International Speedway Corporation Reports Results for the First Quarter of Fiscal 2009
Company Updates Full-Year Financial Guidance
DAYTONA BEACH, Fla.,
"While pleased with the level of excitement and competition on the track
as well as the fans' avid support of NASCAR, we are not immune to the broader
macroeconomic challenges facing all businesses," said ISC President
Ms.
First Quarter Comparison
Total revenues for the first quarter decreased to
-- Exceptionally strong consumer and corporate demand for the 50th
running of the Daytona 500 and surrounding events in the first quarter
of 2008. The historic race provided unique opportunities to drive
revenue above the otherwise strong appeal of one of sport's most
marquee events.
-- The 2008 first quarter also included a non-cash charge of $3.8
million , or $0.07 per diluted share after tax, to correct the carrying
value of certain other assets as of November 30, 2007 . In addition,
the first quarter of 2008 included an impairment charge of $0.7
million , or $0.01 per diluted share after tax, related to charges for
the fill removal process on the Company's Staten Island property and,
to a lesser extent, the net book value of certain assets retired from
service.
-- The first quarter of 2009 included a $1.6 million , or $0.03 per
diluted share after tax, charge for equity in net loss from equity
investments related to Motorsports Authentics, LLC ("MA"), the
Company's motorsports-related merchandise 50/50 joint venture with
Speedway Motorsports Inc. The 2008 first quarter included equity
income of $1.1 million , or $0.02 per diluted share after tax, due to
the strong product sales primarily associated with a new team, car
number and sponsor for Dale Earnhardt, Jr. , NASCAR's most significant
licensee. In addition, merchandise sales from the 50th running of the
Daytona 500 drove strong results for the prior year period.
Net income was
GAAP to Non-GAAP Reconciliation
The following financial information is presented below using other than 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 2008 adjustments relate to: a benefit for equity in net income from equity investment; accelerated depreciation for certain office and related buildings in Daytona Beach; the impairment of long-lived assets associated with the fill removal process on the Staten Island property and the net book value of certain assets retired from service; and, a non-cash charge to correct the carrying value of certain other assets.
The adjustments for 2009 relate to: a charge for equity in net loss from equity investment; accelerated depreciation for certain office and related buildings in Daytona Beach; and, the impairment of long-lived assets associated with the net book value of certain assets retired from service,.
The Company believes such non-GAAP information is useful and meaningful to investors, and is used by investors and ISC to assess core 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.
(In Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
February 29, February 28,
2008 2009
------------- -------------
Net income $36,211 $25,146
Loss from discontinued operations, net of tax 31 42
-- --
Income from continuing operations 36,242 25,188
Equity in net (income) loss from equity
investment, net of tax (1,102) 1,639
------ -----
Consolidated income from continuing operations
excluding equity in net (income) loss from
equity investment 35,140 26,827
Adjustments, net of tax:
Additional depreciation 320 309
Impairment of long-lived assets 448 33
Correction of certain other assets'
carrying value 3,758 -
----- --
Non-GAAP net income $39,666 $27,169
======= =======
Per share data:
Diluted earnings per share $0.71 $0.52
Loss from discontinued operations, net of tax - -
-- --
Income from continuing operations 0.71 0.52
Equity in net (income) loss from equity
investment (0.02) 0.03
----- ----
Consolidated earnings per share from continuing
Operations excluding equity in net (income)
loss from equity investment 0.69 0.55
Adjustments, net of tax:
Additional depreciation 0.01 0.01
Impairment of long-lived assets 0.01 -
Correction of certain other assets'
carrying value 0.07 -
---- --
Non-GAAP diluted earnings per share $0.78 $0.56
===== =====
Recent Events
For the start of the motorsports season,
DIRECTV Speedweeks® continued with several exciting stock car and truck
racing events, culminating with the 51st running of the
Subsequent to the fiscal first quarter,
For the remainder of the second quarter, the Company will host four Sprint Cup and Nationwide series weekends at Phoenix International Raceway, Talladega Superspeedway, Richmond International Raceway and Darlington Raceway. The Talladega weekend will also include an ARCA/RE-MAX event. In addition, Kansas Speedway will host an IRL IndyCar and NASCAR Camping World Truck weekend.
From a marketing partnership perspective, ISC recently signed event
entitlement positions for its NASCAR Sprint Cup races at
External Growth, Financing-Related and Other Initiatives
The Company in a joint venture partnership with
The initial phase of the project, which is planned to comprise
approximately 190,000 square feet, would include a 100,000 square foot casino
gaming floor with approximately 2,300 slot machines and 86 table games, a
high-energy center bar, and dining and entertainment options, and is projected
to cost approximately
Daytona Live!, a mixed-use entertainment destination development that the Company is also pursuing in a 50/50 joint venture with Cordish, is expected to have the ISC and NASCAR headquarters building completed and open in the fourth quarter of 2009. The retail, dining, and entertainment component of Daytona Live! is being actively marketed by Cordish. Final design plans that will include local market studies and further project analysis for the development of the retail, dining and entertainment, and hotel components are being completed. These phases of the development will be market driven, and no construction will begin until the timing is appropriate.
On Staten Island, ISC continues to have discussions with interested buyers for the 676 acre parcel, and remains hopeful that a transaction will occur in 2009. The Company is also continuing through the audit appeals process with the Internal Revenue Service ("IRS") and is having very productive conversations concerning a settlement.
Once ISC sells the Staten Island property and/or secures a favorable
settlement with the IRS, the Company will evaluate opportunities to reduce
debt and further invest in the business, including additional share
repurchases. ISC ceased repurchasing shares in
As it relates to the Company's
Capital Spending
Given its desire to continue to build on its significant cash position,
the Company anticipates spending between
Financial Guidance
The Company is revising its full year guidance as a result of further
weakening of the macroeconomic environment. ISC now expects 2009 full year
total revenue will range between
MA's management team is currently doing a thorough re-evaluation of the business given the unique challenges facing the sales of licensed goods in sports as a result of the current economic landscape. As MA currently has less visibility than ISC's core business of promoting motorsports events, the Company is not including MA's results in its 2009 non-GAAP earnings guidance. ISC currently expects MA will post an operating loss for 2009.
As it relates to margins, ISC currently anticipates the following:
Year Ending
11/30/09
EBITDA (1) 33% - 35%
Operating 23% - 25%
(1) EBITDA is a non-GAAP financial measure used by the Company as an
important indicator of its operating margin. It is defined as
earnings before interest, taxes, depreciation and amortization.
Outlook
"Although we expect our business will continue to be impacted by a
challenging macroeconomic environment throughout 2009, we enjoy a business
model that benefits from strong consumer support and a solid foundation of
contracted revenues," stated Ms.
Ms.
Conference Call Details
The management of ISC will host a conference call today with investors at
A replay will be available two hours after the end of the call through
midnight
The Company also owns and operates MRN® Radio, the nation's largest
independent sports radio network; the
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
(Tables Follow)
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
Three Months Ended
February 29, February 28,
2008 2009
------------- -------------
(Unaudited)
REVENUES:
Admissions, net $56,113 $47,836
Motorsports related 112,845 102,534
Food, beverage and merchandise 22,690 13,409
Other 2,211 2,340
----- -----
193,859 166,119
EXPENSES:
Direct expenses:
Prize and point fund monies
and NASCAR sanction fees 33,053 34,142
Motorsports related 35,336 29,109
Food, beverage and
merchandise 12,784 9,477
General and administrative 27,711 24,935
Depreciation and amortization 17,317 18,391
Impairment of long-lived assets 731 70
--- --
126,932 116,124
------- -------
Operating income 66,927 49,995
Interest income and other (3,060) 464
Interest expense (3,593) (6,270)
Minority interest - 171
Equity in net income (loss) from
equity investments 1,794 (1,639)
----- ------
Income from continuing operations
before income taxes 62,068 42,721
Income taxes 25,826 17,533
------ ------
Income from continuing operations 36,242 25,188
Discontinued operations (31) (42)
--- ---
Net income $36,211 $25,146
------- -------
Basic earnings per share:
Income from continuing operations $0.71 $0.52
Loss from discontinued operations - -
-- --
Net income $0.71 $0.52
----- -----
Diluted earnings per share:
Income from continuing operations $0.71 $0.52
Loss from discontinued operations - -
-- --
Net income $0.71 $0.52
----- -----
Basic weighted average shares
outstanding 50,928,554 48,548,395
---------- ----------
Diluted weighted average shares
outstanding 51,038,079 48,677,666
---------- ----------
Consolidated Balance Sheets
(In Thousands)
November 30, February 28,
2008 2009
------------- -------------
(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $218,920 $241,011
Short-term investments 200 200
Restricted cash 2,405 1,603
Receivables, less allowance of $1,200 in
2008 and 2009 47,558 119,128
Inventories 3,763 4,317
Deferred income taxes 1,838 2,059
Prepaid expenses and other current assets 7,194 14,596
----- ------
Total Current Assets 281,878 382,914
Property and Equipment, net 1,331,231 1,336,357
Other Assets:
Long-term restricted cash and
investments 40,187 36,394
Equity investments 77,613 76,104
Intangible assets, net 178,841 178,815
Goodwill 118,791 118,791
Deposits with Internal Revenue Service 117,936 117,936
Other 34,342 21,487
------ ------
567,710 549,527
------- -------
Total Assets $2,180,819 $2,268,798
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $153,002 $152,994
Accounts payable 26,393 32,146
Deferred income 103,549 148,472
Income taxes payable 8,659 13,523
Other current liabilities 18,035 21,606
------ ------
Total Current Liabilities 309,638 368,741
Long-Term Debt 422,045 421,809
Deferred Income Taxes 104,172 106,977
Long-Term Tax Liabilities 161,834 162,669
Long-Term Deferred Income 13,646 13,878
Other Long-Term Liabilities 28,125 29,113
Commitments and Contingencies - -
Shareholders' Equity:
Class A Common Stock, $.01 par value,
80,000,000 shares authorized; 27,397,924
and 27,741,939 issued and outstanding in
2008 and 2009, respectively 274 277
Class B Common Stock, $.01 par value,
40,000,000 shares authorized; 21,150,471
and 20,806,456 issued and outstanding in
2008 and 2009, respectively 211 208
Additional paid-in capital 497,277 497,881
Retained earnings 665,405 690,380
Accumulated other comprehensive loss (21,808) (23,135)
------- -------
Total Shareholders' Equity 1,141,359 1,165,611
--------- ---------
Total Liabilities and Shareholders' Equity $2,180,819 $2,268,798
---------- ----------
Consolidated Statements of Cash Flows
(In Thousands)
Three Months Ended
February 29, February 28,
2008 2009
------------- -------------
(Unaudited)
OPERATING ACTIVITIES
Net income $36,211 $25,146
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 17,317 18,391
Minority interest - (171)
Stock-based compensation 937 604
Amortization of financing costs 129 129
Deferred income taxes 4,418 2,898
(Income) loss from equity investments (1,794) 1,639
Impairment of long-lived assets, non-
cash 328 70
Other, net 3,707 (3)
Changes in operating assets and
liabilities:
Receivables, net (71,395) (71,570)
Inventories, prepaid expenses
and other assets (5,774) (8,296)
Accounts payable and other
liabilities 5,744 6,021
Deferred income 42,631 45,155
Income taxes 15,188 5,385
------ -----
Net cash provided by operating activities 47,647 25,398
INVESTING ACTIVITIES
Capital expenditures (37,981) (20,042)
Proceeds from affiliate - 12,500
Advance from affiliate - (200)
Decrease in restricted cash - 4,595
Proceeds from short-term investments 41,300 -
Purchases of short-term investments (2,250) -
Other, net (781) 10
---- --
Net cash provided by (used in) investing
activities 288 (3,137)
FINANCING ACTIVITIES
Proceeds under credit facility 20,000 -
Payments under credit facility (1,126) --
Payments of long-term debt - (170)
Reacquisition of previously issued common
stock (50,000) -
------- --
Net cash used in financing activities (31,126) (170)
------- ----
Net increase in cash and cash equivalents 16,809 22,091
Cash and cash equivalents at beginning of
period 57,316 218,920
------ -------
Cash and cash equivalents at end of period $74,125 $241,011
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SOURCE
CONTACT:
Senior Director, Corporate and Investor Communications
+1-386-947-6465
Web Site: http://www.iscmotorsports.com
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding International Speedway's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.