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SBJ/September 30 - October 6, 2002/FinancePrint All
Championship Auto Racing Teams last week revised downward its second-quarter earnings 15 percent, saying it booked too much revenue, and too few expenses, for its Chicago race June 30.
The open-wheel auto racing body now says it lost $3.7 million in the three-month period ending June 30, worse than the $3.2 million of red ink the company said in mid-August that it had bled in the second quarter. Revenue was restated at $19.3 million, down from the previously reported $19.7 million.
The company said that revenue for Chicago race promotion, the first under a new strategy in which the governing body stages events, was overstated by $381,000 and that expenses for race promotion were understated by $396,000.
In a news release, the company said it inadvertently accounted for certain revenue received from sponsors as both race promotion revenue and sponsor revenue. It also blamed the fact that the race was its first self-promoted event, and occurred the last day of the quarter.
— Daniel Kaplan
Gerald Forsythe bought 1,172,400 shares of Championship Auto Racing Teams stock Sept. 12, spending $5,862,000, according to a securities document he filed last week. He now owns 22.9 percent of the open-wheel auto racing body's shares.
Sept. 12 was the day CART waived its poison pill just for Forsythe. Poison pills essentially limit the number of shares any individual or institution can buy in a company, and in CART's case the threshold had been 15 percent.
In the securities document, Forsythe said he planned to look for opportunities to enhance shareholder value, including changes to the board of directors, management and what he described as "extraordinary transactions."
He also said he may consider pursuing such actions on his own or with third parties, meaning he could wage a battle against CART.
The filing discloses that as the price for getting CART to waive the poison pill, Forsythe agreed to vote the newly acquired shares in accordance with the board of directors for the next three years.
Forsythe is the chairman and chief executive of Indeck Power Equipment and of Indeck Energy Services Inc. He is also chairman and CEO of Forsythe Racing, which runs two cars in the CART FedEx series.
— Daniel Kaplan
Rawlings Sporting Goods Co. announced earlier this month that it is ending a tax-sharing pact with Tyco International Ltd.
Tyco is the successor to Rawlings' former parent company, Figgie International Inc.
The tax-share agreement began in 1994 when Figgie divested itself of Rawlings through a common stock public offering, a Rawlings news release said.
The tax-sharing agreement enabled Figgie to share in certain possible future tax benefits, which resulted in Rawlings recording a long-term liability, the release said.
Under the agreement to end the tax-share plan, Rawlings said it will pay Tyco $1 million to be relieved of its long-term tax-sharing liability. The company will make two $500,000 installments, one in November and another in May 2003.
Bill Lacy, Rawlings' chief financial officer, said the decision to end the tax-share agreement was made because the agreement "has been a thorn in both of our sides" and Rawlings just wanted to settle the agreement. The decision for Rawlings to end the agreement was not related to Tyco's recent problems, he said.
Rawlings expects that the elimination of the liability will add about $8.3 million, or $1 a share, to shareholder equity.
— Jennifer Lee
The Sporting 40 Stock Index chart for the week of 9/18/02 – 9/24/02.