They were up at Vegas and at Bristol, but not in Atlanta, which is the repercussion of having a rainout in the prior year.
Event-related revenues were up 10% from a year ago. A great deal of that came from the strong corporate revenues such as sponsorships and display and advertising, but other areas including camping and radio and food and beverage and the Las Vegas Neon Garage Fan Zone entertainment area were all strong. The results were offset a little by the sale in December of the Tribe racing school.
As expected, NASCAR broadcast revenues decreased $5 million as a result of the decline in broadcast.
Other operating revenue decreased about $600,000 from a year ago. The company had lower merchandise sales from the source international, the company’s electronic media company and less results in the oil and gas revenues but that decrease was offset slightly by better results from 600 Racing.
The other direct operating expenses increased because of increased operating cost and recovery allowances associated with oil and gas. The 600 Racing cost of goods were up because the company had better sales results and the TSI results sales were down aa well as the cost of goods.
Direct expense of events decreased about $800,000 primarily from the sale of the driving school.
The company also had a lower merchandising cost of goods from lower merchandising sales. Those trends were offset because Las Vegas had higher costs associated with opening the new media center and the garage and the band zone entertainment areas.
The general administrative expense decreased about $339,000 most from lesser insurance costs and a host of other small items.
Net increase expense decreased about $1.2 million and reflects higher cash balances that earned higher rates and in higher capitalized interest.
The company had a loss on equity investment of about $3.5 million. It was $2.3 million higher than the prior year.
That’s because the company’s Motorsports Authentics investment is a seasonal business and the first quarter was weaker than expected. The management still hopes for a breakeven for 2007.
Tax rate was a little less than last year.
Taxes are comprised of current tax expense, plus or minus changes of the deferred assets on balance sheet, plus or minus and specific reserves and the results of FIN 48 for uncertain tax positions. So it’s possible to see some volatility in that area but this year the company had a 38.3% rate in the first quarter. This is expected to be similar for the year but it could vary for the forementioned reasons. The company’s expectations are for 38% to 39% tax rate.
Key questions and answers from the first quarter fiscal 2007 earnings call conducted by Speedway Motorsports, Inc. (TRK) on May 9, 2007.
Eugene Socks (Cardinal Capital Management):
Can you talk about any results or write offs from your oil operations in the first quarter?
It’s all contained in the combination of the other operating revenue and the other direct operating expense and if we look at last year, there was a $3 million income in the net of those two areas and this year there’s probably a $2 million loss. We had less results at TSI but a lot of it is on poor results from our oil and gas activity.
Eugene Socks:
There were write offs in the fourth quarter of last year and in the earlier quarters. Was this a result of further write downs of receivables that you had?
It’s a combination. Probably the bulk of it is from recovery allowance.
Tom Andrews (BMO Capital Markets):
How do you think about Motorsports Authentics on a quarterly basis for the balance of the year?
The first quarter for Motorsports Authentics ends in February, so it lags our quarter by one month. The strongest quarters are probably the second and third quarters although fourth is also can be the strongest of all or not depending on how successful the chase is. The weakest is the first quarter so we hope to see better results particularly in the third and fourth quarters this year.
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