DAYTONA BEACH, Fla.,
April 7, 2015 /PRNewswire/ -- International Speedway
Corporation (NASDAQ Global Select Market: ISCA; OTC Bulletin Board:
ISCB) ("ISC") today reported financial results for its fiscal
first quarter ended February 28, 2015.
"We are pleased to report first quarter results exceeding our
expectations, delivering growth in all revenue categories and
non-GAAP earnings per share," stated ISC Chief Executive Officer
Lesa France Kennedy.
"Attendance was up for the 57th running of the Daytona 500, where
fans enjoying a beautiful Florida day, cheered Joey Logano to Gatorade Victory Lane,
catapulting the No. 22 Penske Racing Pennzoil Ford into contention
for a spot in the Challenger Round of the NASCAR Sprint Cup
Championship Chase."
"Also during Budweiser Speedweeks 2015, which included the Rolex
24 At DAYTONA, fans received a preview of DAYTONA Rising with
approximately 40,000 new seats available on the west side of the
frontstretch. Feedback was overwhelmingly positive regarding the
new facility, with guests singling out escalators, wider, more
comfortable seats and premier sight lines among their favorite new
amenities."
The Hollywood Casino at Kansas Speedway further contributed to
the year over year first quarter earnings as we continue to
increase market share in the region.
France Kennedy concluded, "The
2015 season is off to a great start and we are hopeful that, with
continuing improvement in consumer sentiment and great competition
on track, we will continue to build on the momentum generated
during the 2014 Chase and Speedweeks."
First Quarter Comparison
Total revenue for the first quarter ended February 28, 2015
was approximately $136.6 million,
compared to revenue of approximately $131.8
million in the prior-year period. Operating income was
approximately $21.6 million
during the period compared to an operating income of approximately
$22.3 million in the first quarter of
fiscal 2014. Year-over-year comparability was impacted
by:
- On January 31, 2014, Speedway
Motorsports, Inc. ("SMI") abandoned its interest and rights in our
50/50 partnership Motorsports Authentics, LLC ("MA"), consequently
bringing the Company's ownership of MA to 100.0 percent. MA's
operations are included in the Company's consolidated operations
subsequent to the date of SMI's abandonment. Prior to January 31, 2014, MA was accounted for as an
equity investment in the Company's financial statements. As a
result of SMI's abandonment of their interest in MA, the Company
recorded other income of approximately $5.4
million representing the fair value of MA, over the carrying
value, as of January 31, 2014. In
addition the Company recognized tax benefits relating to MA of
approximately $1.8 million for the
three months ended February 28, 2014.
There was no comparable event in the same period of fiscal
2015;
- In 2015, NASCAR and NASCAR Team Properties announced a 10-year
agreement with Fanatics Retail Group Concessions ("Fanatics") to
operate NASCAR's entire at-track merchandise business and deliver
fans an enhanced, experiential at-track shopping environment. As
part of the agreement, Fanatics will be the exclusive retailer of
NASCAR and driver merchandise trackside for all 38 NASCAR Sprint
Cup Series events. In addition, Fanatics also contracted with ISC
for 10 years of exclusive retail merchandise rights for its track
trademarks and certain other intellectual property at all ISC
tracks. Consequently, ISC's wholly owned subsidiaries, Americrown
and MA, beginning in January 2015,
will no longer provide at-track merchandise to fans at motorsports
events and therefore will no longer recognize related sales
revenues and operating expenses. Instead, the Company will receive
a percentage of sales from Fanatics, recorded as part of Food,
Beverage and Merchandise Revenue. For the first quarter of fiscal
2015, ISC recognized revenue and expense related to merchandise
operations of approximately $8.8
million and $8.5 million,
respectively. Included in this amount are $0.9 million of commission from Fanatics and
non-recurring transactions of approximately $4.9 million for inventory sold to Fanatics and
$2.9 million of wholesale
transactions by MA, which drive a total of $8.3 million in expense including product costs
associated with these transactions, costs related to the transition
of trackside merchandise operations to Fanatics, as well as partial
period operating expenses incurred prior to the transition of
Americrown and MA merchandise operations, for which there was no
related revenue. This compares to first quarter of fiscal 2014,
where ISC recognized revenue and expense related to merchandise
operations of approximately $7.3
million and $5.5 million,
respectively, which included direct sales of trackside merchandise
and excludes the partial period pre-consolidation operation of
Motorsports Authentics prior to SMI's abandonment of its MA
interest.
- During the three months ended February
28, 2015, the Company recognized approximately $0.3 million, or less than $0.01 per diluted share, in marketing and
consulting costs that are included in general and administrative
expense related to DAYTONA Rising. During the three months ended
February 28, 2014, the Company
recognized approximately $0.4
million, or less than $0.01
per diluted share, of similar costs;
- During the three months ended February
28, 2015, the Company recognized approximately $3.9 million, or $0.05 per diluted share, of accelerated
depreciation that was recorded due to shortening the service lives
of certain assets associated with DAYTONA Rising and other
projects. During the three months ended February 28, 2014, the Company recognized
approximately $3.0 million, or
$0.04 per diluted share, of similar
costs related to DAYTONA Rising and capacity management
initiatives;
- During the three months ended February
28, 2015, the Company recognized approximately $1.6 million, or $0.02 per diluted share, of losses primarily
attributable to demolition and/or asset relocation costs in
connection with DAYTONA Rising and other capital improvements.
During the three months ended February 28,
2014, the Company recognized approximately $2.2 million, or $0.03 per diluted share, of similar losses in
connection with DAYTONA Rising and capacity management initiatives;
and
- During the three months ended February
28, 2015, the Company capitalized approximately $2.6 million, or $0.03 per diluted share, of interest related to
DAYTONA Rising. During the three months ended February 28, 2014, the Company recognized
approximately $0.9 million, or
$0.01 per diluted share, of similar
interest capitalization.
Net income for the first quarter ended February 28, 2015
was approximately $15.0 million, or
$0.32 per diluted share, compared to
net income of approximately $19.9
million, or $0.43 per diluted
share, in the prior year period. Excluding certain marketing
and consulting costs incurred associated with DAYTONA Rising,
accelerated depreciation, losses associated with the retirements of
certain other long-lived assets, DAYTONA Rising project capitalized
interest, and net gain on sale of certain assets, non-GAAP (defined
below) net income for the first quarter of 2015 was $16.9 million, or $0.36 per diluted share. Non-GAAP net
income for the fiscal first quarter of 2014 was $15.5 million, or $0.33 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.
We believe such non-GAAP information is useful and meaningful,
and is used by investors to assess our core operations, which
consist of the ongoing promotion of racing events at our major
motorsports entertainment facilities. Such non-GAAP information
identifies and separately displays and adjusts for items that are
not considered to be reflective of our continuing core operations
at our motorsports entertainment facilities. We believe that such
non-GAAP information improves the comparability of the operating
results and provides a better understanding of the performance of
our core operations for the periods presented. We use 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.
The adjustments for 2014 relate to marketing and consulting
costs incurred associated with DAYTONA Rising, accelerated
depreciation, losses associated with the retirements of certain
other long-lived assets, DAYTONA Rising project capitalized
interest, MA fair value adjustment and income tax benefits, and net
gain on sale of certain assets.
The adjustments for 2015 relate to marketing and consulting
costs incurred associated with DAYTONA Rising, accelerated
depreciation, losses associated with the retirements of certain
other long-lived assets, DAYTONA Rising project capitalized
interest, and net gain on sale of certain assets.
|
Three Months
Ended
|
|
February 28,
2014
|
|
February 28,
2015
|
|
(Unaudited)
|
|
(In Thousands, Except
Per Share Amounts)
|
Net income
|
$
|
19,895
|
|
|
$
|
14,953
|
|
Adjustments, net of
tax:
|
|
|
|
DAYTONA Rising
project
|
235
|
|
|
184
|
|
Accelerated
depreciation
|
1,821
|
|
|
2,372
|
|
Losses on asset
retirements
|
1,350
|
|
|
963
|
|
DAYTONA Rising
project capitalized interest
|
(576)
|
|
|
(1,571)
|
|
MA fair value
adjustment and income tax benefits
|
(7,212)
|
|
|
—
|
|
Net gain on sale of
certain assets
|
(7)
|
|
|
(16)
|
|
Non-GAAP net
income
|
$
|
15,506
|
|
|
$
|
16,885
|
|
Per share
data:
|
|
|
|
Diluted earnings per
share
|
$
|
0.43
|
|
|
$
|
0.32
|
|
Adjustments, net of
tax:
|
|
|
|
DAYTONA Rising
project
|
0.00
|
|
|
0.00
|
|
Accelerated
depreciation
|
0.04
|
|
|
0.05
|
|
Losses on asset
retirements
|
0.03
|
|
|
0.02
|
|
DAYTONA Rising
project capitalized interest
|
(0.01)
|
|
|
(0.03)
|
|
MA fair value
adjustment and income tax benefits
|
(0.16)
|
|
|
—
|
|
Net gain on sale of
certain assets
|
0.00
|
|
|
0.00
|
|
Non-GAAP diluted
earnings per share
|
$
|
0.33
|
|
|
$
|
0.36
|
|
On the corporate partnership front, at this point for fiscal
2015 the Company has agreements in place for approximately 88.0
percent of its gross marketing partnership revenue target and open
event entitlements for one NASCAR Sprint Cup, two Xfinity and one
Camping World Truck series events. This is compared to last
year at this time when the Company had approximately 87.0 percent
of gross marketing partnership revenue target sold and open
entitlements for two NASCAR Sprint Cup, three NASCAR Xfinity and
one Camping World Truck series events.
External Growth and Other Initiatives
Capital Spending
The Company competes for the consumers' discretionary dollar
with many entertainment options such as concerts and other major
sporting events, not just other motorsport events. To better meet
its customers' expectations, ISC is committed to improving the
guest experience at its facilities through on-going capital
improvements that position it for long-term growth.
In June 2013, ISC's board of
directors endorsed a capital allocation plan for fiscal 2013
through fiscal 2017 to not exceed $600.0
million in capital expenditures over that period. The
five-year capital expenditure plan encompasses all the capital
expenditures for ISC's 13 major motorsports facilities, including
DAYTONA Rising and ONE DAYTONA. Of the endorsed five-year
capital expenditure plan, DAYTONA Rising will account for
approximately $400.0 million of the
$600.0 million, excluding capitalized
interest.
With the majority of the capital expenditures for DAYTONA Rising
occurring in fiscal 2014 and 2015, the Company estimates capital
expenditures, exclusive of capitalized interest, across all of
ISC's existing facilities will be approximately $200.0 million for fiscal 2015, based on the
timing of construction payments. With a target completion
date for DAYTONA Rising in January
2016, capital expenditures will then decrease significantly
with an expectation of capital expenditures for projects at all of
ISC's existing facilities, exclusive of capitalized interest, to be
between $60.0 to $70.0 million in
fiscal 2016 and fiscal 2017.
For the three months ended February 28, 2015, the Company
spent approximately $43.4 million on capital expenditures for
projects at its existing facilities, of which $37.5 million is related to DAYTONA Rising, with
the remainder associated with a variety of other improvements and
renovations. In comparison, the Company spent approximately
$31.2 million for the three
months ended February 28, 2014, on capital expenditures for
projects at its existing facilities.
The Company reviews its capital expenditure program periodically
and modifies it as required to meet current business needs.
DAYTONA Rising: Reimagining an American Icon
DAYTONA Rising is the redevelopment of the frontstretch of
Daytona International Speedway, ISC's 56-year-old flagship
motorsports facility, to enhance the event experience for its fans,
marketing partners, broadcasters and the motorsports industry.
The vision for DAYTONA Rising places an emphasis on enhancing
the complete fan experience, beginning with five expanded and
redesigned fan entrances, or injectors. Each injector will
lead directly to a series of escalators and elevators that will
transport fans to any of three different concourse levels, each
featuring spacious and strategically-placed social "neighborhoods"
along the nearly mile-long frontstretch.
A total of 11 neighborhoods, each measuring the size of a
football field, will enable fans to meet and socialize during
events without ever missing any on-track action, thanks to dozens
of strategically-placed video screens in every neighborhood. The
central neighborhood, dubbed the "World Center of Racing," features
open sight-lines enabling fans to catch all the on-track action
while celebrating the history of Daytona International Speedway and
its many unforgettable moments throughout more than 50 years of
racing.
Every seat in Daytona's frontstretch will be replaced with
wider, more comfortable seating that will provide pristine
sight-lines. There will also be twice as many restrooms and
three times as many concessions throughout the facility.
During Budweiser Speedweeks 2015, fans experienced some of DAYTONA
Rising's new amenities including first ever vertical
transportation, approximately 40,000 new grandstand seats on the
frontstretch near Turn 1, and new concessions and restrooms.
Since commencement of construction, two Founding Partners have
been announced, Toyota and Florida Hospital, with partnerships
extending over 10 years. Founding partners receive
sponsorship rights for a dedicated injector, as well as
approximately 20,000 square feet of innovative fan engagement space
that will enhance the overall guest experience, and nearly 50,000
square feet of interior and exterior branding space. The Company is
continuing discussions with potential partners and expects to
announce additional partnerships related to the project in the near
future.
In February 2015, the Company
entered into a long-term extension of Official Sponsor of Daytona
with NextEra Energy Resources that includes the NASCAR Camping
World Truck race entitlement. The agreement extends the Company's
renewable energy credit purchases designed to off-set Daytona's
carbon footprint and, with the newly signed agreement with NextEra
Energy and Florida Power &
Light, adds three new on-site solar arrays. These structures
will serve as aesthetically-pleasing fan amenities, such as covered
parking and shade structures, and make DAYTONA Rising a top-five
sports property in the U.S. for clean energy generation. Also
recently announced is a partnership that extends the iconic Rolex
brand's role as the title sponsor of the annual Rolex 24 At Daytona
sports car race and Official Timepiece of Daytona International
Speedway. The expanded partnership will also afford Rolex naming
rights for the new DAYTONA Rising frontstretch lounge and suite
level as well as enhanced branding opportunities throughout the
redeveloped Speedway.
The Company currently anticipates DAYTONA Rising to cost
approximately $400.0 million,
excluding capitalized interest, which it expects to fund from cash
on hand, cash from its operations, and it may use borrowings on its
credit facility for a limited period of time. In June 2014, Florida Governor Rick Scott signed House Bill 7095 creating
the Florida Sports Development Program, establishing a process for
distributing state tax revenue for the construction or improvement
of professional sports franchise facilities. The DAYTONA Rising
project is among the eligible applicants to receive sales tax
incentives based on the project's capital investment and amount of
sales tax generated by the facility. The Company filed its
application and received approval from the state's Department of
Economic Opportunity. The new program could potentially provide
additional capital for the project. The Company, along with
other applicants, is awaiting final decision on the allocation of
available funds.
Total spending incurred for DAYTONA Rising was $37.5 million during the three months ended
February 28, 2015. Based on the Company's current
expectations of DAYTONA Rising, it has identified existing assets
that are expected to be impacted by the redevelopment and that
those assets will require accelerated depreciation, or losses on
asset retirements, totaling approximately $50.0 million over the approximate 26-month
project time span. During the three months ended February 28,
2015, the Company recognized accelerated depreciation and losses on
disposal of assets totaling approximately $4.3 million, with a total of approximately
$32.4 million recognized since the
inception of the project.
Despite the Company not anticipating the need for additional
long-term debt to fund this project, accounting rules dictate that
the Company capitalizes a portion of the interest on existing
outstanding debt during the construction period. The Company
estimates it will record approximately $11.0
million to $13.0 million of capitalized interest from fiscal
2013 through fiscal 2016. As a result of these assets going
into service during fiscal 2015 and 2016, depreciation expense
related directly to DAYTONA Rising will increase incrementally by
approximately $12.0 million to $14.0
million in fiscal 2015, and an additional $9.0 million to $10.0
million in fiscal 2016, respectively. Total depreciation
expense for fiscal 2015 is estimated to be between approximately
$93.0 million and $97.0 million, and approximately
$100.0 million to $105.0 million in fiscal 2016, and then
decreasing, due to lower capital spending, to approximately
$85.0 million to $90.0 million
beginning in fiscal 2019.
The Company expects that by providing its fans with a better
experience as well as an expansive platform for its marketing
partners, including an elevated hospitality experience, DAYTONA
Rising, upon completion in 2016, is expected to provide an
immediate incremental lift in Daytona International Speedway's
revenues of approximately $20.0
million, and earnings before interest, taxes, depreciation
and amortization ("EBITDA") lift of approximately $15.0 million with a mid-single-digit growth
rate. The Company also currently anticipates the project to be
accretive to its net income per share within three years of
completion. While these forward looking amounts are management's
projections and the Company believes they are reasonable, its
actual results may vary from these estimates due to unanticipated
changes in projected attendance, lower than expected ticket prices,
or lower than forecasted corporate sponsorships. The Company does
not know whether these expectations will ultimately prove correct
and actual revenues and operating results may differ materially
from these estimates.
ONE DAYTONA
In June 2013, the Company entered
into a 50/50 joint venture with Atlanta based Jacoby Development, Inc. ("JDI")
to develop ONE DAYTONA, the proposed premier mixed use and
entertainment destination across from Daytona International
Speedway. In March 2015, the
Company announced a change in its business relationship with JDI
and that we assumed 100.0 percent interest in ONE DAYTONA.
JDI remains involved in the project through a consultative
arrangement.
Also in March 2015, the Company
announced RED Legacy, a leading national development group, as
development consultant for ONE DAYTONA. Intensely focused on
innovative destination retail and mixed-use projects, RED Legacy
will work closely with ISC's development resources on the project.
The RED Legacy team is a natural fit for the project, having served
as the developer for Legends Outlets Kansas City, a mixed-used
retail destination across from the Company's Kansas Speedway.
Shaner Hotels and Prime Hospitality Group ("PHG") have been
selected as hotel partners. Shaner Hotels and PHG are planning a
145-room full-service boutique property and are working with global
hospitality leader Marriott International to bring an exclusive
Marriott Autograph Collection hotel to Daytona Beach and ONE DAYTONA.
The Company continues to refine the conceptual design for the
first phase of ONE DAYTONA. Bass Pro Shops®, America's most popular
outdoor store, and Cobb Theatres, the highly respected
Southeastern-based exhibitor, have executed leases to anchor ONE
DAYTONA. The Company is in active discussions with other potential
tenants for ONE DAYTONA. The Company has approved land use
entitlements for ONE DAYTONA to allow for up to 1.4
million square feet of retail/dining/entertainment, 2,500
seats in a movie theater, 660 hotel rooms, 1,350 units of
residential, 567,000 square feet of additional office space
and 500,000 square feet of commercial/industrial space.
A Community Development District ("CDD") has been established
for the purpose of installing and maintaining public infrastructure
at ONE DAYTONA. The CDD is a local, special purpose government
framework authorized by Chapter 190 of the Florida Statutes for
managing and financing infrastructure to support community
development.
The CDD has negotiated agreements with the City of Daytona Beach and Volusia County for a total of $40.0 million in incentives to finance a portion
of the estimated $53.0 million in
infrastructure required to move forward with the ONE DAYTONA
project. The Company is currently proceeding with the leasing phase
of the project while simultaneously completing the various
necessary requirements for the CDD to access the incentives to
start infrastructure work.
Hollywood Casino at Kansas Speedway
Kansas Entertainment, LLC, ("Kansas Entertainment") a 50/50
joint venture of Penn Hollywood Kansas, Inc. ("Penn"), a subsidiary
of Penn National Gaming, Inc. and Kansas Speedway Development
Corporation ("KSDC"), a wholly owned indirect subsidiary of ISC,
operates the Hollywood-themed
casino and branded destination entertainment facility, overlooking
turn two at Kansas Speedway. Penn, as the managing member of
Kansas Entertainment, is responsible for the operations of the
casino.
For the first three months of the Company's 2015 fiscal year, it
has received cash distributions from the casino totaling
approximately $5.5 million.
Subsequent to the quarter, the Company received an additional cash
distribution of approximately $8.0
million. The Company expects, for its 2015 fiscal year, that
its share of the cash flow from the casino's operations will be
approximately $22.0 million to $24.0
million.
The success to date of the casino's operations has led our
casino joint venture to consider the next phase of development, a
Hollywood Casino Hotel. Per the Development Agreement with
the Unified Government of Wyandotte
County/Kansas City, Kansas
("Unified Government"), the casino is subject to a 1.0 percent
of gross gaming revenue payment if it had not commenced
construction on the adjacent hotel by the second anniversary of its
opening, which was February 2014. In June 2014, the Unified Government approved an
extension of the construction commencement date to give the Unified
Government time to complete a feasibility analysis for a new
convention center that could be integrated with the hotel.
Recently, the Unified Government decided not to proceed with the
integrated development, leaving Kansas Entertainment until
April 10, 2015, to commence
construction on the adjacent hotel, prior to the enforcement of the
aforementioned payment.
The final decision to move forward with the proposed hotel will
be market-based and subject to approval by Kansas Entertainment's
board. Should Kansas Entertainment ultimately decide not to
build the hotel, it will be subject to the payment from the second
anniversary of its opening forward. Accordingly, beginning
February 2014, Kansas Entertainment
began recording expense equal to 1.0 percent of gross gaming
revenue since it did not proceed with construction of a hotel by
the original deadline. Included in the Company's income from
equity investment amounts for the three months ended
February 28, 2015 is approximately $0.2
million expense related to this payment, for a total of
approximately $0.7 million recorded
since February 2014. At this time it is unlikely hotel
construction will commence prior to the April 10, 2015 deadline and that Kansas
Entertainment will be compelled to pay the accrued payment from the
second anniversary of opening forward until such time as it may
commence construction on a proposed hotel adjacent to the gaming
facility.
Outlook
ISC reiterates its previously announced 2015 full year non-GAAP
guidance.
- Revenue: $615.0 million to $630.0
million
- EBITDA margin: 29.5% to 31.0%
- Operating margin: 15.0% to 16.5%
- Diluted earnings per share: $1.10 to
$1.30
The Company also provided guidance for EBITDA to range between
$180.0 million to $195.0
million. Incremental to ISC's EBITDA estimate are cash
distributions from its equity investment in the Hollywood Casino,
estimated to range between $22.0 million to
$24.0 million.
ISC's fiscal 2015 non-GAAP earnings per share guidance excludes
any income statement impact attributable to the completion of
the DAYTONA Rising project, including non-capitalized costs and
accelerated depreciation for removal of assets not fully
depreciated, partially offset by capitalized interest
expense. Also excluded are potential non-capitalized costs or
charges that could be recognized related to our ONE DAYTONA
development, start up and/or financing costs should our Hollywood
Casino at Kansas Speedway joint venture pursue construction of an
adjacent hotel, any costs related to legal settlements; gain or
loss on sale of fixed assets; accelerated depreciation and future
loss on retirements or relocation of certain long-lived assets
which could be recorded as part of capital improvements other than
DAYTONA Rising resulting in removal of assets prior to the end of
their actual useful life.
In closing, Ms. France Kennedy
stated, "We maintain a solid financial position, developed over
many years, that affords us the ability to follow our disciplined
capital allocation strategy and maintain our leadership position in
the motorsports industry. Building on this foundation we will
continue to execute our five year, $600 million capital
allocation plan through 2017. For the future, we are well
positioned to balance the strategic capital needs of our business
with returning capital to our shareholders."
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 69156988.
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 Tuesday, April 21, 2015. To access, dial
(855) 859-2056 and enter the code 69156988, 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 CaliforniaSM
near Los Angeles; Kansas Speedway®
in Kansas City, Kansas; Phoenix
International Raceway® in Arizona;
Chicagoland Speedway® and Route 66 RacewaySM near
Chicago, Illinois;
Homestead-Miami SpeedwaySM in Florida; Martinsville Speedway® in
Virginia; Darlington Raceway® in
South Carolina; and Watkins Glen
International® in New York.
The Company also owns and operates Motor Racing
NetworkSM, the nation's largest independent sports radio
network, and Americrown Service CorporationSM, a
subsidiary that provides catering services, food and beverage
concessions, and with its subsidiary Motorsports Authentics,
produces and markets motorsports-related merchandise. In
addition, the Company has a 50 percent interest in the Hollywood
Casino at Kansas Speedway. 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
|
|
|
February 28,
2014
|
|
February 28,
2015
|
|
|
(Unaudited)
|
REVENUES:
|
|
|
|
|
Admissions,
net
|
|
$
|
30,055
|
|
|
$
|
30,544
|
|
Motorsports
related
|
|
85,228
|
|
|
87,431
|
|
Food, beverage and
merchandise
|
|
13,208
|
|
|
14,735
|
|
Other
|
|
3,298
|
|
|
3,842
|
|
|
|
131,789
|
|
|
136,552
|
|
EXPENSES:
|
|
|
|
|
Direct:
|
|
|
|
|
Prize and point fund
monies and NASCAR sanction fees
|
|
27,151
|
|
|
27,296
|
|
Motorsports
related
|
|
22,824
|
|
|
23,498
|
|
Food, beverage and
merchandise
|
|
10,102
|
|
|
12,443
|
|
General and
administrative
|
|
24,380
|
|
|
26,136
|
|
Depreciation and
amortization
|
|
22,773
|
|
|
24,009
|
|
Losses on asset
retirements
|
|
2,220
|
|
|
1,579
|
|
|
|
109,450
|
|
|
114,961
|
|
Operating
income
|
|
22,339
|
|
|
21,591
|
|
Interest
income
|
|
23
|
|
|
19
|
|
Interest
expense
|
|
(3,133)
|
|
|
(1,468)
|
|
Equity in net income
from equity investments
|
|
1,619
|
|
|
3,244
|
|
Other
|
|
5,458
|
|
|
26
|
|
Income before income
taxes
|
|
26,306
|
|
|
23,412
|
|
Income
taxes
|
|
6,411
|
|
|
8,459
|
|
Net income
|
|
$
|
19,895
|
|
|
$
|
14,953
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic and
diluted
|
|
$
|
0.43
|
|
|
$
|
0.32
|
|
Basic weighted
average shares outstanding
|
|
46,515,208
|
|
|
46,583,832
|
|
Diluted weighted
average shares outstanding
|
|
46,530,016
|
|
|
46,596,605
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
|
20,059
|
|
|
$
|
15,117
|
|
Consolidated
Balance Sheets
|
(In Thousands, Except
Share and Per Share Amounts)
|
|
|
|
November 30,
2014
|
|
February 28,
2014
|
|
February 28,
2015
|
|
|
(Unaudited)
|
ASSETS
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
158,847
|
|
|
$
|
192,598
|
|
|
$
|
161,864
|
|
Receivables, less
allowance
|
|
27,598
|
|
|
81,711
|
|
|
83,281
|
|
Inventories
|
|
4,030
|
|
|
7,468
|
|
|
2,629
|
|
Income taxes
receivable
|
|
6,202
|
|
|
1,273
|
|
|
862
|
|
Deferred income
taxes
|
|
2,789
|
|
|
3,301
|
|
|
2,789
|
|
Prepaid expenses and
other current assets
|
|
8,099
|
|
|
18,527
|
|
|
12,999
|
|
Total Current
Assets
|
|
207,565
|
|
|
304,878
|
|
|
264,424
|
|
|
|
|
|
|
|
|
Property and
Equipment, net
|
|
1,381,190
|
|
|
1,285,920
|
|
|
1,395,699
|
|
Other
Assets:
|
|
|
|
|
|
|
Equity
investments
|
|
122,565
|
|
|
131,431
|
|
|
118,972
|
|
Intangible assets,
net
|
|
178,629
|
|
|
179,315
|
|
|
178,627
|
|
Goodwill
|
|
118,791
|
|
|
118,791
|
|
|
118,791
|
|
Other
|
|
68,911
|
|
|
72,707
|
|
|
65,917
|
|
|
|
488,896
|
|
|
502,244
|
|
|
482,307
|
|
Total
Assets
|
|
$
|
2,077,651
|
|
|
$
|
2,093,042
|
|
|
$
|
2,142,430
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
Current portion of
long-term debt
|
|
$
|
3,435
|
|
|
$
|
2,908
|
|
|
$
|
3,366
|
|
Accounts
payable
|
|
41,491
|
|
|
31,114
|
|
|
35,038
|
|
Deferred
income
|
|
33,043
|
|
|
76,554
|
|
|
85,934
|
|
Other current
liabilities
|
|
18,813
|
|
|
19,773
|
|
|
20,147
|
|
Total Current
Liabilities
|
|
96,782
|
|
|
130,349
|
|
|
144,485
|
|
|
|
|
|
|
|
|
Long-Term
Debt
|
|
268,311
|
|
|
271,420
|
|
|
268,118
|
|
Deferred Income
Taxes
|
|
354,276
|
|
|
373,022
|
|
|
357,413
|
|
Long-Term Deferred
Income
|
|
9,548
|
|
|
8,350
|
|
|
8,286
|
|
Other Long-Term
Liabilities
|
|
2,302
|
|
|
2,258
|
|
|
1,873
|
|
Commitments and
Contingencies
|
|
—
|
|
|
—
|
|
|
—
|
|
Shareholders'
Equity:
|
|
|
|
|
|
|
Class A Common
Stock, $.01 par value, 80,000,000 shares authorized
|
|
262
|
|
|
261
|
|
|
262
|
|
Class B Common
Stock, $.01 par value, 40,000,000 shares authorized
|
|
200
|
|
|
200
|
|
|
200
|
|
Additional paid-in
capital
|
|
447,518
|
|
|
445,526
|
|
|
448,224
|
|
Retained
earnings
|
|
902,433
|
|
|
866,130
|
|
|
917,386
|
|
Accumulated other
comprehensive loss
|
|
(3,981)
|
|
|
(4,474)
|
|
|
(3,817)
|
|
Total Shareholders'
Equity
|
|
1,346,432
|
|
|
1,307,643
|
|
|
1,362,255
|
|
Total Liabilities and
Shareholders' Equity
|
|
$
|
2,077,651
|
|
|
$
|
2,093,042
|
|
|
$
|
2,142,430
|
|
Consolidated
Statements of Cash Flows
|
(In
Thousands)
|
|
|
|
Three Months
Ended
|
|
|
February 28,
2014
|
|
February 28,
2015
|
|
|
(Unaudited)
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net income
|
|
$
|
19,895
|
|
|
$
|
14,953
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Gain on assumption of
controlling interest in equity investee
|
|
(5,447)
|
|
|
—
|
|
Depreciation and
amortization
|
|
22,773
|
|
|
24,009
|
|
Stock-based
compensation
|
|
429
|
|
|
706
|
|
Amortization of
financing costs
|
|
444
|
|
|
445
|
|
Interest received on
Staten Island note receivable
|
|
214
|
|
|
1,162
|
|
Deferred income
taxes
|
|
6,206
|
|
|
3,032
|
|
Income from equity
investments
|
|
(1,619)
|
|
|
(3,244)
|
|
Distribution from
equity investee
|
|
1,906
|
|
|
3,520
|
|
Loss on asset
retirements, non-cash
|
|
18
|
|
|
379
|
|
Other, net
|
|
(16)
|
|
|
(6)
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Receivables,
net
|
|
(54,518)
|
|
|
(55,683)
|
|
Inventories, prepaid
expenses and other assets
|
|
(11,743)
|
|
|
(3,748)
|
|
Accounts payable and
other liabilities
|
|
2,364
|
|
|
2,237
|
|
Deferred
income
|
|
40,621
|
|
|
51,629
|
|
Income
taxes
|
|
16,051
|
|
|
5,339
|
|
Net cash provided by
operating activities
|
|
37,578
|
|
|
44,730
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Capital
expenditures
|
|
(31,247)
|
|
|
(43,418)
|
|
Distribution from
equity investee and affiliate
|
|
2,594
|
|
|
1,980
|
|
Proceeds from sale of
Staten Island property
|
|
6,100
|
|
|
—
|
|
Cash included in
assumption of ownership interest in equity investee
|
|
4,686
|
|
|
—
|
|
Other, net
|
|
235
|
|
|
3
|
|
Net cash used in
investing activities
|
|
(17,632)
|
|
|
(41,435)
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Payment of long-term
debt
|
|
(175)
|
|
|
(278)
|
|
Net cash used in
financing activities
|
|
(175)
|
|
|
(278)
|
|
Net increase in cash
and cash equivalents
|
|
19,771
|
|
|
3,017
|
|
Cash and cash
equivalents at beginning of period
|
|
172,827
|
|
|
158,847
|
|
Cash and cash
equivalents at end of period
|
|
$
|
192,598
|
|
|
$
|
161,864
|
|
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SOURCE International Speedway Corporation