EQUITY AND OTHER INVESTMENTS

Hollywood Casino at Kansas Speedway

In February 2012, 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, opened the Hollywood-themed and branded destination entertainment facility, overlooking turn two of 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, 2013. Start up and related costs through opening were expensed through equity in net loss from equity investments. The Company’s 50.0 percent portion of Kansas Entertainment’s net loss was approximately $4.2 million for fiscal year 2011, and net income of approximately $2.8 million and $9.4 million for fiscal years 2012 and 2013, respectively, and is included in equity in net (loss) income from equity investments in the Company's consolidated statements of operations. The net income from the equity investment in fiscal 2013 includes a property tax credit received in June 2013 as a result of the casino successfully negotiating a resolution to its property tax appeal. The Company's share of the resolution of the appeal attributable to prior years' property taxes contributed approximately $1.1 million to the fiscal 2013 equity income amount.

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



	2011		2012		2013
Distribution from profits	$	—	$	—	$	8,216
Distribution in excess of profits	—		11,000		13,284
Total Distributions	$	—	$	11,000	$	21,500

Subsequent to November 30, 2013, the Company received an additional $4.5 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 will receive the remaining purchase price of $72.5 million in payments of approximately $6.1 million plus interest on this mortgage balance, due February 3, 2014, and $66.4 million, due March 5, 2016. Interest on the latter mortgage balance will be paid 12 months after closing and then quarterly, in arrears. 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 recognition of any profits, which include the option proceeds and interest income until the carrying amount of the property is recovered, which will not be until the final payment is made.

As a result of the sale, the Company expects to receive a cash tax benefit of approximately $41.9 million, based on its current corporate tax rate. This cash tax benefit, when combined with the net proceeds from the sale, will provide the Company with approximately $118.0 million in incremental cash flow over the next several years.

Motorsports Authentics

The Company is a partner with Speedway Motorsports, Inc. 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. The Company’s 50.0 percent investment in MA was previously reduced to zero and they Company did not recognize any net income or loss from operations of MA during fiscal years 2011, 2012, and 2013, respectively.

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



	2011			2012		2013
Current assets	$	48,564		$	46,054	$	43,062
Noncurrent assets	173,393			258,239		238,772
Current liabilities	16,573			22,379		21,510
Noncurrent liabilities	4,065			1,819		1,242
Net sales	34,788			144,715		170,721
Gross profit	19,781			63,516		82,838
Operating (loss) income	(9,080		)	8,914		21,770
Net (loss) income	(9,374		)	9,266		21,986