International Speedway Corporation Reports Financial Results for the Second Quarter of Fiscal 2014

Second Quarter Comparison

Total revenue for the second quarter ended May 31, 2014 was approximately $190.3 million, compared to revenue of approximately $178.4 million in the prior-year period.  Operating income was approximately $34.7 million during the period compared to operating income of approximately $37.1 million in the second quarter of fiscal 2013.  Year-over-year comparability was impacted by:

• During the three months ended May 31, 2013, we expensed approximately $1.1 million, or $0.01 per diluted share, of certain ongoing carrying costs related to our Staten Island property. There were no comparable costs in the same period of fiscal 2014;
• During the three months ended May 31, 2014, we recognized approximately $0.3 million, or less than $0.01 per diluted share, in marketing and consulting costs that are included in general and administrative expense related to DAYTONA Rising. During the three months ended May 31, 2013, we recognized approximately $0.3 million, or $0.01 per diluted share, of similar costs;
• During the three months ended May 31, 2014, we recognized approximately $3.0 million or $0.04 per diluted share of accelerated depreciation that was recorded due to the shortening the service lives of certain assets associated with DAYTONA Rising. There were no comparable amounts in the same period of fiscal 2013;
• During the three months ended May 31, 2014, we recognized approximately $1.2 million, or $0.02 per diluted share, of losses primarily attributable to demolition and/or asset relocation costs in connection with DAYTONA Rising and capacity management initiatives. During the three months ended May 31, 2013, we recognized approximately $0.7 million, or $0.01 per diluted share, of losses associated with asset retirements primarily attributable to the removal of assets not fully depreciated in connection with certain capital improvements; and
• During the three months ended May 31, 2014, we capitalized approximately $1.4 million, or $0.02 per diluted share, of interest related to DAYTONA Rising. There was no interest capitalized related to DAYTONA Rising in the same period of fiscal 2013.

Net income for the second quarter ended May 31, 2014 was approximately $21.5 million, or $0.46 per diluted share, compared to net income of approximately $22.4 million, or $0.48 per diluted share, in the prior year period.  Excluding certain marketing and consulting costs incurred associated with DAYTONA Rising, accelerated depreciation, losses associated with the retirements of certain other long-lived assets, DAYTONA Rising project capitalized interest, and net loss on sale of certain assets, non-GAAP (defined below) net income for the second quarter of 2014 was $23.4 million, or $0.50 per diluted share.  Non-GAAP net income for the fiscal second quarter of 2013 was $23.7 million, or $0.51 per diluted share. 

Year-to-Date Comparison

For the six months ended May 31, 2014, total revenues were $322.1 million, compared to $306.9 million in 2013.  Operating income for the six-month period was $57.1 million compared to $62.2 million in the prior year.  Year-over-year comparability was impacted by:

• On January 31, 2014, Speedway Motorsports, Inc. ("SMI") abandoned its interest and rights in SMISC, LLC, the Company's 50/50 joint venture which owns and operates Motorsports Authentics, LLC ("MA"), consequently bringing our ownership of MA to 100.0 percent. MA's operations were consolidated subsequent to the date of SMI's abandonment.  Prior to January 31, 2014, MA was accounted for as an equity investment in our financial statements.  As a result of SMI's abandonment of their interest in MA, we recorded other income of approximately $5.4 million representing the fair value of MA, over the carrying value, as of January 31, 2014.  In addition we recognized a tax benefit of approximately $1.8 million;
• During the six months ended May 31, 2013, the Company expensed approximately $1.9 million, or $0.03 per diluted share, of certain ongoing carrying costs related to its Staten Island property.  There were no comparable costs in the same period of fiscal 2014;
• During the six months ended May 31, 2013, the Company recognized approximately $0.6 million, or $0.01 per diluted share, related to a judgment following litigation involving certain ancillary facility operations. There were no comparable costs in the same period of fiscal 2014;
• During the six months ended May 31, 2014, we recognized approximately $0.6 million, or $0.01 per diluted share, in marketing and consulting costs that are included in general and administrative expense related to DAYTONA Rising. During the six months ended May 31, 2013, we recognized approximately $0.7 million, or $0.01 per diluted share, of similar costs;
• During the six months ended May 31, 2014, we recognized approximately $6.0 million or $0.08 per diluted share of accelerated depreciation that was recorded due to the shortening the service lives of certain assets associated with DAYTONA Rising.  There were no comparable amounts in the same period of fiscal 2013;
• During the six months ended May 31, 2014, the Company recognized approximately $3.4 million, or $0.05 per diluted share, of losses primarily attributable to demolition and/or asset relocation costs in connection with DAYTONA Rising and capacity management initiatives.  During the six months ended May 31, 2013, the Company recognized approximately $2.3 million, or $0.03 per diluted share, of losses associated with asset retirements primarily attributable to the removal of assets not fully depreciated in connection with certain capital improvements; and
• During the six months ended May 31, 2014, we capitalized approximately $2.4 million, or $0.03 per diluted share, of interest related to DAYTONA Rising. There was no interest capitalized related to DAYTONA Rising in the same period of fiscal 2013.

Net income for the six months ended May 31, 2014 was $41.4 million, or $0.89 per diluted share, compared to a net income of $36.0 million, or $0.77 per diluted share in 2013.  Excluding certain marketing and consulting costs incurred associated with DAYTONA Rising, accelerated depreciation, losses associated with the retirements of certain other long-lived assets, DAYTONA Rising project capitalized interest, MA fair value adjustment and income tax benefit, and net loss on sale of certain assets, non-GAAP (defined below) net income for the six months ended May 31, 2014, was $38.9 million, or $0.84 per diluted share.  This is compared to non-GAAP net income for the first six months of 2013 of $39.3 million, or $0.85 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 2013 relate to carrying costs of our Staten Island property, legal judgment, marketing and consulting costs incurred associated with DAYTONA Rising, losses associated with the retirements of certain other long-lived assets and net gain on sale of certain assets.

The adjustments for 2014 relate to marketing and consulting costs incurred associated with DAYTONA Rising, accelerated depreciation, losses associated with the retirements of certain other long-lived assets, DAYTONA Rising project capitalized interest, MA fair value adjustment and income tax benefit, and net gain on sale of certain assets.

The Company believes such non-GAAP information is useful and meaningful and is used by investors to assess its core operations, which consist of the ongoing promotion of racing events at its major motorsports entertainment facilities. Such non-GAAP information adjusts for items that are not considered to be reflective of the Company's continuing core operations at its motorsports entertainment facilities. The Company believes that such non-GAAP information improves the comparability of its operating results and provides a better understanding of the performance of its core operations for the periods presented. The Company uses this non-GAAP information to analyze the current performance and trends and make decisions regarding future ongoing 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. The presentation of this non-GAAP financial information is not intended to be considered independent of or as a substitute for results prepared in accordance with GAAP. The Company uses both GAAP and non-GAAP information in evaluating and operating its business and as such deemed it important to provide such information to investors.

	Three Months Ended								Six Months Ended
	May 31, 2013				May 31, 2014				May 31, 2013				May 31, 2014
	(Unaudited)
	(In Thousands, Except Per Share Amounts)
Net income	$	22,440			$	21,469			$	35,953			$	41,364
Adjustments, net of tax:
Carrying costs related to Staten Island	643				—				1,176				—
Legal judgment	5				—				351				—
DAYTONA Rising project	204				155				398				390
Accelerated depreciation	—				1,828				—				3,649
Losses on asset retirements	456				742				1,395				2,092
DAYTONA Rising project capitalized interest	—				(862)				—				(1,438)
MA fair value adjustment and income tax benefit	—				—				—				(7,212)
Net (gain) loss on sale of certain assets	(1)				53				(1)				46
Non-GAAP net income	$	23,747			$	23,385			$	39,272			$	38,891
Per share data:
Diluted earnings per share	$	0.48			$	0.46			$	0.77			$	0.89
Adjustments, net of tax:
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