International Speedway Corporation Reports Financial Results for the First Quarter of Fiscal 2010 and Reiterates Its Full Year Financial Guidance

DAYTONA BEACH, Fla., April 8 /PRNewswire-FirstCall/ -- International Speedway Corporation (Nasdaq: ISCA; OTC Bulletin Board: ISCB) ("ISC") today reported results for its fiscal first quarter ended February 28, 2010.

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"We had a solid quarter of events highlighted by the Hershey's Milk and Milkshakes Speedweeks at Daytona," stated ISC Chief Executive Officer Lesa France Kennedy.  "With great events and a capacity crowd on hand for the DAYTONA 500, we exceeded our financial projections for the events at Daytona.  The success of our marquee event gives us tremendous momentum for 2010 and provides us the confidence to reiterate our full year financial guidance."  

Ms. France Kennedy continued, "We continue to focus on various consumer initiatives to make it easier for fans to attend our events. Value pricing is an important part of this initiative, but we are always mindful of maintaining price integrity for the longer term.  For our Sprint Cup Series events in fiscal 2010, we anticipate our weighted average ticket price to decrease in the low to mid-single digits.  Our philosophy is to balance rewarding our loyal customers while providing attractive price points so new fans can experience NASCAR racing live for the first time.  Massive discounting late in the sales cycle not only hurts our most loyal fans that purchased in advance, but it devalues our events in the long term."      

First Quarter Comparison

Total revenues for the first quarter decreased to $152.0 million, compared to revenues of $166.1 million in the prior-year period.  Operating income was $39.8 million during the period compared to $50.0 million in the first quarter of fiscal 2009.  In addition to the macroeconomic challenges, quarter-over-quarter comparability was impacted by:

• A NASCAR Camping World Truck Series event held at Auto Club Speedway in the first quarter of fiscal 2009 was not held in the first quarter of fiscal 2010.
• During the first quarter of fiscal 2010, the Company amortized approximately $1.3 million related to its interest-rate swap for which there was no comparable amortization in the same period in the prior year. This amortization was recorded in interest expense in the consolidated statement of operations.
• As a result of the definitive settlement agreement the Company reached last year with the Internal Revenue Service and based on favorable settlements and ongoing discussions with certain states, ISC de-recognized potential interest and penalties totaling approximately $5.4 million or $0.11 per diluted share after tax.  This de-recognition of interest and penalties was recognized in income tax expense in its consolidated statement of operations.  The Company expects to pay between $1.5 million and $2.5 million in total to finalize the remaining settlements with various states.  ISC has provided adequate reserves related to these state matters including interest charges.  

Net income for the first quarter was $25.4 million, or $0.53 per diluted share, compared to net income of $25.1 million, or $0.52 per diluted share, in the prior year.  Excluding discontinued operations; the Hollywood Casino at Kansas Speedway — equity in net loss from equity investment; the amortization related to an interest rate swap recorded in interest expense; the de-recognition of interest and penalties related to the previously discussed state tax settlements; and impairments of certain other long-lived assets, non-GAAP (defined below) net income for the first quarter of 2010 was $21.6 million, or $0.45 per diluted share.  Non-GAAP net income for the first quarter of 2009 was $27.2 million, or $0.56 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 2009 relate to a charge for Motorsports Authentics — equity in net loss from equity investment; accelerated depreciation for certain office and related buildings in Daytona Beach; and the net book value of certain assets retired from service.

The adjustments for 2010 relate to the Hollywood Casino at Kansas Speedway — equity in net loss from equity investment; de-recognition of interest and penalties related to the previously discussed state tax settlements; amortization of interest rate swap, and impairments of certain other long-lived 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.

Events

From a marketing partnership perspective, for fiscal 2010, ISC has agreements in place for approximately 85.0 percent of its gross marketing partnership revenue target.  The Company recently signed Showtime Networks as the event entitlement sponsor for the NASCAR Sprint Cup Series race at Darlington Raceway, the Showtime Southern 500.  The Company also signed event entitlements for its NASCAR Nationwide Series races at Richmond and Phoenix.  As a result, ISC has two Sprint Cup and one Nationwide title sponsorships that are either open or not announced as compared to last year when it had one Sprint Cup and three Nationwide races either open or not announced.  

"Based on the activity in our corporate marketing group, we remain encouraged by the level of interest in NASCAR from our corporate partners," stated Ms. France Kennedy.  "We recently signed new deals with Hickory Foods, the makers of Bubba Burgers, Kimberly-Clark Professional and the United States Census Bureau. On a renewal standpoint, we have secured deals with CARFAX, FedEx, Kellogg North America and the National Guard. Additionally, we are close to finalizing a Sprint Cup Series race entitlement."  

External Growth and Other Initiatives

During the fiscal first quarter, Kansas Entertainment, LLC, the Company's 50/50 joint venture with Penn National Gaming, Inc. ("Penn") received final approval under the Kansas Expanded Lottery Act along with its gaming license from the Kansas Racing and Gaming Commission. The development of the Hollywood-themed and branded entertainment destination facility is expected to begin in the second half of 2010 with a planned opening in the first quarter of 2012.

The Company has accounted for Kansas Entertainment as an equity investment in its financial statements as of February 28, 2010. The Company's 50.0 percent portion of Kansas Entertainment's net loss is approximately $1.1 million, related to certain start up costs, and is included in equity in net loss from equity investments in its consolidated statements of operations for the period ended February 28, 2010.  

In connection with the Company's efforts to sell its Staten Island property, it entered into a definitive agreement in October 2009 with KB Marine Holdings LLC ("KB Holdings") under which KB Holdings would acquire 100 percent of the outstanding equity membership interests of 380 Development for a total purchase price of $80.0 million. The purchase and sale agreement ("Agreement") called for the transaction to close no later than February 25, 2010, subject to certain conditions, including KB Holdings securing the required equity commitments to acquire the property and performing its obligations under the agreement.

As a result of KB Holdings' failure to perform its obligations, the closing did not occur on February 25, 2010. The Company is currently negotiating with KB Holdings to amend the Agreement and provide an extension of the closing date.  There is no assurance that ISC will come to terms with KB Holdings on such an amendment. The Company has the right to terminate the Agreement and may do so in the event it is unable to come to acceptable terms with KB Holdings on an amendment. ISC does not anticipate a reduction in the purchase price as part of a potential amendment to the Agreement.

Capital Spending

For the three months ended February 28, 2010, ISC spent $23.9 million on capital expenditures, which includes $10.4 million for projects at its existing facilities.  For the remaining $13.5 million of spending, approximately $5.5 million related to construction of the new ISC headquarters which is funded from long-term restricted cash and investments provided by the headquarters financing.  The remaining balance is associated with additional capitalized spending for the Staten Island property and land purchases.  

At February 28, 2010, the Company had approximately $46.5 million in capital projects currently approved for its existing facilities. These projects include grandstand seating enhancements and infield improvements at Michigan, parking improvements at Daytona, grandstand seating enhancements at Talladega, track enhancements at Watkins Glen, and improvements at various facilities for expansion of parking, camping capacity and other uses.  It also includes a variety of other improvements and renovations to our facilities that enable us to effectively compete with other sports venues for consumer and corporate spending.

As a result of these currently approved projects and anticipated additional approvals in fiscal 2010, we expect our total fiscal 2010 capital expenditures at our existing facilities will be approximately $60.0 million to $80.0 million, depending on the timing of certain projects. The Company reviews its capital expenditure program periodically and modifies it as required to meet current business needs.

Share Repurchase Program

During the 2010 fiscal first quarter, the Company purchased approximately 185,000 shares of its Class A stock for $5.3 million, bringing the total number of shares purchased from December 2006 through February 2010 to approximately 5.1 million shares.   ISC currently has approximately $32.0 million in remaining capacity on its $250.0 million authorization.    

While ISC continues to consider its share repurchase program an important component of its long-term capital allocation strategy, we plan on maintaining strong cash reserves awaiting a sustained return to the robust operating cash flows enjoyed prior to the economic downturn.  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 2010 total revenue guidance range of $660.0 million to $680.0 million.  In addition, the Company is maintaining its fiscal 2010 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 the operating results from ISC's equity investment in Motorsports Authentics; 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 or any unanticipated further impairment of the property; any income statement impact related to the Hollywood Casino at Kansas Speedway development; and any amortization related to its interest rate swap recorded in interest expense, or any charges ultimately recorded in connection with contingent liabilities.  

In closing, Ms. France Kennedy added, "We are optimistic that the economy will gradually improve and eventually begin to create jobs.  This is an important component to the economic recovery that we believe will have a measurable effect on attendance levels.  While we can't control the economy, the industry, including ISC, is making the right decisions to grow and support the future of motorsports entertainment, and we will be ideally positioned to capitalize on an economic turnaround."

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 64962305.  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 22, 2010.  To access, dial toll free (800) 642-1687 and enter the code 64962305, 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 California(SM) near Los Angeles; Kansas Speedway® in Kansas City, Kansas; Phoenix International Raceway® in Arizona; Chicagoland Speedway® and Route 66 Raceway(SM) near Chicago, Illinois;  Homestead-Miami Speedway(SM) in Florida; Martinsville Speedway® in Virginia; Darlington Raceway® in South Carolina; and Watkins Glen International® in New York.  In addition, ISC promotes major motorsports activities in Montreal, Quebec, through its subsidiary, Stock-Car Montreal.

The Company also owns and operates MRN® Radio, the nation's largest independent sports radio network; the DAYTONA 500 Experience(SM), the "Ultimate Motorsports Attraction" in Daytona Beach, Florida, and official attraction of NASCAR®; and Americrown Service Corporation(SM), 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®, 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.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.

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SOURCE International Speedway Corporation