International Speedway Corporation To Acquire Martinsville; Settlement Reached In Ferko/Vaughn Litigation, North Carolina To Be
May 14 2004 - 8:32AM
PR Newswire (US)
International Speedway Corporation To Acquire Martinsville;
Settlement Reached In Ferko/Vaughn Litigation, North Carolina To Be
Sold; NASCAR Approves 2005 Realignment, Phoenix Adds Second Cup
Date ISC Gains One Incremental NASCAR NEXTEL Cup Date; Company
Raises 2004 Financial Guidance; Conference Call at 9:00 a.m. ET
Today DAYTONA BEACH, Fla., May 14 /PRNewswire-FirstCall/ --
International Speedway Corporation ("ISC") (BULLETIN BOARD: ISCB)
today announced the following: -- The Company will acquire the
assets of Martinsville Speedway ("Martinsville"), which hosts two
NASCAR NEXTEL Cup Series events annually, for $192 million. The
acquisition will be funded by $100.4 million in proceeds from the
sale of the assets of North Carolina Speedway ("North Carolina"),
which currently hosts one NASCAR NEXTEL Cup event annually, and
$91.6 million in cash. -- Speedway Motorsports, Inc. ("SMI") will
purchase North Carolina for $100.4 million, as per the terms of a
settlement agreement in the Ferko/Vaughn litigation ("Settlement
Agreement") filed with the United States District Court for the
Eastern District of Texas, Sherman Division ("the Court"). The
Settlement Agreement releases ISC and NASCAR from all claims
related to the litigation. The released claims include, but are not
limited to, allegations or assertions with respect to the awarding
and/or sanctioning of races, the effect of the common control of
NASCAR and ISC residing in the France Family Group, and the market
power either individually or jointly of NASCAR and ISC. --
Separately, the Company received NASCAR's approval for the
realignment of several NASCAR NEXTEL Cup races within its portfolio
beginning in 2005. The net result is the addition of a second Cup
event for Phoenix International Raceway ("Phoenix") and the
reduction of Darlington Raceway's ("Darlington") event schedule by
one Cup date. ISC also intends for Nazareth Speedway's ("Nazareth")
NASCAR Busch and IRL IndyCar events to be realigned to other
facilities within its portfolio and will cease major motorsport
event operations at the facility after completion of the track's
2004 events. Martinsville Acquisition and Ferko/Vaughn Settlement
The acquisition of Martinsville and the sale of North Carolina will
happen in a series of transactions that will essentially occur
simultaneously (the "Transactions"). Martinsville is privately
owned, and the France family, which controls in excess of 60% of
the combined voting interest of ISC, indirectly owns 50% of
Martinsville. The addition of an incremental NASCAR NEXTEL Cup date
resulting from the Transactions was integral to the Company's
decision to settle the Ferko/Vaughn litigation through the sale of
North Carolina. Located in Virginia near Greensboro and
Winston-Salem, Martinsville is one of only two one-half mile tracks
on the NASCAR NEXTEL Cup Series circuit. It seats 63,000 grandstand
spectators and offers premium accommodations in the facility's 25
suites. The facility annually conducts two NASCAR NEXTEL Cup
events, including one during the Chase for the NASCAR NEXTEL Cup.
In addition, Martinsville hosts two NASCAR Craftsman Truck Series
races and a Late Model Stock Car event annually. "Martinsville has
a long and rich tradition of world-class racing since its inception
in 1947 and will be a prized addition to ISC," stated Lesa France
Kennedy, President of ISC. "With Martinsville, we add two
successful NEXTEL Cup events that have sold out annually for over a
decade, which is a testament to the commitment and hard work of
Clay Campbell and his team. We believe we can help build upon their
successes through our expertise and strong relationships with
corporate partners. The facility, which has made significant
capital improvements over the past several years, affords us
expansion opportunities such as seat and suite additions, as well
as increased revenue opportunities from additional corporate
spending. Martinsville has a passionate and devoted fan base, and
we will continue to offer these customers a premium race
experience. We are pleased to welcome Martinsville to the ISC
family and look forward to a successful future with Clay and the
rest of the outstanding employees at Martinsville." Under the terms
of the Settlement Agreement, SMI will purchase North Carolina for
$100.4 million in cash. The sale of North Carolina is expected to
close following the satisfaction of conditions as provided in the
North Carolina Asset Purchase Agreement and the Settlement
Agreement. The Settlement Agreement is subject to Court approval,
which the Company anticipates receiving within the next 30 to 45
days. Ms. France Kennedy commented, "We have always viewed
Martinsville as a uniquely attractive asset, and, while it is
disappointing for us to part with North Carolina, the long-term
strategic and financial rationale for the Transactions is clear. We
believe the lawsuit is without merit, the likelihood of a material
adverse outcome would have been remote, and we would have
ultimately prevailed in the litigation. However, the Transactions
created the opportunity for us to gain an incremental Cup date for
our portfolio and settle the lawsuit. Furthermore, the Transactions
will be immediately accretive and are consistent with our long-term
strategy of growing our portfolio of high-quality tracks and major
race dates. We can now focus all of our time and resources on
enhancing value for our shareholders." The purchase prices for the
assets of both facilities are subject to certain non-material
adjustments and prorations at closing, and both are expected to
close within the next 30 to 45 days in ISC's third quarter. ISC
expects to record an approximate $36 million after-tax gain, or
$0.68 per diluted share, from the sale of North Carolina and will
reflect the facility's operations as discontinued in the Company's
financial statements in accordance with generally accepted
accounting principles ("GAAP"). Significant Realignment Initiatives
Announced for 2005 NASCAR has approved ISC's proposal for the
realignment of several NEXTEL Cup dates (ISC schedule following),
including races at Phoenix, Darlington and California Speedway
("California"). As detailed in the 2005 NASCAR NEXTEL Cup Series
schedule released this morning, Phoenix will host an additional
NASCAR NEXTEL Cup event, Darlington will now conduct one NEXTEL Cup
race, and California's Spring NEXTEL Cup weekend will move to the
week after the Daytona 500 in February. The race date realignment
is expected to result in a positive incremental impact to the
Company's revenue and earnings beginning in 2005. The Company also
announced it intends to realign the NASCAR Busch and IRL IndyCar
series events from Nazareth to other facilities in its portfolio.
"The second Cup date in Phoenix strengthens our national presence
and raises our value to our marketing and broadcast partners,
providing another opportunity for them to access this key market,"
commented John R. Saunders, Executive Vice President and Chief
Operating Officer of ISC. "In addition, race fans in the Southwest
will have another opportunity to experience the excitement of live
NASCAR NEXTEL Cup racing. We will install lighting at Phoenix in
order for the facility's 2005 spring race to finish under the
lights during east coast prime time, typically a time of day with
larger television audiences. Also, by realigning Nazareth's Busch
and IRL events to other facilities in our portfolio, we believe we
can successfully grow these events over the long term at a quicker
rate than in their current venue. As such, we are presently working
with the various sanctioning bodies involved." ISC will record a
non-cash pre-tax charge of approximately $13 million, or $0.14 per
diluted share, to reflect the impairment of Nazareth's long-lived
assets. Outlook On April 23, 2004, ISC announced the closing of a
private placement of $150 million 4.20 percent Senior Notes due
April 2009, and $150 million 5.40 percent Senior Notes due April
2014. The Company intends to use a substantial majority of the net
proceeds from this transaction to redeem its existing $225 million
7.875 percent Senior Notes ("Old Notes") due October 2004,
including payment of redemption premium and accrued interest. The
Old Notes are scheduled for redemption on May 28, 2004. As a result
of today's announcements, assuming the Transactions close on June
30, 2004, combined with the debt refinancing, ISC is raising its
fiscal 2004 financial guidance and providing an initial outlook for
fiscal 2005. In accordance with GAAP, the effects of North
Carolina's discontinued operations are included in diluted earnings
per share. -- The Company's actual first quarter results will be
restated to reflect North Carolina as a discontinued operation. As
a result, first quarter revenues will be revised to approximately
$130 million and earnings remain unchanged at approximately $0.52
per diluted share. -- The Company expects 2004 second quarter
revenues to range between $125 million and $130 million, and
earnings from $0.09 to $0.11 per diluted share, including
approximately $7 million pre-tax, or $0.08 per diluted share, for
the estimated redemption premium and interim interest on the Old
Notes from April 23 through May 28, and the $13 million non-cash
pre-tax charge, or $0.14 per diluted share, related to the
impairment of Nazareth's long-lived assets. Excluding these items,
ISC expects earnings to range from $0.31 to $0.33 per diluted
share. -- Third quarter revenues for fiscal 2004 are estimated from
$145 million to $150 million, and earnings from $1.26 to $1.28 per
diluted share, including the approximate $36 million after-tax
gain, or $0.68 per diluted share, on the sale of North Carolina.
Excluding the gain on the North Carolina sale, ISC expects earnings
to range from $0.58 to $0.60 per diluted share. -- ISC expects 2004
fourth quarter revenues to range between $220 million and $225
million, and earnings to range from $0.98 to $1.00 per diluted
share. -- Accordingly, the Company is adjusting its full year
fiscal 2004 revenue guidance to a range of $620 to $635 million and
earnings from $2.85 to $2.91 per diluted share, including the
aforementioned estimated payment of redemption premium and accrued
interest for the Old Notes, charge for impairment of Nazareth's
long-lived assets, and gain on the sale of North Carolina.
Excluding these items, ISC expects earnings to range from $2.39 to
$2.45 per diluted share. -- For 2005, the Company expects to report
revenue growth of approximately 7 to 10 percent and a decrease in
earnings per diluted share due to the non-recurring gain from the
sale of North Carolina in fiscal 2004. Excluding the estimated
payment of redemption premium and accrued interest for the Old
Notes, charge for impairment of Nazareth's long- lived assets, and
gain on the sale of North Carolina in fiscal 2004, ISC anticipates
growth in earnings per diluted share in 2005 of approximately 12 to
15 percent. ISC will provide detailed financial guidance for fiscal
2005 in December, as it has done historically. Ms. France Kennedy
concluded, "Today's announcements have strengthened our position as
a leader in motorsports entertainment while further enhancing the
future growth potential of the industry as a whole. We have
increased our NASCAR NEXTEL Cup roster to include 21 of 39 Cup
events, and in the process added a well-managed facility with
considerable expansion potential. Through realignment, we continue
to execute our long-term strategy of maximizing the profitability
of our event portfolio. Finally, with the litigation settled and
behind us, we can focus exclusively on leveraging our strong
financial position to capitalize on internal and external growth
opportunities. We look forward to updating you on our progress."
Conference Call Details Senior management will host a conference
call at 9:00 a.m. Eastern Time to discuss today's announcement. To
participate on the call, please dial 973-582-2710, or access the
live webcast on the Investor Relations section of
http://www.iscmotorsports.com/. A replay will be available
beginning one hour following the conclusion of the live call until
midnight, May 24, 2004, by dialing 973-341-3080 and entering the
code 4730413, or via the Web at http://www.iscmotorsports.com/, in
the Investor Relations section. International Speedway Corporation
is a leading promoter of motorsports activities in the United
States, currently promoting more than 100 events annually. The
Company owns and/or operates 12 of the nation's major motorsports
facilities, including Daytona International Speedway in Florida
(home of the Daytona 500); Talladega Superspeedway in Alabama;
Michigan International Speedway located outside Detroit; Richmond
International Raceway in Virginia; California Speedway near Los
Angeles; Kansas Speedway in Kansas City, Kansas; Phoenix
International Raceway in Arizona; Homestead-Miami Speedway in
Florida; North Carolina Speedway in Rockingham; Darlington Raceway
in South Carolina; Watkins Glen International in New York; and
Nazareth Speedway in Pennsylvania. Other track interests include an
indirect 37.5% interest in Raceway Associates, LLC, which owns and
operates Chicagoland Speedway and Route 66 Raceway near Chicago,
Illinois. The Company also owns and operates MRN Radio, the
nation's largest independent sports radio network; DAYTONA USA, the
"Ultimate Motorsports Attraction" in Daytona Beach, Florida, the
official attraction of NASCAR; and subsidiaries which provide
catering services, food and beverage concessions, and produce and
market motorsports-related merchandise under the trade name
"Americrown." For more information, visit the Company's Web site at
http://www.iscmotorsports.com/ . Statements made in this release
that express the Company's or management's beliefs or expectations
and which are not historical facts or which are applied
prospectively are forward-looking statements. It is important to
note that the Company's actual results could differ materially from
those contained in or implied by such forward-looking statements.
The Company's results could be impacted by risk factors, including,
but not limited to, weather surrounding racing events, government
regulations, economic conditions, consumer and corporate spending,
military actions, air travel and national or local catastrophic
events. Additional information concerning factors that could cause
actual results to differ materially from those in the forward-
looking statements is contained from time to time in the Company's
SEC filings including, but not limited to, the 10-K and subsequent
10-Q's. Copies of those filings are available from the Company and
the SEC. The Company undertakes no obligation to release publicly
any revisions to these forward- looking statements that may be
needed to reflect events or circumstances after the date hereof or
to reflect the occurrence of unanticipated events. The inclusion of
any statement in this release does not constitute an admission by
International Speedway or any other person that the events or
circumstances described in such statement are material. (Schedule
Follows) ISC 2005 NASCAR NEXTEL Cup Series Schedule Facility Date
Daytona International Speedway* February 12 Daytona International
Speedway* February 17 Daytona International Speedway February 20
California Speedway February 27 Martinsville Speedway April 10
Phoenix International Raceway April 23 Talladega Superspeedway May
1 Darlington Raceway May 7 Richmond International Raceway May 14
Michigan International Speedway June 19 Daytona International
Speedway July 2 Chicagoland Speedway** July 10 Watkins Glen
International August 14 Michigan International Speedway August 21
California Speedway September 4 Richmond International Raceway
September 10 Talladega Superspeedway October 2 Kansas Speedway
October 9 Martinsville Speedway October 23 Phoenix International
Raceway November 13 Homestead-Miami Speedway November 20 *
Represent non-championship point event ** ISC indirectly own 37.5%
DATASOURCE: International Speedway Corporation CONTACT: Wes Harris,
Director of Investor Relations for International Speedway
Corporation, +1-386-947-6465 Web site:
http://www.iscmotorsports.com/
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