~Reiterates Full Year Financial Outlook~ DAYTONA BEACH, Fla., July 9
DAYTONA BEACH, Fla., July 9 /PRNewswire-FirstCall/ -- International
Speedway Corporation (NASDAQ Global Select Market: ISCA; OTC Bulletin Board:
ISCB) ("ISC") today reported results for the fiscal second quarter and six
months ended May 31, 2008.
"We hosted nearly one million paid attendees at our events during the
second quarter, which demonstrates that consumers continue to view
motorsports, particularly NASCAR, as an important part of their lifestyle
despite the current economic environment," said ISC President Lesa France
Kennedy. "Supported by ISC's strong breadth of assets and solid financial
footing, we remain well positioned to successfully execute our long-term
strategic initiatives."
Ms. France Kennedy added, "We held several successful weekends of racing
during the second quarter highlighted by sold-out NASCAR Sprint Cup Series
events at Richmond and Darlington. And, while the economic environment will
continue to impact attendance-related revenues, our 2008 full year results are
expected to benefit from increased sponsorship, hospitality, television and
certain other motorsports related revenues. Also fueling our anticipated full
year results are the ongoing prudent management of our controllable expenses,
the successful turnaround of our equity investment in Motorsports Authentics,
and an aggressive return of capital through share repurchases."
Second Quarter Comparison
Total revenues for the second quarter were $174.9 million, compared to
revenues of $181.0 million in the prior-year period. Operating income
increased to $42.9 million during the period compared to $35.0 million in the
second quarter of fiscal 2007.
Quarter-over-quarter comparability was impacted by:
-- A 2008 second quarter impairment charge of $1.2 million, or $0.01 per
diluted share after tax, primarily 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 second quarter of
2007 included impairment charges of $9.1 million, or $0.11 per diluted share
after-tax, primarily attributable to ISC's decision to discontinue speedway
development efforts in Kitsap County, Washington. To a lesser extent, the
impairment charges included estimated costs for fill removal on the Staten
Island property.
-- Accelerated depreciation of $0.5 million, or $0.01 per diluted share
after tax, in the second quarter of 2008 for certain office and related
buildings in Daytona Beach associated with the Company's previously announced
Daytona Live! project. The 2007 second quarter included Daytona Live!-related
accelerated depreciation charges of $4.6 million, or $0.05 per diluted share
after tax.
Net income for the second quarter of 2008 increased to $26.0 million, or
$0.52 per diluted share, compared to net income of $18.4 million, or $0.35 per
diluted share, in the prior year's second quarter. Excluding discontinued
operations and the aforementioned accelerated depreciation and impairment
charges, non-GAAP (defined below) net income for the second quarter of 2008
was $27.0 million, or $0.54 per diluted share. Non-GAAP net income for the
second quarter of 2007 was $27.1 million, or $0.51 per diluted share.
Year-to-Date Comparison
For the six months ended May 31, 2008, total revenues were $368.8 million,
compared to $365.8 million in 2007. Operating income for the six-month period
was $109.8 million compared to $100.8 million in the prior year.
Year-over-year comparability was impacted by:
-- 2008 impairment charges of $1.9 million, or $0.02 per diluted share
after tax, associated with the previously discussed fill removal costs on
Staten Island and net book value of certain assets retired from service.
Year-to-date results for 2007 included the aforementioned 2007 second quarter
impairment charges for the Company's speedway development efforts in Kitsap
County, Washington, and Staten Island.
-- Accelerated depreciation charges in 2008 of $1.0 million, or $0.02 per
diluted share after tax, associated with the previously discussed Daytona
Live! project. Results for the six months ended May 31, 2007, included
Daytona Live!-related accelerated depreciation charges of $7.2 million, or
$0.09 per diluted share after tax.
-- A 2008 first quarter 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.
Net income for the six months ended May 31, 2008, was $62.2 million, or
$1.23 per diluted share, compared to $54.2 million, or $1.02 per diluted share
in 2007. Excluding discontinued operations, the aforementioned impairment and
related charges, accelerated depreciation and the correction of certain other
assets' carrying value amounts, non-GAAP (defined below) net income for the
six months ended May 31, 2008, was $67.8 million, or $1.34 per diluted share.
This is compared to non-GAAP net income for the first six months of 2007 of
$64.6 million, or $1.22 per diluted share.
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 2007 adjustment relates to: additional depreciation associated with
building structures in the Company's office complex in Daytona Beach; and,
impairment charges associated with ISC's decision to discontinue speedway
development efforts in Kitsap County, Washington, and, to a lesser extent,
fill removal costs on the Company's Staten Island property.
The adjustments for 2008 relate to: 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 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 Six Months Ended
May 31, May 31, May 31, May 31,
2007 2008 2007 2008
Net income $18,390 $25,972 $54,209 $62,183
Net loss from discontinued operations,
net of tax 6 36 26 67
Income from continuing operations 18,396 26,008 54,235 62,250
Adjustments, net of tax:
Additional depreciation 2,856 3204,449 640
Impairment of long-lived assets 5,869 7065,8691,154
Correction of certain other
assets' carrying value--- 3,758
Non-GAAP net income$27,121 $27,034 $64,553 $67,802
Per share data:
Diluted earnings per share $0.35$0.52$1.02$1.23
Net loss from discontinued operations,
net of tax----
Income from continuing operations 0.35 0.52 1.02 1.23
Adjustments, net of tax:
Additional depreciation 0.05 0.01 0.09 0.02
Impairment of long-lived assets 0.11 0.01 0.11 0.02
Correction of certain other
assets' carrying value--- 0.07
Non-GAAP diluted earnings per share $0.51$0.54$1.22$1.34
2008 Second Quarter Highlights
An overview of the significant major event weekends held in the second
quarter of 2008 includes:
-- Daytona International Speedway hosted Bike Week in early March
highlighted by the AMA Supercross and 67th running of the Daytona 200, both
presented by Honda. Results were impacted by inclement weather, which
substantially limited walk-up sales for both events.
-- Homestead-Miami Speedway hosted the 2008 IRL IndyCar Series season
opener GAINSCO Auto Insurance Indy 300, the historic first race of the IndyCar
Series and Champ Car reunification, as well as the Grand-Am Rolex Sports Car
Series Grand Prix of Miami race.
-- Martinsville Speedway hosted a weekend of NASCAR Craftsman Truck and
Sprint Cup racing, highlighted by the Goody's Cool Orange 500. Despite
exciting on-track competition, attendance-related revenues were impacted, in
part, due to inclement weather.
-- Phoenix International Raceway hosted a successful weekend of NASCAR
Nationwide and Sprint Cup racing, highlighted by Jimmie Johnson winning the
Subway Fresh Fit 500, his second consecutive Sprint Cup Series win at the
facility.
-- Talladega Superspeedway hosted a NASCAR Nationwide and Sprint Cup race
weekend, which featured Joe Gibbs Racing sweeping the two-race Aaron's Dream
Weekend.
-- Kansas Speedway hosted a successful ARCA RE/MAX, NASCAR Craftsman Truck
and IRL IndyCar weekend, with Dan Wheldon becoming the first driver to win two
IndyCar races at the Speedway.
-- Richmond International Raceway recorded its 17th consecutive sellout
for its spring NASCAR Sprint Cup event with Clint Bowyer winning the Crown
Royal Presents The Dan Lowry 400. The track also hosted a successful NASCAR
Nationwide Lipton Tea 250.
-- Darlington Raceway hosted an exciting weekend of NASCAR Nationwide and
Sprint Cup competition, highlighted by the fourth consecutive sellout of the
Dodge Challenger 500.
During the 2008 second quarter, lower attendance-related revenues
contributed to total revenue results that were below expectations. As
expected, the challenging macro-economic environment is impacting consumer
spending, and the Company anticipates these trends to continue through the
remainder of the year.
Corporate marketing partner spending remains healthy. While the Company
anticipates being slightly behind budget for the year, it continues to expect
year-over-year revenue growth. Looking specifically at event entitlements,
ISC is in negotiations with multiple companies for Kansas Speedway's Sprint
Cup race scheduled for late September.
"Corporate sponsors continue to view NASCAR as an important piece of their
overall marketing programs," Ms. France Kennedy added. "And, while the
current economic environment has made the process of securing deals more time
consuming, ISC's national presence in key markets continues to position us as
the partner of choice with local, regional and Fortune 500 companies."
ISC's 2008 second quarter results include approximately $3.0 million in
equity income associated with its 50/50 joint venture in Motorsports
Authentics ("MA"). The Company remains optimistic about MA's multi-faceted
turnaround plan designed to grow top line revenue while controlling expenses.
Although the results for the first two quarters of 2008 are encouraging, given
the current economic environment ISC reiterates its guidance of break-even
financial results for MA for the 2008 full year.
Third Quarter Events
To date in the fiscal third quarter:
-- Watkins Glen International hosted a successful weekend of sports car
racing in June, highlighted by the fourth Grand Am Rolex Series Daytona
Prototype victory of the season for Scott Pruett and Memo Rojas in the 27th
running of the Sahlen's Six Hours of The Glen.
-- Route 66 Raceway held the 11th annual Torco Racing Fuels Route 66 NHRA
Nationals. Fans were treated to four days of exciting racing and watched
Funny Car driver Tony Pedregon win for the second time this season and the
38th time in his career.
-- Michigan International Speedway hosted the NASCAR Sprint Cup, Craftsman
Truck and ARCA RE/MAX series in mid-June. Fans were treated to an exciting
weekend of racing that culminated with fan-favorite Dale Earnhardt Jr. winning
the Sprint Cup LifeLock 400.
-- Richmond held a successful weekend of IRL IndyCar racing highlighted by
a record crowd for the SunTrust Indy Challenge.
-- Daytona hosted a Sprint Cup, Nationwide and Grand-Am racing weekend,
highlighted by a thrilling green-white-checkered finish in The Coke Zero 400
Powered by Coca-Cola that resulted in Kyle Busch's first Sprint Cup victory at
the historic facility.
-- Watkins Glen hosted an exciting weekend of IndyCar racing, which
featured increased attendance for the Camping World Grand Prix at The Glen and
Ryan Hunter-Reay's first IRL IndyCar series victory.
For the remainder of the third quarter, ISC will host Sprint Cup and
Nationwide series weekends at Chicagoland Speedway, Watkins Glen, Michigan and
Auto Club Speedway. In addition, through its 50/50 limited partnership with
Group Motorise International, the second annual NASCAR Nationwide and Grand-Am
Rolex race weekend will be held at Circuit Gilles Villeneuve in Montreal,
Canada.
External Growth and Related Initiatives
Construction has begun on the office building component of Daytona Live!,
the mixed-use entertainment destination development that ISC is pursuing in a
50/50 joint venture with The Cordish Company ("Cordish"). In the second
quarter, the Company announced that Cobb Theatres will anchor Daytona Live!
with a 65,000 square-foot, 14-screen theater featuring digital projection with
3D capabilities, stadium seating, and a premium level providing 350 reserved
seats and a full-service restaurant and bar area.
ISC is also partnered in a joint venture with Cordish on the development
of a Hard Rock Hotel & Casino on property adjacent to the Kansas Speedway.
The joint venture has submitted one of several competing proposals to the
State of Kansas. The Kansas Lottery Commission has evaluated the proposals
and forwarded them to the Lottery Gaming Facility Review Board (the "Review
Board"), which has final approval in selecting the company to construct and
manage the casino. The Review Board will hold public meetings on the
proposals with a final decision anticipated in September 2008.
On Staten Island, ISC is in discussions with interested buyers for the 676
acre parcel. The property is being marketed for sale and the Company has
received significant interest from multiple parties.
Share Repurchase Program
In the 2008 second quarter, ISC purchased approximately 967,000 shares of
its Class A Common Stock for $40 million. From initiation of the program in
December 2006 through May 2008, the Company purchased a total of 3.8 million
shares for $171 million, leaving $79 million in remaining capacity on its $250
million authorization at May 31, 2008. ISC continues to believe its capital
allocation strategy reflects a balanced approach that enhances shareholder
value and further positions the Company for long-term success.
Outlook
ISC has narrowed its financial guidance for fiscal 2008. The Company now
expects full year total revenues to range between $805 million and $815
million. ISC also anticipates its fiscal 2008 non-GAAP earnings guidance to
range from $3.05 to $3.10 per diluted share. Given the current economic
environment, ISC is more comfortable at the low end of the earnings range.
ISC expects non-GAAP earnings before interest, taxes, depreciation and
amortization ("EBITDA")(1) margins, operating margins, and effective income
tax rates for the 2008 third quarter, fourth quarter and full year to range as
follows:
Quarter QuarterYear
Ending EndingEnding
8/31/2008 11/30/200811/30/2008
EBITDA margin 37% - 38% 43% - 44% 40% - 41%
Operating margin 29% - 30% 36% - 37% 31% - 32%
Effective tax rate38% - 39% 37% - 38% 38% - 39%
1. EBITDA is a non-GAAP financial measure used by the Company as an
important indicator of its operating margin.
Impacting year-over-year quarterly comparability is the timing of Auto
Club Speedway's Labor Day weekend, which will be held in the 2008 third
quarter. The 2007 race weekend was held in the fourth quarter.
Ms. France Kennedy concluded, "Motorsports remains a stable and growing
industry with a compelling long-term outlook. No other professional sport
attracts the huge crowds that NASCAR does on a weekly basis. Furthermore,
television ratings year-to-date for the three national NASCAR touring series
are up compared to last year. Fueled by a core fan profile that displays the
strongest brand loyalty in all of major sports, corporate partners continue to
view NASCAR as the preferred vehicle to reach consumers. This is hugely
important given the current economic environment we are facing, and ISC
remains in an optimal financial position with significant cash flow and
earnings visibility to weather the downturn. With this backdrop, it is
essential that we execute on our proven business plan. These strategies
include efforts to remain focused on providing guests and partners with
unparalleled service and valued entertainment, while enhancing shareholder
value through a meaningful return of capital program."
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 54181900. A live Webcast will also be
available at that time on the Company's Web site, www.iscmotorsports.com,
under the "Investor Relations" section.
A replay will be available two hours after the end of the call through
midnight Wednesday, July 16, 2008. To access, dial toll free (800) 642-1687
and enter the code 54181900, 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(R) in Florida (home of the Daytona
500(R)); Talladega Superspeedway(R) in Alabama; Michigan International
Speedway(R) located outside Detroit; Richmond International Raceway(R) in
Virginia; Auto Club Speedway of Southern California(SM) near Los Angeles;
Kansas Speedway(R) in Kansas City, Kansas; Phoenix International Raceway(R) in
Arizona; Chicagoland Speedway(R) and Route 66 Raceway(SM) near Chicago,
Illinois; Homestead-Miami Speedway(SM) in Florida; Martinsville Speedway(R)
in Virginia; Darlington Raceway(R) in South Carolina; and Watkins Glen
International(R) in New York. In addition, ISC is a limited partner with
Group Motorise International in the organization and promotion of certain
events at Circuit Gilles Villeneuve in Montreal, Canada.
The Company also owns and operates MRN(R) Radio, the nation's largest
independent sport radio network; the Daytona 500 Experience(SM), the "Ultimate
Motorsports Attraction" in Daytona Beach, Florida, and official attraction of
NASCAR(R); and Americrown Service Corporation, 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(R), 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.iscmotorsports.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 Per Share Amounts)
Three Months Ended Six Months Ended
5/31/2007 5/31/2008 5/31/2007 5/31/2008
(Unaudited)
REVENUES:
Admissions, net $57,238 $53,432$112,548$109,545
Motorsports related 101,383 101,240 209,498 214,085
Food, beverage and
merchandise 20,201 17,738 39,365 40,428
Other 2,130 2,527 4,402 4,738
180,952 174,937 365,813 368,796
EXPENSES:
Direct:
Prize and point fund
monies and NASCAR
sanction fees 33,812 34,728 66,274 67,781
Motorsports related38,254 38,688 68,879 74,024
Food, beverage
and merchandise 12,052 11,747 22,901 24,531
General and administrative 31,496 28,269 58,744 55,980
Depreciation and
amortization21,241 17,436 39,148 34,753
Impairment of
long-lived assets9,076 1,150 9,076 1,881
145,931 132,018 265,022 258,950
Operating income 35,021 42,919 100,791 109,846
Interest income and other 939 384 2,297 (2,676)
Interest expense (3,700) (3,294) (7,740) (6,887)
Equity in net (loss) income
from equity investments (294) 2,960 (4,611) 4,754
Income from continuing
operations before income
taxes 31,966 42,969 90,737 105,037
Income taxes 13,570 16,961 36,502 42,787
Income from continuing
operations18,396 26,008 54,235 62,250
Loss from discontinued
operations, net of income
tax benefits (6)(36)(26)(67)
Net income$18,390 $25,972 $54,209 $62,183
Basic earnings per share:
Income from continuing
operations $0.35 $0.52 $1.02 $1.23
Loss from discontinued
operations - - - -
Net income$0.35 $0.52 $1.02 $1.23
Diluted earnings per share:
Income from continuing
operations $0.35 $0.52 $1.02 $1.23
Loss from discontinued
operations - - - -
Net income$0.35 $0.52 $1.02 $1.23
Dividends per share $0.10 $0.12 $0.10 $0.12
Basic weighted average
shares outstanding52,813,292 49,836,724 52,952,076 50,379,656
Diluted weighted average
shares outstanding52,923,911 49,927,320 53,068,615 50,479,717
Consolidated Balance Sheets
(In Thousands)
November 30, 2007 May 31, 2008
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents$57,316 $81,096
Short-term investments39,250 200
Receivables, less allowance of $1,200
in 2007 and 2008, respectively 46,86072,364
Inventories4,508 5,655
Deferred income taxes 1,345 1,476
Prepaid expenses and other current assets 10,54717,570
Total Current Assets 159,826 178,361
Property and Equipment, net of accumulated
depreciation of $410,192 and $439,372,
respectively1,303,178 1,327,147
Other Assets:
Equity investments76,83980,869
Intangible assets, net 178,984 178,912
Goodwill 118,791 118,791
Deposits with Internal Revenue Service 117,936 117,936
Other 26,56325,108
519,113 521,616
Total Assets$1,982,117$2,027,124
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term
debt $2,538 $152,901
Accounts payable 37,50822,734
Deferred income 128,631 200,139
Income taxes payable 22,17915,408
Other current liabilities 21,44724,082
Total Current Liabilities 212,303 415,264
Long-Term Debt 375,009 223,264
Deferred Income Taxes 214,10980,794
Long-Term Tax Liabilities - 160,656
Long-Term Deferred Income 15,53114,798
Other Long-Term Liabilities 6,077 5,931
Commitments and Contingencies - -
Shareholders' Equity:
Class A Common Stock, $.01 par value,
80,000,000 shares authorized; 30,010,422
and 28,028,972 issued and outstanding in
2007 and 2008, respectively 300 280
Class B Common Stock, $.01 par value,
40,000,000 shares authorized; 21,593,025
and 21,444,416 issued and outstanding in
2007 and 2008, respectively 216 214
Additional paid-in capital 621,528 532,618
Retained earnings537,044 593,305
Total Shareholders' Equity 1,159,088 1,126,417
Total Liabilities and Shareholders'
Equity $1,982,117$2,027,124
Consolidated Statements of Cash Flows
(In Thousands)
Six Months Ended
5/31/2007 5/31/2008
(Unaudited)
OPERATING ACTIVITIES
Net income$54,209$62,183
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 39,148 34,753
Stock-based compensation1,470 1,616
Amortization of financing costs 259259
Deferred income taxes 7,883 7,304
Loss (income) from equity investments 4,611 (4,754)
Excess tax benefits relating to
stock-based compensation(131)(7)
Impairment of long-lived assets, non-cash 6,143460
Other, net729 3,778
Changes in operating assets and
liabilities:
Receivables, net(24,271) (25,504)
Inventories, prepaid expenses and
other assets (13,188)(8,798)
Deposits with Internal Revenue Service (7,123) -
Accounts payable and other liabilities1,029 (7,598)
Deferred income 85,693 70,775
Income taxes 3,013 13,034
Net cash provided by operating activities 159,474147,501
INVESTING ACTIVITIES
Capital expenditures (56,112) (69,844)
Acquisition of business, net of
cash acquired(87,093) -
Proceeds from affiliate67 -
Advance to affiliate- (1,296)
Proceeds from short-term investments 83,450 41,500
Purchases of short-term investments (24,635)(2,450)
Purchases of equity investments -(81)
Other, net 54 75
Net cash used in investing activities (84,269) (32,096)
FINANCING ACTIVITIES
Proceeds under credit facility 65,000 20,000
Payments under credit facility(65,000) (20,000)
Payment of long-term debt (28,679)(1,235)
Exercise of Class A common stock options 272 -
Excess tax benefits relating to
stock-based compensation 131 7
Reacquisition of previously
issued common stock (26,519) (90,397)
Net cash used in financing activities (54,795) (91,625)
Net increase in cash and cash equivalents 20,410 23,780
Cash and cash equivalents at beginning of
period59,681 57,316
Cash and cash equivalents at end of period$80,091$81,096
SOURCE International Speedway Corporation
