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Annual Report // 2 Annual 09 Report ANNUAL 09 REPORT INTERNATIONAL SPEEDWAY CORPORATION | ANNUAL REPORT 2 0 0 9 INTERNATIONAL SPEEDWAY CORPORATION INTERNATIONAL MOTORSPORTS CENTER ONE DAYTONA BOULEVARD DAYTONA BEACH, FL 32114 Driven to be the world leader in motorsports entertainment by providing superior, innovative, and thrilling guest experiences. International Speedway Corporation, (“ISC”) founded in 1953, is a leading promoter of motorsports themed entertainment activities in the United States. The Company owns and/or operates 13 of the nation’s premier motorsports entertainment facilities, which in total, have more than 1 million grandstand seats and over 525 suites. ISC’s facilities are located in six of the nation’s top 12 media markets and nearly 80 percent of the country’s population is located within the primary trading areas of its facilities. ISC promotes major motorsports events in every month of the racing season — more than any other motorsports promoter. Collectively, ISC’s 13 facilities promote well over 100 motorsports events during the racing season. • Daytona International Speedway® in Florida • Chicagoland Speedway® near Chicago, Illinois • Talladega Superspeedway® in Alabama • Route 66 RacewaySM near Chicago, Illinois • Michigan International Speedway® located outside Detroit • Homestead-Miami SpeedwaySM in Florida • Richmond International Raceway® in Virginia • Martinsville Speedway® in Virginia • Auto Club Speedway of Southern CaliforniaSM near Los Angeles • Darlington Raceway® in South Carolina • Kansas Speedway® in Kansas City, Kansas • Watkins Glen International® in New York • Phoenix International Raceway® in Arizona ISC also promotes major motorsports activities in Montreal, Quebec, through its wholly owned subsidiary, Stock-Car Montreal. In addition to motorsports facilities, ISC also owns and operates MRN Radio, the nation’s largest independent sports radio network; Daytona 500 Experience, the “Ultimate Motorsports Attraction” in Daytona Beach, Florida, and the official attraction of NASCAR; and, Americrown Service Corporation, a provider of catering services, food and beverage concessions, and merchandise sales. The Company also owns a 50 percent interest in Motorsports Authentics, a producer and marketer of motorsports-related merchandise licensed by certain competitors in NASCAR racing. National Association for Stock Car Auto Racing (NASCAR) is the most prominent sanctioning body in stock car racing, based on such factors as geographic presence, number of members and sanctioned events. ISC derives almost 90 percent of its revenues from NASCAR-sanctioned racing events. ISC also attributes its solid revenues and profits to an operating strategy that produces significant operating cash flow which is reinvested in strategic opportunities to grow the business and deliver shareholder value. ANNUAL 09 REPORT Dear International Speedway Corporation Shareholders, Partners and Employees: y any measure, 2009 was a challenging year. Revenues decreased $94.1 million to $693.1 million and we Breported non-GAAP net income of $90.7 million or $1.86 per diluted share. On a comparable basis, non- GAAP net income for fiscal 2008 was $138.1 million or $2.78 per diluted share. We continued to record solid results in an unfavorable economic environment exacerbated by high unemployment and diminished consumer confidence not experienced in decades. In spite of these headwinds, through ISC’s strong contracted revenues coupled with sustainable cost reductions and a dedicated employee team focused on ISC’s strategic plan, we remain in excellent financial condition. In a year that will be known for its many challenges, ISC achieved notable results, including: • As the industry leader, we successfully hosted more major motorsports events than any other promoter in the country, including 47 NASCAR national touring events; five IndyCar events; six Grand-Am events; five ARCA events; two AMA Pro Racing events; and one NHRA event, as well as countless other motorsport events across our 14 North American facilities. • Favorable resolution of our dispute with the Internal Revenue Service that resulted in $111 million in funds on deposit being returned to the Company. • Retirement of $150 million in senior notes without refinancing during unfavorable capital market conditions. • Agreement for the sale of 646 acres on Staten Island that will net ISC in excess of $100 million including tax benefits, once the sale is completed. • Subsequent to the fiscal year-end, we received the final approval for the gaming license from the Kansas Racing and Gaming Commission to proceed with the development of a world-class Hollywood-branded casino at Kansas Speedway with our partner Penn National Gaming. • The United States Court of Appeals ruled in our favor in the litigation with the previous owners of Kentucky Speedway. • Initiated steps to restructure our merchandising joint venture, Motorsports Authentics. While we are proud of these accomplishments, we must continue to promote and innovate to raise the prominence of motorsports entertainment nationally. It all starts with getting people to attend our motorsports ISC // 09 ANNUAL REPORT // 2 ANNUAL 09 REPORT events. No other form of entertainment provides the rush of adrenaline experienced when sophisticated, high-tech machinery driven by the sport’s best drivers roars past, at times in excess of 200 MPH. It is this visceral connection that creates motorsports fans and keeps them coming back to their favorite track year after year. Unfortunately, our fans, like most everyone else in the country, were negatively affected by the economic conditions of the past two years. While still attending en masse, fans are not spending as much as they did prior to the recession. In our view, this phenomenon will continue to be the case until the unemployment situation improves and consumer confidence increases. Back when our fans felt secure with their jobs and income levels, they came out in force to support their favorite driver and form of motorsports. We are not sitting idly by waiting for conditions to improve; instead we are taking the necessary steps to keep fans engaged in the sport. Last year, beginning with the DAYTONA 500, we introduced entry- level ticket pricing to make attending our NASCAR Sprint Cup events more affordable. The results were impressive – sales of these tickets spiked and we witnessed the entry of many new fans. In response to that success, this strategic initiative has been expanded for the 2010 NASCAR Sprint Cup Series season. Our consumer initiatives are focused on ensuring the millions of fans who attend our events receive great entertainment value coupled with an unforgettable at-track experience. In addition to our value pricing, we have introduced special ticket offers for children, from half-price NASCAR Sprint Cup Series tickets to free admission to certain NASCAR Nationwide and Camping World Truck Series events. We have expanded our installment payment programs, and our fans now have the option of print-at-home ticketing. This is just one of the ways we have leveraged technology to provide our customers with exceptional service and to increase ticket sales. We know our consumer initiatives are the right long-term strategy to drive growth in our sport. Attendance at our events drives corporate interest and spending levels. Home Depot, Sprint, AAA, Ford, Bank of America, Kroger and Coca-Cola, are but a few of the hundreds of partners that want to connect with the fans at our events. The brand affinity fans have with drivers’ sponsors and the favorable demographics TONY STEWART PREPARES TO DRIVE IN HIS ISC // 09 ANNUAL REPORT // 3 FIRST YEAR AS AN OWNER/DRIVER AT DAYTONA. of the NASCAR nation create a winning combination for marketing programs. It is the reason why there is more corporate participation in NASCAR than in other sports. Our corporate partnerships are experiencing pricing pressures. These challenges are not unique to NASCAR. All sports are feeling pressure as corporations are scrutinizing their marketing expenditures closely. 2009 presented us with an unprecedented turn of events with the bankruptcies of two of the ‘Big Three’ auto manufacturers. While the bankruptcy of GM and Chrysler did not have a material impact on our financial results, we do anticipate that the scope of future partnership deals with auto manufacturers will be impacted near-term. Fortunately, the auto manufacturers, similar to our other corporate partners, are participating in motorsports because racing is uniquely suited to showcase their brands with a clear return on their investment. Driven: TO BE SUPERIOR Driven: TO BE THRILLING No company has the breadth of motorsports facilities and scope of motorsports events equal to ISC. With 14 major motorsports facilities in North America and over 100 motorsports events including 21 NASCAR Sprint Cup Series events spanning the entire motorsports season, our corporate partners have the ability to reach more customers, more times, in more areas of the country than any other motorsports promoter. This is a key strategic and enduring competitive advantage for ISC. ANNUAL 09 REPORT We excel at managing the corporate sales process through active prospecting and by working with existing partners to keep them involved in the sport. In addition, we have secured deals with new corporate partners, such as Able Body Labor, HP Hood and Hershey’s Milk and Milkshakes, as well as doing deals with companies that are returning to again partner with ISC such as UAW and Valvoline. We welcome
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