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International Speedway Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: April 3, 2012 03:07PM
International Speedway Corp. (ISCA) filed Quarterly Report for the period ended 2012-02-29.
Highlight of Business Operations:Domestic broadcast and ancillary media rights fees revenues are an important component of our revenue and earnings stream. Starting in 2007, NASCAR entered into new combined eight-year agreements with FOX, ABC/ESPN, TNT and SPEED for the domestic broadcast and related rights for its three national touring series Sprint Cup, Nationwide and Camping World Truck. The agreements total approximately $4.5 billion over the eight-year period from 2007 through 2014. This results in an approximate $560.0 million gross average annual rights fee for the industry, a more than 40.0 percent increase over the previous contract average of $400.0 million annually. The industry rights fees were approximately $530.0 million, $545.0 million and $565.0 million for fiscal 2009, 2010 and 2011, respectively, and will be approximately $585.0 million for 2012; $605.0 million for 2013; and, $630.0 million for 2014.
Domestic broadcast media rights fees provide significant cash flow visibility to us, race teams and NASCAR over the contract term. Television broadcast and ancillary rights fees from continuing operations received from NASCAR for the NASCAR Sprint Cup, Nationwide and Camping World Truck series events conducted at our wholly owned facilities under these agreements, and recorded as part of motorsports related revenue, were approximately $64.9 million and $53.7 million for three months ended February 28, 2011 and February 29, 2012, respectively. Operating income generated by these media rights were approximately $47.6 million and $39.0 million for the three months ended February 28, 2011 and February 29, 2012, respectively.
Motorsports related revenue decreased approximately $17.2 million, or 17.6 percent, during the three months ended February 29, 2012, as compared to the same period of the prior year. The decrease for the three month period is largely attributable to the previously mentioned timing of the spring events at Phoenix, as well as reduced ancillary rights. To a lesser extent, sponsorship, suite and hospitality revenue for certain events held during Speedweeks at Daytona also contributed to the decrease. Partially offsetting the decreases was an increase in television broadcast revenue for events held during Speedweeks at Daytona.
Motorsports related expenses decreased approximately $2.5 million, or 10.2 percent, during the three months ended February 29, 2012, as compared to the same period of the prior year. The decrease for the three month period is attributable to the previously mentioned timing of the spring events at Phoenix. Slightly offsetting this decrease were increased expenses related to the certain non-event operations and events conducted during Speedweeks at Daytona. Motorsports related expenses as a percentage of combined admissions and motorsports related revenue increased to 19.4 percent for the three months ended February 29, 2012, as compared to 18.3 percent for the same period in the prior year. The margin decrease is primarily due to the previously discussed timing of events held at Phoenix.
Our wholly owned subsidiary, Raceway Associates, LLC, which owns and operates Chicagoland Speedway and Route 66 Raceway, has debt outstanding in the form of revenue bonds payable (4.8 percent Revenue Bonds), consisting of economic development revenue bonds issued by the City of Joliet, Illinois to finance certain land improvements. The 4.8 percent Revenue Bonds have an interest rate of 4.8 percent and a monthly payment of $29,000 principal and interest. At February 29, 2012, outstanding principal on the 4.8 percent Revenue Bonds was approximately $1.2 million.