reportANNUAL 2001 SeeSee YouYou aatt tthehe RRaces!aces! Annual Report 2001 ISC remains uniquely positioned to maintain its leadership status while delivering the best in motorsports entertainment. ISC Total Revenue 1997-2001 (In Millions) $600 Letter to Shareholders . .3 500 Selected Financial Data . .17 400 300 Management’s Discussion and 200 Analysis of Financial Condition and Results of Operations . .18 100 0 1997 1998 1999 2000 2001 Consolidated Financial Statements . .28 Notes to Consolidated ISC Operating Income Financial Statements . .32 1997-2001 (In Millions) $180 Report of Independent 150 Certified Public Accountants . .47 120 90 Market for Registrant’s Common Equity and Related Stockholder Matters . .48 60 30 Other Executive Officers . .48 0 1997 1998 1999 2000 2001 Board of Directors . .49 1 “We remain excited about the future and believe our proven business strategies uniquely position our company to successfully capitalize on the industry’s future growth opportunities.” William C. France Chairman and Chief Executive Officer “The combination of strategic expansion, increased media benefits, effective event promotion and focused marketing efforts helped drive record financial results across the board.” James C. France President and Chief Operating Officer “Our long-term development efforts were rewarded in 2001 with the much-anticipated openings of the Kansas Speedway and Chicagoland Speedway.” Lesa D. Kennedy Executive Vice President 2 To Our Fellow Shareholders, International Speedway Corporation enjoyed a year of significant milestones and record financial success during 2001. The Company expanded its impressive national presence with the opening of two world-class facilities in key media markets. In addition, the Company enjoyed the first year of substantial financial benefit and increased exposure associated with NASCAR’s long-term domestic television broadcast rights agreements. The combination of strategic expansion, substantially increasing rights fees for the indus- increased media benefits, effective event promo- try and creating additional awareness, which is tion and focused marketing efforts helped drive helping take the sport to new heights. record financial results across the board. We In many respects, the tremendous accom- were especially pleased to generate these results plishments and successes of the past year were in less-than-favorable economic conditions overshadowed by the loss of Dale Earnhardt. Along throughout the year,made even more difficult by with millions of NASCAR fans,we will miss Dale as the events of September 11th. a competitor who helped broaden the appeal of Our long-term development efforts were NASCAR and grow it into a truly national sport. rewarded in 2001 with the much-anticipated More than that, we will miss Dale as a person who openings of our Kansas Speedway and the was a great friend to many of us in the industry. Chicagoland Speedway in which we have a Looking forward, we believe the popularity 37.5% interest. Both facilities hosted impressive of motorsports entertainment continues to inaugural schedules featuring exciting NASCAR, grow. During 2001, the combination of increased Indy Racing League and ARCA racing. In addi- event promotion by the broadcasters,top-quality tion, both facilities received rave reviews from television productions and exciting on-track the fans, competitors, corporate marketing part- competition resulted in record television viewer- ners and media. We were extremely pleased ship, which exceeded everyone’s expectations. both Kansas and Chicagoland sold all of their In addition, we continued to attract new fans to grandstand seats as season ticket packages – a first our events and build relationships with corpo- in motorsports entertainment. rate marketing partners to generate additional In addition to expansion into additional major investment in the sport. We remain excited about markets, during 2001 the industry benefited the future and believe our proven business from increased exposure generated by new strategies uniquely position our company to suc- media contracts and the return of Chrysler to cessfully capitalize on the industry’s future Winston Cup competition. As expected, NASCAR’s growth opportunities. long-term domestic television broadcast agree- Thank you for your support. ments began to pay immediate dividends by See you at the races! 3 4 From its small beginnings in the rural Southeast, over the past 50 years NASCAR has grown stock car racing into a mainstream national sport. This growth has been phenomenal over the past decade, capturing the interest of millions of new fans and increasing the attention of corporate sponsors. As a result of its long-term commitment to provide a first-class entertainment experience,attendance and television viewership growth for NASCAR events continues to outpace other ISC’s long-term strategy encompasses a vari- major sports. In addition,NASCAR continues to lead ety of internal and external growth initiatives all sports properties in terms of sponsor satisfaction. designed to support the Company’s vision of By providing an economic model in which being the undisputed leader in event entertain- all those involved in the sport can prosper, ment. By focusing on the needs of its guests, NASCAR has been successful in building a prod- business partners,participants and shareholders, uct that is unrivaled in professional sports. Over ISC’s team of dedicated employees has a history the years, this economic model has been the of successfully executing these initiatives, and engine driving the impressive success of 2001 was no exception. International Speedway Corporation (“ISC” or the “Company”). 5 6 A Year of Milestones The first NASCAR-sanctioned race was held in 1948 in Daytona Beach, Florida. In 1959, the Company completed construction of Daytona International Speedway and promoted the first Daytona 500. The motorsports entertainment industry began to gather momentum in the mid-1960’s, when major North American automobile and tire manufacturers first offered engi- neering and financial support. In the early 1970’s,NASCAR created a more elite circuit with Winston as title sponsor, result- NASCAR Media Rights ing in a substantial increase in promotion and In early 1999, NASCAR announced it would awareness for the sport. The first live flag-to-flag retain all media rights and negotiate such rights network coverage of the Daytona 500 by CBS in other than radio for the NASCAR Winston Cup 1979 ushered in increased exposure associated and Busch Grand National series. Later that year, with live television broadcasts. The influx of NASCAR reached an agreement on an eight-year cable programming in the 1980’s and the tech- television contract with FOX and its FX cable nological advancements of the broadcasts network, and a six-year agreement with NBC enhanced the appeal of motorsports and Sports and Turner Sports, for the domestic televi- expanded its reach to audiences in millions of sion broadcast rights beginning in 2001. households worldwide. In addition, the sport Television ratings for the 2001 NASCAR began to capture additional attention from new Winston Cup Series exceeded all expectations as fans and attract non-traditional corporate mar- average households increased 36% over the prior keting partners, including major consumer prod- year, resulting in more than 280 million viewers. ucts companies, and these Even more impressive was the trends accelerated through- growth in the demographic out the 1990’s. numbers, which showed a Looking back, all of these 29% increase in male viewers events helped elevate the ages 18 to 34, and a 34% sport of NASCAR racing to increase in male viewers ages new heights. During 2001, 18 to 49. In addition, a signifi- the combination of new cant milestone was reached NASCAR media contracts, the with the airing of Talladega’s opening of Kansas Speedway EA Sports 500. The race’s 4.8 and Chicagoland Speedway rating, representing eight mil- and the return of Chrysler to lion viewers, was the highest Winston Cup competition national rating ever for an resulted in one of the most auto race that was broadcast in direct television significant years in NASCAR’s history. competition with professional football. 7 In addition to substantially higher rights fees, these agreements are expected to create significant indirect benefits for the industry that will help drive future growth. For example, net- work event coverage increased tremendously during 2001. Approximately 70% of the Winston Cup events were scheduled on network broad- casts compared to approximately 30% during 2000. This resulted in additional viewers and exposure for the sport as network broadcasts offer the opportunity to reach significantly more households than cable broadcasts. Prior to 2001,Winston Cup and Busch Series events were broadcast by as many as six different network and cable operators each year. This resulted in little promotion by the broadcasters and lack of continuity in race coverage. FOX, NBC and their respective cable partners began actively promoting their involvement beginning with the 2001 season through advertising and support programming, as well as working togeth- er to improve race coverage and provide continu- ity of coverage throughout the season. This is creating additional exposure for the sport, and is expected to help drive future growth. With the agreements limited to domestic broadcast coverage, we believe there is a sub- stantial long-term revenue opportunity associat- ed with