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DATE News (chronologically)
07/29/11
track news
ISC Financial Results for the 2nd Quarter 2011
International Speedway Corp. (ISC) reported results for its fiscal second quarter ended May 31.

"Through multiple initiatives designed to enhance the long-term performance of the Company, we are pleased to report growth in operating income for both the second quarter and the first six months of fiscal 2011," said ISC Chief Executive Officer Lesa France Kennedy. "The decrease in revenues year-over-year were primarily attributable to the event schedule changes at Kansas Speedway which last year hosted an IZOD IndyCar and NASCAR Camping World Truck series weekend during the second quarter. The performance of our events-to-date, coupled with the cost reduction commitments we outlined last year, continues to generate results in line with our expectations."

France Kennedy continued, "While the economy remains our biggest hurdle to admissions-related revenue growth, we feel confident that our commitment to improving the guest experience is positioning the Company for long-term growth. Recent and on-going capital improvements at our facilities continue to elicit raves from our customers. We believe that delivering unique and memorable experiences, working in concert with attractive pricing options and fantastic racing, will generate stronger revenues as well as improved bottom-line results."

Second Quarter Comparison

In a release n July 7, the Company reported total revenues for the second quarter were $138.8 million, compared to revenues of $142.2 million in the prior-year period. Operating income increased to $24.1 million during the period compared to $21.3 million in the second quarter of fiscal 2010. In addition to the macroeconomic challenges, quarter-over-quarter comparability was impacted by:

-The spring NASCAR Sprint Cup and Nationwide events held at Auto Club Speedway of Southern California in the first quarter of fiscal 2010 were held in the second quarter of fiscal 2011.

-The spring NASCAR Sprint Cup and Nationwide series events held at Phoenix International Raceway in the second quarter of fiscal 2010 were held in the first quarter of fiscal 2011.

-The IZOD IndyCar Series event held at Kansas Speedway in the second quarter of fiscal 2010 for which there is no comparable event in fiscal 2011. In addition, the NASCAR Camping World Truck Series event at Kansas Speedway, which was held in the second quarter of fiscal 2010, will be held in the third quarter of fiscal 2011.

-During the second quarter of fiscal 2011, the Company expensed certain ongoing carrying costs related to its Staten Island property. Similar costs had previously been capitalized.

-The non-cash impairment of long-lived assets, during the three months ended May 31, 2010, of approximately $0.4 million, or $0.01 per diluted share after tax, is attributable to the removal of certain long-lived assets not fully depreciated as part of ongoing capital improvements at our motorsports facilities.

-During the second quarter of fiscal 2010, the Company recognized approximately $1.2 million, or $0.01 per diluted share, related to an interest rate swap. In fiscal 2011, the remaining deferred interest rate swap balance is included in accumulated other comprehensive loss and is being amortized as interest expense over the 10 year term of private placement senior notes the Company issued in January 2011.

-During the three months ended May 31, 2010, the Company had favorable tax settlements with certain states, where it de-recognized potential interest and penalties totaling approximately $0.7 million or $0.02 per diluted share. This de-recognition of interest and penalties was recorded in income tax expense in the consolidated statement of operations.

Net income for the second quarter increased to $11.9 million, or $0.25 per diluted share, compared to net income of $10.3 million, or $0.21 per diluted share, in the prior year. Excluding the operating results from the Company's equity investment and certain carrying costs related to the Staten Island property, non-GAAP (defined below) net income for the second quarter of 2011 was $12.5 million, or $0.26 per diluted share. Non-GAAP net income for the second quarter of 2010 was $10.8 million, or $0.22 per diluted share.

Year-to-Date Comparison

For the six months ended May 31, total revenues were $287.4 million, compared to $294.2 million in 2010. Operating income for the six-month period increased to $63.4 million compared to $61.1 million in the prior year.

Year-over-year comparability was impacted by:

-A NASCAR Camping World Truck Series event held at Phoenix International Raceway in the first quarter of fiscal 2011 that was previously held in the fourth quarter in fiscal 2010.

-An IZOD IndyCar Series event held at Kansas Speedway in the second quarter of fiscal 2010 for which there is no comparable event in fiscal 2011. In addition, the NASCAR Camping World Truck Series event at Kansas Speedway, which was held in the second quarter of fiscal 2010, will be held in the third quarter of fiscal 2011.

-During the six months ended May 31, the Company expensed certain ongoing carrying costs related to its Staten Island property. Similar costs had previously been capitalized.

-The non-cash impairment of long-lived assets during the six months ended May 31, of approximately $2.9 million, or $0.04 per diluted share after tax, is attributable to the removal of certain long-lived assets not fully depreciated as part of ongoing capital improvements at our motorsports facilities. During the six months ended May 31, 2010, the Company recorded an approximately $0.7 million, or $0.01 per diluted share after tax, impairment charge of long-lived assets.

-During the six months ended May 31, 2010, the Company recognized approximately $2.5 million, or $0.03 per diluted share, related to an interest rate swap.

-During the six months ended May 31, 2010, the Company had favorable tax settlements with certain states, where it de-recognized potential interest and penalties totaling approximately $6.2 million or $0.13 per diluted share. This de-recognition of interest and penalties was recorded in income tax expense in the consolidated statement of operations.

Net income for the six months ended May 31, was $33.3 million, or $0.70 per diluted share, compared to a net income of $35.7 million, or $0.74 per diluted share in 2010. Excluding the operating results from the Company's equity investment; certain carrying costs related to the Staten Island property; and impairments of certain other long-lived assets, non-GAAP (defined below) net income for the for the six months ended May 31, was $35.9 million, or $0.75 per diluted share. This is compared to non-GAAP net income for the first six months of 2010 of $32.4 million, or $0.67 per diluted share.

Outlook

ISC reiterates its 2011 total revenue guidance range of $635.0 million to $650.0 million. In addition, the Company is maintaining its fiscal 2011 full year non-GAAP earnings range of $1.60 to $1.80 per diluted share after-tax. The non-GAAP earnings per share estimates exclude 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, unanticipated further impairment of the property and the ongoing carrying costs; and any income statement impact related to the Kansas Casino development.

In closing, France Kennedy added, "These financial results are a testament to focused and dedicated attention to manage our Company for the long-term. While the economy is clearly having an impact on fans' discretionary spending, we continue to make capital investments in the Company to better position ISC for future growth. Investing in our business through fan-friendly capital improvements with prudent ancillary developments, such as our Hollywood Casino at Kansas Speedway, aligned with sound financial policies, will ensure ISC maintains its significant competitive advantage within the industry."

International Speedway is a promoter of motorsports activities, currently promoting more than 100 racing events annually as well as numerous other motorsports-related activities.

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