International Speedway Reports Results For The Third Quarter Of Fiscal 2004
~Results at High End of Expectations; Company Reiterates Fourth Quarter Guidance~ ~Announces Renewal of Multi-Year, Multi-Track Agreement with Pepsi~ ~Receives Proposal for Public/Private Partnership to Develop Motorsports Facility in Pacific Northwest~
DAYTONA BEACH, Fla., Oct. 7 /PRNewswire-FirstCall/ -- International Speedway Corporation (Nasdaq: ISCA)(OTC Bulletin Board: ISCB) ("ISC") today reported results for the third quarter and nine months ended August 31, 2004.
Third Quarter Comparison
Total revenues for the third quarter were $156.5 million compared to revenues of $160.5 million in the prior-year period. Prior period financial statements have been restated to reflect discontinued operations, net of tax, related to the previously announced sale of North Carolina Speedway. Operating income was $50.8 million during the period compared to $59.9 million in the third quarter of fiscal 2003. Net income for the third quarter of fiscal 2004 was $68.1 million, or $1.28 per diluted share, compared to net income of $36.0 million, or $0.68 per diluted share, in the prior-year period.
The timing of the Company's Labor Day NASCAR NEXTEL Cup and Busch series weekend significantly impacted results for this year's third quarter. Results for the 2003 third quarter include the Labor Day Cup/Busch weekend at Darlington, while the 2004 Labor Day weekend events at California will be included in 2004 fourth quarter results. Third quarter fiscal 2004 results also include, net of tax, a $36.3 million, or $0.68 per diluted share, gain on the sale of North Carolina's assets and a $0.7 million pre-tax non-cash charge for the net book value of assets removed related to the Daytona infield renovation project.
Year to Date Comparison
For the nine months ended August 31, 2004, total revenues increased to $419.9 million from $400.0 million in 2003. Prior period financial statements have been restated to reflect discontinued operations, net of tax, related to the sale of North Carolina. Operating income for the nine-month period was $121.3 million compared to $133.1 million in the prior year.
Year to date net income was $101.9 million, or $1.92 per diluted share, in 2004, which includes:
* Income, net of tax, from the discontinued operations of North Carolina of $3.1 million, or $0.06 per diluted share;
* the after-tax gain of $36.3 million, or $0.68 per diluted share, on the sale of North Carolina;
* the third quarter $0.7 million pre-tax non-cash charge for the net book value of assets removed related to the Daytona infield renovation project;
* a second quarter non-cash pre-tax charge of $13.2 million, or $0.16 per diluted share, for the impairment of Nazareth's long-lived assets; and
* a second quarter combined pre-tax charge of $6.6 million, or $0.08 per diluted share, associated with refinancing the Company's Senior Notes.
As stated above, results for the nine months ended August 31, 2003 include the Labor Day Cup event held at Darlington, while the 2004 Labor Day weekend event at California will be recorded in the fourth quarter.
In the first nine months of 2003, net income was $73.8 million, or $1.39 per diluted share, which includes:
* Income, net of tax, from the discontinued operations of North Carolina of $1.7 million, or $0.03 per diluted share;
* a non-cash pre-tax charge of $2.8 million, or $0.03 per diluted share, for the net book value of assets removed at Homestead-Miami Speedway; and
* a revenue contribution to ISC's Food, Beverage and Merchandise Income of $1.6 million, or $0.02 per diluted share, related to the Company's ongoing activities to audit third party vendors' sales reports for prior years.
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 adjustments relate to: (1) the presentation of North Carolina Speedway's operations and sale as discontinued; (2) the impairment of long-lived assets at Nazareth Speedway; (3) the write- off of the net book value of certain undepreciated assets removed in connection with a major track reconfiguration project at Homestead-Miami Speedway; and (4) charges associated with refinancing the majority of the Company's long-term debt. We believe such non-GAAP information is useful and meaningful to investors, and is used by investors and us to assess our 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 alternatives 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 Nine Months Ended Aug. 31 Aug. 31 Aug. 31 Aug. 31 2003 2004 2003 2004 Net income $35,953 $68,090 $73,809 $101,942 Net loss (income), net of tax, from: Discontinued operations of North Carolina 547 (50) (1,742) (3,074) Gain on sale of North Carolina -- (36,337) (36,337) Income from continuing operations 36,500 31,703 72,067 62,531 Adjustments, net of tax: Impairment of long-lived assets at Nazareth -- -- -- 8,591 Homestead-Miami track reconfiguration -- -- 1,726 -- Interim interest on debt redeemed -- -- -- 995 Loss on early redemption of debt -- -- -- 3,028 Non-GAAP net income $36,500 $31,703 $73,793 $75,145 Diluted earnings per share $0.68 $1.28 $1.39 $1.92 Net loss (income), net of tax, from: Discontinued operations of North Carolina 0.01 -- (0.03) (0.06) Gain on sale of North Carolina -- (0.68) -- (0.68) Income from continuing operations 0.69 0.60 1.36 1.18 Adjustments, net of tax: Impairment of long-lived assets at Nazareth -- -- -- 0.16 Homestead-Miami track reconfiguration -- -- 0.03 -- Interim interest on debt redeemed -- -- -- 0.02 Loss on early redemption of debt -- -- -- 0.06 Non-GAAP diluted earnings per share $0.69 $0.60 $1.39 $1.42 Highlights of the third quarter of 2004 include: * Capacity crowds for Michigan's two NASCAR NEXTEL Cup races;
* sold-out attendance for Chicagoland's NEXTEL Cup and Busch weekend and Kansas' IRL IndyCar and NASCAR Craftsman Truck weekend;
* increased attendance for Watkins Glen's NEXTEL Cup event, Michigan's Busch and Craftsman Truck races and the IndyCar events at Richmond, Michigan and Nazareth; and
* despite a two-hour delay to the start of the NEXTEL Cup Pepsi 400 due to inclement weather, Daytona's race weekend posted record revenue, even after excluding the increase from NASCAR's broadcast rights revenue.
"ISC posted an excellent quarter with revenues up over ten percent on a comparable event basis," commented Lesa France Kennedy, President of ISC. "Revenue growth was driven by increased broadcast rights fees and higher sales primarily attributable to Americrown's expanded merchandising operations as of the beginning of this year. Also contributing to overall top line results were higher sponsorship, camping, hospitality, advertising and other motorsports related revenues for comparable events held in the quarter."
The 2004 third quarter benefited from ISC's renewal of its multi-year, multi-track official status agreement with Pepsi. Other than the collective ten-year deals Nextel has with the Company's facilities, Pepsi's agreement marks the single largest marketing partnership announced by ISC to date. Pepsi continues its status as the official soft drink of ISC and its facilities. In addition, Pepsi remains title sponsor of the July NEXTEL Cup race in Daytona.
Ms. Kennedy continued, "We are very excited to announce that we have extended our longstanding relationship with Pepsi. Our key market penetration and strengthening nationwide presence raises our value to major corporate partners. In addition, our focus on relationship management helps ISC's sponsors maximize their return on investment. We remain committed to securing similar multi-year, multi-track agreements, further enhancing revenue visibility and stability for the Company."
To date in the fourth quarter, ISC has hosted several successful major events, including:
* The inaugural Pop Secret 500 weekend at California Speedway, the result of realignment of the NEXTEL Cup schedule. The event, which finished "under the lights," posted a more than 50 percent attendance increase over the same Labor Day weekend race held at Darlington in 2003.
* Richmond posted record weekend attendance and a sold-out NEXTEL Cup Chevy Rock and Roll 400. The final race before the Chase for the NEXTEL Cup featured thrilling door-to-door racing as drivers competed for an opportunity to become the first NEXTEL Cup Champion. Television viewership grew 15% over the prior year, resulting in the largest television audience for an event at the facility.
* Chicagoland recorded sold-out attendance for its IRL IndyCar and ARCA racing weekend.
* California hosted an exciting Craftsman Truck/IRL IndyCar weekend highlighted by Tony Kanaan's clinching of the 2004 IndyCar Championship with his second place finish in the Toyota Indy 400.
* Talladega posted increased attendance for its successful ARCA/NEXTEL Cup weekend. Dale Earnhardt Jr. recorded his fifth win of the season and fifth career victory at Talladega, placing him second only to his father, Dale Earnhardt, for most career victories at the facility. Viewership for the event was strong as overnight results posted a six percent increase over the prior year.
For the remainder of the fourth quarter, the Company will host a sold-out NASCAR NEXTEL Cup/Busch series weekend at Kansas, and a Craftsman Truck/NEXTEL Cup weekend at newly acquired Martinsville Speedway. In addition, ISC will host three consecutive NASCAR triple-header weekends at Phoenix, Darlington and the season finale Ford Championship Weekend at Homestead-Miami Speedway in November. Advanced ticket sales for these events are trending ahead of the prior year.
Regarding the Company's ongoing expansion efforts in the New York metropolitan area, due diligence continues on the collection of land parcels identified on Staten Island. The land purchase will depend on the outcome of that process. However, even if the property is purchased, the ultimate decision to develop a motorsports facility will be based on the overall results of a detailed feasibility study, including estimated construction cost, availability of public financing, permitting considerations, traffic and transportation analyses, and other necessary project reviews. The Company remains optimistic for its prospects to bring NASCAR racing to New York City.
In the Pacific Northwest, the Company has identified a preferred site for the development of a motorsports facility in Snohomish County, approximately 30 miles north of Seattle, Washington, the country's 12th largest media market. On October 6, City of Marysville and Snohomish County officials presented a proposal for a public/private partnership to Washington's Legislative Committee on Economic Development and International Relations. While it is too early to know if any public participation will materialize, as it will require approval by the Washington Legislature, ISC is excited to take this important next step toward building a major motorsports venue in this underserved region of the country.
The Company reiterates its previously issued fourth quarter guidance for revenues of $220 to $225 million and earnings of $0.98 to $1.00 per diluted share.
"As evidenced by the strength of our advanced ticket sales, we are on track for another record fourth quarter," Ms. France Kennedy continued. "We are especially excited about hosting our first NEXTEL Cup and Craftsman Truck events since purchasing Martinsville in July. Advanced sales for the Subway 500 race weekend are trending solidly ahead of 2003 -- a testament to the excellent show put on there year after year. The facility and its outstanding management team have made a wonderful addition to the ISC family, and we look forward to contributing to their future success."
Ms. France Kennedy concluded, "Supported by our strong business fundamentals, we expect to post solid results during fiscal 2005. Contributing to next year's growth will be increased capacity at our facilities, including 1,600 grandstand seats at Kansas, and 900 club seats and six incremental luxury suites at Michigan. On the external developmental front, our efforts in New York and the Pacific Northwest are proceeding well, and we look forward to working diligently to bring those projects to fruition. Finally, industry initiatives including Nextel's sponsorship, Realignment and the Chase for the NEXTEL Cup are yielding important long-term results and we expect the sport's positive momentum will continue to build in 2005."
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 (973) 582-2710 five to ten minutes prior to the scheduled start time and request to be connected to the ISC earnings call. A live webcast will also be available at that time on the Company's Web site, www.iscmotorsports.com, under the "Investor Relations" section. This section has been expanded to include a full range of company, financial, corporate governance and other data that is useful to the financial community.
A replay will be available one hour after the end of the call through midnight Thursday, October 14, 2004. To access, dial (973) 341-3080 and enter the code 5162788, or visit the "Investor Relations" section of the Company's Web site.
International Speedway Corporation is a leading promoter of motorsports activities in the United States, currently promoting more than 100 events annually. The Company owns and/or operates 11 of the nation's major motorsports 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; California Speedway near Los Angeles; Kansas Speedway in Kansas City, Kansas; Phoenix International Raceway in Arizona; Homestead-Miami Speedway in Florida; Martinsville Speedway in Virginia; Darlington Raceway in South Carolina; and Watkins Glen International in New York. Other track ownership includes Nazareth Speedway in Pennsylvania and an indirect 37.5% interest in Raceway Associates, LLC, which owns and operates Chicagoland Speedway and Route 66 Raceway near Chicago, Illinois.
The Company also owns and operates MRN Radio, the nation's largest independent sports radio network; DAYTONA USA, the "Ultimate Motorsports Attraction" in Daytona Beach, Florida, the official attraction of NASCAR; and subsidiaries which provide catering services, food and beverage concessions, and produce and market motorsports-related merchandise under the trade name "Americrown." 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.
Consolidated Statements of Operations (In Thousands, Except Per Share Amounts) (Unaudited) Three Months Ended Nine Months Ended August 31, August 31, 2003 2004 2003 2004 REVENUES: Admissions, net $62,673 $56,735 $150,975 $147,358 Motorsports related income 74,806 75,753 191,944 211,709 Food, beverage and merchandise income 21,612 22,083 52,766 55,769 Other income 1,449 1,912 4,320 5,030 160,540 156,483 400,005 419,866 EXPENSES: Direct expenses: Prize and point fund monies and NASCAR sanction fees 26,329 23,278 68,786 69,919 Motorsports related expenses 31,610 33,041 74,960 79,957 Food, beverage and merchandise expenses 12,053 14,997 29,547 35,748 General and administrative expenses 20,169 23,243 59,765 66,503 Depreciation and amortization 10,470 11,159 30,980 33,179 Impairment of long- lived assets -- -- -- 13,217 Homestead-Miami Speedway track reconfiguration -- -- 2,829 -- 100,631 105,718 266,867 298,523 Operating income 59,909 50,765 133,138 121,343 Interest income 554 1,065 1,245 2,824 Interest expense (5,834) (4,833) (17,617) (17,301) Loss on early redemption of debt -- -- -- (4,988) Equity in net income from equity investments 5,176 5,253 2,154 2,318 Income from continuing operations before income taxes 59,805 52,250 118,920 104,196 Income taxes 23,305 20,547 46,853 41,665 Income from continuing operations 36,500 31,703 72,067 62,531 (Loss) income from discontinued operations, net of income taxes (547) 50 1,742 3,074 Gain on sale of discontinued operations, net of income taxes -- 36,337 -- 36,337 Net income $35,953 $68,090 $73,809 $101,942 Basic earnings per share: Income from continuing operations $0.69 $0.60 $1.36 $1.18 (Loss) income from discontinued operations (0.01) -- 0.03 0.06 Gain on sale of discontinued operations -- 0.68 -- 0.68 Net income $0.68 $1.28 $1.39 $1.92 Diluted earnings per share Income from continuing operations $0.69 $0.60 $1.36 $1.18 (Loss) income from discontinued operations (0.01) -- 0.03 0.06 Gain on sale of discontinued operations -- 0.68 -- 0.68 Net income $0.68 $1.28 $1.39 $1.92 Dividends per share $0.00 $0.00 $0.06 $0.06 Basic weighted average shares outstanding 53,064,693 53,092,962 53,054,252 53,079,888 Diluted weighted average shares outstanding 53,135,632 53,194,807 53,127,718 53,175,098 Consolidated Balance Sheets (In Thousands) November 30, 2003 August 31, 2004 (Unaudited) ASSETS Current Assets: Cash and cash equivalents $223,973 $286,133 Short-term investments 201 200 Receivables, less allowance of $1,500 in 2003 and 2004 37,996 46,104 Inventories 5,496 9,600 Prepaid expenses and other current assets 4,078 17,950 Total Current Assets 271,744 359,987 Property and Equipment, net of accumulated depreciation of $235,672 and $254,247, respectively 884,623 926,662 Other Assets: Equity investments 33,706 36,023 Intangible assets, net 1,033 149,000 Goodwill 92,542 98,688 Other 20,144 21,828 147,425 305,539 Total Assets $1,303,792 $1,592,188 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $232,963 $7,390 Accounts payable 15,739 32,710 Deferred income 106,998 159,847 Income taxes payable 6,877 3,667 Other current liabilities 13,928 18,432 Total Current Liabilities 376,505 222,046 Long-Term Debt 75,168 369,893 Deferred Income Taxes 113,414 161,483 Long-Term Deferred Income 11,894 11,772 Other Long-Term Liabilities 346 198 Commitments and Contingencies -- -- Shareholders' Equity: Class A Common Stock, $.01 par value, 80,000,000 shares authorized; 28,359,173 and 28,692,895 issued and outstanding at November 30, 2003 and August 31, 2004, respectively 283 287 Class B Common Stock, $.01 par value, 40,000,000 shares authorized; 24,858,610 and 24,575,152 issued and outstanding at November 30, 2003 and August 31, 2004, respectively 249 246 Additional paid-in capital 694,719 696,846 Retained earnings 34,602 133,314 Accumulated other comprehensive loss (333) (89) 729,520 830,604 Less: unearned compensation- restricted stock (3,055) (3,808) Total Shareholders' Equity 726,465 826,796 Total Liabilities and Shareholders' Equity $1,303,792 $1,592,188 Consolidated Statements of Cash Flows Nine Months Ended August 31, 2003 2004 (Unaudited) (In Thousands) OPERATING ACTIVITIES Net income $73,809 $101,942 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of discontinued operations -- (63,926) Depreciation and amortization 32,500 34,022 Amortization of unearned compensation 1,280 1,270 Amortization of financing costs 240 91 Deferred income taxes 25,958 48,069 Undistributed loss from equity investments (2,154) (2,318) Impairment of long-lived assets -- 13,217 Homestead-Miami Speedway track reconfiguration 2,829 -- Loss on early redemption of debt -- 4,988 Other, net (49) 608 Changes in operating assets and liabilities: Receivables, net (11,735) (4,267) Inventories, prepaid expenses and other assets (11,723) (17,861) Accounts payable and other liabilities 4,185 6,117 Deferred income 32,359 48,785 Income taxes payable 8,987 (3,152) Net cash provided by operating activities 156,486 167,585 INVESTING ACTIVITIES Capital expenditures (42,116) (71,524) Proceeds from asset disposals 178 85 Acquisition of business -- (193,745) Proceeds from sale of discontinued operations -- 100,391 Proceeds from affiliate 4,075 -- Proceeds from short-term investments 200 200 Purchases of short-term investments (200) (200) Other, net (1,034) (477) Net cash used in investing activities (38,897) (165,270) FINANCING ACTIVITIES Proceeds from long-term debt -- 299,570 Payment of long-term debt (5,500) (231,500) Payment of long-term debt redemption premium -- (5,340) Proceeds from interest rate swaps -- 2,771 Cash dividends paid (3,193) (3,196) Deferred financing costs -- (2,473) Reacquisition of previously issued common stock (336) (386) Exercise of Class A common stock options -- 399 Net cash (used in) provided by financing activities (9,029) 59,845 Net increase in cash and cash equivalents 108,560 62,160 Cash and cash equivalents at beginning of period 109,263 223,973 Cash and cash equivalents at end of period $217,823 $286,133
SOURCE International Speedway Corporation