect to Participants subject to the reporting requirements of Section 16(a) o the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to effect such tax withholding in compliance with the Rules established by the Securities and Exchange Commission (the "Commission") under Section 16 of the Exchange Act and the positions of the staff of the Commission thereunder expressed in no-action letters exempting such tax withholding from liability under Section 16(b) of the Exchange Act. The Committee may make such other arrangements with respect to income tax withholding as it shall determine. 24. Effectiveness of Plan: The Plan shall be effective on the date the Board of Directors of the Corporation adopts the Plan, provided that the shareholders of the Corporation approve the Plan within 12 months of its adoption by the Board of Directors. Stock options, stock appreciation rights and restricted stock may be granted or awarded prior to shareholder approval of the Plan, but each such stock option, stock appreciation right or restricted stock grant or award shall be subject to shareholder approval of the Plan. No stock option or stock appreciation right may be exercised prior to shareholder approval, and any restricted stock awarded is subject to forfeiture if such shareholder approval is not obtained. 25. Termination, Duration and Amendments of Plan: The Plan may be abandoned or terminated at any time by the Board of Directors of the Corporation. Unless sooner terminated, the Plan shall terminate on the date ten years after its adoption by the Board of Directors, and no stock options, stock appreciation rights or restricted stock may be granted or awarded thereafter. The termination of the Plan shall not affect the validity of any stock option, stock appreciation right or restricted stock outstanding on the date of termination. For the purpose of conforming to any changes in applicable law or governmental regulations, or for any other lawful purpose, the Board of Directors shall have the right, with or without approval of the shareholders of the Corporation, to amend or revise the terms of the Plan at any time. 26. Capital Readjustments/Share Allocation Modifications. The shares included in Participant awards granted under this Plan are shares of the Stock as constituted on the Effective Date of this Plan, but if, and whenever, after such Effective Date and prior to the earlier of the last day of the Term of this Plan or the delivery by the Corporation of all of the shares of Stock included in Participant awards, the Corporation shall effect: a. A change in the par value of its Stock; b. A change in the number of shares of Stock having par value into the same or a different number of shares without par value; c. A subdivision or consolidation of shares; d. Any other capital readjustment; e. The payment of a Stock dividend; or f. Any other increase or reduction of the number of shares of Stock outstanding; without the receipt of consideration by the Corporation, then (1) The Plan Administrator shall make concomitant adjustments in the maximum outstanding Participant awards specified in Section 3.2 as appropriate; and (2) In the event of no change in the number of shares outstanding in connection with a change in par value of the Stock or a change from par value to no par value, the shares resulting from any such change shall be deemed to be Stock under this Plan. 27. Mergers and Consolidations. In case at any time the Corporation shall be a party to any transaction (including, without limitation, a merger, consolidation, sale of all or substantially all of the Corporation's assets, liquidation or recapitalization of the Common Stock) in which the previously outstanding Common Stock shall be changed into or exchanged for different securities of the Corporation (in a situation not covered under Section 3.11) or common stock or other securities of another corporation or interests in a non-corporate entity or other property (including cash) or any combination of the foregoing (each such transaction being herein called a "Transaction," and the Corporation (in the case of the recapitalization of the Common Stock) or such other corporation or entity (in the case of a merger, consolidation or such sale) being herein called the "Acquiring Corporation"), then as a condition of the consummation of the Transaction, lawful and adequate provision shall be made so that each Participant shall be entitled to receive, in lieu of the Shares which were awarded to such Participant and are still subject to the restrictions contained in Section 3.5 of this Plan on or prior to the consummation of the Transaction, the securities or other property to which each such Participant would have been entitled upon consummation of the Transaction if such Participant had been able to tender or otherwise transfer his or her shares without restriction. Any such securities or other property received as contemplated by this Section 3.12 shall be held by the Corporation or its successor (or an agent designated by the Corporation or such successor) until the restrictions as set forth in Section 3.6 of this Agreement shall have lapsed. 28. Legal Impediments to Implementation. Anything in this Plan to the contrary notwithstanding, if at any time specified herein for the award or delivery of restricted shares to Participants, any law or regulations of any governmental authority having jurisdiction in the matter shall require either the Corporation or the Participant to take any action or refrain from action in connection therewith, then the award or delivery of such shares shall be deferred until such action shall have been taken or such restriction on action shall have been removed. 29. Non-Transferability/Designation of Beneficiary. a. Except as provided in subparagraph b, a Participant may not either voluntarily or involuntarily assign, anticipate, alienate, commute, pledge or encumber an award to which he or she is or may become entitled to under the Plan, nor may the same be subject to attachment or garnishment by any creditor of a Participant. b. Notwithstanding anything in subparagraph a to the contrary, a Participant must designate a person or persons to receive, in the event of his death, any right to which he would be entitled under the Plan. Such designation shall be made in writing, and filed with the Corporation. A beneficiary designation may be changed or revoked by a Participant at any time by filing a written statement of such change or revocation with the Corporation. If a Participant fails to designate a beneficiary, then his or her estate shall be deemed to be his beneficiary. 30. Awards Unfunded. The awards provided pursuant to this Plan (if any) shall be provided solely from the general assets of the Corporation. No trust or other funding device providing for the identification or segregation of assets to fund Plan awards has been established, nor is it the Corporation's intention to do so. Each Participant shall be a general and unsecured creditor of the Corporation with respect to any interest he or she may have under this Plan, provided that awards of Stock with respect to which certificates have been issued pursuant to this Plan shall be deemed the property of the Participant in whose name they are issued subject to the ownership and transfer restrictions described elsewhere. With respect to such Stock the Corporation shall be deemed a custodian. 31. Taxation of Awards. Awards under this Plan will be compensation subject to federal and state taxes. 32. Retirement Plans and Welfare Benefit Plans. Except as otherwise specified in this Plan and the plan in question, awards will not be included as "compensation" for purposes of the Corporation's retirement plans (both qualified and non-qualified) or welfare benefit plans. 33. Governing Law. The Plan shall be construed and its provisions enforced and administered in accordance with the laws of the State of Florida and, where applicable, federal law. 34. Severability. If any provision of this Plan should be held illegal or invalid for any reason, such determination shall not affect the provisions of this Plan, but instead the Plan shall be construed as if such provisions had never been included herein. 35. Headings. Headings contained in this Plan are for convenience only and shall in no event be construed as part of this Plan. EX-10 7 MATERIAL CONTRACTS - SPLIT-DOLLAR AGREEMENT (WCF) SPLIT-DOLLAR AGREEMENT THIS SPLIT DOLLAR AGREEMENT ("Agreement") is made and entered into as of the 17th day of October, 1995, by and among INTERNATIONAL SPEEDWAY CORPORATION, a Florida corporation (hereinafter referred to as the "Corporation"), WILLIAM C. FRANCE ("William"), BETTY JANE FRANCE ("Betty Jane") and DESERT TRANQUILITY LIMITED PARTNERSHIP, a Nevada limited partnership, by and through its sole general partner, WESTERN SANDUNE CORP., a Nevada corporation (the "Owner"). R E C I T A T I O N S A. William is an executive officer of the Corporation. B. William and Betty Jane (referred to hereinafter together as the "Insureds") are husband and wife. C. The Corporation desires to help William create a life insurance program for the benefit of his family by the establishment of a split-dollar life insurance plan and the payment of a portion of the premiums on the second-to-die life insurance policies described on Schedule "A" attached hereto (collectively, the "Policy") on the lives of the Insureds. D. The Owner possesses or will possess all incidents of ownership in and to the Policy. E. The Corporation wishes to have the Policy collaterally assigned to it by the Owner, in order to secure the repayment of the amounts that the Corporation paid or will pay in respect of the premiums on the Policy as more fully specified herein. F. The parties intend that by such collateral assignment the Corporation shall receive only the right to such repayment, with the Owner retaining all other ownership rights in the Policy, as specified herein. O P E R A T I V E P R O V I S I O N S IN CONSIDERATION of the foregoing recitations, the mutual covenants of the parties set forth herein and other good and valuable considerations, the receipt and sufficiency of which are acknowledged hereby, the parties hereto, intending legally to be bound, agree as follows: 1. PURCHASE OF POLICY. The Owner has applied to the Insurance Company for the Policy, and with the assistance of the Corporation, will take all reasonable steps to cause the Policy to be issued. When the Policy is issued, the insurance company, policy number, effective date, face amount and plan of insurance shall be recorded on Schedule A attached hereto, and the Policy shall become subject to the terms of this Agreement. The Owner owns or will own the Policy issued by the insurers described on Schedule "A" attached hereto (collectively, the "Insurer"). The parties hereto have taken or will take all action that may be necessary to cause the Policy to conform to the provisions of this Agreement. 2. OWNERSHIP OF POLICY. (a) The Owner shall be the sole and absolute owner of the Policy and may exercise all ownership rights granted to the owner thereof by the terms of the Policy, except as may otherwise be provided herein. (b) It is the intention of the parties to this Agreement and the collateral assignment executed by the Owner in favor of the Corporation in connection herewith that the Owner shall retain all rights that the Policy grants to the owner thereof, except the right of the Corporation to its Collateral Interest in the Policy. The Corporation's "Collateral Interest" in the Policy shall mean the aggregate sum of all premiums then or theretofore paid by the Corporation to the Insurance Company and credited to the Policy, including any amounts considered taxable "economic benefit" to the Insureds as a result of such premium payments. The Corporation shall neither have nor exercise any right as collateral assignee of the Policy that could in any way defeat or impair the Owner's right to receive the death proceeds of the Policy in excess of the amount due the Corporation hereunder. All provisions of this Agreement and of such collateral assignment shall be construed so as to carry out such intention. 3. PAYMENT OF PREMIUMS. (a) The Owner may elect to pay part or all of any premiums on the Policy and shall deliver notice of such election to the Corporation on or before the premium due date. (b) The Corporation shall advance on behalf of the Owner an amount equal to all premiums on the Policy not paid by the Owner. The amount advanced by the Corporation shall not exceed $750,000 per year for a period not exceeding eight years. The Corporation shall pay all such advances directly to the Insurer within the grace period following the due date of each such premium. (c) It is currently anticipated that on the date first set forth above and each anniversary date thereof the Corporation shall advance annually out of its own funds a sufficient sum to make up the requisite net annual premium (*i.e., the full premium less the amount that the Owner has contributed). While both Insureds are alive, the Insureds shall be deemed to receive a taxable economic benefit in an amount equal to the sum of v * qx * qy' where v = 1/1.025, qx and qy = the annual mortality rates for ages x and y, respectively, computed from the values in U.S. Life Table 38, and x and y = the ages of William and Betty Jane, respectively, on the due date of each annual premium. After the death of the first of the Insureds to die, the surviving Insured shall be deemed to receive a taxable economic benefit in an amount equal to the economic benefit based on the surviving Insured pursuant to the provisions of Rev. Rul. 64-328, 1964-2 CB 11, Rev. Rul. 66-110, 1966-1 CB 12, Rev. Rul. 55-747, 1955-2 CB 228 and Rev. Rul. 67-154, 1967-1 CB 11. 5. PAYMENT OF BONUSES. In order to minimize the tax consequences of this plan on the Insureds during the term of this Agreement the Corporation agrees to provide additional annual compensation in the form of a bonus to the Insureds for a period of no more than 15 years in an amount equal to the applicable federal income taxes on the taxable economic benefit as a result of the premium payments by the Corporation plus an amount equal to the applicable federal income taxes on the aggregate bonuses. 6. COLLATERAL ASSIGNMENT. To secure the repayment to the Corporation of its Collateral Interest in the Policy, the Owner shall assign the Policy to the Corporation as collateral, pursuant to the form of collateral assignment attached hereto as Exhibit "1" (the "Collateral Assignment"). Such repayment shall not exceed (i) the cash surrender value of the Policy if this Agreement is terminated or if the Owner surrenders or cancels the Policy, or (ii) the death proceeds of the Policy if both of the Insureds should die while the Policy and this Agreement remain in force. In no event shall the Corporation have any right to borrow against the Policy. The Collateral Assignment of the Policy to the Corporation hereunder shall not be terminated, altered or amended by the Owner without the express written consent of the Corporation. The parties hereto agree to take all action necessary to cause such Collateral Assignment to conform to the provisions of this Agreement. 7. LIMITATION ON OWNER'S RIGHTS IN POLICY. (a) The Owner shall take no action with respect to the Policy that would in any way compromise or jeopardize the Corporation's right to be repaid its Collateral Interest in the Policy. (b) The Owner shall have the sole right to surrender or cancel the Policy and to receive the full cash surrender value of the Policy directly from the Insurer. Upon the surrender or cancellation of the Policy, the Corporation shall have the unqualified right to receive its Collateral Interest in the Policy. Immediately upon receipt of the cash value, the Owner shall pay to the Corporation its Collateral Interest in the Policy. 8. COLLECTION OF DEATH PROCEEDS. (a) Following the deaths of both Insureds, the Corporation and the Owner promptly shall take all action necessary to obtain the death benefit provided under the Policy. (b) The Corporation shall have the unqualified right to receive a portion of such death benefit equal to its Collateral Interest in the Policy. The balance of the death benefit provided under the Policy, if any, shall be paid directly to the Owner, pursuant to the beneficiary designation for the Policy. In no event shall the amount payable to the Corporation hereunder exceed the Policy proceeds payable at the death of the Insureds. No amount shall be paid from such death benefit by the Owner until the full amount due the Corporation hereunder has been paid. The parties hereto agree that the beneficiary designation provisions of the Policy shall conform to the provisions hereof. 9. TERMINATION OF AGREEMENT. (a) This Agreement shall terminate, without notice, upon the occurrence of (i) the total cessation of the business of the Corporation or (ii) the bankruptcy, receivership or dissolution of the Corporation. (b) In addition, the Corporation or the Owner shall have the right to terminate this Agreement, by written notice to the other parties hereto, at any time that the cash surrender value of the Policy equals or exceeds the aggregate sum of all premiums then or theretofore paid by the Corporation to the Insurance Company and credited to the Policy, including amounts considered "economic benefit" to the Insureds as a result of such premium payments. Such termination shall be effective as of the date of such notice. 10. DISPOSITION OF POLICY ON TERMINATION OF AGREEMENT. (a) Within sixty (60) days following the date of the termination of this Agreement, the Owner shall obtain from the Corporation the release of the Collateral Assignment of the Policy. To obtain such release, the Owner shall repay to the Corporation its Collateral Interest in the Policy. Upon receipt of such amount, the Corporation shall release the Collateral Assignment of the Policy by the execution and delivery of an appropriate instrument of release. (b) If the Owner fails to obtain the release of the Collateral Assignment within such sixty (60) day period, then the Corporation may enforce its right to be repaid its Collateral Interest in the Policy from the cash surrender value of the Policy under the Collateral Assignment of the Policy. 11. INSURER NOT A PARTY. The Insurer shall be fully discharged from its obligations under the Policy by payment of the Policy death benefits to the beneficiary or beneficiaries named in the Policy, subject to the terms and conditions of the Policy. In no event shall the Insurer be considered a party to this Agreement or any modification or amendment thereof. No provision of this Agreement, or of any modification or amendment hereof, shall be construed in any way as enlarging, changing, varying or in any other way affecting the obligations of the Insurer as expressly provided in the Policy, except insofar as the provisions hereof are made a part of the Policy by the Collateral Assignment executed by the Owner and filed with the Insurer in connection herewith. 12. NAMED FIDUCIARY; DETERMINATION OF BENEFITS; CLAIMS PROCEDURE; AND ADMINISTRATION. (a) The Corporation is hereby designated as the named fiduciary under this Agreement. The named fiduciary shall have authority to control and manage the operation and administration of this Agreement. All premiums in respect of the Policy shall be paid to the Insurer when due, pursuant to Paragraph 3 of this Agreement. (b) The Corporation shall make all determinations concerning rights to benefits under this Agreement. Any decision by the Corporation denying a claim by the Owner for benefits under this Agreement shall be stated in writing and delivered or mailed to the Owner. Such decision shall set forth the specific reasons for the denial, written, to the best of the Corporation's ability, in a manner that may be understood without legal or actuarial counsel. In addition, the Corporation shall afford a reasonable opportunity to the Owner for a full and fair review of the decision denying such claim. In no event shall the Corporation, acting as the named fiduciary, perform any such act that violates the prohibited transaction rules of the Employee Retirement Income Security Act of 1974. 13. AMENDMENT. This Agreement may not be amended, altered or modified, except by a written instrument signed by the parties hereto or their respective successors or assigns, and may not be terminated otherwise, except as provided herein. 14. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the Corporation and the Owner, and their respective successors and assigns, and the Insureds, and their respective successors, assigns, heirs, executors and administrators. 15. NOTICE. Any notice, consent, demand or other communication required or permitted to be given under the provisions of this Agreement shall be in writing (including telefacsimile transmission or similar writing) and shall be given to such party at its address or telefacsimile number set forth on Schedule "B" attached hereto or as given subsequently to the sender by the addressee. Such notice shall be signed by the party giving or making the same. If such notice, consent, demand or other communication is mailed to a party hereto, it shall be sent by United States certified mail, postage prepaid, properly addressed. Each such notice, consent, demand or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mails as aforesaid or (ii) if given by any other means, when delivered at the address specified. 16. GOVERNING LAW. This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of Nevada. IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the day and year first above written. CORPORATION: INTERNATIONAL SPEEDWAY CORPORATION, a Florida Corporation Attest: /s/ Lesa D. Kennedy By: /s/ James C. France Lesa D. Kennedy James C. France Secretary President WITNESSES: INSUREDS: /s/ Robert E. Smith /s/ William C. France Robert E. Smith WILLIAM C. FRANCE /s/ Geraldine McMullin Geraldine McMullin /s/ Robert E. Smith /s/ Betty Jane France Robert E. Smith BETTY JANE FRANCE /s/ Geraldine McMullin Geraldine McMullin OWNER: DESERT TRANQUILITY LIMITED PARTNERSHIP, a Nevada Limited Partnership By: WESTERN SANDUNE CORP. a Nevada corporation, its sole general partner Attest: /s/ William C. France By: /s/ William C. France William C. France William C. France Secretary President SCHEDULE "A" INSURANCE POLICIES It is agreed, pursuant to the foregoing Split-Dollar Agreement dated October 17, 1995, that the policies of life insurance described below shall be subject to the provisions of said Agreement. Company Policy # Face Amount Insureds Connecticut General 7016557 $12,500,000.00 William C. Insurance Company France and Betty Jane France John Hancock Mutual 80126808 $ 7,800,000.00 William C. Life Insurance Company France and Betty Jane France SCHEDULE "B" ADDRESS OF PARTIES International Speedway Corporation Attn: Lesa D. Kennedy Post Office Box 2801 Daytona Beach, Florida 32120-2801 Desert Tranquility Limited Partnership c/o Western Sandune Corp. 245 East Liberty Street, 3rd Floor Reno, Nevada 89501 William C. France Betty Jane France 1600 South Peninsula Drive Daytona Beach, Florida 32118 EXHIBIT "1" FORM OF COLLATERAL ASSIGNMENT COLLATERAL ASSIGNMENT OF LIFE INSURANCE POLICY A. FOR VALUE RECEIVED, the undersigned (hereinafter the "Owner") hereby assigns, transfers and sets over to INTERNATIONAL SPEEDWAY CORPORATION, a Florida corporation, its successors and assigns (hereinafter the "Assignee"), the following specific rights (and only those specific rights) in and to the policies listed on Exhibit A issued by the respective insurers (hereinafter the "Insurers") shown on Exhibit A, and any supplementary contract or contracts issued in connection therewith (said policies and any such contracts hereinafter the "Policies"), insuring the lives of William C. France and Betty Jane France (hereinafter the "Insureds"), subject to all the terms and conditions of the Policies and to all superior liens, if any, which the Insurers may have against the Policies. The Owner, by this Assignment, and the Assignee, by acceptance of the assignment of the Policies to it hereunder, agree to the terms and conditions contained herein. B. This assignment is made, and the Policies are to be held as collateral security for, all liabilities of the Owner to the Assignee, now existing or hereafter arising under and pursuant to that certain Split-Dollar Agreement, by and between the Owner and the Assignee dated of even date herewith (hereinafter the "Agreement"). The Owner reserves all rights and powers in and to the Policies, except those specific, limited rights granted in the Policies to the Assignee hereby, as security for the liabilities of the Owner to the Assignee under the Agreement. C. It is expressly agreed that the Assignee's interest in the Policies under and by virtue of this Assignment shall be limited to the following specific rights, and no others: (a) the right to be paid the amount due it under the Agreement by recovering said amount out of the net death proceeds of the Policies, upon the death of the survivor of the Insureds; and (b) the right to be paid the amount due it under the Agreement by recovering said amount from the net cash surrender proceeds of the Policies, in the event the Policies are surrendered or canceled by the Owner. The Assignee shall have no other rights or powers in and to the Policies as a result of the assignment to it hereunder and specifically shall not have the right or power to borrow against or obtain loans or advances on the Policies, make withdrawals from the Policies, nor cancel or surrender the Policies. D. Notwithstanding this Assignment, the Owner shall specifically retain all incidents of ownership in and to the Policies, including, but not limited to: (a) the sole right to cancel or surrender the Policies and receive the surrender value thereof at any time provided by the terms of the Policies and at such other times as the Insurers may allow; (b) the sole right to collect and receive all distributions or shares of surplus, dividend deposits or additions to the Policies now or hereafter made or apportioned thereto, and to exercise any and all options contained in the Policies with respect thereto; (c) the sole right to exercise all non-forfeiture rights permitted by the terms of the Policies or allowed by the Insurers and to receive all benefits and advantages derived therefrom; (d) the sole right to designate and change the beneficiaries of the Policies (for any amount in excess of the amount due the Assignee under the Agreement); (e) the sole right to elect any optional mode of settlement permitted by the Policies or allowed by the Insurer: (f) the sole right to borrow against, obtain loans or advances on, or make withdrawals from the Policies; (g) the sole right to assign the Policies (subject to this Assignment and Agreement); and (h) the sole right to collect directly from the Insurers that portion of the net death proceeds of the Policies in excess of those proceeds payable to the Assignee under the Agreement; provided, however, that all of the foregoing rights retained by the Owner in the Policies shall be subject to the terms and conditions of the Agreement. E. Notwithstanding anything in this Assignment to the contrary, the Insurers shall be under no obligation to monitor the obligation of the Assignee hereunder to pay to the persons entitled thereto any amounts received from the Insurers remaining after payment of the then existing liabilities of the Owner to the Assignee under the Agreement; the Insurers shall have no obligation or liability to any person or entity if the Assignee fails to pay such amounts as required hereunder. F. The Insurers are hereby authorized to recognize, and are protected in recognizing, the Assignee's claims to amounts due it hereunder without investigating the validity of its claim thereto, the reason for any action taken by the Assignee, the validity or accuracy of the amount of any of the liabilities of the Owner to the Assignee under the Agreement, the existence of any default therein, the giving of any notice required herein, or the application to be made by the Assignee of any amounts to be paid to the Assignee. The sole receipt of the Assignee for any amounts received by it shall be a full discharge and release therefor to the Insurer. G. Except as otherwise provided in the Agreement, the Assignee shall be under no obligation to pay any premium on the Policies or the principal of or interest on any loans or advances on the Policies, whether or not obtained by the Assignee, or any other charges on the Policies. H. The Insurers shall be fully protected in recognizing the request made by the Owner for cancellation or surrender of the Policies, with or without the consent of the Assignee, and upon such cancellation or surrender, the Policies shall be terminated and be of no further force or effect. I. Upon the full payment of the liabilities of the Owner to the Assignee pursuant to the Agreement, the Assignee shall promptly release this Assignment and thereby reassign to the Owner all specific rights in the Policies included herein. J. The Assignee may take or release other security, may grant extensions, renewals or indulgences with respect to the obligations of the Owner to the Assignee under the Agreement, or may apply the proceeds of the Policies hereby assigned or any amount received on account of the policies by the exercise of any right permitted under this assignment, without resorting to or regard to other security for such obligations, if any. K. In the event of any conflict between the provisions of this Assignment and the provisions of the Agreement with respect to the Policies or the Assignee's rights therein, the provisions of this Assignment shall prevail. L. The Owner declares that no proceedings in bankruptcy are pending against the Owner, and that the Owner's property is not subject to any assignment for the benefit of creditors of the Owner. Signed and sealed this ______ day of October, 1995. DESERT TRANQUILITY LIMITED PARTNERSHIP, a Nevada limited partnership By: WESTERN SANDUNE CORP., a Nevada corporation, its sole general partner By: _________________________________ William C. France, President ACKNOWLEDGMENT OF INSURANCE COMPANY The undersigned Insurance Company hereby acknowledges receipt of an original counterpart of this Collateral Assignment and that the same has been filed at its home office and noted on its records. Dated: ______________________, 1995 By: ____________________________ President or Authorized Officer EXHIBIT A The policies of life insurance described below, on the lives of William C. France and his wife, Betty Jane France, are subject to the provisions of this Assignment. Company Policy # Face Amount EX-10 8 MATERIAL CONTRACTS - SPLIT-DOLLAR AGREEMENT (JCF) SPLIT-DOLLAR AGREEMENT THIS SPLIT DOLLAR AGREEMENT ("Agreement") is made and entered into as of the 17th day of October, 1995, by and among INTERNATIONAL SPEEDWAY CORPORATION, a Florida corporation (hereinafter referred to as the "Corporation"), JAMES C. FRANCE ("James"), SHARON M. FRANCE ("Sharon") and J & S POLICY LIMITED PARTNERSHIP, a Nevada limited partnership, by and through its sole general partner, TERTIARY INVESTMENT COMPANY, a Nevada corporation (the "Owner"). R E C I T A T I O N S A. James is an executive officer of the Corporation. B. James and Sharon (referred to hereinafter together as the "Insureds") are husband and wife. C. The Corporation desires to help James create a life insurance program for the benefit of his family by the establishment of a split-dollar life insurance plan and the payment of a portion of the premiums on the second-to-die life insurance policies described on Schedule "A" attached hereto (collectively, the "Policy") on the lives of the Insureds. D. The Owner possesses or will possess all incidents of ownership in and to the Policy. E. The Corporation wishes to have the Policy collaterally assigned to it by the Owner, in order to secure the repayment of the amounts that the Corporation paid or will pay in respect of the premiums on the Policy as more fully specified herein. F. The parties intend that by such collateral assignment the Corporation shall receive only the right to such repayment, with the Owner retaining all other ownership rights in the Policy, as specified herein. O P E R A T I V E P R O V I S I O N S IN CONSIDERATION of the foregoing recitations, the mutual covenants of the parties set forth herein and other good and valuable considerations, the receipt and sufficiency of which are acknowledged hereby, the parties hereto, intending legally to be bound, agree as follows: 1. PURCHASE OF POLICY. The Owner has applied to the Insurance Company for the Policy, and with the assistance of the Corporation, will take all reasonable steps to cause the Policy to be issued. When the Policy is issued, the insurance company, policy number, effective date, face amount and plan of insurance shall be recorded on Schedule A attached hereto, and the Policy shall become subject to the terms of this Agreement. The Owner owns or will own the Policy issued by the insurers described on Schedule "A" attached hereto (collectively, the "Insurer"). The parties hereto have taken or will take all action that may be necessary to cause the Policy to conform to the provisions of this Agreement. 2. OWNERSHIP OF POLICY. (a) The Owner shall be the sole and absolute owner of the Policy and may exercise all ownership rights granted to the owner thereof by the terms of the Policy, except as may otherwise be provided herein. (b) It is the intention of the parties to this Agreement and the collateral assignment executed by the Owner in favor of the Corporation in connection herewith that the Owner shall retain all rights that the Policy grants to the owner thereof, except the right of the Corporation to its Collateral Interest in the Policy. The Corporation's "Collateral Interest" in the Policy shall mean the aggregate sum of all premiums then or theretofore paid by the Corporation to the Insurance Company and credited to the Policy, including any amounts considered taxable "economic benefit" to the Insureds as a result of such premium payments. The Corporation shall neither have nor exercise any right as collateral assignee of the Policy that could in any way defeat or impair the Owner's right to receive the death proceeds of the Policy in excess of the amount due the Corporation hereunder. All provisions of this Agreement and of such collateral assignment shall be construed so as to carry out such intention. 3. PAYMENT OF PREMIUMS. (a) The Owner may elect to pay part or all of any premiums on the Policy and shall deliver notice of such election to the Corporation on or before the premium due date. (b) The Corporation shall advance on behalf of the Owner an amount equal to all premiums on the Policy not paid by the Owner. The amount advanced by the Corporation shall not exceed $455,000 per year for a period not exceeding eight years. The Corporation shall pay all such advances directly to the Insurer within the grace period following the due date of each such premium. (c) It is currently anticipated that on the date first set forth above and each anniversary date thereof the Corporation shall advance annually out of its own funds a sufficient sum to make up the requisite net annual premium (*i.e., the full premium less the amount that the Owner has contributed). While both Insureds are alive, the Insureds shall be deemed to receive a taxable economic benefit in an amount equal to the sum of v * qx * qy' where v = 1/1.025, qx and qy = the annual mortality rates for ages x and y, respectively, computed from the values in U.S. Life Table 38, and x and y = the ages of James and Sharon, respectively, on the due date of each annual premium. After the death of the first of the Insureds to die, the surviving Insured shall be deemed to receive a taxable economic benefit in an amount equal to the economic benefit based on the surviving Insured pursuant to the provisions of Rev. Rul. 64-328, 1964-2 CB 11, Rev. Rul. 66-110, 1966-1 CB 12, Rev. Rul. 55-747, 1955-2 CB 228 and Rev. Rul. 67-154, 1967-1 CB 11. 5. PAYMENT OF BONUSES. In order to minimize the tax consequences of this plan on the Insureds during the term of this Agreement the Corporation agrees to provide additional annual compensation in the form of a bonus to the Insureds for a period of no more than 15 years in an amount equal to the applicable federal income taxes on the taxable economic benefit as a result of the premium payments by the Corporation plus an amount equal to the applicable federal income taxes on the aggregate bonuses. 6. COLLATERAL ASSIGNMENT. To secure the repayment to the Corporation of its Collateral Interest in the Policy, the Owner shall assign the Policy to the Corporation as collateral, pursuant to the form of collateral assignment attached hereto as Exhibit "1" (the "Collateral Assignment"). Such repayment shall not exceed (i) the cash surrender value of the Policy if this Agreement is terminated or if the Owner surrenders or cancels the Policy, or (ii) the death proceeds of the Policy if both of the Insureds should die while the Policy and this Agreement remain in force. In no event shall the Corporation have any right to borrow against the Policy. The Collateral Assignment of the Policy to the Corporation hereunder shall not be terminated, altered or amended by the Owner without the express written consent of the Corporation. The parties hereto agree to take all action necessary to cause such Collateral Assignment to conform to the provisions of this Agreement. 7. LIMITATION ON OWNER'S RIGHTS IN POLICY. (a) The Owner shall take no action with respect to the Policy that would in any way compromise or jeopardize the Corporation's right to be repaid its Collateral Interest in the Policy. (b) The Owner shall have the sole right to surrender or cancel the Policy and to receive the full cash surrender value of the Policy directly from the Insurer. Upon the surrender or cancellation of the Policy, the Corporation shall have the unqualified right to receive its Collateral Interest in the Policy. Immediately upon receipt of the cash value, the Owner shall pay to the Corporation its Collateral Interest in the Policy. 8. COLLECTION OF DEATH PROCEEDS. (a) Following the deaths of both Insureds, the Corporation and the Owner promptly shall take all action necessary to obtain the death benefit provided under the Policy. (b) The Corporation shall have the unqualified right to receive a portion of such death benefit equal to its Collateral Interest in the Policy. The balance of the death benefit provided under the Policy, if any, shall be paid directly to the Owner, pursuant to the beneficiary designation for the Policy. In no event shall the amount payable to the Corporation hereunder exceed the Policy proceeds payable at the death of the Insureds. No amount shall be paid from such death benefit by the Owner until the full amount due the Corporation hereunder has been paid. The parties hereto agree that the beneficiary designation provisions of the Policy shall conform to the provisions hereof. 9. TERMINATION OF AGREEMENT. (a) This Agreement shall terminate, without notice, upon the occurrence of (i) the total cessation of the business of the Corporation or (ii) the bankruptcy, receivership or dissolution of the Corporation. (b) In addition, at any time, the Corporation or the Owner shall have the right to terminate this Agreement, by written notice to the other parties hereto, at any time that the cash surrender value of the Policy equals or exceeds the aggregate sum of all premiums then or theretofore paid by the Corporation to the Insurance Company and credited to the Policy, including amounts considered "economic benefit" to the Insureds as a result of such premium payments. Such termination shall be effective as of the date of such notice. 10. DISPOSITION OF POLICY ON TERMINATION OF AGREEMENT. (a) Within sixty (60)days following the date of the termination of this Agreement, the Owner shall obtain from the Corporation the release of the Collateral Assignment of the Policy. To obtain such release, the Owner shall repay to the Corporation its Collateral Interest in the Policy. Upon receipt of such amount, the Corporation shall release the Collateral Assignment of the Policy by the execution and delivery of an appropriate instrument of release. (b) If the Owner fails to obtain the release of the Collateral Assignment within such sixty (60) day period, then the Corporation may enforce its right to be repaid its Collateral Interest in the Policy from the cash surrender value of the Policy under the Collateral Assignment of the Policy. 11. INSURER NOT A PARTY. The Insurer shall be fully discharged from its obligations under the Policy by payment of the Policy death benefits to the beneficiary or beneficiaries named in the Policy, subject to the terms and conditions of the Policy. In no event shall the Insurer be considered a party to this Agreement or any modification or amendment thereof. No provision of this Agreement, or of any modification or amendment hereof, shall be construed in any way as enlarging, changing, varying or in any other way affecting the obligations of the Insurer as expressly provided in the Policy, except insofar as the provisions hereof are made a part of the Policy by the Collateral Assignment executed by the Owner and filed with the Insurer in connection herewith. 12. NAMED FIDUCIARY; DETERMINATION OF BENEFITS; CLAIMS PROCEDURE; AND ADMINISTRATION. (a) The Corporation is hereby designated as the named fiduciary under this Agreement. The named fiduciary shall have authority to control and manage the operation and administration of this Agreement. All premiums in respect of the Policy shall be paid to the Insurer when due, pursuant to Paragraph 3 of this Agreement. (b) The Corporation shall make all determinations concerning rights to benefits under this Agreement. Any decision by the Corporation denying a claim by the Owner for benefits under this Agreement shall be stated in writing and delivered or mailed to the Owner. Such decision shall set forth the specific reasons for the denial, written, to the best of the Corporation's ability, in a manner that may be understood without legal or actuarial counsel. In addition, the Corporation shall afford a reasonable opportunity to the Owner for a full and fair review of the decision denying such claim. In no event shall the Corporation, acting as the named fiduciary, perform any such act that violates the prohibited transaction rules of the Employee Retirement Income Security Act of 1974. 13. AMENDMENT. This Agreement may not be amended, altered or modified, except by a written instrument signed by the parties hereto or their respective successors or assigns, and may not be terminated otherwise, except as provided herein. 14. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the Corporation and the Owner, and their respective successors and assigns, and the Insureds, and their respective successors, assigns, heirs, executors and administrators. 15. NOTICE. Any notice, consent, demand or other communication required or permitted to be given under the provisions of this Agreement shall be in writing (including telefacsimile transmission or similar writing) and shall be given to such party at its address or telefacsimile number set forth on Schedule "B" attached hereto or as given subsequently to the sender by the addressee. Such notice shall be signed by the party giving or making the same. If such notice, consent, demand or other communication is mailed to a party hereto, it shall be sent by United States certified mail, postage prepaid, properly addressed. Each such notice, consent, demand or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mails as aforesaid or (ii) if given by any other means, when delivered at the address specified. 16. GOVERNING LAW. This Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of Nevada. IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the day and year first above written. CORPORATION: INTERNATIONAL SPEEDWAY CORPORATION, a Florida Corporation Attest: /s/ Lesa D. Kennedy By: /s/ William C. France Lesa D. Kennedy William C. France Secretary Chairman & CEO WITNESSES: INSUREDS: /s/Susan G. Schandel /s/ James C. France Susan G. Schandel JAMES C. FRANCE /s/ W. G. Crotty W. G. Crotty /s/ Robert E. Smith /s/ Sharon M. France Robert E. Smith SHARON M. FRANCE /s/ Lorraine Gerardo Lorraine Gerardo OWNER: J & S POLICY LIMITED PARTNERSHIP, a Nevada Limited Partnership By: TERTIARY INVESTMENT COMPANY a Nevada corporation, its sole general partner Attest: /s/ James C. France By: /s/ James C. France James C. France James C. France Secretary President SCHEDULE "A" INSURANCE POLICIES It is agreed, pursuant to the foregoing Split-Dollar Agreement dated October 17, 1995, that the policies of life insurance described below shall be subject to the provisions of said Agreement. Company Policy # Face Amount Insureds Connecticut General 7016559 $12,500,000.00 James C. France Life Insurance Company and Sharon France John Hancock Mutual 80126782 $ 7,800,000.00 James C. France Life Insurance Company and Sharon France SCHEDULE "B" ADDRESSES OF PARTIES International Speedway Corporation Attn: Lesa D. Kennedy Post Office Box 2801 Daytona Beach, Florida 32120-2801 J & S Policy Limited Partnership c/o Tertiary Investment Company 245 East Liberty Street, 3rd Floor Reno, Nevada 89501 James C. France Sharon M. France 125 Seminole Drive Ormond Beach, Florida 32174 EXHIBIT "1" FORM OF COLLATERAL ASSIGNMENT COLLATERAL ASSIGNMENT OF LIFE INSURANCE POLICY A. FOR VALUE RECEIVED, the undersigned (hereinafter the "Owner") hereby assigns, transfers and sets over to INTERNATIONAL SPEEDWAY CORPORATION, a Florida corporation, its successors and assigns (hereinafter the "Assignee"), the following specific rights (and only those specific rights) in and to the policies listed on Exhibit A issued by the respective insurers (hereinafter the "Insurers") shown on Exhibit A, and any supplementary contract or contracts issued in connection therewith (said policies and any such contracts hereinafter the "Policies"), insuring the lives of James C. France and Sharon M. France (hereinafter the "Insureds"), subject to all the terms and conditions of the Policies and to all superior liens, if any, which the Insurers may have against the Policies. The Owner, by this Assignment, and the Assignee, by acceptance of the assignment of the Policies to it hereunder, agree to the terms and conditions contained herein. B. This assignment is made, and the Policies are to be held as collateral security for, all liabilities of the Owner to the Assignee, now existing or hereafter arising under and pursuant to that certain Split-Dollar Agreement, by and between the Owner and the Assignee dated of even date herewith (hereinafter the "Agreement"). The Owner reserves all rights and powers in and to the Policies, except those specific, limited rights granted in the Policies to the Assignee hereby, as security for the liabilities of the Owner to the Assignee under the Agreement. C. It is expressly agreed that the Assignee's interest in the Policies under and by virtue of this Assignment shall be limited to the following specific rights, and no others: (a) the right to be paid the amount due it under the Agreement by recovering said amount out of the net death proceeds of the Policies, upon the death of the survivor of the Insureds; and (b) the right to be paid the amount due it under the Agreement by recovering said amount from the net cash surrender proceeds of the Policies, in the event the Policies are surrendered or canceled by the Owner. The Assignee shall have no other rights or powers in and to the Policies as a result of the assignment to it hereunder and specifically shall not have the right or power to borrow against or obtain loans or advances on the Policies, make withdrawals from the Policies, nor cancel or surrender the Policies. D. Notwithstanding this Assignment, the Owner shall specifically retain all incidents of ownership in and to the Policies, including, but not limited to: (a) the sole right to cancel or surrender the Policies and receive the surrender value thereof at any time provided by the terms of the Policies and at such other times as the Insurers may allow; (b) the sole right to collect and receive all distributions or shares of surplus, dividend deposits or additions to the Policies now or hereafter made or apportioned thereto, and to exercise any and all options contained in the Policies with respect thereto; (c) the sole right to exercise all non-forfeiture rights permitted by the terms of the Policies or allowed by the Insurers and to receive all benefits and advantages derived therefrom; (d) the sole right to designate and change the beneficiaries of the Policies (for any amount in excess of the amount due the Assignee under the Agreement); (e) the sole right to elect any optional mode of settlement permitted by the Policies or allowed by the Insurer: (f) the sole right to borrow against, obtain loans or advances on, or make withdrawals from the Policies; (g) the sole right to assign the Policies (subject to this Assignment and Agreement); and (h) the sole right to collect directly from the Insurers that portion of the net death proceeds of the Policies in excess of those proceeds payable to the Assignee under the Agreement; provided, however, that all of the foregoing rights retained by the Owner in the Policies shall be subject to the terms and conditions of the Agreement. E. Notwithstanding anything in this Assignment to the contrary, the Insurers shall be under no obligation to monitor the obligation of the Assignee hereunder to pay to the persons entitled thereto any amounts received from the Insurers remaining after payment of the then existing liabilities of the Owner to the Assignee under the Agreement; the Insurers shall have no obligation or liability to any person or entity if the Assignee fails to pay such amounts as required hereunder. F. The Insurers are hereby authorized to recognize, and are protected in recognizing, the Assignee's claims to amounts due it hereunder without investigating the validity of its claim thereto, the reason for any action taken by the Assignee, the validity or accuracy of the amount of any of the liabilities of the Owner to the Assignee under the Agreement, the existence of any default therein, the giving of any notice required herein, or the application to be made by the Assignee of any amounts to be paid to the Assignee. The sole receipt of the Assignee for any amounts received by it shall be a full discharge and release therefor to the Insurer. G. Except as otherwise provided in the Agreement, the Assignee shall be under no obligation to pay any premium on the Policies or the principal of or interest on any loans or advances on the Policies, whether or not obtained by the Assignee, or any other charges on the Policies. H. The Insurers shall be fully protected in recognizing the request made by the Owner for cancellation or surrender of the Policies, with or without the consent of the Assignee, and upon such cancellation or surrender, the Policies shall be terminated and be of no further force or effect. I. Upon the full payment of the liabilities of the Owner to the Assignee pursuant to the Agreement, the Assignee shall promptly release this Assignment and thereby reassign to the Owner all specific rights in the Policies included herein. J. The Assignee may take or release other security, may grant extensions, renewals or indulgences with respect to the obligations of the Owner to the Assignee under the Agreement, or may apply the proceeds of the Policies hereby assigned or any amount received on account of the policies by the exercise of any right permitted under this assignment, without resorting to or regard to other security for such obligations, if any. K. In the event of any conflict between the provisions of this Assignment and the provisions of the Agreement with respect to the Policies or the Assignee's rights therein, the provisions of this Assignment shall prevail. L. The Owner declares that no proceedings in bankruptcy are pending against the Owner, and that the Owner's property is not subject to any assignment for the benefit of creditors of the Owner. Signed and sealed this _____ day of October, 1995. J & S POLICY LIMITED PARTNERSHIP, a Nevada limited partnership By: TERTIARY INVESTMENT COMPANY, a Nevada corporation, its sole general partner By:___________________________________ James C. France, President ACKNOWLEDGMENT OF INSURANCE COMPANY The undersigned Insurance Company hereby acknowledges receipt of an original counterpart of this Collateral Assignment and that the same has been filed at its home office and noted on its records. Dated: ___________, 1995 By: _________________________________ President or Authorized Officer EXHIBIT A The policies of life insurance described below, on the lives of James C. France and his wife, Sharon M. France, are subject to the provisions of this Assignment. Company Policy # Face Amount EX-22 9 SUBSIDIARIES OF THE REGISTRANT SUBSIDIARIES OF THE REGISTRANT Americrown Service Corporation, a South Carolina Corporation Chicago Holdings, Inc., a Nevada Corporation Event Equipment Leasing, Inc., a Florida Corporation Event Support Corporation, a Florida Corporation Facility Investments, Inc., a Nevada Corporation Great Western Sports, Inc., an Arizona Corporation, d/b/a Tucson Raceway Park ISC Properties, Inc. a Florida Corporation Kansas International Speedway Corporation, a Kansas Corporation Miami Speedway Corp., a Nevada Corporation Midwest Facility Investments, Inc., a Florida Corporation North American Testing Company, a Florida Corporation Phoenix Speedway Corp., a Delaware Corporation d/b/a/ Phoenix International Raceway Seasonal Services, Inc., a Florida Corporation South Carolina International Speedway Corporation, a South Carolina Corporation, d/b/a Darlington International Raceway Watkins Glen International, Inc., a New York Corporation d/b/a Watkins Glen International EX-27 10 ARTICLE 5 FINANCIAL DATA SCHEDULE FOR 1998 10-K
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED BALANCE SHEETS OF INTERNATIONAL SPEEDWAY CORPORATION AS OF NOVEMBER 30, 1998 AND THE RELATED CONSOLIDATED STATEMENTS OF INCOME, SHAREHOLDERS' EQUITY AND CASH FLOWS FOR THE YEAR ENDED NOVEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 YEAR NOV-30-1998 NOV-30-1998 38,676 54,127 9,545 100 953 108,444 291,360 65,529 476,818 80,954 0 0 0 431 366,424 476,818 187,336 188,968 77,075 77,075 50,979 79 582 65,086 24,894 40,192 0 0 0 40,192 1.00 1.00
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