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Charles N. Talbert - Senior Director of Investor and Corporate Communications

Lesa France Kennedy - Vice Chairwoman and Chief Executive Officer

John R. Saunders - President

Daniel W. Houser - Chief Financial Officer, Chief Accounting Officer, Senior Vice President and Treasurer


Jaime M. Katz - Morningstar Inc., Research Division

Stephen Altebrando - Sidoti & Company, LLC

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

International Speedway (ISCA) Q3 2013 Earnings Call October 3, 2013 9:00 AM ET


Good morning, and welcome to the International Speedway Corporation 2013 Third Quarter Conference Call. [Operator Instructions] As a reminder, this conference is being recorded on Thursday, October 3, 2013. I would now like to turn the conference over to Charles Talbert. Mr. Talbert, please go ahead.

Charles N. Talbert

Thank you, operator. Good morning, everyone, and welcome to International Speedway's conference call. We are here to discuss the company's results for the third quarter ended August 31, 2013. With us on this morning's call are Lesa France Kennedy, Chief Executive Officer; John Saunders, President; and Dan Houser, Senior Vice President and Chief Financial Officer.

After our formal remarks, a question-and-answer period will follow. The operator will instruct you on procedures at that time. Before we start, I would like to address forward-looking statements that may be addressed on the call.

Forward-looking statements involve risks, uncertainties and assumptions. Actual future performance, outcomes and results may differ materially from those expressed in these forward-looking statements. Please refer to the documents filed by International Speedway Corporation with the SEC, specifically, the most recent reports on Form 10-K and 10-Q, which identify important risk factors which could cause actual results to differ from those contained in these forward-looking statements.

So with these formalities out of the way, I'll turn the call over to Lesa Kennedy. Lesa?

Lesa France Kennedy

Good morning and thank you for participating on today's call. It has been a very active few months for us. Since we last spoke in July, we have realized a number of significant objectives that put ISC in a much stronger position for the long-term.

First, NASCAR announced a broadcast agreement with NBC and amended the previously announced Fox agreement through the 2024 NASCAR season. These agreements represent the largest broadcast rights deal in the sport's 65-year history.

Broadcast revenues represent our largest revenue source, almost 50% of total revenues. Having this visibility through 2024 places us in an enviable position compared to other industries and will provide unparalleled long-term cash flow.

Next, in August, we closed on the sale of our Staten Island property. In addition to receiving $7.5 million at closing, a $72.5 million interest-bearing note receivable, and a significant cash tax benefit, we are eliminating approximately $4 million of annual carrying cost with this sale. We also announced in August our partnership with Jacoby Development for the landmark project named ONE DAYTONA, a proposed mixed-use and entertainment destination located directly across from the Daytona International Speedway. We envision ONE DAYTONA will become a vibrant and exciting upscale year-round destination. We're very excited about this partnership and the potential impact of this important project to our company. Jacoby has a successful track record, spanning more than 30 years, and we are thrilled to have them on board for ONE DAYTONA.

And finally, before I turn it over to John and Dan, we broke ground on the redevelopment of the fund stretch of Daytona International Speedway. Today, DAYTONA Rising is running at full speed. At the conclusion of the redevelopment, Daytona International Speedway will have approximately 101,000 permanent, wider, and more comfortable seats, twice as many restrooms and 3x as many concession stands. In addition, the Speedway will feature over 60 luxury suites and a completely revamped hospitality experience for our corporate guests.

We're confident that elevating the experience at the most important motorsports facility in North America will grow the DAYTONA 500 brand, our 12 other motorsports facilities brands, and NASCAR's brand. And ultimately, it will influence attendance trends, corporate involvement in the sport, and the long-term strength of future broadcast media rights revenues.

So with that, I would like to thank all of you, and I will now turn it over to John Saunders.

John R. Saunders

Thank you, Lesa, and good morning, everyone. During the quarter, we hosted 4 NASCAR Sprint Cup weekends. We were encouraged with the results. Both Daytona and Watkins Glen had increased attendance at their respective Sprint Cup events. The 2 Michigan events were down year-over-year in attendance, but the average ticket prices for the combined events increased and were in part responsible for the third quarter's average ticket price for Sprint Cup's events to be up slightly. This quarter's Sprint Cup attendance results were a continuation of last quarter where we had increased growth or flat attendance at Phoenix, Auto Club and Kansas. We remain encouraged with this trend but realize there is still risk associated with attendance and their associated revenues at our events.

While overall, the U.S. economy continues to remain resilient, recent figures released by governmental agencies and retailers such as Walmart, whose second quarter stated customers are curbing their spending, show a potentially concerning picture of the economy emerging. Even as consumer spending is feeling the economic recovery, mid to lower-income households are being left behind, while higher-end households are seemingly doing well.

Essentially, we're seeing a bit of a split economy underscoring the unevenness of the recovery. The fact that half of our Sprint Cup points events experienced increased growth or roughly flat attendance this year is encouraging and potentially bears out that we are moving in the right direction. Certainly, a more meaningful recovery in NASCAR's core demographic would fuel more growth for the industry. That said, we remain optimistic that we will see additional year-over-year attendance increases at our remaining 2013 events.

Phoenix is trending toward a third straight sellout of its cup event in November. Advanced ticket sales for cup events are currently down on average, approximately 5% in units and 7% in revenue compared to this time last year. As a result, as Dan will discuss in more detail, we are maintaining our earnings guidance that are more comfortable at the mid to low end of the ranges. We continue to focus our efforts on increasing advance sales earlier in the sales cycles supported by strategic initiatives, including capacity management initiatives.

We are committed to meeting and exceeding our fan's expectations through ongoing capital improvements at our facilities. We are providing our fans enhanced audio and visual experiences, more comfortable and wider seating, more points of sale and greater social connectivity.

Capacity management initiatives are a continuation of our commitment to improve the at-track experience by providing better sightlines and equal access to the facilities and amenities, including pre-race experiences, points of sale or social zones, we are ultimately improving fan engagement. Other benefits of increasing fan engagement through capacity management include better pricing power, increased tickets sold earlier, thereby reducing the impact of forecasted or actual inclement weather on ticket sales, increased customer retention and allowing for increased level of promotion for our leading events, which will drive additional ticket sales.

Capacity management has been prevalent in other professional sports, particularly Major League Baseball. The fact is, fans and corporate customers are consuming sports in vastly different ways from how they did 10 to 15 years ago. We would argue that baseball hasn't suffered by moving out of the multi-sport stadiums into ballparks that are better matched for consumer and corporate demand. It is a much better experience for the consumer, which in turn, increases engagement. We believe our sport can accomplish the same through competitive racing, coupled with a heightened at-track experience. Increasing engagement will improve attendance trends and positively influence corporate sales, which will continue to provide us with strong revenue visibility.

Corporate sponsorship continues to perform to our expectations. We have entitled all of our NASCAR Sprint Cup, Nationwide and Camping World Truck Series events for the year, allowing the sales team to focus more resources on media advertising, prospecting, and growing official status categories. Our strategy has been to introduce companies into an ISC partnership at the appropriate level and build relationships while delivering value. This creates the gateway to great growth opportunities for the company.

For our 2013 fiscal year, we expect to be within 1 or 2 percentage points of our fiscal year target, despite some ongoing softness in our motor racing network, media advertising and Sprint Vision sales.

Corporate entertainment dollars appear to be increasing throughout sports and entertainment venues. We are seeing a shift, however, from a larger group hospitality towards smaller hospitality that is more scalable, providing a more intimate client experience. Our Daytona redevelopment, DAYTONA Rising, will provide not only an expansive platform for our marketing partners, but also an elevated hospitality experience that will exceed partner's expectations for a more intimate, scalable and effective offering.

Our Hollywood Casino at Kansas Speedway continues to perform in line with expectations and provides a good model on ways that we can partner with best-in-class to create shareholder value. With the casino providing cash distributions to ISC of approximately $21.5 million this fiscal year, which we have already received, we are confident the operations will significantly contribute to earnings and shareholder value for years to come. And as Lesa mentioned, we have ONE DAYTONA potentially on the horizon, which if undertaken, will provide us with an additional revenue stream.

This is an exciting time for us. Importantly, the worst is behind us, and the initiatives we and industry have undertaken and are currently undertaking, will support and encourage growth for our business for the foreseeable future.

I will now turn the call over to Dan Houser.

Daniel W. Houser

Thanks, John, and good morning, everyone. I too, echo Lesa and John's sentiments about ISC's long-term prospects. We're pleased with our third quarter and 9-month results. In most areas of our business, we continue to be encouraged by signs of stabilization. There is work to be done, but our efforts have and will pay off.

Affecting quarterly comparisons is the NASCAR Camping World Truck Series event held at Chicagoland in the third quarter of fiscal 2012 that was held in the fourth quarter of fiscal 2013. Other items affecting comparison for our third quarter include: carrying costs related to Staten Island; losses associated with the retirement of certain long-lived assets and accelerated depreciation driven by shortened service lives of certain assets, in connection with DAYTONA Rising, capacity management initiatives and other capital improvements; and marketing and consulting costs incurred for our DAYTONA Rising project.

All these are outlined in the earnings news release and are included in our GAAP to non-GAAP reconciliation where appropriate.

Going to the income statement, our admissions revenue for the third quarter decreased low-single digits to $25.4 million, which was largely attributable to attendance for certain events, as well as the timing of the NASCAR Camping World Truck Series event at Chicagoland. Attendance revenue for comparable events is down less than 1%. The increase in motorsports-related revenues to $79.8 million was primarily attributable to contracted increases in television broadcast rights. Partially offsetting the increase were lower motor racing network advertising and Sprint Vision revenues.

For the quarter, ISC's television broadcast and ancillary revenue was $51.7 million, which includes $206,000 related to ancillary rights. Food, beverage and merchandise revenue of $8.9 million was comparable to the same period in the prior year. Prize and point fund monies and NASCAR sanction fees increased slightly to $30.2 million due to higher television broadcast rights fees for our NASCAR series event, and to a lesser extent, sanction fees paid to NASCAR. Offsetting the increase was the timing of the Truck event held at Chicagoland.

Motorsports-related expense increased to $30.3 million. The slight increase is primarily attributable to advertising expenses and other direct event costs. Offsetting this increase were expenses related to the timing of the Truck event at Chicagoland.

Decrease in food, beverage and merchandise expense to $6.9 million was largely due to improved margin on concession sales for events held during the quarter. The margin improvement for the period is a result of streamlined menus aimed at reducing overall food cost by leveraging purchasing power while elevating quality and delivery.

General and administrative expense increased to $27.5 million for the quarter. The increase is primarily attributable to certain administrative costs, including merit pay increases and marketing and consulting costs incurred for DAYTONA Rising. Partially offsetting the increase were lower property taxes and legal fees. And going forward, as Lesa mentioned, we've eliminated approximately $4 million of annual carrying costs with the sale of our Staten Island property.

The increase in depreciation and amortization expense to $27.2 million for the quarter is largely due to shortening service lives of certain assets associated with DAYTONA Rising and capacity management initiatives.

Loss on retirement of long-lived assets of approximately $8.1 million is primarily attributable to our capacity management initiatives, the removal of assets not fully depreciated in connection with DAYTONA Rising and other guest enhancements at our facilities. Specific to DAYTONA Rising, accounting conventions during the construction period, as well as when Daytona comes online, will impact our reported financials. Based on our current plans for DAYTONA Rising, we have identified existing assets that are expected to be impacted by the redevelopment and will require accelerated depreciation or a loss on asset retirements, totaling approximately $50 million over the approximate 26-month project time span. In addition, we will have significant capitalized interest through the project, which I will discuss shortly.

Interest income was comparable to the same period of the prior year. Of note here is while we sold our Staten Island property and our hold in the secured mortgage of $72.5 million, which includes annual interest on the outstanding balances, however, we have accounted for this transaction using the cost recovery method and are deferring recognition of any profits and interest income until the final payment is made, which will be in the first quarter of 2016.

Interest expense during the quarter was comparable to the same period in the prior year, with interest on our private placements offset by a 0 balance on our revolving credit facility and higher capitalized interest during the current quarter.

Equity and net income from equity investments of approximately $2.9 million represents our 50% equity interest in the Hollywood Casino at Kansas Speedway. Our current expectation for ISC's 2013 equity income is approximately $8.5 million. As mentioned on the last earnings call, in June, the casino received a property tax credit as a result of successfully negotiating a resolution to its property tax appeal. Our share of that resolution, attributable to prior year's property taxes, contributes approximately $1 million to our fiscal 2013 estimates. And we have already received fiscal 2013 cash distributions from the casino to ISC, of approximately $21.5 million.

Net loss for the 3 months ended August 31, 2013, was $7.9 million, or $0.17 per diluted share, on approximately 46.5 million shares outstanding. However, when you exclude the carrying cost related to Staten Island, losses associated with this -- with as long-lived asset retirements, as well as depreciation -- accelerated depreciation driven by shortened service lives, in connection with DAYTONA Rising, capacity management and other capital improvements, and the marketing and consulting costs incurred for DAYTONA Rising, we posted earnings of $0.05 per diluted share for the 2013 fiscal third quarter. As described in the release, this is compared to non-GAAP net income for the 2012 third quarter of $0.01 per diluted share.

As for the balance sheet and future liquidity, at August 31, our combined cash and cash equivalents totaled $163.4 million and shareholders' equity was $1.3 billion. Our deferred income was approximately $78.9 million, which was slightly below this time last year.

At the end of the quarter, total debt was approximately $276.5 million, which includes approximately $165 million in Senior Notes, $60.7 million in TIF bonds associated with Kansas Speedway, $50 million for our term loan on our headquarters office building, and $740,000 in revenue bonds.

As it relates to capital spending, for the 9 months ended August 31, 2013, we spent approximately $46.9 million on capital expenditures for projects at our existing facilities. For fiscal 2013, we reiterate that our total capital expenditures at our existing facilities will be approximately $90 million, which includes spending for the DAYTONA Rising project.

In June of this year, our Board endorsed a capital investment plan for 2013 to 2017 not to exceed $600 million over that period. The 5-year plan encompasses CapEx for all of our 13 facilities, including DAYTONA Rising, and any equity commitments to undertake ONE DAYTONA. The majority of DAYTONA Rising's construction will occur in 2014 and 2015. We estimate ISC's fiscal 2014 total CapEx will be approximately $190 million and the total for 2015 will be approximately $180 million. With the target completion date for the project in January 2016, spending will then decrease significantly with an expectation of capital expenditures for projects at all of ISC's existing facilities to be between $60 million and $70 million annually in fiscal 2016 and '17.

While we will leverage our revolver, on a short-term basis, we will not take on additional long-term debt to fund DAYTONA Rising. However, accounting rules require that we capitalize a portion of the interest on our private placements during the construction period. We estimate we will recognize approximately $22 million of CapEx -- of capitalized interest from 2014 through 2016 with roughly half being recorded in 2015.

In terms of our 2013 financial outlook, we are reiterating our full year guidance of total revenues between $610 million and $625 million, non-GAAP earnings to range between $1.35 and $1.55 per diluted share, EBITDA margin to range between 31.5% and 32.5%, and operating margin to range between 18.5% and 20%.

As John mentioned, with the late buying trends and the potential for inclement weather as already experienced in our fiscal fourth quarter at Chicagoland, we remain more comfortable at the low to mid range of the guidance.

Our fiscal 2013 non-GAAP earnings per share guidance excludes accelerated depreciation and any future impairments or losses on retirements of assets, which could be recorded as parts of capital improvements due to removal of assets prior to the end of their actual useful life, gains or losses on sales of assets, legal judgments and legal settlements, any other income statement impact attributable to DAYTONA Rising, and certain carrying costs for our Staten Island property.

A couple of items I'd like to discuss before we open up the line to questions.

The recently announced TV contracts provide us unparalleled revenue visibility. The 2014 NASCAR season is the last year of the current contract before the 2015 to 2024 contracts begin. The industry will receive approximately $630 million in 2014. At this point, we do not know the dollar amount the industry will receive per year beginning in 2015. We hope NASCAR will provide that information in the coming months. There is no concern that NASCAR will change the long-standing 65-25-10 split and has confirmed as much in the media. As soon as we are made aware of the 10-year TV distributions, we'll provide that information.

We continue to work with Congress to extend our 7-year tax depreciation classification for motorsports facilities, which is set to expire on December 31. Preserving the tax treatment the industry has used for decades, which Congress codified in 2004 and has extended twice, is important to the industry, and we remain hopeful that Congress will make it permanent or at least extend the provision beyond the current year.

In closing, there's a tremendous opportunity for the company to grow stronger as we continue to successfully execute our strategic initiatives, particularly DAYTONA Rising. Its importance to us and the industry cannot be understated. The rationale for this investment is straightforward. We believe we can build a deeper, emotional bond between our customers and some corporate partners at Daytona. This is not only to ensure our product -- this will not only ensure our product remains relevant, but will also take our company and the sport to renewed heights.

We're focusing on our brand while elevating the sports prominence. By providing our fans a better experience with increased points-of-sale, as well as an expansive platform for our marketing partners, we estimate DAYTONA Rising upon completion, will provide an immediate incremental lift in Daytona's revenues of approximately $20 million and then the EBITDA lift of approximately $15 million with a single-digit growth rate. We anticipate the project to be accretive to ISC's earnings within 3 years of completion, and this doesn't include the intangibles. Positive long-term benefits to our sport, the potential it will have to drive future broadcast revenues and how it will generate new interest across all our motorsports facilities.

Our long-term outlook has great potential. We have the largest revenue source secured for the next 11 years. The sport's most important facility, the one that shaped the industry into what it is today, will carry on its tradition for decades to come. And we continue to explore and undertake new ways to add revenue to streams to our business. We look forward to speaking with you on our next earnings conference call in January, at which point, we will provide 2014 financial guidance.

With that, I'll turn it back over to the operator for the Q&A portion of the call.

Question-and-Answer Session


[Operator Instructions] Your first question is from Jaime Katz with Morningstar.

Jaime M. Katz - Morningstar Inc., Research Division

You guys talked about all the entitlements being completed for the year. Can you talk about kind of what that looks like for next year, and maybe if you're ahead or behind of where you were at the same time last year and how the pricing of that is shaping up, maybe?

John R. Saunders

Yes. Currently, for next year, we have 6 of 20 that are currently open. And we're seeing pricing stabilizing on the entitlements, we are seeing some extension in terms. I think we talked about this on the last call, with low single-digit escalators. So we see that improving. It's not where we wanted it to be, but it's positive.

Jaime M. Katz - Morningstar Inc., Research Division

And did you have about the same number open at this time last year?

John R. Saunders

Yes, we're about in line where we were last year.

Jaime M. Katz - Morningstar Inc., Research Division

And then can you -- I know CapEx changed a little bit on how you thought it was going to be over the next 2 years. Is there just a timing shift in how the project is rolling out? Or was there something else in the 2014, 2015 numbers that moved it from 2 15 next year to 1 90 and shifted 2015 a little?

Daniel W. Houser

It's really just more clarity on the timing of -- the way the project's going to fly out -- will roll out. We're on schedule, very happy with the progress on the project. We've, knock on wood, been blessed with a season without major tropical storms or anything like that, which can hold up the construction timetables. So things are moving along well on DAYTONA Rising.

Jaime M. Katz - Morningstar Inc., Research Division

Well they just announced one on CNN, so I'm going to rain on your parade with that. But finally, the outlook for Kansas long-term, has that changed at all? Or are you guys still kind of on-board with the $50 million in total EBITDA, like longer-term as to where you can get for the project before it splits you guys in pen[ph]?

Daniel W. Houser

Yes. I think we are making the progress, penetration in the market there that is meeting our expectations. We're seeing growth and strength in the slot revenues, which are the high-margin pieces of the business. We've done, today, very well on the table game piece. So yes, we're extremely optimistic about where we stand with that property and think it was a great investment for us and our shareholders.


Your next question is from Steve Altebrando with Sidoti & Company.

Stephen Altebrando - Sidoti & Company, LLC

You mentioned some of the metrics for Phoenix, which I guess is about 5 weeks away. What percentage of tickets are typically sold by now?

Daniel W. Houser

We're pretty close on Phoenix where we've been in the past. We've had a sellout out there in the fall the last few years. Hopefully, we can get there again. But that's been a bright spot as far as the different markets.

Stephen Altebrando - Sidoti & Company, LLC

Okay. And then, is there anything you can provide about Miami advance tickets?

Daniel W. Houser


John R. Saunders

Yes. First of all, Miami -- let me back up to what we said on the call on the scripted remarks, is that our advanced sales continue to -- they're down year-over-year. And while we're very optimistic about trends that we're seeing for Homestead-Miami, there's still risk whether it's weather, or it could be that we're not sure what the status of the chase will be at that point. So it's -- we're happy with where we're at, but I stress that there's still risk in the system. And if the championship somehow got locked up in Phoenix, that could have a potentially downside impact. So it's still a very fluid situation.

Daniel W. Houser

And just -- on those cautious comments there, which I agree with, we were behind on -- we were down on advanced ticket sales going into Q3 as it end up, we're less than 1% off from last year. So there's still so much of the -- the story ends up in the last couple of weeks for each event. That's one of the reasons I think we remain cautiously optimistic on the rest of the year. We have a lot of events in Q4, a lot of big events.

Stephen Altebrando - Sidoti & Company, LLC

Okay. And then in terms of DAYTONA Rising project, is it -- I assume with the construction underway that you've already entered into a guaranteed max price. If that's correct or not. And if you can, I guess, go over any potential risks that are out there of going over budget?

Daniel W. Houser

Well, the good news is, yes, we've entered into a fixed contract with a -- a fixed fee contract. So the only risk on budget there are -- would be owner -- change orders to that portion of the construction. I believe that's like about 615 or 600 -- I'm sorry, $320 million or so, $315 million of the total $375 million to $400 million, the rest are owner-directed cost. So I think we've got a pretty good handle on where those numbers will come out and hit in our expectations on the spending.

Stephen Altebrando - Sidoti & Company, LLC

Okay and then just last one. The $1 million tax benefit, was that all recognized in the quarter in Kansas City? And is that reflected in the equity contribution line?

Daniel W. Houser

Yes. Yes. That was picked up in the third quarter and it is all in the equity -- income from equity investments.


Your next question is from Tim Conder with Wells Fargo Securities.

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

A few questions here on the interest expense. Dan, you'd mentioned, or Lesa, that you're going to have basically a $4 million savings on the carrying costs with the debt on a go-forward basis. Can you talk about, when you layer on your anticipated borrowings on your revolver, how that'll net out with that $4 million included?

Daniel W. Houser

Well, the $4 million is, in general, the administrator expense. So that's not -- that's the carrying cost that we have for Staten Island, which were property taxes and some other holding of the property. So that's where that $4 million will -- the savings will show up, which is an item that we've been adjusting for on our non-GAAP result. As far as interest expense goes, our interest expense will be pretty well set other than when we -- as we ramp up for the project with -- and that will track the capital spending, which will be most significant in 2014 and 2015, and then we'll start to pay that down in 2016. Again, we're going to have a significant amount of -- as I' said, about $22 million over the course of the project, in capitalized interest. So I think we'll see interest expense actually probably down for a couple of years and then it will probably get back to kind of the stable run rate that we have now because we anticipate getting off of the revolver as soon we can.

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

Okay. So basically, you're going to capitalize all the incremental interest related to DAYTONA Rising and anything largely to be pulled down on the revolver, is what you're saying?

Daniel W. Houser

Yes. I mean, we'll follow the accounting rules on how that needs to be done, but we anticipate that it will be about $22 million between 2014 and 2016, with about half of it in 2015. We'll have more guidance on what that'll be for 2014 when we talk with you in January.

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

Okay. Any -- then and again, you had mentioned that some of your tracks now or the attendance in that is tracking upward on a year-over-year basis. Any commentary you can give for the whole company on an EBITDA, adjusted EBITDA per guest basis?

Daniel W. Houser

I don't know, Tim, that, that's something that we really -- that we look at that metric. I don't have that off the top of my head.

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

Okay. I could circle back with you and Charles later on. And then on TV, a couple of questions here. Do you anticipate any change in the tiering for the tracks, as to what tracks will get -- what percentage slice of a given race under the new deal? Or is that maybe just something that's still has not yet been decided?

Daniel W. Houser

We haven't received any indication from NASCAR that there's going to be any change in the -- that there's going to be any change there. However, as far as we know, we're not expecting it.

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

Okay. And then any comment that you can give -- 2 things I guess, the escalator, the average escalator year-over-year at this point. And then will ISC's portion of the total annual revenue from the TV contract, will that change in any material way? The percentage portion, I should say?

Daniel W. Houser

Yes. Again, we don't expect any change of any material nature on that. We haven't been -- we don't know at this point about the escalators, but I think history tells us is back when we had NBC involved in the first deal from -- I think it was -- when did it start? 2001 through 2006. The escalator was pretty high. So -- because that transferred over -- does that mean something different than just continuing on a 2 to 3 year escalator? We haven't been able to get clarity on that at this point. But that is something we anticipate hearing from NASCAR in the next month or 2, and we will be sharing that with all of you as soon as that's available to us.

John R. Saunders

Again -- and again, Tim, yes I think Dan mentioned this earlier. What we do know, I mean, this is coming from a quote from Brian France. We don't anticipate any change in the 20 -- the 65-25-10 split.

Daniel W. Houser

So if there was any change, it would come. If there was any recalibration of the allocation between series.

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division

Okay, okay. Okay.


[Operator Instructions] At this time, there are no further questions in queue. I'll now turn the call back over to John.

John R. Saunders

Well, thank you. And thanks, all of you for joining us on our third quarter call and we look forward to talking with you again on the fourth quarter in January. So thanks very much for joining us today, and have a good one. See you.


Ladies and gentlemen, thank you for joining. Today's conference call is now complete. You may now disconnect.

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