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Press release from PR Newswire

International Speedway Corporation Reports Financial Results For The First Quarter Of Fiscal 2013

Thursday, April 04, 2013

International Speedway Corporation Reports Financial Results For The First Quarter Of Fiscal 2013

07:30 EDT Thursday, April 04, 2013

~55th DAYTONA 500® was the Highest Rated Since 2008
~Company Reiterates Full-Year Financial Guidance

DAYTONA BEACH, Fla., April 4, 2013 /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, 2013.

(Logo:  http://photos.prnewswire.com/prnh/20091005/FL87045LOGO)

"The solid financial performance in the first quarter demonstrates the continued strength of not only our business but also the motorsports industry," stated ISC Chief Executive Officer Lesa France Kennedy. "Our first quarter results, which saw year-over-year growth in total revenues, benefited from a successful Budweiser Speedweeks at Daytona, highlighted by increased corporate sponsorship, hospitality and ancillary rights revenues. 'The Great American Race', with over 31 million people watching a portion of the race, was the highest-rated Daytona 500 since 2008.

"We continue to support NASCAR's Industry Action Plan on a number of fronts, which means meeting and exceeding our fans' expectations through on-going capital enhancements at our motorsports facilities, including at our iconic Daytona International Speedway.  We recognize the prominence of the Daytona 500, which is among the most valuable sporting event brands in the world, and it is essential that we focus on maintaining and growing its brand.  To accomplish this we are reviewing a proposed redevelopment project at the legendary speedway.  Elevating the live event experience and the value it represents to our race fans at Daytona, or any of our other major motorsports facilities, will improve attendance trends, which will ultimately increase corporate sales and influence the long-term health of broadcast media rights fees."

First Quarter Comparison

Total revenue for the first quarter ended February 28, 2013 was approximately $128.6 million, compared to revenue of approximately $127.4 million in the prior-year period.  Operating income was approximately $25.1 million during the period compared to approximately $29.7 million in the first quarter of fiscal 2012.  In addition to the macroeconomic challenges, quarter-over-quarter comparability was impacted by:

  • During the three months ended February 28, 2013, the Company expensed approximately 0.9 million, or $0.01 per diluted share, of certain ongoing carrying costs related to its Staten Island property. During the three months ended February 29, 2012, ISC expensed approximately $0.7 million, or $0.01 per diluted share, of similar costs.
  • During the three months ended February 28, 2013, the Company recognized approximately $0.6 million, or $0.01 per diluted share, related to a judgment following litigation involving certain ancillary facility operations.
  • During the three months ended February 28, 2013, the Company recognized approximately $1.5 million, or $0.02 per diluted share, of losses associated with the retirement of long-lived assets primarily attributable to the removal of assets not fully depreciated in connection with certain capital improvements.
  • For the three months ended February 28, 2013, the Company recognized $0.3 million in certain costs related to the potential Daytona redevelopment project.
  • For the three months ended February 28, 2013, the Company recognized approximately $1.0 million of income from equity investments associated with its Hollywood Casino at Kansas Speedway. During the three months ended February 29, 2012, ISC recognized a loss of approximately $0.3 million from this equity investment, which included results of operations beginning in February 2012, net of charges related to certain start up costs through the opening.
  •  During the first quarter of fiscal 2012, the Company recorded approximately $0.8 million, or $0.01 per diluted share, net gain on the sale of certain assets.   

Net income for the first quarter was approximately $13.5 million, or $0.29 per diluted share, compared to net income of approximately $17.1 million, or $0.37 per diluted share, in the prior year period.  Excluding certain carrying costs related to the Staten Island property; judgment following litigation; losses associated with the retirement of certain other long-lived assets; and certain costs associated with our potential Daytona International Speedway redevelopment, non-GAAP (defined below) net income for the first quarter of 2013 was $15.5 million, or $0.33 per diluted share.  Non-GAAP net income for the fiscal first quarter of 2012 was $17.1 million, or $0.37 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 2012 relate to carrying costs of ISC's Staten Island property, losses associated with the retirement of certain other long-lived assets and net gain on sale of certain assets.

The adjustments for 2013 relate to carrying costs of ISC's Staten Island property, judgment following litigation, losses associated with the retirement of certain other long-lived assets and certain costs incurred associated with our potential Daytona International Speedway redevelopment.

The Company believes such non-GAAP information is useful and meaningful, and is used by investors to assess its core operations, which consist of the ongoing promotion of racing events at its major motorsports entertainment facilities. Such non-GAAP information 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 its 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. The Company uses both GAAP and non-GAAP information in evaluating and operating its business and as such deemed it important to provide such information to investors.

 

Three Months Ended

February 29, 2012

February 28, 2013

(Unaudited)

( In Thousands, Except Per Share Amounts )

Net income

$

17,139

$

13,513

Adjustments, net of tax:

Carrying costs related to Staten Island

417

533

Legal judgment

?

345

Losses on asset retirements

30

940

Daytona International Speedway redevelopment

?

194

Net gain on sale of certain assets

(511)

?

Non-GAAP net income

$

17,075

$

15,525

Per share data:

Diluted earnings per share

$

0.37

$

0.29

Adjustments, net of tax:

Carrying costs related to Staten Island

0.01

0.01

Legal judgment

?

0.01

Losses on asset retirements

?

0.02

Daytona International Speedway redevelopment

?

0.00

Net gain on sale of certain assets

(0.01)

?

Non-GAAP diluted earnings per share

$

0.37

$

0.33

ISC's corporate sales team continues to generate strong levels of interest from corporate prospects. Entering the 2013 motorsports season, the Company had less open entitlement inventory compared to the beginning of the 2012 motorsports season.  For fiscal 2013, the Company has agreements in place for approximately 88.0 percent of its gross marketing partnership revenue target.  All of the Company's available NASCAR Sprint Cup Series entitlements have been sold for the year.  The remaining open NASCAR entitlements include one Nationwide Series and two Camping World Truck Series entitlement. 

The Company continues to secure multi-year official status deals and has recently announced MillerCoors to a multi-year sponsorship renewal that will keep Miller Lite as the Official Beer of Chicagoland Speedway and Route 66 Raceway. 

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 customer's expectations, ISC is committed to improving the guest experience at its facilities through on-going capital improvements that position it for long-term growth.

For the three months ended February 28, 2013, the Company spent approximately $6.1 million on capital expenditures for projects at its existing facilities.  In comparison, capital expenditures for the three months ended February 29, 2012, totaled approximately $12.8 million for projects at its existing facilities.

At February 28, 2013, the Company had approximately $26.7 million remaining in capital projects currently approved for its existing facilities. These projects include:

  • grandstand seating enhancements at Talladega;
  • grandstand concourse improvements at Richmond; and
  • improvements at various facilities for expansion of parking, camping capacity and other uses.

As a result of these currently approved projects and anticipated additional approvals in fiscal 2013, the Company expects its total fiscal 2013 capital expenditures at its existing facilities will be close to $90.0 million, depending on the timing of certain projects.  The Company reviews the capital expenditure program periodically and modifies it as required to meet current business needs.

Daytona International Speedway

The Company is currently in the process of reviewing a proposed redevelopment project at Daytona International Speedway. While many aspects of this redevelopment project are yet to be determined including potential capacity modifications, such a project could include a complete overhaul of the entire frontstretch grandstand creating a world-class motorsports entertainment facility.  Features such as new seats, suites and guest amenities, as well as new entry points, improved fan conveyance, a modern exterior, first-class interior areas, and a redesigned midway for fans would be focal points. 

There are multiple internal and external factors that will influence project feasibility, including a stable economic operating environment and, preferably, the sale of ISC's Staten Island property. We anticipate that moving forward with the Daytona International Speedway redevelopment project would increase the Company's total annual capital expenditures to an average range of between $100 million to $120 million for several years. 

Daytona International Speedway and ISC's operations in Daytona Beach generate $1.6 billion in annual economic benefit to the state of Florida.  As such, the Company is pursuing a public / private partnership with the state of Florida to receive a number of incentives including a sales-tax rebate. This is an identical rebate that has benefited Florida's other professional sports venues for over two decades. ISC is committed to invest at least $250 million to the potential partnership and the proposed legislation is currently being reviewed by the Florida Legislature.  The Company is hopeful for a successful outcome in the near future.

Hollywood Casino at Kansas Speedway

The Hollywood Casino at Kansas Speedway, a 50/50 joint venture with Penn National Gaming, Inc., which opened in February 2012, features a 95,000 square-foot casino with 2,000 slot machines and 52 table games, a 1,253 space parking structure as well as a sports-themed bar, dining and entertainment options.  Penn National Gaming, Inc. is responsible for the development and operation of the casino.

For ISC's 2012 fiscal year, total cash to ISC from the casino JV, including cash from operations used to complete construction and to fund working capital, was approximately $15 million. During the fiscal 2013 first quarter, the Company received a distribution from the casino of approximately $4.5 million. Subsequent to the quarter, ISC received another distribution from the casino of approximately $5.0 million.  For 2013, The Company currently expects cash distributions from the casino to ISC to be in the $15.0 million to $20.0 million dollar range. 

Return of Capital

The Company has authorized its agent to purchase shares under certain opportunistic parameters, which encompass price, corporate and regulatory requirements, capital availability and other market conditions.   ISC did not purchase any shares of its Class A common shares during its fiscal 2013 first quarter.  From December 2006 through February 2013, the Company purchased approximately 7.1 million shares.  At the end of fiscal 2013 first quarter, the Company had approximately $61.7 million in remaining capacity on its $330.0 million authorization.  On a quarterly basis and pursuant to the trading plan under Rule10b5-1, the Company reviews and adjusts, if necessary, the parameters of its Stock Purchase Plans.

Outlook

ISC reiterates its 2013 total revenue guidance range of $610.0 million to $625.0 million.  In addition, the Company is maintaining its fiscal 2013 full year non-GAAP earnings range of $1.35 to $1.55 per diluted share after-tax. 

ISC's fiscal 2013 non-GAAP earnings per share guidance excludes any accelerated depreciation and future  impairments / losses on disposals of certain long-lived assets which could be recorded as part of capital improvements resulting in removal of assets prior to the end of their actual useful life; any income statement impact attributable to the Company's proposed redevelopment project at Daytona International Speedway; legal judgments/settlements; certain carrying costs as well as any gain or loss on the sale of its Staten Island property and unanticipated further impairment of the property. 

In closing, Ms. France Kennedy stated, "We are optimistic regarding the remainder of the motorsports season; however, we realize that our attendance-related revenues will continue to be a significant near-term business risk.  Fortunately the economy is showing signs of sustained growth.  As it strengthens, we have a tremendous opportunity to grow revenues through improved consumer and corporate spending trends.

"Our Hollywood Casino at Kansas Speedway joint venture, which provides strong cash flow, will contribute to earnings and shareholder value for years to come. There is a tremendous opportunity for the Company to grow even stronger as we continue to successfully execute our strategic initiatives.  With careful financial oversight, we are well-positioned to balance the ongoing capital needs of our business as well as our other strategic opportunities, while returning capital to our shareholders.  We benefit from a solid financial position that we have maintained over the years which allows us to continue with our disciplined capital allocation strategy to maintain our leadership position in the industry."

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 28930054. 

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, April 18, 2013.  To access, dial (855) 859-2056 and enter the code 28930054, 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 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)

(Unaudited)

Three Months Ended

February 29, 2012

February 28, 2013

REVENUES:

Admissions, net

$

32,526

$

30,737

Motorsports related

80,746

84,605

Food, beverage and merchandise

11,045

10,174

Other

3,081

3,036

127,398

128,552

EXPENSES:

Direct:

Prize and point fund monies and NASCAR sanction fees

25,252

26,345

Motorsports related

21,965

22,302

Food, beverage and merchandise

7,737

7,283

General and administrative

23,236

26,088

Depreciation and amortization

19,459

19,842

Losses on asset retirements

50

1,545

97,699

103,405

Operating income

29,699

25,147

Interest income

27

20

Interest expense

(3,437)

(3,962)

Equity in net (loss) income from equity investments

(301)

1,020

Other

839

?

Income before income taxes

26,827

22,225

Income taxes

9,688

8,712

Net income

$

17,139

$

13,513

Earnings per share:

Basic and diluted

$

0.37

$

0.29

Basic weighted average shares outstanding

46,391,006

46,423,324

Diluted weighted average shares outstanding

46,395,912

46,436,343

Comprehensive income

$

17,322

$

13,677

 

Consolidated Balance Sheets

(In Thousands, Except Share and Per Share Amounts)

(Unaudited)

November 30, 2012

February 29, 2012

February 28, 2013

ASSETS

Current Assets:

Cash and cash equivalents

$

78,379

$

98,742

$

111,269

Receivables, less allowance

30,830

89,859

78,957

Inventories

3,020

4,542

4,190

Income taxes receivable

6,202

?

5,129

Deferred income taxes

2,029

2,487

1,870

Prepaid expenses and other current assets

7,159

15,433

17,894

Total Current Assets

127,619

211,063

219,309

Property and Equipment, net

1,362,186

1,366,356

1,350,921

Other Assets:

Equity investments

146,378

150,402

142,899

Intangible assets, net

178,649

178,689

178,642

Goodwill

118,791

118,791

118,791

Other

8,118

7,745

8,098

451,936

455,627

448,430

Total Assets

$

1,941,741

$

2,033,046

$

2,018,660

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Current portion of long-term debt

$

2,513

$

2,275

$

2,522

Accounts payable

12,630

19,034

16,706

Deferred income

42,818

94,278

88,585

Income taxes payable

1,507

1,750

8,694

Current tax liabilities

434

755

436

Other current liabilities

16,849

17,724

21,878

Total Current Liabilities

76,751

135,816

138,821

Long-Term Debt

274,419

343,740

274,261

Deferred Income Taxes

328,223

318,750

328,851

Long-Term Tax Liabilities

1,790

1,911

1,875

Long-Term Deferred Income

10,455

11,707

10,355

Other Long-Term Liabilities

1,293

1,314

1,487

Shareholders' Equity:

Class A Common Stock, $.01 par value, 80,000,000

 shares authorized

260

260

260

Class B Common Stock, $.01 par value, 40,000,000

shares authorized

200

200

200

Additional paid-in capital

442,474

442,090

442,997

Retained earnings

811,172

783,016

824,685

Accumulated other comprehensive loss

(5,296)

(5,758)

(5,132)

Total Shareholders' Equity

1,248,810

1,219,808

1,263,010

Total Liabilities and Shareholders' Equity

$

1,941,741

$

2,033,046

$

2,018,660

 

Consolidated Statements of Cash Flows

(In Thousands)

(Unaudited)

Three Months Ended

February 29, 2012

February 28, 2013

OPERATING ACTIVITIES

Net income

$

17,139

$

13,513

Adjustments to reconcile net income to net cash provided

by operating activities:

Depreciation and amortization

19,459

19,842

Stock-based compensation

319

523

Amortization of financing costs

349

379

Deferred income taxes

6,413

710

Loss (income) from equity investments

301

(1,020)

Loss on asset retirements, non-cash

50

719

Other, net

(804)

(44)

Changes in operating assets and liabilities:

Receivables, net

(53,761)

(48,127)

Inventories, prepaid expenses and other assets

(10,499)

(12,040)

Accounts payable and other liabilities

1,280

6,116

Deferred income

49,689

45,667

Income taxes

1,296

8,424

Net cash provided by operating activities

31,231

34,662

INVESTING ACTIVITIES

Capital expenditures

(12,796)

(6,106)

Distribution from equity investee and affiliate

?

4,500

Equity investments and advances to affiliate

(50,566)

?

Other, net

1,250

?

Net cash used in investing activities

(62,112)

(1,606)

FINANCING ACTIVITIES

Proceeds from credit facility

30,000

?

Payment of long-term debt

(156)

(166)

Reacquisition of previously issued common stock

(10,299)

?

Net cash provided by (used in) financing activities

19,545

(166)

Net (decrease) increase in cash and cash equivalents

(11,336)

32,890

Cash and cash equivalents at beginning of period

110,078

78,379

Cash and cash equivalents at end of period

$

98,742

$

111,269

 

SOURCE International Speedway Corporation

For further information: Charles N. Talbert, Senior Director, Investor and Corporate Communications, (386) 681-4281

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