International Speedway Reports Record Results for the First Quarter of Fiscal 2006
~ Company Reiterates Full-Year Financial Guidance ~
DAYTONA BEACH, Fla., April 6 -- International Speedway Corporation (BULLETIN BOARD: ISCB) ("ISC") today reported record results for the fiscal first quarter ended February 28, 2006.
"Our strong financial results for the first quarter demonstrate the continued strength of our business and the motorsports industry," commented ISC President Lesa France Kennedy. "Television and media revenues contributed to top-line growth, fueled by an approximate 15 percent increase in broadcast rights fees for the NASCAR NEXTEL Cup and Busch series. In addition, higher corporate sponsorship and hospitality revenues, as well as other motorsports- related revenue helped drive our overall results. The first quarter benefited from a successful Speedweeks at Daytona, highlighted by record television viewership for the Daytona 500. Looking forward, we remain on-track to post another record year during fiscal 2006."
First Quarter Comparison
Total revenues for the first quarter increased to $193.9 million, compared to revenues of $179.4 million in the prior-year period. Operating income was $78.5 million during the period compared to $71.8 million in the first quarter of fiscal 2005. Net income was $44.1 million, or $0.83 per diluted share, compared to net income of $41.1 million, or $0.77 per diluted share, in the prior year.
2006 First Quarter Highlights
An overview of the significant major event weekends held in the first quarter of 2006 includes:
* Speedweeks 2006 kicked off in exciting fashion with the Grand American Road Racing Series Rolex 24 at Daytona International Speedway. World class competitors from several national and international racing series competed in the country's premier sports car endurance race. The on-track competition was outstanding, and the event posted a double-digit percentage increase in attendance over the prior year.
* Inclement weather forced the postponement of the NEXTEL Cup Budweiser Shootout to the following day. In addition, the NEXTEL Cup Gatorade Duel was impacted by inclement weather on race day, which affected walk-up sales for the event.
* The NASCAR Craftsman Truck Series GM FlexFuel 250 and Busch Series Hershey's Kissables 300 races posted strong attendance increases over the prior year. Mark Martin captured the checkered flag for the Craftsman Truck event and Tony Stewart survived a wild finish to capture his second consecutive Speedweeks Busch Series victory.
* A capacity crowd was on-hand to witness this year's NEXTEL Cup Daytona 500. Ending in dramatic fashion, Jimmie Johnson held off several charging drivers to capture his first victory in The Great American Race. The event also posted record television results as more than 37 million viewers nationwide tuned in to watch NASCAR's richest, most prestigious event. The 11.3 broadcast rating recorded by the 2006 Daytona 500 is the highest ever for a NASCAR race.
* The following week California Speedway hosted a NEXTEL Cup, Busch and Craftsman Truck weekend highlighted by strong on-track competition. While attendance related revenues for the weekend were lower than anticipated, ISC remains confident in its long-term plan of growing the fan base in this strategically important and underserved market.
Corporate spending continues to drive both top and bottom-line success for the Company. During the first quarter of 2006, ISC announced significant long-term official status agreements with Bank of America and Anheuser-Busch, as well as Elizabeth Arden, which launched the Daytona 500 men's fragrance during Speedweeks in February. Results for fiscal 2006 will also benefit from recently announced major NASCAR event entitlements with DirecTV, 3M and Pepsi. ISC currently has three NEXTEL Cup and two Busch race title sponsorships open for 2006, and expects to announce additional agreements over the coming months.
"Corporate advertisers are continuing to increase their presence in the sport, particularly in non-traditional motorsports categories like beauty, technology, and financial services," Ms. France Kennedy continued. "These sponsors recognize the significant value of partnering with ISC given our broad national reach and ability to deliver a fully-integrated marketing platform to help maximize their at-track presence and generate brand awareness. We continue to expect strong growth in corporate sponsorship and hospitality revenue for the next several years."
Recent Developments
To date in the fiscal second quarter, Daytona hosted a successful Bike Week in early March highlighted by increased overall attendance. In addition, Homestead-Miami Speedway hosted increased crowds for its open-wheel and Grand American racing weekend. Most recently, Martinsville Speedway hosted a weekend of Craftsman Truck and NEXTEL Cup racing, highlighted by a sold-out crowd and record television viewership for the NEXTEL Cup DirecTV 500.
For the remainder of the second quarter, ISC will host four consecutive weekends of NEXTEL Cup and Busch series racing at Phoenix International Raceway, Talladega Superspeedway, Richmond International Raceway and Darlington Raceway. Overall advance ticket sales are currently trending ahead of the prior year.
ISC continues to make important progress on its facility development projects. In New York, the Company expects to enter the public scoping phase of the land-use change process in the next several weeks. This phase of the regulatory process is expected to last through mid-2007. Concurrently, ISC is proceeding with its overall feasibility study as well as site improvement work, which is critical to the overall construction plan of the proposed facility and improves the marketability of the site should the speedway project not proceed.
In Washington state, ISC continues to generate local and statewide support for its proposed facility development project from civic groups, trade organizations and businesses. The Company is exploring all of its options related to the Kitsap County location, including introducing the necessary public financing legislation in the 2007 session of the Washington State Legislature. ISC expects to decide on the best course of action for the project over the next several months.
Regarding the Kentucky Speedway, LLC civil action filed in July 2005 against NASCAR and ISC, the United States District Court, Eastern District of Kentucky (the "Court") has denied ISC's motion to dismiss the litigation. The Company is now proceeding into the discovery process of its defense, which will result in additional legal and related expenses in the low seven figures, or up to $0.04 per diluted share in earnings, for fiscal 2006. ISC maintains that the lawsuit is without merit, and intends to vigorously defend itself.
Outlook
Fueled by the Company's solid outlook for 2006, ISC reiterates its previous full year guidance range of revenues between $780 and $800 million, and earnings of $3.20 to $3.30 per diluted share. In addition, the Company continues to expect second quarter earnings before interest, taxes, depreciation and amortization ("EBITDA")(1) and operating margins to range from 38 to 39 percent and 30 to 31 percent, respectively.
"We are very excited with the outstanding start to this year," Ms. France Kennedy concluded. "Looking toward the remainder of 2006, consumer and corporate demand remain strong and we expect both to contribute to our overall revenue growth. Complementing these efforts, we are also exploring opportunities to maximize efficiencies and strengthen future operating margins. Finally, we are well positioned to capitalize on external initiatives designed to complement our long-term revenue growth trends and further enhance shareholder value."
(1) EBITDA is a non-GAAP financial measure used by the Company as an
important indicator of its operating margin.
International Speedway Corporation is a leading promoter of motorsports
activities in the United States, currently promoting more than 100 racing
events annually as well as numerous other motorsports-related activities.
The Company owns and/or operates 11 of the nation's major motorsports
entertainment 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; Martinsville Speedway in
Virginia; Darlington Raceway in South Carolina; and Watkins Glen
International in New York. Other motorsports entertainment facility
ownership includes an indirect 37.5 percent 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." In addition, the Company has an indirect 50
percent interest in a business called Motorsports Authentics, which markets
and distributes motorsports-related merchandise licensed by certain
competitors in NASCAR racing. For more information, visit the Company's
Web site at http://www.iscmotorsports.com/ .
(Tables Follow)
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
Three Months Ended
February 28, February 28,
2005 2006
(Unaudited)
REVENUES:
Admissions, net $55,784 $55,520
Motorsports related 100,269 114,323
Food, beverage and merchandise 20,949 21,863
Other 2,430 2,228
179,432 193,934
EXPENSES:
Direct expenses:
Prize and point fund monies
and NASCAR sanction fees 31,484 34,536
Motorsports related 28,435 30,814
Food, beverage and
merchandise 12,632 13,165
General and administrative 23,171 23,493
Depreciation and amortization 11,863 13,463
107,585 115,471
Operating income 71,847 78,463
Interest income 970 934
Interest expense (3,055) (4,068)
Equity in net loss from equity
investments (1,531) (2,497)
Income from continuing operations
before income taxes 68,231 72,832
Income taxes 27,113 28,701
Income from continuing operations 41,118 44,131
Loss from discontinued operations,
net of income tax benefits of $64
and $83 (53) (78)
Net income $41,065 $44,053
Basic earnings per share:
Income from continuing
operations $0.77 $0.83
Loss from discontinued
operations -- --
Net income $0.77 $0.83
Diluted earnings per share:
Income from continuing
operations $0.77 $0.83
Loss from discontinued
operations -- --
Net income $0.77 $0.83
Dividends per share -- --
Basic weighted average shares
outstanding 53,101,260 53,144,014
Diluted weighted average shares
outstanding 53,223,241 53,249,635
Consolidated Balance Sheets
(In Thousands)
November 30, February 28,
2005 2006
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $130,758 $99,211
Short-term investments 8,200 200
Receivables, less allowance of
$1,500 in 2005 and 2006 45,557 128,306
Inventories 6,528 7,895
Prepaid expenses and other
current assets 6,335 12,412
Total Current Assets 197,378 248,024
Property and Equipment, net of
accumulated depreciation of
$315,313 and $328,732, respectively 1,178,682 1,186,663
Other Assets:
Equity investments 51,160 173,139
Intangible assets, net 149,464 149,429
Goodwill 99,507 99,507
Deposits with Internal Revenue
Service 96,913 96,913
Other 23,965 23,260
421,009 542,248
Total Assets $1,797,069 $1,976,935
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $635 $635
Accounts payable 19,274 24,562
Deferred income 123,870 178,377
Income taxes payable 20,067 34,532
Other current liabilities 18,645 24,170
Total Current Liabilities 182,491 262,276
Long-Term Debt 368,387 418,314
Deferred Income Taxes 194,825 200,499
Long-Term Deferred Income 11,342 11,117
Other Long-Term Liabilities 69 57
Commitments and Contingencies -- --
Shareholders' Equity:
Class A Common Stock, $.01 par
value, 80,000,000 shares
authorized; 29,215,778 and
29,471,515 issued and outstanding
at November 30, 2005 and February
28, 2006, respectively 292 295
Class B Common Stock, $.01 par
value, 40,000,000 shares
authorized; 23,928,058 and
23,673,321 issued and outstanding
at November 30, 2005 and
February 28, 2006, respectively 239 236
Additional paid-in capital 695,658 696,322
Retained earnings 343,766 387,819
Total Shareholders' Equity 1,039,955 1,084,672
Total Liabilities and Shareholders'
Equity $1,797,069 $1,976,935
Consolidated Statements of Cash Flows
(In Thousands)
Three Months Ended
February 28, February 28,
2005 2006
(Unaudited)
OPERATING ACTIVITIES
Net income $41,065 $44,053
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and
amortization 11,863 13,463
Stock-based compensation 453 620
Amortization of financing
costs 148 141
Deferred income taxes 9,689 5,674
Loss from equity
investments 1,531 2,497
Other, net 13 --
Changes in operating assets
and liabilities:
Receivables, net (54,399) (82,749)
Inventories, prepaid
expenses and other
assets (12,548) (7,476)
Accounts payable and
other liabilities 4,695 12,154
Deferred income 48,614 54,282
Income taxes 937 14,466
Net cash provided by operating
activities 52,061 57,125
INVESTING ACTIVITIES
Capital expenditures (130,211) (22,811)
Proceeds from asset disposals 27 49
Purchase of equity investments -- (124,476)
Acquisition of businesses (764) --
Proceeds from affiliate 487 --
Proceeds from short-term
investments 99,040 28,000
Purchases of short-term
investments (68,685) (20,000)
Other, net (11) 523
Net cash used in investing activities (100,117) (138,715)
FINANCING ACTIVITIES
Proceeds under credit facility -- 80,000
Payments under credit facility -- (30,000)
Payment of long-term debt (7,000) --
Exercise of Class A common stock
options 147 43
Deferred financing costs (10) --
Net cash (used in) provided by
financing activities (6,863) 50,043
Net decrease in cash and cash
equivalents (54,919) (31,547)
Cash and cash equivalents at
beginning of period 160,978 130,758
Cash and cash equivalents at end of
period $106,059 $99,211