This summary is based on the third quarter fiscal 2007 earnings call conducted by International Speedway Corporation (ISCA: chart) on October 4, 2007.
Management:
EVP, Chief Operating Officer: John Saunders
SVP, Chief Finance Officer: Susan Schandel
Investor Relations: Wes Harris
Key Investors Issues
- Signed agreements with Lifelock for Kansas City''s Speedway cup race, and Sharp Aquia’s for California''s Labor Day Cup Week.
- Closed on the acquisition of Raceway Associates, owner and operator of Chicagoland Speedway and Route 66 Raceway.
- Purchased 495,000 shares of the Class A common stock for a $25 million
Third Quarter Highlights
Revenues increased to $196.3 million, compared to $178.9 million in the prior-year period, though operating income declined 6.9% to $48.2 million from $51.8 million in 2006.
- Admissions revenue increased to $63 million, due to the consolidation of Chicagoland Speedway and Route 66 Raceway. Offsetting this increase was the timing of the Kansas IRL weekend, and to a lesser extent, lower than anticipated results at Michigan and Daytona.
- Television broadcast rights fees from NASCAR''s consolidated contracts that began in 2007, were down 12% from 2006.
- Food, beverage and merchandise revenue decreased to $17.7 million driven by the timing of the IRL weekend at Kansas and inclement weather at the August Michigan race. The decline was partially offset by the consolidation of concession and catering revenue at Chicagoland and Route 66 this year.
Net income decreased by 72% to $9.5 million, or 18 cents per share, compared to $34.3 million, or 64 cents a share in the prior year.
- The firm recognized $1.6 million, or 3 cents per share in deferred income tax expense attributable to enactment of an income-based tax system in the state of Michigan and the write-down by Motorsports Authentics (MA) of certain inventory and related assets, which is included in ISC''s equity losses.
- NASCAR direct expenses increased to $35.1 million attributable to the consolidation of Chicagoland Speedway and offset by lower television broadcast rights fees, a percentage of which are paid as part of the prize money.
- Motorsports-related expense increased to $47.1 million, due to the consolidation of Raceway Associates.
- Depreciation increased to $23.8 million, following the accelerated depreciation of $6.9 million associated with the Daytona Live project and the acquisition of Raceway Associates.
Interest income was flat, at $1.4 million, though interest expense rose to $4 million, due to lower capitalized interest and interest related to the debt assumed as part of the Raceway Associates acquisition.
- Combined cash and short-term investments totaled $96 million.
- Total debt was $378 million, including $301 million in senior notes, $67 million in bonds associated with Kansas, and $10 million in debt associated with Chicagoland Speedway and Route 66 Raceway, which is now consolidated.
- The firm purchased 495,000 shares of the Class A common stock for a $25 million, bringing the total number of shares purchased from December through August to 1 million shares.
Third Quarter Weekend Events
- The Glen hosted a weekend of open wheel racing, culminating with the Camping World’s Watkins Glen Grand Prix.
- Richmond posted a 25% increase in weekend attendance, anchored by the SunTrust Indy Challenge presented by XM.
- Route 66 Raceway hosted the NHRA Nationals in June, highlighted by increased attendance over the prior year.
- Michigan hosted Nextel Cup and Craftsman Truck as well as the ARCA Series races in June. However, ongoing weak economic conditions in the region continued to impact attendance for Michigan''s events.
Improvements to the fan experiences include enhancements in the post-race traffic on Sunday, reducing egress time to two hours.
- Daytona hosted a weekend of NASCAR and Grand Am racing, highlighted by the second-closest finish in cup history.
- The Pepsi 400 weekend has been challenged by inclement weather over the past few years, and this year''s Friday Night Busch Race was rained out and run on Saturday morning.
- The NEXTEL Cup and Busch Series traveled to Chicagoland Speedway in mid-July for a weekend of stock car racing, culminating in Tony Stewart’s 30th cup victory.
- The Chicagoland Speedway track announced it will install lights in time for the 2008 NEXTEL Cup, allowing events to be run later in the day when the temperatures are cooler, enhancing the atmosphere while providing a hedge against bad weather.
The Michigan August open wheel racing anchored by the Firestone Indy 400 was the last IRL event at Michigan International Speedway as the company was unable to reach an agreement on a mutually beneficial event date.
- The inaugural NASCAR Busch and Grand Am weekend at Circuit Giles Villeneuve in Montreal hosted a strong crowd to witness the first-ever Busch Series race in Canada.
- Watkins Glen hosted a successful NEXTEL Cup, Busch and Grand Am series weekend, anchored by the Centurion Boats at the Glen with total weekend attendance up 5% over the prior year.
- The company partnered with World Access to offer fans event ticket insurance beginning in 2008 covering the price of a fan''s ticket should they be forced to miss an event for a covered reason such as medical emergencies, jury duty or other extenuating circumstances.
- California Speedway hosted cup and Busch racing on Labor Day weekend though adverse weather conditions negatively impacted attendance-related revenues.
Fourth Quarter Events
- The Chase for the Championship field was set in Richmond at the Chevy Rock ‘n Roll 400, highlighted by the 32nd consecutive NEXTEL Cup sellout.
- Chicagoland Speedway hosted a season finale weekend for the IRL Indy Car Series.
- The firm recently hosted the first race in the NEXTEL Cup Chase for the Championship at Kansas Speedway with record sold-out attendance for both the cup and Busch events.
- Advance tickets for the upcoming NEXTEL Cup, Craftsman Truck and ARCA racing at Talladega are trending behind prior year due to the distance fans have to travel to attend as well as the promotion surrounding the release of the movie, Talladega Nights in 2006.
- Martinsville will host a NEXTEL cup and truck weekend, Phoenix will host a NASCAR triple header weekend, of cup, Busch and truck racing, and Homestead Miami will host the Ford Championship Weekend.
Corporate Sponsorship
