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Equity and Other Investments
9 Months Ended
Aug. 31, 2015
Text Block [Abstract]  
Equity and Other Investments
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, as the managing member of Kansas Entertainment, 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 August 31, 2014 and 2015. The Company's 50.0 percent portion of Kansas Entertainment’s net income is approximately $2.3 million and $3.5 million for the three months ended August 31, 2014 and 2015, respectively, and approximately $6.7 million and $11.2 million for the nine months ended August 31, 2014 and 2015, respectively, and is included in income from equity investments in its consolidated statements of operations.
Distributions from Kansas Entertainment for the nine months ended August 31, 2015, totaling approximately $24.8 million, consist of approximately $12.1 million received as a distribution from its profits, included in net cash provided by operating activities on the Company's statement of cash flows, with the remaining approximately $12.7 million received, recognized as a return of capital from investing activities on the Company's statement of cash flows. Distributions from Kansas Entertainment for the nine months ended August 31, 2014, totaling $15.5 million, consist of approximately $7.6 million received as a distribution from its profits, is included in net cash provided by operating activities on the Company's statement of cash flows, with the remaining approximate $7.9 million received, recognized as a return of capital from investing activities on the Company's statement of cash flows.
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 by the Company through 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 received a principal payment of approximately $6.1 million plus interest on the mortgage balance through August 31, 2015, with the remaining purchase price of $66.4 million due March 5, 2016. Interest on the remaining mortgage balance is due quarterly, in arrears. Marine Development is current with all payments through October 2015. Based on the level of Marine Development's principal payments received to date, 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 $9.1 million at August 31, 2015, until the carrying amount of the property is recovered, upon final payment .
Subsequent to August 31, 2015, the Company received a scheduled interest payment of approximately $1.2 million.
The net proceeds from the sale, combined with the mortgage interest and related cash tax benefits, will provide the Company with approximately $118.0 million in incremental cash flow through the term of the mortgage.