International Speedway Corporation Reports Financial Results for the Second Quarter of Fiscal 2010
~Company Updates Full-Year Financial Guidance~
DAYTONA BEACH, Fla., July 8 -- International Speedway Corporation (OTC:ISCB) (BULLETIN BOARD: ISCB) ("ISC") today reported results for its fiscal second quarter ended May 31, 2010.
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"During the quarter, we hosted five NASCAR Sprint Cup series weekends packed with exciting on track competition," stated ISC Chief Executive Officer Lesa France Kennedy. "Our value-pricing initiatives, as well as the recent competition and Sprint Cup Series car design changes implemented by NASCAR, are being well received by the fans who continue to attend our events in strong numbers. However, our financial results for the second quarter were adversely impacted by the ongoing economic headwinds and compounded by weather issues, which further impacted attendance-related revenues at our Martinsville Speedway and Talladega Superspeedway race weekends."
Ms. France Kennedy continued, "It is becoming increasingly clear that there will not be any meaningful macroeconomic recovery, particularity in unemployment and consumer confidence levels, for the balance of the year. We based our 2010 financial projections on economic forecasts reflecting expectations that the economy would by now have stabilized and be showing stronger growth in the second half of the year. We remain concerned about consumer spending based on many economic indicators, most recently the substantial drop in the Consumer Confidence Index which demonstrates the fragile state of the economic recovery.
"Fortunately, through our prudent financial discipline, we continue to weather any interim volatility. We are mindful, particularly in these uncertain times, to maintain our commitment to the guest experience and not undermine the perception of the value of our product. Despite the current pressure on revenues and cash flow, through strategic focus which has brought us to the enviable financial position we are in today, I am confident we will emerge a more efficient business better positioned for long-term growth.
"Also, I am pleased to report that the former owners of Kentucky Speedway did not petition the United States Supreme Court for a writ of certiorari, effectively concluding the litigation against ISC and NASCAR. This puts an end to any question about which locations and dates NASCAR can operate its races. Like other sports such as the National Football League and Major League Baseball, NASCAR can host its events where it decides is best for the sport and its fans."
Second Quarter Comparison
Total revenues for the second quarter decreased to $142.2 million, compared to revenues of $152.4 million in the prior-year period. Operating income was $21.3 million during the period compared to $31.7 million in the second quarter of fiscal 2009. In addition to the macroeconomic challenges, quarter-over-quarter comparability was impacted by:
-- A Grand American series event was held at Homestead-Miami Speedway in
the second quarter of fiscal 2010 that was previously held in the
fourth quarter of fiscal 2009.
-- Accelerated depreciation of $0.5 million, or $0.01 per diluted share
after tax, in the second quarter of 2009 for certain office and
related buildings in Daytona Beach associated with the Company's
previously announced Daytona Development project.
-- The impairment of long-lived assets, during the three months ended May
31, 2010, of approximately $0.4 million is attributable to the removal
of certain long-lived assets located at our motorsports facilities.
-- During the second quarter of fiscal 2010, the Company amortized
approximately $1.2 million, or $0.01 per diluted share after tax,
related to its interest-rate swap for which there was no comparable
amortization in the same period in the prior year. This amortization
was recorded in interest expense in the consolidated statement of
operations.
-- During the second quarter of fiscal 2010, the Company recognized a
$0.5 million, or $0.01 per diluted share after tax, charge for equity
in net loss from equity investments related to certain start up costs
associated with its Hollywood Casino at Kansas Speedway. The second
quarter of fiscal 2009, the Company recognized a $57.3 million, or
$1.17 per diluted share after tax, charge for equity in net loss from
equity investments related to Motorsports Authentics, LLC ("MA"),
ISC's motorsports-related merchandise 50/50 joint venture with
Speedway Motorsports Inc. Included is an approximately $55.6 million,
or $1.14 per diluted share after tax, non-cash charge to reflect an
impairment recognized by ISC on its equity investment in MA. Under
equity method accounting the Company discontinued applying the equity
method since the carrying value of its investment in MA was zero as of
November 30, 2009 and May 31, 2010. Based on this, the Company did not
recognize any net loss from operations of MA during the three months
ended May 31, 2010.
-- The 2009 fiscal second quarter results include interest income, net of
tax, recorded as a reduction of income tax expense of approximately
$8.9 million, or $0.18 per diluted share, for interest earned on the
deposited funds which were ultimately returned to the Company as a
result of the definitive settlement agreement entered into with the
Internal Revenue Service ("Service") in connection with the previously
disclosed federal income tax examination for its 1999 through 2005
fiscal years.
-- As a result of the definitive settlement agreement the Company reached
last year with the Service and based on favorable settlements and
ongoing discussions with certain states, ISC, in fiscal second quarter
2010, de-recognized potential interest and penalties totaling
approximately $0.7 million or $0.02 per diluted share after tax. This
de-recognition of interest and penalties was recognized as a reduction
in income tax expense in its consolidated statement of operations.
Net income for the second quarter was $10.3 million, or $0.21 per diluted share, compared to net loss of $31.7 million, or $0.65 per diluted share, in the prior year. Excluding discontinued operations; the Hollywood Casino at Kansas Speedway -- equity in net loss from equity investment; impairments of certain other long-lived assets; the amortization related to an interest rate swap recorded in interest expense; and the de-recognition of interest and penalties related to the previously discussed state tax settlements, non-GAAP (defined below) net income for the second quarter of 2010 was $10.8 million, or $0.22 per diluted share. Non-GAAP net income for the second quarter of 2009 was $17.0 million, or $0.35 per diluted share.
Year-to-Date Comparison
For the six months ended May 31, 2010, total revenues were $294.2 million, compared to $318.5 million in 2009. Operating income for the six-month period was $61.1 million compared to $81.7 million in the prior year.
Year-over-year comparability was impacted by:
-- A NASCAR Camping World Truck Series event held at Auto Club Speedway
in the first quarter of fiscal 2009 was not held in the first quarter
of fiscal 2010.
-- A Grand American series event was held at Homestead-Miami Speedway in
the second quarter of fiscal 2010 that was previously held in the
fourth quarter of fiscal 2009.
-- Accelerated depreciation charges for the six months ended May 31,
2009, of $1.0 million, or $0.01 per diluted share after tax,
associated with the previously discussed Daytona Development project.
-- The impairment of long-lived assets, during the six months ended May
31, 2010, of approximately $0.7 million, or $0.01 per diluted share
after tax, is attributable to the removal of certain long-lived assets
located at our motorsports facilities.
-- For the six months ended May 31, 2010, the Company amortized
approximately $2.5 million or $0.03 per diluted share after tax,
related to its interest-rate swap for which there was no comparable
amortization in the same period in the prior year.
-- For the six months ended May 31, 2010, the Company recognized a $1.5
million, or $0.02 per diluted share after tax, charge for equity in
net loss from equity investments related to certain start up costs
associated with its Hollywood Casino at Kansas Speedway. The six
months ended May 31, 2009, included a $58.9 million, or $1.21 per
diluted share after tax, charge for equity in net loss from equity
investments related to MA, which includes the previously discussed
impairment on MA. The Company did not recognize any net loss from
operations of MA during the six months ended May 31, 2010.
-- The previously mentioned interest earned on the deposited funds
returned to the Company as a result of the definitive settlement
agreement it entered into with the Service.
-- As a result of the aforementioned definitive settlement agreement the
Company reached last year with the Service and based on favorable
settlements and ongoing discussions with certain states, for the six
months ended May 31, 2010, the Company de-recognized potential
interest and penalties totaling approximately $6.2 million or $0.13
per diluted share after tax. This de-recognition of interest and
penalties was recognized as a reduction in income tax expense in its
consolidated statement of operations.
Net income for the six months ended May 31, 2010, was $35.7 million, or $0.74 per diluted share, compared to a net loss of $6.6 million, or $0.13 per diluted share in 2009. Excluding discontinued operations; the Hollywood Casino at Kansas Speedway -- equity in net loss from equity investment; impairments of certain other long-lived assets; the amortization related to an interest rate swap recorded in interest expense; and the de-recognition of interest and penalties related to the previously discussed state tax settlements, non-GAAP (defined below) net income for the for the six months ended May 31, 2010, was $32.4 million, or $0.67 per diluted share. This is compared to non-GAAP net income for the first six months of 2009 of $44.2 million, or $0.91 per diluted share.
GAAP to Non-GAAP Reconciliation
The following financial information is presented below using other than U.S. generally accepted accounting principles ("non-GAAP"), and is reconciled to comparable information presented using GAAP. Non-GAAP net income and diluted earnings per share below are derived by adjusting amounts determined in accordance with GAAP for certain items presented in the accompanying selected operating statement data, net of taxes.
The adjustments for 2009 relate to a charge for accelerated depreciation for certain office and related buildings in Daytona Beach, impairments of certain other long-lived asset, Motorsports Authentics -- equity in net loss from equity investment, and interest income related to the Settlement with the Service.
The adjustments for 2010 relate to the impairments of certain other long-lived assets, amortization of interest rate swap, Hollywood Casino at Kansas Speedway -- equity in net loss from equity investment, and the de-recognition of interest and penalties related to the previously discussed state tax settlements.
The Company believes such non-GAAP information is useful and meaningful to investors, and is used by investors and ISC to assess core operations, which consist of the ongoing promotion of racing events at its major motorsports entertainment facilities. Such non-GAAP information identifies and separately displays the equity investment earnings and losses and adjusts for items that are not considered to be reflective of the Company's continuing core operations at its motorsports entertainment facilities. The Company believes that such non-GAAP information improves the comparability of the operating results and provides a better understanding of the performance of its core operations for the periods presented. The Company uses this non-GAAP information to analyze the current performance and trends and make decisions regarding future ongoing operations. This non-GAAP financial information may not be comparable to similarly titled measures used by other entities and should not be considered as an alternative to operating income, net income or diluted earnings per share, which are determined in accordance with GAAP. The presentation of this non-GAAP financial information is not intended to be considered independent of or as a substitute for results prepared in accordance with GAAP. Management uses both GAAP and non-GAAP information in evaluating and operating the business and as such deemed it important to provide such information to investors.
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended Six Months Ended
May 31, May 31, May 31, May 31,
2009 2010 2009 2010
-------- -------- -------- --------
Net (loss) income $(31,740) $10,262 $(6,594) $35,702
Loss from discontinued
operations, net of tax 45 - 87 47
--- --- --- ---
(Loss) income from
continuing operations (31,695) 10,262 (6,507) 35,749
Equity in net loss from
equity investments,
net of tax 57,274 291 58,913 937
------ --- ------ ---
Consolidated income
from continuing
operations excluding
equity in net loss from
equity investments 25,579 10,553 52,406 36,686
Adjustments, net of
tax:
Additional depreciation 319 - 638 -
Impairment of long-
lived assets 9 267 52 396
Amortization of
interest rate swap - 754 - 1,517
Interest income from
IRS Settlement (8,923) - (8,923) -
State tax settlements - (744) - (6,163)
--- ---- --- ------
Non-GAAP net income $16,984 $10,830 $44,173 $32,436
------- ------- ------- -------
Per share data:
Diluted (loss) earnings
per share $(0.65) $0.21 $(0.13) $0.74
Loss from discontinued
operations, net of tax - - - -
--- --- --- ---
(Loss) income from
continuing operations (0.65) 0.21 (0.13) 0.74
Equity in net loss from
equity investments 1.17 0.01 1.21 0.02
---- ---- ---- ----
Consolidated income
from continuing
operations excluding
equity in net loss from
equity investments 0.52 0.22 1.08 0.76
Adjustments, net of
tax:
Additional depreciation 0.01 - 0.01 -
Impairment of long-
lived assets 0.00 0.01 0.00 0.01
Amortization of
interest rate swap - 0.01 - 0.03
Interest income from
IRS Settlement (0.18) - (0.18) -
State tax settlements - (0.02) - (0.13)
--- ----- --- -----
Non-GAAP diluted
earnings per share $0.35 $0.22 $0.91 $0.67
----- ----- ----- -----
Major Events
Fiscal Second
Quarter
Events
Facility Dates Major Event Hosted
-------- ----- ------------------
Daytona
International
Speedway March 3-5 AMA Pro Racing
Homestead-
Miami
Speedway March 6-7 Grand-Am Rolex Sports Car
Martinsville NASCAR Sprint Cup and NASCAR Camping
Speedway March 26-28 World Truck
Auto Club
Speedway March 26-28 AMA Pro Racing
Phoenix
International
Raceway April 9-11 NASCAR Sprint Cup and NASCAR Nationwide
Talladega NASCAR Sprint Cup; NASCAR Nationwide
Superspeedway April 23-25 and ARCA RE/MAX
Richmond
International April 30 -May
Raceway 2 NASCAR Sprint Cup and NASCAR Nationwide
Kansas IZOD IndyCar and NASCAR Camping World
Speedway May 1-2 Truck
Darlington
Raceway May 7-9 NASCAR Sprint Cup and NASCAR Nationwide
Fiscal Third
Quarter
Events
Facility Dates Major Event Hosted
-------- ----- ------------------
Watkins Glen
International June 5-6 Grand-Am Rolex Sports Car
Michigan
International NASCAR Sprint Cup; NASCARCamping World
Speedway June 11-13 Truck; and ARCA RE/MAX
Daytona
International NASCAR Sprint Cup; NASCAR Nationwide
Speedway July 2-4 and Grand-Am Rolex Sports Car
Watkins Glen
International July 4 IZOD IndyCar
Chicagoland
Speedway July 9-11 NASCAR Sprint Cup and NASCAR Nationwide
Watkins Glen NASCAR Sprint Cup; NASCAR Nationwide
International August 6-8 and Grand-Am Rolex Sports Car
Michigan
International
Speedway August 13-15 NASCAR Sprint Cup and NASCAR Nationwide
Darlington
Raceway August 14 NASCARCamping World Truck
Chicagoland IZOD IndyCar and NASCAR Camping World
Speedway August 27-29 Truck
Circuit Gilles
Villeneuve, NASCAR Nationwide and Grand-Am Rolex
Montreal August 27-29 Sports Car
From a marketing partnership perspective, ISC has agreements in place for 91 percent of its gross marketing partnership revenue target for fiscal 2010. The Company has recently signed deals with Ruiz Foods, Papa John's Pizza, and Toyota Motor Sales. ISC also signed a letter of intent with Lowe's for its Kobalt Tools brand to serve as the title sponsor for the Phoenix NASCAR Sprint Cup Series event in November. Royal Purple Synthetic Oil has signed a multiyear deal to be the title sponsor for the Company's NASCAR Nationwide Series event held in May at Darlington. Currently, ISC has only one Sprint Cup title sponsorship open at Richmond.
"The general tone of our meetings with current and prospective corporate partnership clients is much more upbeat than it was a year ago. While corporate budgets are still constrained and our partnership revenues will be down for the year, it does provide some encouragement for next year and beyond," stated Ms. France Kennedy. "For the year, we have added a number of new brands and companies to our roster of corporate marketing partners such as Samuel Adams; Bubba Burgers; Drive-4-COPD; Hershey's Milk and Milkshakes; Safelite AutoGlass; the U.S. Census; and Showtime Entertainment."
External Growth and Other Initiatives Hollywood Casino at Kansas Speedway
During the fiscal second quarter, Kansas Entertainment, LLC, the Company's 50/50 joint venture with Penn National Gaming, Inc., marked the beginning of construction on its Hollywood Casino at Kansas Speedway with a groundbreaking ceremony. The development of the Hollywood-themed and branded entertainment destination facility is expected to open in the first half of 2012.
Staten Island
In connection with ISC's efforts to sell its Staten Island property, on April 19, 2010, the Company executed an amendment to the Agreement which provided an extension to KB Holdings to close the transaction on or before June 30, 2010. Under the terms of that extension, the maximum purchase price to be paid by KB Holdings is $88.0 million; however, certain price reductions were available if the closing were to occur before June 30. The closing did not occur on June 30 and ISC is presently negotiating a further extension to the Agreement. While the Company remains optimistic that a closing will occur, there can be no assurance that it will reach an agreement with KB Holdings on a further extension, or that KB Holdings will secure the required equity commitments and proceed to closing.
Motorsports Authentics
In June 2010, MA successfully restructured its business with reasonable future opportunities to operate profitably. MA, previous to its restructuring, had licenses, many involving guaranteed minimum royalty payments over the term, for exclusive and non-exclusive product distribution with certain teams competing in NASCAR. The products included a broad range of motorsports-related apparel, gifts, die-cast replica collectibles, and other memorabilia, which were marketed through a combination of mass retail, domestic wholesale, trackside, international and collector's club distribution channels.
In the fiscal third quarter 2009, MA, suffering financial stress from the recession, ceased paying certain guaranteed royalties under several license agreements where estimated royalties payable based on projected sales were less than stipulated guaranteed minimum royalties payable. MA did pay all earned royalties and was exploring business strategies in conjunction with certain motorsports industry stakeholders to find the optimal business model for long-term viability.
In July 2010, industry stakeholders have created the NASCAR Teams Licensing Trust ("Trust") that is represented by a Board of Directors that includes representatives from NASCAR, the sanctioning body, and from 11 participating NASCAR Teams. The Trust will represent four key categories, die-cast, toys, apparel and trackside retail rights, and will grant the rights of any driver that is participating in the licensing categories included in the Trust. This should allow the industry to more efficiently manage costs and increase revenues, while providing a wider selection of products for fans.
Concurrent with the creation of the Trust, MA management, ownership and industry stakeholders negotiated MA's release from future guaranteed minimum royalties as well as the current unearned guaranteed minimum royalties payable to NASCAR team licensors. With respect to the one agreement secured by parent company guarantees, MA and the parent companies negotiated a settlement amount to eliminate future guaranteed minimum royalties.
As a result of the settlement, the Company's remaining guaranty exposure, to one NASCAR team licensor, has been reduced to approximately $5.5 million and will be satisfied upon MA making certain payments to the team through January 2013. While it is possible that some obligation under this guarantee may occur in the future, the amount the Company ultimately could pay, if any, cannot be estimated at this time. In any event, the Company does not believe that the ultimate financial outcome will have a material impact on its financial position or results of operations.
Capital Spending
For the three months ended May 31, 2010, ISC spent $27.2 million on capital expenditures, which includes $24.4 million for projects at its existing facilities. The remaining $2.8 million of spending is primarily related to the construction of the new ISC headquarters which is funded from long-term restricted cash and investments provided by the headquarters financing.
At May 31, 2010, the Company had approximately $62.2 million remaining in capital projects currently approved for its existing facilities. These projects include the track repaving at Daytona; grandstand seating enhancements and infield improvements at Michigan; parking improvements at Daytona; grandstand seating enhancements at Talladega; track enhancements at Watkins Glen; improvements at various facilities for expansion of parking, camping capacity and other uses; and a variety of other improvements and renovations to its facilities that enable ISC to effectively compete with other sports venues for consumer and corporate spending.
As a result of these currently approved projects and anticipated additional approvals in fiscal 2010, the Company expects its total fiscal 2010 capital expenditures will be approximately $85.0 million to $95.0 million which includes approximately $60.0 million to $80.0 million of capital expenditures at its existing facilities, depending on the timing of certain projects. ISC reviews the capital expenditure program periodically and modifies it as required to meet current business needs.
Share Repurchase Program
There were no purchases of ISC's Class A common shares pursuant to the Stock Purchase Plan during the three months ended May 31, 2010. Since inception of the Stock Purchase Plan through May 31, 2010, the Company has purchased 5.1 million shares of its Class A common shares, for a total of approximately $218.0 million. At May 31, 2010, the Company had approximately $32.0 million remaining repurchase authority under the current Plan.
While ISC continues to consider its share repurchase program an important component of its long-term capital allocation strategy, the Company plans on maintaining strong cash reserves awaiting a sustained return to the robust operating cash flows enjoyed prior to the economic downturn. On a quarterly basis and pursuant to the trading plan under Rule10b5-1, ISC reviews and adjusts, if necessary, the parameters of its Stock Purchase Plan.
Fiscal 2010 Financial Outlook
The Company is revising its full year guidance as a result of the sluggish economic recovery, particularly in job growth and consumer spending trends. ISC now expects 2010 full year total revenue will range between $650 million to $660 million and full year non-GAAP earnings of $1.50 to $1.60 per diluted share. The non-GAAP earnings per share estimates exclude the operating results from ISC's equity investments in Motorsports Authentics and Kansas Entertainment; any future loss on impairment of long-lived assets which could be recorded as part of capital improvements resulting in removal of assets not fully depreciated; gain or loss on the sale of its Staten Island property or any unanticipated further impairment of the property; the de-recognition of interest and penalties related to the state tax settlements in income tax expense; and any amortization related to its interest rate swap recorded in interest expense, or any charges ultimately recorded in connection with contingent liabilities.
Core Operations
The proposed guidance takes into account the fact that advance ticket sales are still trending down year-over-year and corporate partnership sales, while encouraging, are also expected to decrease. Lower revenue will be partially offset by annualized cost savings established throughout 2009 and lower Prize & Point Fund Monies.
On a percentage basis as compared to fiscal 2009;
-- Attendance revenues are forecasted to decrease as much as 15 percent;
-- Food, beverage and merchandise revenues forecasted to decrease to the
mid-single digits;
-- Domestic television and ancillary media rights fees revenue will
increase approximately 2.5 percent.
-- Other motorsports-related revenues, which are primarily comprised of
sponsorship, hospitality, advertising and other related revenues, are
forecasted to decrease in the mid- to high single digits.
-- From an expense standpoint, direct expenses - Prize & Point Fund
Monies and NASCAR sanction fees; Motorsports related expenses; and
Food, beverage & merchandise Expense - to decrease to the low single
digits.
Margins
ISC continues to expect non-GAAP earnings before interest, taxes, depreciation and amortization ("EBITDA")(1) margins, operating margins, and effective income tax rates for the 2010 full year to range as follows:
-- EBITDA Margin: 32% - 34% -- Operating Margin: 21% - 24% -- Effective Tax Rate: 38% - 39%
(1) EBITDA is a non-GAAP financial measure used by the Company as an important indicator of its operating margin.
In closing, Ms. France Kennedy added, "While our business is impacted by the macroeconomic environment, we still have significant top-line visibility with our contracted revenues. This combined with our improved efficiencies will ensure that our business will continue to generate substantial cash flow to fund capital expenditures, pay down debt and return capital to shareholders.
"We remain a leader in motorsports entertainment. Our premier venues across North America host successful events nearly every month of the year. Despite economic challenges, we continue to provide unmatched value to our marketing partners while delivering lasting memories to our guests. I am confident that once the macroeconomic situation improves to a level where new jobs are created, we will have the ability over time to grow our revenues back to levels of only a few years ago."
Conference Call Details
The management of ISC will host a conference call today with investors at 9:00 a.m. Eastern Time. To participate, dial toll free (888) 694-4641 five to ten minutes prior to the scheduled start time and request to be connected to the ISC earnings call, ID number 83599102. A live Webcast will also be available at that time on the Company's Web site, www.internationalspeedwaycorporation.com, under the "Investor Relations" section.
A replay will be available two hours after the end of the call through midnight Thursday, July 22, 2010. To access, dial toll free (800) 642-1687 and enter the code 83599102, or visit the "Investor Relations" section of the Company's Web site.
International Speedway Corporation is a leading promoter of motorsports activities, currently promoting more than 100 racing events annually as well as numerous other motorsports-related activities. The Company owns and/or operates 13 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; Auto Club Speedway of Southern California(SM) near Los Angeles; Kansas Speedway® in Kansas City, Kansas; Phoenix International Raceway® in Arizona; Chicagoland Speedway® and Route 66 Raceway(SM) near Chicago, Illinois; Homestead-Miami Speedway(SM) in Florida; Martinsville Speedway® in Virginia; Darlington Raceway® in South Carolina; and Watkins Glen International® in New York. In addition, ISC promotes major motorsports activities in Montreal, Quebec, through its subsidiary, Stock-Car Montreal.
The Company also owns and operates MRN® Radio, the nation's largest independent sports radio network; the DAYTONA 500 Experience(SM), the "Ultimate Motorsports Attraction" in Daytona Beach, Florida, and official attraction of NASCAR®; and Americrown Service Corporation(SM), a subsidiary that provides catering services, food and beverage concessions, and produces and markets motorsports-related merchandise. In addition, ISC has an indirect 50 percent interest in 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 www.internationalspeedwaycorporation.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-Qs. 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.
(Tables Follow)
Consolidated Statements of Operations
(In Thousands, Except Share and Per Share Amounts)
Three Months Ended
May 31, May 31,
2009 2010
-------- --------
(Unaudited)
REVENUES:
Admissions, net $43,680 $35,695
Motorsports related 92,908 91,756
Food, beverage and merchandise 13,392 11,968
Other 2,398 2,747
----- -----
152,378 142,166
EXPENSES:
Direct:
Prize and point fund monies and
NASCAR 35,390 35,201
sanction fees
Motorsports related 31,953 32,115
Food, beverage and merchandise 9,249 8,780
General and administrative 25,569 25,909
Depreciation and amortization 18,489 18,425
Impairment of long-lived assets 15 433
120,665 120,863
------- -------
Operating income 31,713 21,303
Interest income 230 38
Interest expense (5,509) (5,142)
Equity in net loss from equity
investments (57,274) (474)
Other income 163 -
--- ---
(Loss) income from continuing
operations before income taxes (30,677) 15,725
Income taxes 1,018 5,463
----- -----
(Loss) income from continuing
operations (31,695) 10,262
Loss from discontinued operations (45) -
Net (loss) income $(31,740) $10,262
-------- -------
Basic earnings per share:
(Loss) income from continuing
operations $(0.65) $0.21
Loss from discontinued operations - -
Net (loss) income $(0.65) $0.21
------ -----
Diluted earnings per share:
(Loss) income from continuing
operations $(0.65) $0.21
Loss from discontinued operations - -
Net (loss) income $(0.65) $0.21
------ -----
Dividends per share $0.14 $0.16
----- -----
Basic weighted average shares
outstanding 48,565,438 48,151,840
---------- ----------
Diluted weighted average shares
outstanding 48,565,438 48,243,168
---------- ----------
Six Months Ended
May 31, May 31,
2009 2010
-------- --------
(Unaudited)
REVENUES:
Admissions, net $91,516 $74,232
Motorsports related 195,442 190,314
Food, beverage and merchandise 26,801 24,367
Other 4,738 5,279
----- -----
318,497 294,192
EXPENSES:
Direct:
Prize and point fund monies and
NASCAR 69,532 68,076
sanction fees
Motorsports related 61,062 59,862
Food, beverage and merchandise 18,726 17,267
General and administrative 50,504 50,492
Depreciation and amortization 36,880 36,784
Impairment of long-lived assets 85 656
236,789 233,137
------- -------
Operating income 81,708 61,055
Interest income 694 100
Interest expense (11,779) (10,755)
Equity in net loss from equity
investments (58,913) (1,549)
Other income 334 -
--- ---
(Loss) income from continuing
operations before income taxes 12,044 48,851
Income taxes 18,551 13,102
------ ------
(Loss) income from continuing
operations (6,507) 35,749
Loss from discontinued
operations (87) (47)
Net (loss) income $(6,594) $35,702
------- -------
Basic earnings per share:
(Loss) income from continuing
operations $(0.13) $0.74
Loss from discontinued
operations - -
Net (loss) income $(0.13) $0.74
------ -----
Diluted earnings per share:
(Loss) income from continuing
operations $(0.13) $0.74
Loss from discontinued
operations - -
Net (loss) income $(0.13) $0.74
------ -----
Dividends per share $0.14 $0.16
----- -----
Basic weighted average shares
outstanding 48,557,010 48,209,102
---------- ----------
Diluted weighted average shares
outstanding 48,557,010 48,312,954
---------- ----------
Consolidated Balance Sheets
(In Thousands, Except Share and Per Share Amounts)
November 30,
2009 May 31, 2009 May 31, 2010
------------- ------------ ------------
ASSETS (Unaudited)
Current Assets:
Cash and cash
equivalents $158,572 $146,336 $166,634
Short-term
investments 200 200 200
Restricted cash - 802 -
Receivables, less
allowance 41,934 66,897 48,462
Receivables from
Internal Revenue
Service - 111,984 -
Inventories 2,963 4,080 3,840
Income taxes
receivable 4,015 - -
Deferred income
taxes 2,172 2,191 2,420
Prepaid expenses
and other current
assets 8,100 20,138 15,314
----- ------ ------
Total Current
Assets 217,956 352,628 236,870
Property and
Equipment, net 1,353,636 1,334,777 1,376,294
Other Assets:
Long-term
restricted cash
and investments 10,144 26,859 2,201
Equity investments - 18,825 26,673
Intangible assets,
net 178,610 178,790 178,610
Goodwill 118,791 118,791 118,791
Other 29,766 21,202 9,335
------ ------ -----
337,311 364,467 335,610
------- ------- -------
Total Assets $1,908,903 $2,051,872 $1,948,774
---------- ---------- ----------
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Current
Liabilities:
Current portion of
long-term debt $3,387 $3,060 $54,856
Accounts payable 18,801 21,026 22,049
Deferred income 63,999 151,925 113,184
Income taxes
payable 8,668 3,735 1,140
Other current
liabilities 19,062 22,113 23,384
------ ------ ------
Total Current
Liabilities 113,917 201,859 214,613
Long-Term Debt 343,793 421,019 266,302
Deferred Income
Taxes 247,743 237,089 262,265
Long-Term Tax
Liabilities 20,917 22,543 7,263
Long-Term
Deferred Income 12,775 13,327 11,663
Other Long-Term
Liabilities 30,481 23,517 30,017
Commitments and
Contingencies - - -
Shareholders'
Equity:
Class A Common
Stock, $.01 par
value, 80,000,000 278 278 275
shares authorized
Class B Common
Stock, $.01 par
value, 40,000,000 205 207 205
shares authorized
Additional paid-
in capital 493,765 497,496 482,973
Retained earnings 665,274 651,957 693,270
Accumulated other
comprehensive
loss (20,245) (17,420) (20,072)
------- ------- -------
Total
Shareholders'
Equity 1,139,277 1,132,518 1,156,651
Total Liabilities
and Shareholders'
Equity $1,908,903 $2,051,872 $1,948,774
---------- ---------- ----------
Consolidated Statements of Cash Flows
(In Thousands)
Six Months Ended
May 31, May 31,
2009 2010
-------- --------
OPERATING ACTIVITIES (Unaudited)
Net (loss) income $(6,594) $35,702
Adjustments to reconcile net
(loss) income to net cash
provided by
operating activities:
Depreciation and amortization 36,880 36,784
Stock-based compensation 1,187 833
Amortization of financing costs 270 291
Amortization of interest rate swap 2,506
Deferred income taxes 4,650 3,253
Loss from equity investments 58,913 1,549
Impairment of long-lived assets,
non cash 85 656
Other, net (334) 4
Changes in operating assets and
liabilities:
Receivables, net (19,380) (6,528)
Inventories, prepaid expenses and
other assets (13,445) (9,660)
Accounts payable and other
liabilities (5,836) (9,745)
Deferred income 48,057 48,073
Income taxes (10,533) (6,731)
------- ------
Net cash provided by operating
activities 93,920 96,987
INVESTING ACTIVITIES
Capital expenditures (41,382) (51,149)
Proceeds from equity investments/
affiliates 12,500
Equity investments and advance to
affiliates (432) (14,174)
Decrease in restricted cash 14,931 7,943
Other, net (1,016)
------ ---
Net cash used in investing
activities (15,399) (57,380)
FINANCING ACTIVITIES
Payment of long-term debt (150,859) (26,090)
Reacquisition of previously issued
common stock (246) (5,455)
---- ------
Net cash used in financing
activities (151,105) (31,545)
-------- -------
Net (decrease) increase in cash
and cash equivalents (72,584) 8,062
Cash and cash equivalents at
beginning of year 218,920 158,572
------- -------
Cash and cash equivalents at end
of year $146,336 $166,634
-------- --------
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