Wednesday, July 09, 2008

International Speedway Liquidity Problems? Yellow Flag Caution

International Speedway Corporation (ISCA) announced their Q2 results. The purveyors of NASCAR racing experienced higher net profits on lower revenues. Always a good sign but it does cause you to look closely at the financials. The press release deals with the financials well after some promotional messages from the President Lesa France Kennedy who espoused on the strength of NASCAR offerings.

She also went on the say “"Supported by ISC's strong breadth of assets and solid financial footing, we remain well positioned to successfully execute our long-term strategic initiatives."

Let’s look at these two points:

Firstly the long term debt suddenly has a huge and I mean huge slug of debt that is now short term and needs to be repaid or rolled over. $150 million needs to be taken care of and not one comment from management about what is to be done.

Secondly let’s take a look at accounts receivable which has grown to approximately $72 million which is 57% larger than same period last year. Yet revenues are down . Accounts receivable are 20% of the first six months of revenues whereas last year is was in the 13% range which still seems small. Again not one word from management about this major change.

Long term positioning comments seem suspect and needs more clarity.