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Monday, July 10, 2006

International Speedway (ISCB)

ISCB (sec) International Speedway. These guys own Daytona, Talladega, Michigan International, and several others like Watkins Glen.

[It makes me think of Ben Keaton. Pause for a moment of silence.]

10-K period ending Nov 30, 2005
March 29, 2006 press release
10-Q period ending Feb 28, 2006
June 16, 2006 press release revolver facility
10-Q period ending May 31, 2006

Assets are almost entirely PP&E. Way more than half equity. $2 billion in assets (but only $13.8 million in quarterly depreciation).

2nd quarter's revenues are $172 million. This is an asset intensive business.
Revenues are up from prior year. 30% operating margins. 17.8% net margins.
1.5% quarterly return on assets. Looking at the 10-K and checking 4 years of numbers (roughly), they seem to get like a 7% return on assets, probably very inflation adjusting.

Looking at the 10-K, here are the annual revenues:
2001: $502 million (income tax = $61.6 million)
2002: $524 million (+4.4%) (income tax = $65.9 million)
2003: $549 million (+4.8%) (income tax = $66.0 million)
2004: $648 million (+18%) (income tax = $82.2 million)
2005: $740 million (+14%) (income tax = $101.9 million)
Income tax changes can sometimes be a useful measure of profitability.

Q2 revenue growth was "only" 9.6%.

But capex has been pretty high during at least the last three years (more than double depreciation) so there's been investment plowed into the business (hopefully this isn't de facto maintenance capex). Free cash flow has actually been dropping over the last three years as capex has been greatly increasing. Good? Bad? I don't know.

Capex dropped during 2006.

Big debt, sometimes big financing cash flows.

Big question: Is NASCAR a trend? a fad? There may be some short term trendiness, but I believe it's a long term trend going back decades. The last three years have seen big increases in revenues from all sources, which probably has attracted a lot of attention to the stock, so it's probably less likely to be cheap, but you never know. I haven't done a detailed look at it yet.

Diluted shares have held fairly steady over they years at around 53 million (currently 53.2 million). Assume 55 million totally diluted shares.

Maybe they're worth $50 per share, perhaps more. Check closer if they screw up and the stock drops to say $35.

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