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Equity and Other Investments
3 Months Ended
Feb. 29, 2016
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 February 28, 2015 and February 29, 2016. The Company's 50.0 percent portion of Kansas Entertainment’s net income is approximately $3.2 million and $4.0 million for the three months ended February 28, 2015 and February 29, 2016, respectively, and is included in income from equity investments in its consolidated statements of operations.
Distributions from Kansas Entertainment for the three months ended February 29, 2016, totaling approximately $4.5 million, consist of approximately $4.3 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 $0.2 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 three months ended February 28, 2015, totaling $5.5 million, consist of approximately $3.5 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 $2.0 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 February 29, 2016, with the remaining purchase price of $66.4 million due in March 2016. 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 $11.4 million at February 29, 2016, until the carrying amount of the property is recovered, upon final payment .
In March 2016, the Company completed an assignment of all rights, title and interest in the mortgage and underlying promissory note to an affiliate of Matrix Development Group, a New York/New Jersey area developer, and received the remaining principal balance of $66.4 million, plus additional consideration of approximately $0.3 million. The Company has no further commitments or contingencies related to the property or its sale. As a result, in the second quarter of fiscal 2016, the Company will record a gain of approximately $13.6 million, comprised of the aforementioned deferred gain, interest, and other consideration paid.
The net proceeds from the sale, combined with the mortgage interest and related cash tax benefits, will provide the Company with approximately $129.8 million in incremental cash flow through the term of the mortgage.