Overview -- We are assigning our 'BBB' corporate credit rating to Daytona Beach, Fla.-based International Speedway Corp. (ISC), a promoter of racing events at motorsports entertainment facilities. -- Our stable rating outlook reflects our expectation that the company's financial risk profile can withstand some level of earnings volatility, which we believe is likely given the still weak economy and its effects on the ISC customer base. Rating Action On July 13, 2012, Standard & Poor's Ratings Services assigned its 'BBB' corporate credit rating to Daytona Beach, Fla.-based International Speedway Corp. The rating outlook is stable. Rationale The 'BBB' corporate credit rating on ISC reflects our assessment of the company's business risk profile as "satisfactory" and our assessment of the company's financial risk profile as "intermediate" according to our criteria. Our assessment of ISC's business risk profile as satisfactory reflects the company's leading market position in the U.S. motorsports industry and good profitability. ISC's reliance on an event-based business model, the susceptibility of its revenue base to the economic cycle, and the existence of substitute entertainment events all partially offset those strengths. Still, ISC benefits from an established fan base supporting National Association for Stock Car Auto Racing (NASCAR)-sanctioned events and a recurring revenue stream derived from broadcasting contracts which runs through 2014. Our assessment of ISC's financial risk profile as intermediate reflects current strong credit measures, including operating lease-adjusted debt to EBITDA of 1.4x and EBITDA coverage of interest above 10x, as of May 2012. We operating lease-adjusted debt to EBITDA will remain below 2.5x. ISC is the larger of the two major companies (the other is Speedway Motorsports Inc.) hosting races sanctioned by NASCAR. About 90% of ISC's revenues and an even greater percentage of EBITDA come from 47 major NASCAR-sanctioned events held at ISC's 13 facilities, and ISC has more than a 50% market share of the Spring Cup races. ISC's market share is likely to remain solid as NASCAR--which is controlled by the same principal shareholders as ISC--has consistently awarded ISC race dates. We believe the industry, with high capital costs for new racetracks, long construction lead times, and a limited supply of NASCAR racing dates, has significant barriers to entry. We expect profitability to remain strong and reasonably stable. Contracted NASCAR broadcasting revenue represents a significant portion of the company's motorsports-related (broadcast rights and sponsorship) revenue and provides a stable source of cash flow increasing on average by 3% per year through 2014, when the current contract ends. While we expect a new contract will be in place by the end of 2013, the new contract negotiation represents a key risk for the company. Weak attendance trends and low TV ratings in the period leading up to these negotiations could hurt revenues. While TV ratings and viewership for the 2011 NASCAR Sprint Cup telecasts improved over 2010, they are still below pre-recession levels. However, NASCAR remains the second-highest-rated regular season sport on TV, and we believe there is still time before renegotiation for economic improvements to translate into both increased attendance and viewership. For the six months ended May 31, 2012, revenues were up 6.8% compared to the first half of fiscal 2011 (ended November) because of two additional races in the 2012 period. The recession meaningfully affected ISC's target demographic and the geographic regions where the company's tracks are located, and we expect admission revenues from NASCAR-sanctioned events to remain pressured over the near-to-intermediate term. Additionally, the company's cost structure is largely fixed given the operating costs associated with hosting an event, and, as such, the decline in revenue over the past four years has affected margins. For fiscal 2012, our rating incorporates our expectation that modest growth in broadcasting revenues will mitigate a continued decline in admission sales, resulting in low-single-digit declines in revenue and EBITDA. Our preliminary forecast for fiscal 2013 is for modest, low single digit percentage growth in both revenues and EBITDA, which should be the result of the continued gradual economic recovery. Liquidity Based on the company's likely sources and uses of cash over the next 12 to 18 months and incorporating our performance expectations, ISC has a "strong" liquidity profile, according to our criteria. Relevant factors in our assessment of ISC's liquidity profile include the following: -- We expect sources of liquidity to exceed uses by at least 1.5x. -- We project net sources of liquidity to remain positive, even in the event of a 30% decline in EBITDA. -- Covenant cushions are likely to be large enough that ISC would not violate its total leverage or minimum interest coverage covenants, even with 30% EBITDA declines. ISC historically has generated good levels of cash from operations, used to fund operations and liquidity needs. Cash balances totaled approximately $104 million at May 2012, and ISC had $176 million availability under its $300 million revolving credit facility due 2015. Beyond operational expenditures, cash uses include modest share repurchases (ISC has $61.7 million remaining under its existing share repurchase authorization), dividend payments, and expenditures for capital improvements at existing tracks, which we estimate will total about $90 million in 2012. ISC's debt maturity profile is strong: The nearest maturity is the revolver in 2015. The balance on the revolver is high compared with normal usage, because of ISC's March 2012 repurchase of its senior notes. We expect it to refinance this balance in the intermediate term. Outlook The stable rating outlook reflects our expectation that ISC's financial risk profile can withstand some level of earnings volatility, which we believe is likely given the still weak economy and its effects on the ISC customer base. Although credit measures are currently strong, we expect ISC to deploy more financial resources to expand the business over the intermediate term. An upgrade, which we view as a longer-term scenario, would hinge on sustained growth in attendance and ratings of NASCAR racing events, which we believe should translate into favorable terms under a new broadcasting contract and growth in EBITDA margins. We could lower the rating if the company's debt to EBITDA deteriorates to 2.5x. Scenarios that could lead to such a decline include worsening economic conditions, or if there were a secular shift away from interest in NASCAR events, both of which would result in a decrease in attendance and ancillary revenues. Such scenarios would also have a compounding effect if either were to occur in the period leading up to broadcast contract negotiations. Related Criteria And Research -- Methodology And Assumptions: Liquidity Descriptors For Global Corporate Issuers, Sept. 28, 2011 -- Business Risk/Financial Risk Matrix Expanded, May 27, 2009 -- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008 Ratings List Rating Assigned International Speedway Corp. Corporate Credit Rating BBB/Stable/-- Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.