EQUITY AND OTHER INVESTMENTS

Hollywood Casino at Kansas Speedway

Kansas Entertainment, LLC, (“Kansas Entertainment”) a 50/50 joint venture of Penn Hollywood Kansas, Inc. (“Penn”), a subsidiary of Penn National Gaming, Inc. and Kansas Speedway Development Corporation (“KSDC”), a wholly owned indirect subsidiary of ISC, operates the Hollywood-themed casino and branded destination entertainment facility, overlooking turn two at Kansas Speedway. Penn is the managing member of Kansas Entertainment and is responsible for the operations of the casino.

The Company has accounted for Kansas Entertainment as an equity investment in its financial statements as of November 30, 2014. The Company’s 50.0 percent portion of Kansas Entertainment’s net income was approximately $2.8 million , $9.4 million and $8.9 million for fiscal years 2012, 2013 and 2014, respectively, and is included in equity in net income from equity investments in the Company's consolidated statements of operations. Included in the Company's fiscal 2013 income from equity investment amount is approximately $1.1 million related to a one-time property tax refund. Beginning February 2014, Kansas Entertainment began recording expense equal to 1.0 percent of gross gaming revenue since it did not commence with construction of a hotel by the original deadline. Included in the Company's income from equity investment amounts for fiscal 2014 is approximately $0.6 million expense, respectively, related to this penalty.

Distributions from Kansas Entertainment, for the years ended November 30, are as follows (in thousands):



	2012		2013		2014
Distribution from profits	$	—	$	8,216	$	10,076
Distribution in excess of profits	11,000		13,284		11,924
Total Distributions	$	11,000	$	21,500	$	22,000

Subsequent to November 30, 2014, the Company received an additional $5.5 million from Kansas Entertainment.

Staten Island Property

On August 5, 2013, the Company announced that it sold its 676 acre parcel of property located in Staten Island, New York, to Staten Island Marine Development, LLC (“Marine Development”). Marine Development purchased 100 percent of the outstanding equity membership interests of 380 Development LLC (“380 Development”), a wholly owned indirect subsidiary of ISC and owner of the Staten Island property, for a total sales price of $80.0 million. In addition, the Company previously received approximately $4.2 million for an option provided to the purchaser that is nonrefundable and does not apply to the $80.0 million sales price.

The Company received $7.5 million, less closing and other administrative costs, of the sales price at closing. The remaining sales price was financed with the Company holding a secured mortgage interest in 380 Development as well as the underlying property. The mortgage balance bears interest at an annual rate of 7.0 percent. In accordance with the terms of the agreement, the Company has received a principal payment of approximately $6.1 million plus interest on this mortgage balance through November 30, 2014, and will receive the remaining purchase price of $66.4 million, due March 5, 2016. Interest on the remaining mortgage balance is due quarterly, in arrears, and Marine Development is current with all payments through January 2015. Based on the level of Marine Development's initial investment at closing and continuing investment, the Company has accounted for the transaction using the cost recovery method and has deferred the recognition of profit of approximately $1.9 million, and interest totaling approximately $5.6 million at November 30, 2014, until the carrying amount of the property is recovered, which will not be until the final payment is made.

The net proceeds from the sale, combined with the mortgage interest and related total cash tax benefit, will provide the Company with approximately $118.0 million in incremental cash flow through the term of the mortgage.

Motorsports Authentics

Prior to January 31, 2014, the Company was partners with Speedway Motorsports, Inc. ("SMI") in a 50/50 joint venture, SMISC, LLC, which, through its wholly owned subsidiary Motorsports Authentics, LLC conducts business under the name Motorsports Authentics (“MA”). MA designs, promotes, markets and distributes motorsports licensed merchandise. On January 31, 2014, SMI abandoned its interest and rights in SMISC, LLC, consequently bringing the Company's ownership to 100.0 percent. MA's operations are included in the Company's consolidated operations subsequent to the date of SMI's abandonment. Prior to January 31, 2014, MA was accounted for as an equity investment in the Company's financial statements.

As a result of SMI's abandonment of their interest in SMISC, LLC, the Company recorded other income of approximately $5.4 million, representing the fair value of MA, over the carrying value, as of January 31, 2014. The fair value was based on a discounted cash flow analysis using level 3 inputs. Most of the fair value represents the value of MA's working capital and the fair value was not sensitive to assumptions used in the discounted cash flow analysis. In addition, the Company recognized tax benefits of approximately $4.0 million, representing the tax benefit associated with various operating loss carryforwards of MA that are expected to be realized in its consolidated tax filings in the future and certain other tax filing positions of SMISC, LLC. In November 2014, the Company recognized an impairment of a long-lived intangible asset of approximately $0.6 million, which is included in non-cash losses on retirements of long-lived assets. MA's operating income contribution, subsequent to consolidation, was immaterial, and is included in the Motorsports Event segment.

Prior to the SMI abandonment of SMISC, LLC, no equity income was recognized in prior periods, by the Company, as MA operated at breakeven.

Summarized financial information of the Company’s equity investments as of and for the years ended November 30, are as follows (in thousands):



	2012		2013		2014
Current assets	$	46,054	$	43,062	$	33,349
Noncurrent assets	258,239		238,772		215,226
Current liabilities	22,379		21,510		19,273
Noncurrent liabilities	1,819		1,242		—
Net sales	144,715		170,721		141,849
Gross profit	63,516		82,838		72,031
Operating income	8,914		21,770		20,153
Net income	9,266		21,986		20,153