~Company to Reactivate Open Market Share Repurchase Program~
DAYTONA BEACH, Fla., June 3 /PRNewswire-FirstCall/ --International Speedway Corporation (NASDAQ Global Select Market: ISCA; OTC Bulletin Board: ISCB) ('ISC') announced today that it has entered into a definitive settlement agreement (the 'Settlement') with the Internal Revenue Service (the 'Service') in connection with the previously disclosed federal income tax examination for its 1999 through 2005 fiscal years. In order to prevent incurring additional interest, beginning in fiscal 2005 ISC deposited corporate funds with the United States Treasury relating to this examination. As a result of the Settlement, the Company expects the Service will return to ISC approximately $97 million of its $118 million deposit.
Settlement Details
In addition, the Company expects to receive approximately $14 million in cash for interest earned on the deposited funds to be returned. In its fiscal 2009 second quarter results, ISC will record the interest income net of applicable taxes and related adjustments through income tax expense. The Company currently estimates that this will result in a net tax benefit of approximately $9 million, or $0.18 per diluted share after tax. ISC expects to receive its deposit, in excess of the amount owed, and applicable interest within 30 days.
The Settlement concludes an examination process the Service opened in fiscal 2002 that challenged the tax depreciation treatment of a significant portion of ISC's motorsports entertainment facility assets. Under Section 168 of the Internal Revenue Code and applicable IRS guidance, there is a particular Asset Class and corresponding depreciation period for theme and amusement parks and other similar combinations of entertainment attractions. The Company has consistently applied that Asset Class to its motorsports entertainment facility assets. Under this classification, assets are considered seven-year property for tax purposes (i.e., depreciated over a seven-year period). The Service disputed that the Asset Class applied to certain of the Company's assets which were placed in service prior to October 23, 2004. The Settlement reaches an appropriate compromise of this issue.
It is important to note in October 2008, legislation was passed that provided a two-year extension of a provision in the tax code passed by Congress in the Federal American Jobs Creation Act of 2004, providing owners of motorsports entertainment facility assets a seven-year recovery period for tax depreciation purposes.
